SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF
FOREIGN ISSUER
PURSUANT
TO RULE 13a-16 OR 15d-16 OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the
month of June 2005
HIGHWAY
HOLDINGS LIMITED
(Translation
of Registrant's Name Into English)
Suite
810, Level 8
Landmark
North
39
Lung
Sum Avenue
Sheung
Shui
New
Territories, Hong Kong
(Address
of Principal Executive Offices)
(Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.)
Form
20-F
x Form
40-F
o
(Indicate
by check mark whether the registrant by furnishing the information contained
in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes
o No
x
(If
"Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_______________.)
Attached
to this Report on Form 6-K is the press release issued by the registrant
on June
30, 2005.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| HIGHWAY HOLDINGS LIMITED | ||
| |
|
|
| Date: June 30, 2005 | By: | /s/ ROLAND W. KOHL |
|
Roland W. Kohl |
||
| Chief Executive Officer | ||
NEWS
RELEASE
CONTACTS: Gary
S.
Maier
Maier
& Company, Inc.
(310) 442-9852
HIGHWAY
HOLDINGS LIMITED REPORTS
FISCAL
YEAR-END RESULTS
--Announces
Sale of Non-Clock and Watch Kienzle Trademark Rights--
HONG
KONG — June 30, 2005 —Highway
Holdings Limited (Nasdaq:
HIHO)
today
announced financial results for its fiscal fourth quarter and year ended
March
31, 2005, reflecting the impact of a strategic decision to focus primarily
on
OEM manufacturing services and the downsizing, and possible curtailment,
of its
camera and clock operations.
Fiscal
year results for 2004 and 2005 were severely impacted by extensive write-downs
of inventory and assets, including tools and intellectual property assets
related to the company’s camera and clock operations -- reflecting corporate
initiatives to eliminate business products lines operating at a loss. (Pro
Forma
profit/loss statement attached)
Net
sales
for the 2005 fiscal fourth quarter climbed 16.5 percent to $7.8 million from
$6.7 million in fiscal 2004. However, because the company in the fiscal 2005
fourth quarter recognized (i) significant, one-time, non-cash write offs
related
to its on-going restructuring, and (ii) a significant one-time, non-cash
compensation expense to settle a payment issue by the issuance of stock options,
for the fourth quarter of fiscal 2005, the company reported a net loss of
$642,000, or $0.21 per share, compared with net income of $408,000, or $0.12
per
diluted share, a year ago.
For
the
full fiscal year, the company incurred a net loss of $152,000, or $0.05 per
share, compared with net income of $982,000, or $0.30 per diluted share,
last
year. Net sales for the same period increased nine percent to $27.7 million
from
$25.4 million a year earlier.
Subsequent
to year-end, the company completed the sale of its rights to use the
Kienzle
trademark in all markets, but retained the rights to the Kienzle trademark
for
clocks and watches, to a German marketing organization - Kienzle AG and its
affiliates. The purchase price for the non-clock and watch rights for the
Kienzle trademark was $1.0 million in cash. The sale of these rights will
be
booked in the company’s fiscal first quarter ended June 30, 2005.
(more)
Highway
Holdings Limited
Page
2
“Fiscal
2005 was a challenging period for the company. The business environment
for some
of our operations has changed dramatically. For example, the popular acceptance
of digital photographic devices, particularly mobile phones that can take
pictures easily and cheaply, has hurt our single-use film based camera
business,
and changes in the manufacture and demand for clocks has changed our clock
operations. This situation has required management to make difficult decisions
and initiate actions to transition the business and redirect Highway Holdings’
operations back to core strengths as an OEM manufacturer to global companies,”
said Roland Kohl, chairman and chief executive officer of Highway Holdings.
Gross
profit for the March 31, 2005, twelve-month period was $5.1 million, essentially
the same from a year ago. Gross profit as a percentage of sales for the
twelve
months was 18.5 percent compared with 20.1 percent last year, reflecting
significant increases in raw metal and plastic material costs. Gross margins
were also impacted by significant increases in the price of metal and plastic
raw materials, as well as increasing operating costs in Shenzhen, including
rising labor and transportation and facility-related costs.
Sales
of
metal manufactured parts and OEM business increased during fiscal 2005
by
$3,006,000 to $17,792,000. Sales to the company’s European, primarily German,
customers represented the largest increase in metal manufacturing in fiscal
2005. Metal and OEM manufacturing sales represented 64.3 percent of the
company’s total sales in fiscal 2005 compared with 58.3 percent of the company’s
total sales in fiscal 2004. The increase in metal manufacturing and OEM
sales is
a result of the company’s focus on manufacturing more complex components,
subassemblies and products for its blue chip customers.
Net
sales
of cameras decreased in fiscal 2004 by $2,154,000 to $3,836,000 due to
the
declining market for film-based cameras. The company has decided that in
the
current fiscal year ending March 31, 2006, it would discontinue the manufacture
and sales of single-use cameras and would modify, sell or otherwise dispose
of
its other camera operations, with the possible exception of the company’s
specialized underwater camera product line. Net sales of cameras represented
13.9 percent of the company’s total net sales in fiscal 2005 compared with 23.6
percent in fiscal 2004.
Sales
of
clocks and watches for the year ended March 31, 2004, decreased by $132,000
compared with a year ago. Sales of the company’s principal clock products,
quartz clocks, declined in fiscal 2005 due to the impact of certain competing
clock manufacturers, some of whom the company believes are, directly or
indirectly, subsidized and able to offer clocks at a significantly reduced
price
point, often below raw materials costs. The company’s clock and watch sales were
also impacted by the cancellation of its licensing contract with Kienzle
AG and
the subsequent curtailment of certain marketing activities in Germany.
(more)
Highway
Holdings Limited
Page
3
Highway
Holdings utilizes its clock/watch division to produce OEM electronic products
for the company’s other OEM divisions. Despite a decline in clock and watch
sales, sales of the clock/watch division increased during fiscal 2005 as
a
result of revenue generated by the company’s Metal
and
OEM divisions. As a result, total revenues for the clock/watch division
during
fiscal 2005 increased substantially -- representing 21.9 percent of the
company’s net sales, compared with 18.1 percent a year earlier. The company
currently is restructuring its German marketing business, which incurred
substantial losses for the year. In order to reduce losses from its clock/watch
manufacturing operations, management is considering selling, closing and/or
modifying its Germany marketing operation -- as well as its current clock
and
watch manufacturing operations.
Selling,
general and administrative expenses for the year ended March 31, 2005,
increased
by $766,000, or 18.2 percent, over fiscal 2004. As a result, selling, general
and administrative expenses represented 18.0 percent of total net sales,
compared with 16.6 percent in fiscal 2004. The increase in selling, general
and
administrative expenses as a percentage of net sales was due primarily
to
$414,000 impairment losses for its camera, clock and watch property, plant
and
equipment and industrial property rights related to the restructuring of
the
clock/watch division, and to an increase in net sales and to $337,000 of
non-cash compensation expenses. During the fiscal year ended March 31,
2005, the
company realized a $249,000 gain due to currency exchange rate fluctuations
compared with a currency exchange rate gain of $278,000 in fiscal 2004.
The
gains were the result of the strength of the euro compared to the U.S.
dollar,
which increased the value of payments the company received in euros from
sales
in Europe. Since the company does not undertake any currency hedging
transactions, its financial results will continue to be impacted by the
fluctuations of currencies.
The
decrease in gross margins combined with the increase in selling, general
and
administrative expenses, the non-cash compensation expenses, and the impairment
of the assets due to the on-going restructuring caused the company to report
an
operating loss in fiscal 2005 of $269,000 compared with operational profit
of
$875,000 in fiscal 2004. After taxes, the company’s fiscal 2005 net loss was
$152,000 compared with net profit of $982,000 in fiscal 2004.
Kohl
noted the company’s balance sheet remains strong. At March 31, 2005, the company
had working capital of $9.9 million, compared with $8.8 million at March
31,
2004. Total Shareholders’ equity was $13.1 million compared with $12.8 million
last year. The
company’s current ratio was 2.56:1 at March 31, 2005, with long-term debt of
$967,000 mainly for asset loans.
(more)
Highway
Holdings Limited
Page
4
About
Highway Holdings:
Highway
Holdings produces a wide variety of high-quality products for blue chip
original
equipment manufacturers -- from simple parts and components to sub-assemblies
and finished products. It also manufactures clocks, clock movements and
watches
for sale under the company's own Kienzle Uhren brand name, as well as for
unaffiliated companies. Additionally, Highway Holdings currently manufactures
or
produces other finished products, including cameras and certain electronic
products. Highway Holdings is headquartered in Hong Kong and operates
manufacturing facilities in Shenzhen province of the People's Republic
of
China
Except
for the historical information contained herein, the matters discussed
in this
press release are forward-looking statements which involve risks and
uncertainties, including but not limited to economic, competitive, governmental,
political and technological factors affecting the company's revenues,
operations, markets, products and prices, and other factors discussed in
the
company’s various filings with the Securities and Exchange Commission, including
without limitation, the company’s annual reports on Form 20-F.
#
# #
(Financial
Tables Follow)
HIGHWAY
HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated
Statement of Income
(Dollars
in thousands, except per share data)
|
|
|
|
Quarter
Ended
|
|
|
Twelve
Months
Ended
|
|||||||
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|||||||
|
March
31,
|
March
31,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Net
sales
|
$ | 7,817 | $ | 6,712 | $ | 27,678 | $ | 25,356 | |||||
|
Cost
of sales
|
6,468
|
5,083
|
22,548
|
20,262
|
|||||||||
|
Gross
profit
|
1,349
|
1,629
|
5,130
|
5,094
|
|||||||||
|
Selling,
general and administrative expenses
|
1,351
|
1,118
|
4,985
|
4,219
|
|||||||||
|
Impairment
of industrial property rights
|
67
|
--
|
67
|
--
|
|||||||||
|
Impairment
of property, plant and equipment
|
347
|
--
|
347
|
--
|
|||||||||
|
Operating
income (loss)
|
(416
|
)
|
511
|
(269
|
)
|
875
|
|||||||
|
Non-operating
items
|
|||||||||||||
|
Interest
expenses
|
(35
|
)
|
(23
|
)
|
(110
|
)
|
(77
|
)
|
|||||
|
Exchange
gain (loss), net
|
(181
|
)
|
(43
|
)
|
249
|
278
|
|||||||
|
Interest
income
|
2
|
(1
|
)
|
14
|
9
|
||||||||
|
Other
income
|
(11
|
)
|
55
|
56
|
105
|
||||||||
|
Total
non-operating income (expense)
|
(225
|
)
|
(12
|
)
|
209
|
315
|
|||||||
|
Affiliates
|
|||||||||||||
|
Impairment
of investment in an affiliate
|
(5
|
)
|
(109
|
)
|
(5
|
)
|
(109
|
)
|
|||||
|
Equity
in (loss) income of an affiliate
|
1
|
2
|
0
|
2
|
|||||||||
|
|
(4
|
)
|
(107
|
)
|
(5
|
)
|
(107
|
)
|
|||||
|
Net
income (loss) before income taxes
|
(645
|
)
|
392
|
(65
|
)
|
1,083
|
|||||||
|
Income
taxes
|
4
|
16
|
(86
|
)
|
(100
|
)
|
|||||||
|
Net
income (loss) before Minority Interest
|
$
|
(641
|
)
|
$
|
408
|
$
|
(151
|
)
|
$
|
983
|
|||
|
Minority
Interest
|
(1
|
)
|
0
|
(1
|
)
|
(1
|
)
|
||||||
|
Net
income (loss) after Minority Interest
|
$
|
(642
|
)
|
$
|
408
|
$
|
(152
|
)
|
$
|
982
|
|||
|
Earnings
(loss) per share - basic
|
$
|
(0.21
|
)
|
$
|
0.13
|
$
|
(.05
|
)
|
$
|
0.32
|
|||
|
Weighted
average number of shares
|
3,260
|
3,030
|
3,260
|
3,030
|
|||||||||
|
Earnings
(loss) per share -diluted
|
$
|
(0.21
|
)
|
$
|
0.12
|
$
|
(.05
|
)
|
$
|
0.30
|
|||
|
Weighted
average number of shares
|
3,260
|
3,258
|
3,260
|
3,258
|
|||||||||
HIGHWAY
HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated
Balance Sheet
(In
thousands, except per share data)
|
March
31
|
March
31
|
||||||
|
2005
|
2004
|
||||||
|
Current
assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
3,948
|
$
|
4,158
|
|||
|
Restricted
cash
|
965
|
965
|
|||||
|
Accounts
receivable, net of doubtful accounts
|
5,165
|
3,763
|
|||||
|
Inventories
|
5,062
|
4,394
|
|||||
|
Investment
securities
|
296
|
309
|
|||||
|
Prepaid
expenses and other current assets
|
721
|
639
|
|||||
|
Total
current assets
|
16,157
|
14,228
|
|||||
|
Property,
plant and equipment, net
|
3,473
|
3,780
|
|||||
|
Investment
and advance in affiliate
|
2
|
7
|
|||||
|
Industrial
property rights
|
468
|
673
|
|||||
|
Total
assets
|
$
|
20,100
|
$
|
18,688
|
|||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
2,846
|
$
|
2,296
|
|||
|
Short-term
borrowings
|
1,449
|
1,933
|
|||||
|
Current
portion of long-term debt
|
409
|
173
|
|||||
|
Accrued
mold charges
|
208
|
233
|
|||||
|
Accrued
payroll and employee benefits
|
331
|
321
|
|||||
|
Income
tax payable
|
119
|
78
|
|||||
|
Other
liabilities and accrued expenses
|
945
|
420
|
|||||
|
Total
current liabilities
|
6,307
|
5,454
|
|||||
|
Long-term
debt
|
558
|
212
|
|||||
|
Deferred
income taxes
|
174
|
178
|
|||||
|
Minority
interest
|
3
|
2
|
|||||
|
Shareholders’
equity:
|
|||||||
|
Common
shares, $0.01 par value
|
|||||||
|
Authorized,
20,000,000 shares; issued 3,316,254 shares at March 31, 2005;
outstanding
3,278,454 shares at March 31, 2005
|
33
|
31
|
|||||
|
Additional
paid-in capital
|
9,820
|
9,035
|
|||||
|
Retained
earnings
|
3,480
|
3,955
|
|||||
|
Accumulated
other comprehensive income
|
(222
|
)
|
(126
|
)
|
|||
|
Treasury
shares, at cost-37,800 shares
|
(53
|
)
|
(53
|
)
|
|||
|
Total
shareholders’ equity
|
13,058
|
12,842
|
|||||
|
Total
liabilities and shareholders’ equity
|
$
|
20,100
|
$
|
18,688
|
|||
HIGHWAY
HOLDINGS LIMITED AND SUBSIDIARIES
PROFORMA
Consolidated Statement of Income
(Dollars
in thousands, except per share data)
Excluding
all provisions, write-offs, settlements and impairments of inventories,
assets,
investments
and
intellectual property rights recognized during fiscal 2004 and 2005
|
Fiscal
Year Ended March 31, 2005
|
|||||||||||||
|
As
Reported
|
Adjustments
|
As
Adjusted
|
|||||||||||
|
Net
Sales
|
$
|
27,678
|
-
|
$
|
27,678
|
||||||||
|
Cost
of Sales
|
22,548
|
(409)(A
|
)
|
22,139
|
|||||||||
|
Selling,
general and administrative
|
4,985
|
(177)(B
|
)
|
4,808
|
|||||||||
|
Impairment
of industrial property rights
|
67
|
(67)(C
|
)
|
-
|
|||||||||
|
Impairment
of property, plant & equipment
|
347
|
(347)(C
|
)
|
-
|
|||||||||
|
Operating
income (loss)
|
(269
|
)
|
731
|
||||||||||
|
Impairment
in affiliate
|
5
|
(5)(C
|
)
|
-
|
|||||||||
|
Net
income (loss)
|
$
|
(152
|
)
|
$
|
853
|
||||||||
| A. | Write-off of $409,000 in inventory, including $135,000 for camera operation and $274,000 for clocks and watches operation. |
|
B.
|
Non-cash
expense of $177,000 for the issuance of stock options to a
service
provider.
|
|
C.
|
Write-off
of assets and investments in camera operation ($67,000 in industrial
property rights, $177,000 in property, plant and equipment, $5,000
for
investment in Panama and clock operations $170,000 in property,
plant and
equipment).
|
|
Fiscal
Year Ended March 31, 2004
|
|||||||||||||
|
As
Reported
|
Adjustments
|
As
Adjusted
|
|||||||||||
|
Net
Sales
|
$
|
25,356
|
-
|
$
|
25,356
|
||||||||
|
Cost
of Sales
|
20,262
|
(640)(A
|
)
|
19,622
|
|||||||||
|
Operating
income
|
875
|
1,515
|
|||||||||||
|
Impairment
in affiliate
|
109
|
(109)(B
|
)
|
-
|
|||||||||
|
Tax
Expense
|
100
|
27(C
|
)
|
127
|
|||||||||
|
Net
income (loss)
|
$
|
982
|
$
|
1,704
|
|||||||||
| A. | Write-off of inventory $640,000 ($57,000 in camera operation, $312,000 in clocks and watches operation, $271,000 in metal operation). |
|
B.
|
Represents
the write-off or the investment in Kienzle AG, a German Marketing
and
distribution company. Kienzle AG has agreed to repurchase this
investment
for approximately $131,000.
|
|
C.
|
Increase
of tax expense if metal operation did not write off $271,000
inventory.
|
Pro
Forma Information
Highway
Holdings provides pro forma data to assist investors seeking to understand
Highway Holdings’ financial performance and prospects. Highway Holdings believes
that this Pro Forma information provides useful information to investors
by
excluding the effect of the non-recurring, non-cash expenses that are required
to be recorded under GAAP that Highway Holdings does not believe are indicative
of Highway Holdings’ core operating results. Highway Holdings’ Pro Forma data is
not prepared in accordance with, or as an alternative to, GAAP information.
These Pro Forma results should be considered supplemental to, and not a
substitute for or superior to, Highway Holdings’ results prepared in accordance
with GAAP, which are included in this press release.