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 August 2006


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 August 3, 2006.


 
 
 

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: August 31, 2006
By /s/ ROLAND W. KOHL                                        
 
Roland W. Kohl
 
Chief Executive Officer

 
 
 

LOGO
NEWS RELEASE


CONTACTS:
Gary S. Maier/Crystal Chang Warner
 
Maier & Company, Inc.
 
(310) 442-9852


HIGHWAY HOLDINGS REPORTS FISCAL 2007 FIRST QUARTER RESULTS
-- Sales Up 11.1 percent as OEM Focus Gains Momentum --

HONG KONG — August 3, 2006 — Highway Holdings Limited (Nasdaq:HIHO) today reported results for its first fiscal quarter ended June 30, 2006 - reflecting the initial benefits of its divesture of non-core businesses completed in fiscal 2006.
 
Net income for the fiscal 2007 first quarter increased 5.6 percent to $570,000, or $0.16 per diluted share, from $540,000, or $0.16 per diluted share, last year -- which included a one-time $940,000 net gain related to the sale of a portion of the company’s rights to its Kienzle trademark. Net sales for the 2007 fiscal first quarter increased 11.1 percent to $7.3 million from $6.6 million a year earlier.
 
"Our strategic divestiture initiatives over the past year have established a solid foundation for growth and profitability within the OEM sector. Results for the first fiscal quarter are particularly encouraging given the company’s $400,000 loss a year ago before the one-time gain noted above and an 11 percent sales increase this quarter, despite the approximate $1.0 million loss of sales due to divestiture of the clock and camera businesses. We fully expect to now capitalize on the opportunities available to the company without the distractions and costs associated with non-core operations that impacted the company in recent years,” said Roland Kohl, chairman and chief executive officer of Highway Holdings.
 
Metal, mechanical and electronic OEM net sales represented $6.74 million, or 92.39 percent of the company’s total net sales, for the first fiscal quarter -- highlighting the company’s successful strategy to concentrate on its core OEM operations. As anticipated, sales of clocks and watches declined to $423,000 from $860,000 -- representing current OEM customers. Sales of cameras also, as expected, declined to $132,000 from $711,000 in the same fiscal period a year earlier.
 
Gross profit as a percentage of sales for the first fiscal quarter of fiscal 2006 was 21 percent compared with 21 percent in the same period a year ago. Gross profit increased 10.5 percent to $1.53 million from $1.38 million last year, reflecting increased OEM sales and the elimination of watch and clock business not directly related to the company’s watch and clock OEM business. The company noted that margins for the current fiscal quarter were impacted by: increases in the cost of raw materials, such as metal and plastic materials, which increased, from the same period a year ago, in the range of five to 20 percent; gasoline price increases of approximately 35 percent; increases in labor and facility costs; and, set-up expenses associated with the recent formation of a new metal company and tool-making operation located in Wuxi, China, approximately 160 kilometers west of Shanghai.
 
(more)

ADDRESS
 
 
 
Highway Holdings Ltd.
2-2-2

Selling, general and administrative expenses for the fiscal quarter declined by $152,000, or 11.35 percent, from the same period a year ago -- primarily due to the significant reduction of staff in Germany, as reported last quarter. The company cautioned that this trend is not necessarily indicative of future trends given planned strategic growth initiatives, such as operations in Wuxi, China, noted above, and other current and potential developments highlighted in the company’s Form 20-F report for its fiscal year ended March 31, 2006.
 
Kohl noted the company’s balance sheet remains strong. Cash and cash equivalents increased to $6.6 million at June 30, 2006, compared with $6.4 million at March 31, 2006, despite investments in fixed assets for new machinery and equipment. At June 30, 2006, the company had working capital of 10.2 million compared with $10.0 million at March 31, 2006. Total shareholders’ equity at June 30, 2006, was $12.8 million compared with 12.3 million last year. The company’s current ratio was 2.55:1 at June 30, 2006.
 
The company recently declared a cash dividend of $0.20 per share, payable August 10, 2006 to holders of record on July 28, 2006. This follows a $0.20 per share dividend paid on December 12, 2005 and August 15, 2005 -- representing a combined payout of $0.60 over a one-year period.
 
 
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. It also manufactures finished products, such as LED Lights, radio chimes and other electronic products. Highway Holdings is headquartered in Hong Kong and operates three manufacturing facilities in 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)
(Unaudited)
 

   
Quarter Ended
June 30,
  
   
2006
  
2005
  
Net sales
  
$
7,295
  
$
6,563
  
Cost of sales
    
5,769
    
5,182
  
Gross profit
    
1,526
    
1,381
  
Selling, general and administrative expenses
    
1,187
    
1,339
  
Gain on sale of industrial property rights
    
0
    
(940
)
Operating income
    
339
    
982
  
               
Non-operating items
              
Interest expenses
    
(47
)
  
(29
)
Exchange gain (loss), net
    
248
    
(398
)
Interest income
    
46
    
10
  
Other income/(expense)
    
10
    
5
  
Total non-operating income (expenses)
    
257
    
(412
)
               
Net income before income tax
    
596
    
570
  
Income taxes
    
26
    
30
  
               
Net Income
  
$
570
  
$
540
  
               
Earning per share - basic
  
$
0.16
  
$
0.16
  
Weighted average number of shares - basic
    
3,539
    
3,302
  
Earning per share - diluted
  
$
0.16
  
$
0.16
  
Weighted average number of shares - diluted
    
3,543
    
3,455
  


 
 
 


HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)

   
June 30,
 
March 31
  
   
2006
  
2006
  
   
(Unaudited)
      
Current assets
          
     Cash and cash equivalents
  
$
6,553
  
$
6,384
  
     Restricted cash
    
965
    
965
  
     Short term investment
    
299
    
300
  
     Accounts receivable, net of doubtful accounts
    
4,236
    
3,789
  
     Inventories
    
3,970
    
4,118
  
     Prepaid expenses and other current assets
    
799
    
546
  
Total current assets
    
16,822
    
16,102
  
               
               
Property, plant and equipment, net
    
3,008
    
2,787
  
Investment and advance in affiliate
    
2
    
2
  
Total assets
  
$
19,832
  
$
18,891
  
               
Current liabilities:
              
     Accounts payable
  
$
3,243
  
$
2,498
  
     Short-term borrowings
    
1,482
    
2,015
  
     Current portion of long-term debt
    
441
    
481
  
     Accrual payroll and employee benefits
    
363
    
292
  
     Accrued mould charges
    
213
    
246
  
     Other liabilities and accrued expenses
    
820
    
610
  
     Income tax payable
    
26
    
0
  
Total current liabilities
    
6,588
    
6,142
  
               
Long-term liabilities:
              
     Long-term debt
    
243
    
322
  
     Deferred income taxes
    
153
    
153
  
               
Shareholders’ equity:
              
     Common shares, $0.01 par value, authorized 20,000,000 shares
    
35
    
35
  
     Additional paid-in capital
    
10,245
    
10,245
  
     Retained earnings
    
2,703
    
2,133
  
     Accumulated other comprehensive income
    
(82
)
  
(86
)
     Treasury shares, at cost-37,800 shares
   
(53
)
  
(53
)
Total shareholders’ equity
    
12,848
    
12,274
  
               
Total liabilities and shareholders’ equity
  
$
19,832
  
$
18,891