HONG KONG, Jan. 2, 2004 (PRIMEZONE) -- Highway Holdings Limited (Nasdaq:HIHO) today announced it has received an initial original equipment manufacturing order from OSRAM GmbH, a subsidiary of Siemens AG (NYSE:SI), valued at approximately $3.7 million. The company said this initial contract represents an entirely new business line and the beginning of a long-term commitment to produce finished products in an original equipment manufacturing capacity.
Production by Highway Holdings of the lighting fixtures under this agreement is expected to commence in March/April 2004. The agreement's initial term expires at the end of 2004, but will automatically be extended thereafter for successive one-year periods subject to annual pricing adjustments. Additional terms were not disclosed.
Highway Holdings said it will establish a new 50,000-square foot factory at its existing facility dedicated exclusively to original equipment manufacturing of light fixtures for OSRAM. It has budgeted $500,000 for factory set-up costs, including the purchase of machinery and other necessary equipment for the new operation, which will have an initial annual production capacity, if fully utilized, for approximately $12 million of business volume.
"The awarding of this OEM contract offers Highway Holdings an opportunity for significant revenue and earnings growth in an entirely new business segment. Our relationship with OSRAM and its subsidiaries over the past ten years has been mutually beneficial, with Highway Holdings supplying metal casings for electronic ballasts and various other components. This was an important factor in being selected by OSRAM for the light fixture manufacturing venture. We believe this OEM contract is a significant milestone in the company's development and future growth potential," said Roland Kohl, chairman and chief executive officer.
Headquartered in Munich, OSRAM, a subsidiary of Siemens AG, is one of the largest lighting manufacturers in the world.
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 manufactures or produces other finished products, including single-use and 35mm cameras and certain electronic products. Highway Holdings is headquartered in Hong Kong and operates manufacturing facilities both 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 the market potential for OSRAM's lighting fixtures and various 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 Registration Statement on Form F-1, as amended (Registration No. 333-05980), and the company's annual reports on Form 20-F.