Hollysys Automation Technologies Reports Unaudited Financial Results for Fiscal Year 2013 Second Quarter Ended December 31,

   Hollysys Automation Technologies Reports Unaudited Financial Results for
           Fiscal Year 2013 Second Quarter Ended December 31, 2012

PR Newswire

BEIJING, Feb. 19, 2013

BEIJING, Feb. 19, 2013 /PRNewswire-FirstCall/ --Hollysys Automation
Technologies, Ltd. (NASDAQ: HOLI) ("Hollysys" or the "Company"),a leading
provider of automation and control technologies and applications in China,
today announced its unaudited financial results for the fiscal year 2013
second quarter ended on December 31, 2012 (see attached tables).

Q2 Financial Highlights

  oQuarterly revenues of $87.2 million, representing an increase of 8.6%
    compared to $80.3 million year over year, and a decrease of 1.0% compared
    to $88.1 million quarter over quarter.
  oGross margin at 32.1%, as compared to 38.5% year over year, and 34.4%
    quarter over quarter.
  oNon-GAAP net income attributable to Hollysys of $13.6 million, a 33.4%
    decrease compared to $20.4 million year over year, and a 13.7% decrease
    compared to $15.8 million quarter over quarter. Excluding $9.3 million VAT
    refunds recorded in the second quarter of the prior year, which was
    related to the VAT refund claims made for the sales from January to
    September 2011 that were approved in the second quarter of the prior year
    due to the delay in the government's issuance of the renewed VAT refund
    policy, Non-GAAP net income attributable to Hollysys increased by 21.9%
    compared to $11.2 million year over year.
  oNon-GAAP Diluted EPS at $0.24 reported for the quarter, as compared to
    $0.37 year over year, and $0.28 quarter over quarter.
  oBacklog of $359.6 million as of December 31, 2012, a 8.3% increase
    compared to $332.1 million year over year, and 2.5% decrease compared to
    $368.7 million quarter over quarter.
  oQuarterly DSO of 161 days, as compared to 150 days year over year, and 140
    days quarter over quarter.
  oInventory turnover days of 42 days for the current quarter compared to 54
    days year over year, and 43 days quarter over quarter.
  oThe total amount of cash and cash equivalents and time deposits with
    original maturities over three months were $133.5 million as of the
    current quarter end.

Dr. Changli Wang, Chairman and CEO of Hollysys, stated: "We continue to report
another quarter with solid financial and operational performance, but we are
not satisfied with overall results achieved amid the unfavorable external
environment. We have to say we underestimated the impact that the downturn of
the macro economy brought to our businesses including both industrial
automation and rail transportation: the restart of high-speed rail
construction is slower than we expected; and more importantly we
underestimated the impact it brought to low- and middle-end markets of
industrial automation. So in January of this new year, we conducted a thorough
introspection deeply across various levels of management and the execution
team and we adjusted our strategies: firstly, we will continue to intensify
marketing efforts in the industrial automation field, expand our sales and
service network across China and enhance market position in the low- and
middle-end of the industrial automation market; secondly, we will organize
professional teams to penetrate and occupy the high-end market; thirdly, we
will actively work on new business opportunities and boost these businesses'
growth. All in all, we believe that we did not make our full efforts and
achieve satisfactory results in the past half year; in this calendar year we
will spare no efforts to achieve our originally set targets with all that we
can do. What's more, the recovery of China's economy in 2013 will further
support our growth, incorporating with our own efforts.

"Here I would like to take this opportunity to discuss some key events that
took place during this quarter:

"Industrial automation continued its solid growth and performed as the largest
growth driver for the whole group. During this quarter, we further segmented
the process industries including chemical, petro-chemical, thermal power as
well as metallurgy, new energies, etc.; we found more automation application
opportunities and made several significant breakthroughs in penetrating to the
high end of several industries. Also, we released several advanced
technologies such as our 5^th generation Distributed Control System, Safety
Instrumentation System, which we believe will further complete our total
solution offerings and bring us significant revenue contribution; moreover, we
believe that the intention to reduce labor cost and energy consumption,
protect the environment, improve safety, and increase output with higher
quality will be a major trend and bring us tremendous business opportunities.
With our solid research and development capability, profound industry
knowledge, renowned brand name recognition and successful track record, we are
more than confident that we will continue to drive our industrial automation
growth to a higher level and create value for our customers.

"In the rail sector, even though the restarted pace of high-speed rail
construction is not yet as fast as expected, the momentum is on the upward
trend. As one of the major high-speed rail signaling system providers in
China, Hollysys is well prepared for more meaningful and significant contract
awards and systems providing. In this quarter, we signed a contract to provide
Line-side Electronic Unit (LEU) and Balise to the Chongqing-Lichuan high-speed
rail line in October. In addition, we are encouraged by the contract win of
approximately RMB 67.60 million, or US $10.75 million, to supply our
ground-based signaling system to the Xiamen-Shenzhen high-speed rail line,
Guangdong Section in December. Given that the Ministry of Railways of China
("MOR") plans to beef up investment in railway infrastructure construction as
compared to last year, we are confident that with our strong research and
development capability and well-reputed track records, Hollysys will capture
its fair share in China's vast high-speed rail build out. We are also well on
track in completing the development of our proprietary subway signaling
system, and have currently reached the last phase of certification. We expect
that we will soon attain the Safety Integrity Level 4 certification of subway
signaling system according to international standards, which will build us to
an unparalleled place to further explore China and international subway
signaling business opportunities.

"In this quarter, we are also delighted with the outstanding achievements by
our wholly owned subsidiary, Concord Corporation Pte. Ltd. ("Concord"). In
November last year, Concord signed a contract with SMRT Trains Ltd in
Singapore to provide design, electrification and installation for station
renovations on the North-South and East-West lines, valued at approximately
$5.59 million. Shortly after this contract, in December the same year, Concord
signed a significant contract with Thales Solutions Asia Pte Ltd to provide
design, installation, testing & commission for replacing the existing
signaling systems for the North-South and East-West lines and install new
signaling systems for the Tuas West Extension line (TWEL) in Singapore, valued
at approximately $19.14 million. The two successful records in this quarter
further validate the rich experience and knowledge, capability and strong
track record of Concord. We believe that it is a good synergy between Hollysys
and Concord, which will greatly enhance Hollysys' international presence, and
enable us to continuously create value for our shareholders."

The Second Quarter Ended December 31 Unaudited Financial Results Summary

To facilitate a clear understanding of Hollysys' operational results, a
summary of unaudited non-GAAP financial results is shown as below:

In USD thousands, except share numbers and EPS
                  Three months ended                  Six months ended
                  December31, December31, %         December31, December31, %
                  2012         2011         Change    2012         2011         Change
Revenues        $ 87,206       80,288       8.6%      175,272      167,452      4.7%
 Integrated
contract        $ 81,182       75,902       7.0%      164,034      159,384      2.9%
revenue
 Products    $ 6,024        4,386        37.3%     11,239       8,069        39.3%
sales
Cost of         $ 59,195       49,412       19.8%     116,995      103,629      12.9%
revenues
Gross profit    $ 28,010       30,877       (9.3)%    58,277       63,824       (8.7)%
Total operating $ 13,269       8,870        49.6%     28,786       26,385       9.1%
expenses
 Selling     $ 8,086        8,060        0.3%      14,679       15,042       (2.4)%
 General and $ 4,143        7,385        (43.9)%   9,975        12,243       (18.5)%
administrative
 Research    $ 8,334        6,881        21.1%     16,009       12,950       23.6%
and development
 VAT refunds
and government  $ (7,295)      (13,456)     (45.8)%   (11,878)     (13,851)     (14.2)%
subsidies
Income from     $ 14,742       22,007       (33.0)%   29,491       37,439       (21.2)%
operations
Other income,   $ 902          71           1,162.0%  2,938        259          1032.9%
net
Share of net
(loss) income   $ (451)        207          (317.9)%  288          152          90.0%
of equity
investees
Dividend income
from cost       $ 829          -            -         829          -            -
investees
Interest income $ 751          424          77.0%     1,732        629          175.4%
Interest        $ (521)        (865)        (39.7)%   (1,237)      (1,791)      (30.9)%
expenses
Income tax      $ 2,635        1,334        97.5%     4,601        3,201        43.8%
expenses
Non-GAAP net
income
attributable to $ 18           82           (78.2)%   93           223          (58.4)%
non-controlling
interest
Non-GAAP net
income
attributable to
Hollysys        $ 13,597       20,428       (33.4)%   29,348       33,265       (11.8)%
Automation
Technologies
Ltd.
Basic Non-GAAP  $ 0.24         0.37         (35.1)%   0.52         0.60         (13.3)%
EPS
Diluted        $ 0.24         0.37         (35.1)%   0.52         0.60         (13.3)%
Non-GAAP EPS
Stock-based
compensation    $ 527          157          234.8%    1,054        315          234.8%
expenses
Net income
attributable to
Hollysys        $ 13,071       20,271       (35.5)%   28,294       32,950       (14.1)%
Automation
Technologies
Ltd.(GAAP)
Basic GAAP EPS  $ 0.23         0.36         (36.1)%   0.51         0.60         (15.0)%
Diluted GAAP    $ 0.23         0.36         (36.1)%   0.50         0.59         (15.3)%
EPS
Basic weighted
average common    56,001,526   55,703,338   0.5%      56,000,221   55,356,413   1.2%
shares
outstanding
Diluted
weighted
average common    56,070,948   55,852,982   0.4%      56,066,950   55,592,152   0.9%
shares
outstanding

Operational Results Analysis for the Second quarter ended December 31, 2012

For the three months ended December 31, 2012, total revenues increased by 8.6%
to $87.2 million, from $80.3 million for the same period in the prior year. Of
the total revenues, revenue from integrated contracts increased by 7.0% to
$81.2 million, as compared to $75.9 million for the same period of the prior
year; revenue from products sales increased by 37.3% to $6.0 million, as
compared to $4.4 million for the same period of the prior year. The Company's
total revenue by segment was as followings:

                      Three months ended Dec 31,  Six months ended Dec 31,
                      2012          2011          2012           2011
                           % to          % to           % to           % to
                      $    Total    $    Total    $     Total    $     Total
                           Revenue       Revenue        Revenue        Revenue
Industrial            53.9 61.8%    48.1 59.9%    114.0 65.1%    102.9 61.5%
Automation
Rail Transportation   21.5 24.6%    24.8 30.9%    36.4  20.8%    50.4  30.1%
Miscellaneous         11.8 13.6%    7.4  9.2%     24.9  14.1%    14.1  8.4%
Total                 87.2 100.0%   80.3 100.0%   175.3 100.0%   167.4 100.0%

As a percentage of total revenues, overall gross margin was 32.1% for the
three months ended December 31, 2012, as compared to 38.5% for the same period
of the prior year. The gross margin for integrated contracts and product sales
were 29.8% and 63.8% for the three months ended December 31, 2012, as compared
to 36.4% and 73.4% for the same period of the prior year respectively. The
gross margin fluctuation was mainly due to the different revenue mix with
different margin.

For the three months ended December 31, 2012, selling expenses were $8.1
million, compared to $8.1 million for the same quarter of the prior year,
representing a slight increase of 0.3% year over year. As a percentage of
total revenues, selling expenses were 9.3% and 10.0% for the three months
ended December 31, 2012, and 2011, respectively.

General and administrative expenses, excluding non-cash stock-based
compensation expense, were $4.1 million for the quarter ended December 31,
2012, representing an decrease of $3.3 million, or 43.9%, as compared to $7.4
million for the same period of the prior year, mainly due to a decrease of 1.7
million of bad debt allowance. As a percentage of total revenues, G&A expenses
were 4.8% and 9.2% for the three months ended December 31, 2012 and 2011,
respectively. Including the non-cash stock-based compensation cost recorded on
a GAAP basis, G&A expenses were $4.7 million and $7.5 million for the three
months ended December 31, 2012 and 2011, respectively.

Research and development expenses were $8.3 million for the three months ended
December 31, 2012, compared to $6.9 million for the same quarter of the prior
year, representing a year over year increase of $1.4 million, or 21.1%. The
increase was mainly due to the Company's increased R&D activities. As a
percentage of total revenues, R&D expenses were 9.6% and 8.6% for the quarter
ended December 31, 2012 and 2011, respectively.

The VAT refunds and government subsidies amounted to $7.3 million for three
months ended December 31, 2012, as compared to $13.5 million for the same
period in the prior year, representing a decrease of $6.2 million. Of the
total amount of $13.5 million for the month ended December 31, 2011, $9.3
million VAT refunds was related to the VAT refund claims made for the sales
from January to September 2011 that were approved in the second quarter of the
prior year due to the delay in the government's issuance of the renewed VAT
refund policy. Excluding this effect, the VAT refunds and government subsidies
amounted to $7.3 million and $4.2 million for the quarter ended December 31,
2012, December 31, 2011 respectively.

The income tax expenses and the effective tax rate were $2.6 million and 16.8%
for the three months ended December 31, 2012, as compared to $1.3 million and
6.2% for the same period of the prior year. The lower rate for the quarter
ended December 31, 2011 was mainly due to the large sum of VAT refunds
recognized, which was a non-taxable income.

For the three months ended December 31, 2012, the non-GAAP net income
attributable to Hollysys excluding non-cash stock compensation expenses was
$13.6 million or $0.24 per diluted share based on 56 million shares
outstanding. This represents a decrease of $6.8 million, or 33.4%, over the
$20.4 million, or $0.37 per share based on 56 million shares outstanding,
reported in the prior year period. On a GAAP basis, net income attributable to
Hollysys was $13.1 million, or $0.23 per diluted share representing a decrease
of $7.2 million or 35.5%, over the $20.3 million, or $0.36 per diluted share
reported in the prior year period. The decrease of net income is mainly due
to lower VAT refunds and government subsidies.

Backlog Highlights

Hollysys' backlog as of December 31, 2012 was $359.6 million, representing a
decrease of 2.5% compared to $368.7 million as at September 30, 2012, and an
increase of 8.3% compared to $332.1 million as at December 31, 2011.The
detailed breakdown of the backlog by segment was as followings:

                                Quarter-over-Quarter    Year-over-Year
                                Analysis                Analysis
                 2012-12-31     2012-9-30               2011-12-31
                       % to           % to     %              % to     %
                 $     Total    $     Total    Change   $     Total    Change
                       Backlog        Backlog                 Backlog
Industrial       125.4 34.9%    145.2 39.4%    (13.6%)  124.4 37.5%    0.8%
Automation
Rail             206.7 57.4%    185.3 50.2%    11.5%    170.4 51.3%    21.3%
Transportation
Miscellaneous    27.5  7.7%     38.2  10.4%    (28.1%)  37.3  11.2%    (26.3%)
Total            359.6 100.0%   368.7 100.0%   (2.5%)   332.1 100.0%   8.3%

Cash Flow Highlights

The net cash used in operating activities was $2.9 million for the three
months ended December 31, 2012; including investing and financing activities,
the total net cash inflows for this quarter was $4.1 million. Of the total net
cash inflows, there was a cash inflow of matured time deposits with original
maturities over three months amounting to $10.0 million included in investing
activities during this quarter.

Balance Sheet Highlights

The total amount of cash and cash equivalents and time deposits with original
maturities over three months were $133.5 million, $139.2 million, and $130.0
million as of December 31, 2012, September 30, 2012, and December 31, 2011,
respectively. Of the total $133.5 million as of December 31, 2012, cash and
cash equivalents were $125.3 million, and time deposits with original
maturities over three months were $8.2 million.

For the three months ended December 31, 2012, Days Sales Outstanding ("DSO")
was 161 days, as compared to 150 days year over year and 140 days quarter over
quarter; and inventory turnover was 42 days, as compared to 54 days year over
year and 43 days quarter over quarter.

Outlook for FY 2013

Dr. Wang concluded, "Given our strong backlog currently on-hand and sales
pipeline envisioned so far, we reiterate our guidance of fiscal year 2013 with
revenue in the range of $385 million to $410 million and non-GAAP net income
in the range of $63 million to $67 million unchanged."

Conference Call

Management will discuss the current status of the Company's operations during
a conference call 9:00 a.m. Beijing Time on February 20, 2013 / 8:00 p.m. U.S.
Eastern Time on February 19, 2013. Interested parties may participate in the
call by dialing the following numbers approximately 10 minutes before the call
is scheduled to begin and ask to be connected to the Hollysys Automation
Technologies conference call. The conference call identification number is
92254065.

1-866-519-4004 (USA)
800-930-346 (HK)
+852-24750994  (HK)
800-819-0121 (China Landline)
400-620-8038 (China Mobile)
+65-67239381 (International)

In addition, a recorded replay of the conference call will be accessible
within 24 hours via Hollysys' website at:

http://www.hollysys.com.sg/home/index.php/investor-relations/events-a-webcast

About Hollysys Automation Technologies, Ltd.

Hollysys Automation Technologies is a leading provider of automation and
control technologies and applications in China that enables its diversified
industry and utility customers to improve operating safety, reliability, and
efficiency. Founded in 1993, Hollysys has approximately 3,500 employees with
nationwide presence in over 60 cities in China, with subsidiaries and offices
in Singapore, Malaysia, Dubai, India, and serves over 4,000 customers more
than 15,000 projects in the industrial, railway, subway & nuclear industries
in China, South-East Asia, and the Middle East. Its proprietary technologies
are applied in its industrial automation solution suite including DCS
(Distributed Control System), PLC (Programmable Logic Controller), RMIS
(Real-time Management Information System), HAMS (HolliAS Asset Management
System), OTS (Operator Training System), HolliAS BATCH (Batch Application
Package), HolliAS APC Suite (Advanced Process Control Package), SIS (Safety
Instrumentation System), high-speed railway signaling system of TCC (Train
Control Center), ATP (Automatic Train Protection), Subway Supervisory and
Control platform, SCADA (Surveillance Control and Data Acquisition), nuclear
conventional island automation and control system and other products.

SAFE HARBOUR:

This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements, other than
statements of historical fact included herein are "forward-looking
statements," including statements regarding: the ability of the Company to
achieve its commercial objectives; the business strategy, plans and objectives
of the Company and its subsidiaries; and any other statements of
non-historical information. These forward-looking statements are often
identified by the use of forward-looking terminology such as "believes,"
"expects" or similar expressions, involve known and unknown risks and
uncertainties. Such forward-looking statements, based upon the current
beliefs and expectations of Hollysys' management, are subject to risks and
uncertainties, which could cause actual results to differ from the forward
looking statements. Although the Company believes that the expectations
reflected in these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may prove to be
incorrect. Investors should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of factors,
including those discussed in the Company's reports that are filed with the
Securities and Exchange Commission and available on its website
(http://www.sec.gov). All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking statements.

Contact Information:

Hollysys Automation Technologies, Ltd.
www.hollysys.com

Investor Relations
+8610-58981386
investors@hollysys.com



HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In US Dollars except for per-share data)
                      Three months ended           Six months ended
                      December 31,                 December 31,
                      2012          2011           2012           2011
                      (Unaudited)   (Unaudited)    (Unaudited)    (Unaudited)
Revenues
Integrated contract $ 81,181,627  $ 75,901,956   $ 164,033,662  $ 159,383,839
revenue
Products sales        6,023,980     4,386,448      11,238,563     8,068,638
Total revenues        87,205,607    80,288,404     175,272,225    167,452,477
Cost of integrated    57,013,225    48,243,403     113,040,984    101,149,057
contracts
Cost of products      2,182,121     1,168,308      3,954,308      2,479,579
sold
Gross profit          28,010,261    30,876,693     58,276,933     63,823,841
Operating expenses
Selling               8,086,257     8,059,951      14,679,142     15,041,782
General and           4,670,168     7,542,441      11,029,027     12,557,924
administrative
Research and          8,334,000     6,880,941      16,008,707     12,950,410
development
VAT refunds and
government            (7,294,961)   (13,456,043)   (11,877,547)   (13,850,534)
subsidies
Total operating       13,795,464    9,027,290      29,839,329     26,699,582
expenses
Income from           14,214,797    21,849,403     28,437,604     37,124,259
operations
Other income , net    901,645       71,443         2,938,308      259,369
Share of net (loss)
income of equity      (450,755)     206,872        288,263        151,697
investees
Dividend income       828,567       -              828,567        -
from cost investees
Interest income       750,727       424,137        1,732,438      629,115
Interest expenses     (521,475)     (864,897)      (1,237,306)    (1,791,014)
Income before         15,723,506    21,686,958     32,987,874     36,373,426
income taxes
Income taxes          2,635,096     1,334,468      4,601,152      3,200,648
expenses
Net income            13,088,410    20,352,490     28,386,722     33,172,778
Net income
attributable to       17,870        81,938         92,694         222,868
non-controlling
interests
Net income
attributable to
Hollysys Automation $ 13,070,540  $ 20,270,552   $ 28,294,028   $ 32,949,910
Technologies Ltd.
stockholders
Other comprehensive
income, net of tax
Foreign currency
translation           1,804,697     1,714,300      (112,757)      5,653,872
adjustments, net of
nil tax
Comprehensive         14,893,107    22,066,790     28,273,965     38,826,650
income
Comprehensive
income attributable   31,476        90,814         99,437         248,865
to non-controlling
interests
Comprehensive
income attributable
to Hollysys         $ 14,861,631  $ 21,975,976     28,174,528     38,577,785
Automation
Technologies Ltd.
stockholders
Net income per
ordinary share:
Basic                 0.23          0.36           0.51           0.60
Diluted               0.23          0.36           0.50           0.59
Weighted average
ordinary shares
used in income per
share computation:
Basic                 56,001,526    55,703,338     56,000,221     55,356,413
Diluted               56,070,948    55,852,982     56,066,950     55,592,152



HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED BALANCE SHEETS
(In US Dollars)
                                                  December 31,   September 30,
                                                  2012           2012
                                                  (Unaudited)    (Unaudited)
ASSETS
 Current Assets
  Cash and cash equivalents                     $ 125,262,261  $ 121,157,212
  Time deposits with original maturities over     8,187,751      18,015,398
  three months
  Restricted cash                                 3,175,576      3,829,739
  Accounts receivable, net of allowance for
  doubtful accounts of $15,443,730 and            168,168,878    136,752,983
  $15,777,271 as of December 31,2012 and
  September 30, 2012, respectively
  Costs and estimated earnings in excess of
  billings, net of allowance for doubtful
  accounts of $1,489,477 and $1,768,528 as of    118,625,168    126,344,148
  December 31, 2012 and September 30, 2012,
  respectively
  Other receivables, net of allowance for
  doubtful accounts of $272,361 and $354,214 as   6,967,259      5,948,416
  of December 31, 2012 and September 30, 2012,
  respectively
  Advances to suppliers                           6,981,527      8,542,288
  Amount due from related parties                 14,739,788     14,750,841
  Inventories, net                                25,756,160     28,553,597
  Prepaid expenses                                858,274        288,241
  Income tax recoverable                          102,655        319,298
  Deferred tax assets                             1,994,575      652,979
 Total current assets                             480,819,872    465,155,140
  Restricted cash                                 1,195,548      675,651
  Prepaid expenses                                29,205         -
  Property, plant and equipment, net              70,510,908     69,137,613
  Prepaid land leases                             6,829,996      6,813,632
  Acquired intangible assets, net                 371,836        503,328
  Investments in equity investees                 14,055,037     14,256,245
  Investments in cost investees                   3,650,290      2,989,025
  Goodwill                                        27,686,774     27,643,846
  Deferred tax assets                             466,170        1,376,462
 Total assets                                     605,615,636    588,550,942
LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
  Current portion of long-term loans              7,959,768      7,895,145
  Accounts payable                                85,760,172     83,314,254
  Construction cost payable                       4,213,860      3,309,360
  Deferred revenue                                72,606,208     70,235,032
  Accrued payroll and related expense             9,989,855      7,239,996
  Income tax payable                              3,068,458      3,148,875
  Warranty liabilities                            3,827,355      1,602,545
  Other tax payables                              18,183,202     18,504,017
  Accrued liabilities                             8,464,522      14,077,091
  Amounts due to related parties                  1,594,749      1,835,253
  Deferred tax liabilities                        200,452        1,351,906
 Total current liabilities                        215,868,601    212,513,474
  Long-term bank loans                            20,804,534     22,610,747
  Deferred tax liabilities                        223,368        234,111
 Total liabilities                                236,896,503    235,358,332
 Commitments and contingencies
 Equity
  Ordinary shares                                 56,029         55,999
  Additional paid-in capital                      152,595,661    151,831,919
  Statutory reserves                              23,128,214     23,091,072
  Retained earnings                               159,060,872    146,157,830
  Accumulated other comprehensive income          32,595,056     30,803,965
 Total Hollysys Automation Technologies Ltd.      367,435,832    351,940,785
 stockholder's equity
  Non-controlling interests                       1,283,301      1,251,825
 Total equity                                     368,719,133    353,192,610
 Total liabilities and equity                   $ 605,615,636  $ 588,550,942



HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In US Dollars)
                                        Three months ended   Six months ended
                                        December 31, 2012    December 31, 2012
                                        (Unaudited)          (Unaudited)
Cash flows from operating activities:
     Net income                       $ 13,088,410         $ 28,386,722
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
     Depreciation of property, plant    1,549,652            3,016,951
     and equipment
     Amortization of prepaid land       39,229               78,279
     leases
     Amortization of intangible         130,724              174,035
     assets
     Allowance for doubtful accounts    (424,089)            1,141,757
     Loss on disposal of property,      1,051                25,166
     plant and equipment
     Share of net loss (income) from    450,755              (288,263)
     equity investees
     Stock dividends from cost          (828,567)            (828,567)
     investees
     Gain on disposal of a subsidiary   (136,795)            (136,795)
     Share based compensation           526,772              1,053,545
     expenses
     Deferred income tax expenses       (1,632,632)          (1,269,670)
Changes in operating assets and
liabilities:
     Accounts receivable                (30,729,525)         (32,225,082)
     Costs and estimated earnings in    8,950,142            (2,408,240)
     excess of billings
     Inventories                       2,941,596            1,091,660
     Advances to suppliers              1,638,898            3,373,135
     Other receivables                 (892,749)            468,489
     Deposits and other assets          (435,481)            1,318,312
     Due from related parties           201,591              1,274,795
     Accounts payable                   2,389,095            6,947,250
     Deferred revenue                   1,919,368            12,808,899
     Accruals and other payable         (1,037,005)          3,263,634
     Due to related parties             (256,515)            (380,550)
     Income tax payable                 114,343              (514,921)
     Other tax payables                 (473,090)            (147,489)
     Net cash (used in) provided by     (2,904,822)          26,223,052
     operating activities
Cash flows from investing activities:
     Time deposits placed with banks    (72,292)             (5,289,537)
     Purchases of property, plant and   (1,254,877)          (5,288,117)
     equipment
     Maturity of time deposits          10,003,337           18,769,802
     Proceeds from disposal of a        111,998              111,998
     subsidiary
     Net cash provided by investing     8,788,166            8,304,146
     activities
Cash flows from financing activities:
     Repayments of long-term bank       (1,985,332)          (3,961,330)
     loans
     Proceeds from exercise of share    237,000              237,000
     options
     Net cash used in financing         (1,748,332)          (3,724,330)
     activities
     Effect of foreign exchange rate    (29,963)             (1,873,569)
     changes
     Net increase in cash and cash    $ 4,105,049          $ 28,929,299
     equivalents
     Cash and cash equivalents,       $ 121,157,212        $ 96,332,962
     beginning of period
     Cash and cash equivalents, end     125,262,261          125,262,261
     of period

Non-GAAP Measures

In evaluating our results, the non-GAAP measures of "Non-GAAP general and
administrative expenses", "Non-GAAP net income attributable to Hollysys
Automation Technologies Ltd. stockholders", "Non-GAAP basic earnings per
share", and "Non-GAAP diluted earnings per share"serve as additional
indicators of our operating performance and not as a replacement for other
measures in accordance with U.S. GAAP. We believe these non-GAAP measures are
useful to investors, as they exclude the stock-based compensation expenses,
which is calculated based on the number of shares or options granted and the
fair value as of the grant date. It will not result in any cash inflows or
outflows. We believe that using non-GAAP measures help our shareholders to
have a better understanding of our operating results and growth prospects. In
addition, given the business nature of Hollysys, it has been a common practice
for investors and analysts to use such non-GAAP measures to evaluate the
Company.

The following table provides a reconciliation of U.S. GAAP measures to the
non-GAAP measures for the periods indicated:

                         Three months ended          Six months ended
                         December 31,                December 31,
                         2012          2011          2012          2011
                         (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
General and
administrative         $ 4,670,168   $ 7,542,441   $ 11,029,027  $ 12,557,924
expenses
Minus:
  Stock-based            526,772       157,356       1,053,545     314,712
  compensation cost
Non-GAAP general and
administrative         $ 4,143,396   $ 7,385,085   $ 9,975,482   $ 12,243,212
expenses
Net income
attributable to
Hollysys Automation    $ 13,070,540  $ 20,270,552  $ 28,294,028  $ 32,949,910
Technologies Ltd.
stockholders
Add:
  Stock-based            526,772       157,356       1,053,545     314,712
  compensation cost
Non-GAAP net income
attributable to
Hollysys Automation    $ 13,597,312  $ 20,427,908  $ 29,347,573  $ 33,264,622
Technologies Ltd.
stockholders
  Weighted average
  number of ordinary     56,001,526    55,703,338    56,000,221    55,356,413
  shares
  Weighted average
  number of diluted      56,070,948    55,852,982    56,066,950    55,592,152
  ordinary shares
Non-GAAP basic         $ 0.24        $ 0.37        $ 0.52        $ 0.60
earnings per share
Non-GAAP diluted       $ 0.24        $ 0.37        $ 0.52        $ 0.60
earnings per share

SOURCE Hollysys Automation Technologies, Ltd.

Website: http://www.hollysys.com
Website:
http://www.hollysys.com.sg/home/index.php/investor-relations/events-a-webcast
 
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