Hollysys Automation Technologies Reports Unaudited Financial Results for the Fiscal Year 2012 Third Quarter Ended March 31, 2012

PR Newswire
BEIJING
May 14, 2012

BEIJING, May 14, 2012 /PRNewswire-Asia-FirstCall/--

Q3 Financial Highlights

  • Quarterly revenues of $66.1 million, representing an increase of 18.6% compared to $55.8 million  year-over-year.
  • Gross margin at 39.3%, as compared to 40.3% year-over-year, and 38.5% quarter-over-quarter
  • Non-GAAP net income attributable to Hollysys of $11.6 million, as compared to $9.6 million and a 20.8% increase year-over-year.
  • Non-GAAP Diluted EPS at $0.21 reported for the quarter, as compared to $0.17 year-over-year
  • Record-breaking backlog of $401.8 million as of March 31, 2012, a 43.1% increase compared to $280.9 million year-over-year, and 21.0% increase compared to $332.1 million quarter-over-quarter.
  • Inventory turn-over days of 68 days for this quarter compared to 101 days year-over-year.
  • Quarterly DSO of 160 days, as compared to 156 days year-over-year.
  • Generate net cash provided by operating activities of $1.5 million for this quarter.

 

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 2012 third quarter ended March 31, 2012 (see attached tables).

Dr. Changli Wang, Chairman and CEO of Hollysys, stated: "We are pleased to report another quarter with solid operating and financial results.  Here I would like to take this opportunity to discuss some key events that took place in this quarter:

"Industrial automation is continuously growing towards the top position in domestic market and starting to build its brand power globally. We keep seeing strong business demand across all of our products and industry verticals. The significant growth we reported in the quarter clearly validates our dedicated industry expert total solution and sales network expansion strategies. Our established brand recognition, strong track record of customization, quality and service, efficient R&D and implementation together with customer-orientated flexibility give us a significant competitive advantage over domestic and international competitors. We believe Hollysys is in an excellent position as we pursue future growth in industrial automation market.

"In our high-speed rail segment, we successfully won the international bid and signed a contract of approximately US$63.15 million with MTR Corporation Ltd to provide the complete suite of high-speed rail signaling systems to Guangzhou-Shenzhen-Hong Kong Express Rail Hong Kong Section. As the first-ever international contract for our high-speed rail signaling system amid the stiff competition from other world class signaling system providers, this contract is of paramount importance and remarkable milestone in steering our business to the next level in the global arena. On the domestic side, we believe we will continue to benefit from the continuous construction of high-speed rail called by the huge demand for rail transportation across the country. With the successful Safety certification in accordance with International Standards for our Signaling products and system, we will continue to leverage on our strong commitment to Research & Development, quality and service to further explore business opportunities in both China and abroad.

"In subway business, in addition to the Hong Kong MTR contract and Beijing Subway Line 14 contract of supplying the integrated surveillance control and data acquisition system (SCADA) we signed last quarter, we are expecting our self-developed proprietary subway signaling system to obtain the European Safety Standard Certification Level 4 (SIL 4) by the end of 2012. We are excited about the subway signaling system because it clearly differentiates Hollysys and will bring us to a higher level in competing with other players to propel our subway business in both Chinese and international market.

"What's more, we made substantial progress in our strategy of international market expansion through our successfully acquired company - Concord. In this quarter Concord successfully signed a retrofit project of USD $14.02 million with Shaw Brothers Limited to supply and provide installation and electrification services for Shaw Centre in Singapore. We are seeing building automation is becoming a lucrative market given the increasing high-end commercial buildings and growing demand for retrofit projects of existing commercial buildings in many markets. Meanwhile, Concord has been actively working on a few international biddings and projects in rail and industrial automation sectors. The acquisition of Concord has been proved to be a good synergy and successful by combining our proprietary technology and Concord's international team, we will continue to leverage the core capabilities to further penetrate into the international arena and build Hollysys into a world leading automation and control technology and products provider."

The Third Quarter ended March 2012 Unaudited Financial Results Summary

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

In USD thousands, except share numbers and EPS

   

Three months ended

 

Nine months ended

   

March 31,2012

March 31,2011

%
Change

 

March 31,2012

March 31,2011

%
Change

                 

Revenues

$

66,135

55,765

18.6%

 

233,587

190,979

22.3%

    Integrated Contract Revenue

$

61,755

52,426

17.8%

 

221,138

180,998

22.2%

    Products Sales

$

4,380

3,339

31.2%

 

12,449

9,981

24.7%

Cost of Revenues

$

40,119

33,268

20.6%

 

143,747

120,525

19.3%

Gross Profit

$

26,016

22,497

15.6%

 

89,840

70,454

27.5%

Total Operating Expenses

$

14,115

12,708

11.1%

 

40,499

33,751

20.0%

    Selling

$

6,106

5,320

14.8%

 

21,148

14,275

48.1%

    General and Administrative

$

4,934

4,885

1.0%

 

17,177

13,370

28.5%

    Research and Development

$

5,588

3,854

45.0%

 

18,538

14,628

26.7%

    VAT refunds and government subsidy

$

(2,513)

(1,352)

85.9%

 

(16,364)

(8,522)

92.0%

Income from operations

$

11,902

9,790

21.6%

 

49,341

36,703

34.4%

Other income (expense), net

$

1,029

(63)

(1,736.8)%

 

1,292

(616)

(309.8)%

Gains on disposal of long-term investments

$

2,045

23

8,758.4%

 

2,042

1,451

40.8%

Share of net gains (losses) of equity investees

$

(507)

406

(224.7)%

 

(355)

2,360

(115.0)%

Interest expense, net

$

(224)

(447)

(50.0)%

 

(1,386)

(1,168)

18.7%

Income tax Expenses

$

2,540

169

1,407.0%

 

5,741

3,811

50.6%

Non-GAAP net income (loss) attributable to non-controlling interest

$

77

(87)

(188.8)%

 

300

(75)

(497.9)%

Non-GAAP net income attributable to Hollysys

$

11,628

9,628

20.8%

 

44,893

34,994

28.3%

Basic Non-GAAP EPS

$

0.21

0.18

16.7%

 

0.81

0.64

26.6%

Diluted  Non-GAAP EPS

$

0.21

0.17

23.5%

 

0.81

0.64

26.6%

                 

Stock-based Compensation Cost

$

100

134

(25.9)%

 

414

396

4.5%

GAAP Net income attributable to Hollysys

$

11,529

9,493

21.4%

 

44,479

34,598

28.6%

Basic GAAP EPS

$

0.21

0.17

23.5%

 

0.80

0.64

25.0%

Diluted GAAP EPS

$

0.21

0.17

23.5%

 

0.80

0.63

27.0%

                 

Basic Weighted Average Common Shares Outstanding

 

55,933,984

54,671,818

2.3%

 

55,547,536

54,451,063

2.0%

Diluted Weighted Average Common Shares Outstanding

 

56,046,907

55,055,393

1.8%

 

55,742,634

54,876,540

1.6%

 

 

Operational Results Analysis for the Third quarter ended March 31, 2012

For the three months ended March 31, 2012, total revenues increased by 18.6% to $66.1 million, from $55.8 million in the prior fiscal year period.  Among total revenues, revenue from integrated contracts increased by 17.8% to $61.8 million, as compared to $52.4 million for the same period of the prior year. The Company's integrated contract revenue by segment was shown as followings:

(In USD million)

   

Three months ended March 31,

 

Nine months ended March 31,

   

2012

 

2011

 

2012

 

2011

   

$

% to Total Revenue

 

$

% to Total Revenue

 

$

% to Total Revenue

 

$

% to Total Revenue

Industrial Automation

 

35.7

57.7%

 

26.1

49.8%

 

133.1

60.2%

 

94.3

52.1%

Rail Transportation

 

21.1

34.2%

 

26.3

50.2%

 

70.9

32.0%

 

86.7

47.9%

Overseas

 

5.0

8.1%

 

-

-

 

17.1

7.8%

 

-

-

Total

 

61.8

100.0%

 

52.4

100.0%

 

221.1

100.0%

 

181.0

100.0%

The industrial automation revenue of $35.7 million for the three months ended March 31, 2012 is consisted of industrial automation revenue of $35.6 million and nuclear revenue of $0.1 million in previous break-down categories. And the rail transportation revenue of $21.1 million for the three months ended March 31, 2012 is consisted of high-speed rail revenue of $13.2 million and subway automation revenue of $7.9 million.

As a percentage of total revenues, overall gross margin was 39.3% for the three months ended March 31, 2012, as compared to 40.3% for the same period of last year. The gross margin for integrated contracts and product sales were 37.9% and 59.9% for the three months ended March 31, 2012, as compared to 38.8% and 65.1% for the same period of last year respectively. The gross margin fluctuation was mainly due to the different revenue mix with different margin.

For the three months ended March 31, 2012, selling expenses were $6.1 million, compared to $5.3 million year over year, and $8.1 million quarter over quarter. Compared to the same period of prior year, the increase was mainly due to the Company's expanded sales network and increased selling staffs. As a percentage of total revenues, selling expenses were 9.2% compared to 9.5% year over year, and 10.0% quarter over quarter.

General and administrative expenses, excluding non-cash stock-based compensation expense, were $4.9 million for the quarter ended March 31, 2012, representing an increase of $0.1 million, or 1.0%, as compared to $4.8 million for the same period of prior year. As a percentage of total revenues, G&A expenses were 7.5% and 8.8% for the three months ended March 31, 2012 and 2011, respectively. Including the non-cash stock compensation cost recorded on a GAAP basis, G&A expenses were $5.0 million and $5.0 million for three months ended March 31, 2012 and 2011, respectively.

Research and development expenses were $5.6 million for the three months ended March 31, 2012, compared to $3.9 million year over year, and $6.9 million quarter over quarter. Compared to the same period of prior year, the increase was mainly due to the Company's increased R&D activities. As a percentage of total revenues, R&D expenses were 8.4% compared to 6.9% year over year, and 8.6% quarter over quarter.

The VAT refunds and government subsidy amounted to $2.5 million for three months ended March 31, 2012, as compared to $1.3 million for the comparative prior year period, representing an increase of $1.2 million, or 85.9%, mainly due to Hangzhou Hollysys, the Company's wholly-owned subsidiary, recognized a subsidy of $0.9 million during this quarter, which was granted to encourage the Company's research and development activities in DCS field.

The gains on disposal of long term investment amounted to $2.0 million for the quarter ended March 31, 2012, which Beijing Hollysys, the Company's wholly-owned subsidiary, disposed 10% equity interest in China Techenergy Co., Ltd. by consideration of RMB 27.8 million (approximately $4.4 million), and recognized a disposal gain of $2.0 million during this quarter. After this transaction, Beijing Hollysys continues to hold 40% equity interest in China Techenergy.

The income tax expenses were $2.5 million for the three months ended March 31, 2012, compared to $0.2 million year over year, and $1.3 million quarter over quarter.  The effective tax rate was 18.0% compared to 1.8% year over year, and 6.2% quarter over quarter. The large increase of tax expenses was mainly due to an income tax expense of $1.0 million related to VAT refunds was recognized by Beijing Hollysys during this quarter, as the Beijing Tax Bureau specified the VAT refunds be taxable.  For the nine months ended March 31, 2012, the effective tax rate was 11.4%, as compared to 9.9% for the prior year period.

For the three months ended March 31, 2012, the non-GAAP net income to Hollysys excluding non-cash stock compensation cost was $11.6 million or $0.21 per diluted share based on 56 million shares outstanding. This represents an increase of $2.0 million, or 20.8%, over the $9.6 million, or $0.17 per share based on 55 million shares outstanding, reported in the prior year period. On a GAAP basis, net income attributable to Hollysys was $11.5 million, or $0.21 per diluted share representing an increase of $2.0, or 21.4%, over the $9.5 million, or $0.17 per diluted share reported in the prior year period.

Backlog Highlights

Hollysys' backlog as of March 31, 2012 was $401.8 million, compared to $332.1 million on December 31, 2011, and $280.9 million on March 31, 2011. The large increase was mainly contributed by a backlog of $63.2 million, brought by contracts with Hong Kong MTR Corporation to provide High-Speed Rail Signaling Systems. The detailed breakdown of the backlog by segment is as followings:

 (In USD million)

         

Quarter-over-Quarter Analysis

 

Year-over-Year Analysis

   

2012-3-31

 

2011-12-31

 

2011-3-31

   

$

% to Total Backlog

 

$

% to Total Backlog

 

%
Change

 

$

% to Total Backlog

 

%
Change

Industrial Automation

 

144.8

36.0%

 

124.4

37.5%

 

16.4%

 

106.3

37.9%

 

36.1%

Rail Transportation

 

208.4

51.9%

 

170.4

51.3%

 

22.3%

 

174.6

62.1%

 

19.4%

Overseas

 

48.6

12.1%

 

37.3

11%

 

30.3%

 

-

-

   

Total

 

401.8

100.0%

 

332.1

100.0%

 

21.0%

 

280.9

100.0%

 

43.1%

 

Cash Flow Highlights

The net cash provided by operating activities was $1.5 million for the three months ended March 31, 2012; Including investing and financing activities, the total net cash outflow for this quarter was $3.7million, mainly due to a cash outflow of $2.0 million for repayment of long-term loans and $3.7 million used for purchase of property, plant and equipment.

 

 

Balance Sheet Highlights

As of March 31, 2012, Hollysys' cash and cash equivalents were $126.2 million, compared to $130.0 million on December 31, 2011. For the three months ended March 31, 2012, Days Sales Outstanding ("DSO") is 160 days, as compared to 156 days year over year and 150 days quarter over quarter; and inventory turnover was 68 days, as compared to 101 year over year and 54 days quarter over quarter.

Outlook for FY 2012

Dr. Wang concluded, "Due to severe slow down of China's high-speed development, as well as overseas projects delayed because of the mixed international environment. We are revising the previous announced FY2012 revenue guidance between $354 million and $356 million, down to between $310 million and $ 320 million; but we are confidently reiterating our FY 2012 net income guidance between $ 57 million and $ 58 million unchanged."

Conference Call

Management will discuss the current status of the Company's operations during a conference call at 9:00 AM ET/9:00 PM Beijing time on Tuesday, May 15, 2012. 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: 73953456

1-866-519-4004 (USA)
800-930-346 (HK)
+852-2475-0994 (HK)
800-819-0121 (China Landline)
400-620-8038 (China Mobile)
+ 65-6723-9381 (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 50 cities in China, with subsidiaries and offices in Singapore, Malaysia, Dubai, India, and serves over 2000 customers 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 Distributed Control System (DCS), Programmable Logic Controller (PLC), RMIS, HAMS, OTS, and other products, high-speed railway signaling system of Train Control Center(TCC) and Automatic Train Protection (ATP), and other products, subway supervisory and control platform (SCADA), and nuclear conventional island automation and control system.

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.

For further information, please contact:

Hollysys Automation Technologies, Ltd.
www.hollysys.com
+8610-58981386
+8610-58981326
investors@hollysys.com

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In US Dollars)

                 
   

Three months ended
March 31,

 

Nine months ended
December 31,

   

2012

 

2011

 

2012

 

2011

   

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 (Unaudited)

Revenues

               

Integrated contract revenue

$

61,754,657

$

52,426,094

$

221,138,496

$

180,997,840

Products sales

 

4,380,008

 

3,339,012

 

12,448,646

 

9,980,879

Total revenues

 

66,134,665

 

55,765,106

 

233,587,142

 

190,978,719

                 

Cost of integrated contracts

 

38,361,214

 

32,102,736

 

139,510,271

 

115,984,582

Cost of products sold

 

1,757,506

 

1,165,022

 

4,237,085

 

4,540,308

Gross profit

 

26,015,945

 

22,497,348

 

89,839,786

 

70,453,829

                 

Operating expenses

               

Selling

 

6,105,737

 

5,320,126

 

21,147,519

 

14,274,548

General and administrative

 

5,033,217

 

5,019,553

 

17,591,141

 

13,766,858

Research and development

 

5,587,796

 

3,854,212

 

18,538,206

 

14,628,051

VAT refunds and government subsidies

 

(2,513,331)

 

(1,351,983)

 

(16,363,865)

 

(8,522,489)

Total operating expenses

 

14,213,419

 

12,841,908

 

40,913,001

 

34,146,968

                 

Income from operations

 

11,802,526

 

9,655,440

 

48,926,785

 

36,306,861

                 

Other income (expense), net

 

1,029,217

 

(62,881)

 

1,291,613

 

(615,693)

Gains on disposal of long-term investments

 

2,045,042

 

23,086

 

2,042,015

 

1,450,627

Share of net gains (losses) of equity investees

 

(506,650)

 

406,303

 

(354,953)

 

2,359,630

Interest expense, net

 

(223,602)

 

(447,235)

 

(1,385,501)

 

(1,167,705)

Income before income taxes

 

14,146,533

 

9,574,713

 

50,519,959

 

38,333,720

                 

Income taxes expenses

 

2,540,429

 

168,574

 

5,741,077

 

3,811,422

Net income

 

11,606,104

 

9,406,139

 

44,778,882

 

34,522,298

                 

Less: Net income (loss) attributable to non-controlling interests

 

 

77,294

 

 

(87,072)

 

 

300,162

 

 

(75,428)

Net income attributable to Hollysys Automation Technologies Ltd.

$

 

11,528,810

$

 

9,493,211

$

 

44,478,720

$

 

34,597,726

                 

Weighted average number of common shares

 

55,933,984

 

54,671,818

 

55,547,536

 

54,451,063

                 

Weighted average number of diluted common shares

 

 

56,046,907

 

 

55,055,393

 

 

55,742,634

 

 

54,876,540

                 

Basic earnings per share attributable to Hollysys Automation Technologies Ltd.

 

0.21

 

0.17

 

0.80

 

0.64

                 

Diluted earnings per share attributable to Hollysys Automation Technologies Ltd.

 

0.21

 

0.17

 

0.80

 

0.63

                 

Other comprehensive income

               

Net income

 

11,606,104

 

9,406,139

 

44,778,882

 

34,522,298

Translation adjustments

 

594,719

 

2,461,800

 

6,248,591

 

7,894,021

Comprehensive income

 

12,200,823

 

11,867,939

 

51,027,473

 

42,416,319

                 

Less: Comprehensive income attributable to non-controlling interest

 

78,486

 

(79,906)

 

327,351

 

(47,166)

Comprehensive income attributable to Hollysys Automation Technologies Ltd.

$

 

12,122,337

$

 

11,947,845

$

50,700,122

$

42,463,485

 

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED BALANCE SHEETS

(In US Dollars)

             
       

March 31,

 

December 31,

       

2012

 

2011

       

(Unaudited)

 

(Unaudited)

ASSETS

       
 

Current Assets

       
   

Cash and cash equivalents

$

126,178,593

$

129,918,106

   

Contract commitment deposit in banks

 

4,832,623

 

2,698,087

   

Accounts receivable, net of allowance for doubtful accounts of $13,626,327 and $12,947,639

 

106,710,893

 

101,591,729

   

Cost and estimated earnings in excess of billings, net of allowance for doubtful accounts of $1,558,430 and $1,467,630

 

 

100,326,971

 

 

94,160,656

   

Other receivables, net of allowance for doubtful accounts of $347,264 and $335,697

 

7,738,132

 

9,813,354

   

Advances to suppliers

 

9,081,346

 

6,715,126

   

Amounts due from related parties

 

15,642,061

 

15,755,057

   

Inventories, net of provision of $2,456,312 and $2,542,564

 

28,764,216

 

26,606,991

   

Prepaid expenses

 

977,026

 

1,050,170

   

Income tax recoverable

 

171,551

 

572,804

   

Deferred tax assets

 

2,101,850

 

2,281,798

 

Total current assets

 

402,525,262

 

391,163,878

             
 

Property, plant and equipment, net

 

68,667,959

 

69,628,760

 

Long term investments

 

15,857,673

 

17,548,814

 

Goodwill

 

29,872,841

 

29,875,776

 

Deferred tax assets

 

1,069,204

 

1,196,892

             
 

Total assets

 

517,992,939

 

509,414,120

             

LIABILITIES AND STOCKHOLDERS' EQUITY

       
 

Current liabilities

       
   

Short-term bank loans

 

5,334,878

 

5,329,291

   

Current portion of long-term bank loans

 

7,943,695

 

7,935,374

   

Accounts payable

 

76,929,206

 

70,671,271

   

Construction cost payable

 

927,693

 

926,721

   

Deferred revenue

 

34,882,340

 

34,668,157

   

Accrued payroll and related expense

 

5,379,151

 

10,149,946

   

Income tax payable

 

4,293,253

 

4,537,854

   

Warranty liabilities

 

3,033,303

 

3,040,047

   

Other tax payables

 

15,187,451

 

11,086,248

   

Accrued liabilities

 

8,028,948

 

10,029,391

   

Amounts due to related parties

 

2,185,521

 

3,476,228

   

Advance receipt of disposal of equity interests in an equity investee

 

-

 

4,412,068

 

Total current liabilities

 

164,125,439

 

166,262,596

             
   

Long-term bank loans

 

26,763,935

 

28,716,050

 

Total liabilities

 

190,889,374

 

194,978,646

             
 

Commitments and contingencies

       
             
 

Equity

       
   

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 55,998,917 and  55,834,782 shares issued and outstanding

 

 

55,999

 

 

55,835

   

Additional paid-in capital

 

150,580,096

 

150,112,992

   

Appropriated earnings

 

23,091,073

 

23,090,979

   

Retained earnings

 

119,191,215

 

107,662,499

   

Accumulated comprehensive income - translation adjustments

 

33,047,213

 

32,453,686

 

Total Hollysys Automation Technologies Ltd. stockholder's equity

 

325,965,596

 

313,375,991

             
   

Non-controlling interests

 

1,137,969

 

1,059,483

 

Total equity

 

327,103,565

 

314,435,474

             
 

Total liabilities and stockholders' equity

$

517,992,939

$

509,414,120

 

 

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In US Dollars)

           
     

Three months ended
March 31, 2012

 

Nine months ended
March 31, 2012

     

(Unaudited)

 

(Unaudited)

Cash flows from operating activities:

       
 

Net income

$

11,606,104

$

44,778,882

Adjustments to reconcile net income to net cash

       

provided by (used in) operating activities:

       
 

Depreciation and amortization

 

1,815,818

 

4,896,043

 

Allowance for doubtful accounts

 

885,792

 

3,175,806

 

Provision for inventories

 

(88,124)

 

669,166

 

Gains on disposal of property, plant and equipment

 

(459,659)

 

(420,026)

 

Impairment Loss

 

5,739

 

5,739

 

Gains on disposal of long-term investments

 

(2,045,042)

 

(2,042,015)

 

Share of net losses from equity investees

 

506,650

 

354,953

 

Stock-based compensation

 

99,606

 

414,318

 

Deferred tax assets (liabilities), net

 

310,615

 

(82,836)

Changes in operating assets and liabilities:

       
 

Accounts receivable

 

(4,351,576)

 

(195,594)

 

Cost and estimated earnings in excess of billings

 

(7,321,710)

 

5,447,468

 

Inventories 

 

(2,021,445)

 

(148,656)

 

Advance to suppliers

 

(2,341,922)

 

(567,851)

 

Other receivables 

 

2,103,416

 

3,803,941

 

Deposits and other assets

 

(2,054,290)

 

(483,416)

 

Due from related parties

 

(539,888)

 

(2,177,470)

 

Accounts payable

 

6,046,454

 

7,463,857

 

Deferred revenue

 

144,826

 

(10,218,311)

 

Accruals and other payable

 

(2,552,865)

 

4,211,790

 

Due to related parties

 

(2,396,699)

 

(2,349,480)

 

Tax payable

 

4,167,297

 

159,139

 

Net cash provided by operating activities

 

1,519,097

 

56,695,447

           

Cash flows from investing activities:

       
 

Purchase of property, plant and equipment

 

(3,680,087)

 

(5,769,298)

 

Proceeds from disposing property, plant and equipment

 

64,590

 

3,286,159

 

Proceeds from disposal of long-term investments

 

4,404,405

 

4,461,290

 

Acquisition of equity interests in an equity investee

 

(476,622)

 

(476,622)

 

Acquisition of a subsidiary, net of cash acquired

 

-

 

(5,410,486)

 

Advance receipt of disposal of equity interests in an equity investee

 

 

(4,360,237)

 

-

 

Net cash used in investing activities

 

(4,047,951)

 

(3,908,957)

           

Cash flows from financing activities:

       
 

Proceeds from short-term loans

 

-

 

563,194

 

Repayments of short-term loans

 

-

 

(7,018,852)

 

Repayments of long-term loans

 

(1,989,100)

 

(4,018,315)

 

Proceeds from options exercised

 

367,662

 

672,000

 

Repayment of  pre-acquisition announced dividends due to the seller of Concord

 

-

 

 

(8,224,328)

 

Net cash used in financing activities

 

(1,621,438)

 

(18,026,301)

           
 

Effect of foreign exchange rate changes

 

410,779

 

749,345

 

Net increase (decrease) in cash and cash equivalents

$

(3,739,513)

$

35,509,534

           
 

Cash and cash equivalents, beginning of period

$

129,918,106

$

90,669,059

 

Cash and cash equivalents, end of period

 

126,178,593

 

126,178,593

 

 

Reconcile GAAP Net Income to Non-GAAP Net Income

The following table provides more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

   

Three months ended
March 31,

 

Nine months ended
March 31,

   

2012

 

2011

 

2012

 

2011

   

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

                 

Net income attributable to Hollysys Automation Technologies Ltd.

$

11,528,810

$

9,493,211

$

44,478,720

 

34,597,726

Adjustments:

               

Stock-based compensation cost

 

99,606

 

134,388

 

414,318

 

396,426

Non-GAAP Net Income attributable to Hollysys Automation Technologies Ltd.

$

11,628,416

$

9,627,599

$

44,893,038

 

34,994,152

SOURCE Hollysys Automation Technologies, Ltd.

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


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