Hollysys Automation Technologies Reports Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2010 Ended June 30, 2010
PRNewswire
Aug 11, 2010
BEIJING, Aug. 11 /PRNewswire-Asia-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 its fiscal fourth quarter and the fiscal year 2010 ended June 30, 2010 (see attached tables).
Q4 Financial Highlights
-- Revenues of $56.4 million, representing an increase of 25.9% compared
to $44.8 million year-over-year
-- Gross margin at 33.9%, as compared to 33.5% year-over-year
-- Non-GAAP net income of $10.7 million, as compared to $6.3 million and a
69.2% increase year-over-year
-- Record-breaking backlog balance at $252.9 million as of June 30, 2010,
a 33.8% increase compared to $188.9 million year-over-year
-- Operating cash inflow of $1.8 million
-- Quarterly DSO of 116 days, as compared to 124 days year-over-year and
192 days quarter-over-quarter
Fiscal Year 2010 Financial Highlights
-- Revenues of $174.1 million, an increase of 10.5% compared to 157.5
million year-over-year
-- Non-GAAP net income attributable to Hollysys of $30.7 million, a 19.4%
increase compared to $25.7 million for fiscal year 2009
-- $30.1 million cash generated from operations for the fiscal year 2010;
cash and cash equivalents of $119.5 million as of the year end
-- DSO of 140 days, as compared 147 days year-over-year
-- Inventory turnover of 73 days, versus 79 days year-over-year
Dr. Changli Wang, Hollysys' Chairman of the Board and CEO, stated, "We are very pleased to report a solid fiscal 2010 annual result, culminated by the fourth quarter of strong financial and operational results, amid some of the difficulties we overcame during the year. Our financials demonstrated the continuous trend of revenues and earnings growth on a year-over-year basis, and our record-breaking backlog balance and strong sales pipeline indicated our strong operational status going into the new fiscal year. Most important of all, Hollysys is becoming a stronger and better company, not only from the market competitiveness perspective, but also from the corporate management perspective. I would like to discuss some of the key events that took place during this quarter. "
"In the industrial automation segment, we achieved accelerated growth in both revenue and backlog this quarter, attributable to our solid execution, increased efforts in research and development. The quarterly segment revenue increased by 27.8% and backlog balance increased by 31.5% year-over-year. "
"In the high-speed rail segment, the contract win of US $12.4 million Tai-Zhong-Yin Line in July 2010 is the result of our hard work and persistent efforts in the previous quarters. We were contracted to provide our ground based high-speed rail signaling system to the Phase I of Tai-Zhong-Yin Railway Line with 460 km in length and designed to travel at a speed of 200km/h. With the winning of this contract, it is not only a strong validation of Hollysys' state-of-the-art high-speed rail signaling system, most importantly, it marks our successful penetration into China's northwest region's high-speed rail market. With China's high-speed rail build-out expedites its pace towards 2012, Hollysys has successfully laid a solid foundation to capture its fair share in this unprecedented high-speed rail build-out.
In our subway segment, we were awarded a contract to supply our SCADA System to the Phase II of Beijing Subway Line 8, valued at approximately USD$11million. This contract win further validates our well-established brand name recognition in China's fast-growing subway automation market. As China's subway ramp-up accelerates in over 22 cities nationwide, Hollysys will continue to leverage on its solid track record and brand-name recognition to expand its market share in this booming market."
Dr. Wang continued, "In the nuclear segment, we commenced supplying our proprietary conventional island automation and control products to #1 and #2 reactors of Yangjiang Nuclear Power Station, pursuant to the first batch of purchase orders from our JV with China Guangdong Nuclear Power Corp. The Yangjiang Nuclear Power Station in Guangdong province is designed to have six one-gigawatt (GW) pressurized water reactors using CGNPC's proprietary CPR-1000 technology. With China's accelerated nuclear build-out in the coming years and our strategic alliance with the most leading nuclear station builder in China, our nuclear segment will contribute more to our margin and profit going forward."
The Fourth Quarter and Fiscal Year 2010 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
June 30, June 30, % Change
2010 2009
Revenues $ 56,371 44,772 25.9%
Integrated Contract $ 53,016 41,791 26.9%
Revenue
Products Sales $ 3,355 2,981 12.5%
Cost of Revenues $ 37,246 29,779 25.1%
Gross Profit $ 19,125 14,993 27.6%
Total Operating Expenses $ 9,287 6,394 45.3%
Selling $ 3,113 2,327 33.8%
General and
Administrative $ 4,514 2,752 64.0%
Research and
Development $ 3,859 3,593 7.4%
VAT refunds and
government subsidy $ (2,199) (2,278) -3.5%
Income from Operations $ 9,838 8,599 14.4%
Others $ 3,039 (242) -1,354.6%
Income Tax Expenses $ 2,097 841 149.3%
Non-GAAP Net income
attributable to non-
controlling interest $ 47 1,174 -96.0%
Non-GAAP Net Income
attributable to Hollysys
Automation Technologies
Ltd. $ 10,733 6,342 69.2%
Basic Non-GAAP EPS $ 0.20 0.14 43.1%
Diluted Non-GAAP EPS $ 0.20 0.14 42.3%
Stock-based Compensation
Cost for Options $ 131 131 0.0%
Stock-based Compensation
Cost for Incentive Shares $ -- 22,240
Net income attributable to
Hollysys Automation
Technologies Ltd.(GAAP) $ 10,602 (16,029) -166.1%
Basic GAAP EPS $ 0.19 (0.35) -155.9%
Diluted GAAP EPS $ 0.19 (0.35) -155.6%
Basic Weighted Average
Common Shares Outstanding 54,385,044 45,986,570 18.3%
Diluted Weighted Average
Common Shares Outstanding 54,984,420 46,233,857 18.9%
Fiscal year ended
June 30, June 30, % Change
2010 2009
Revenues $ 174,089 157,502 10.5%
Integrated Contract $ 164,118 149,303 9.9%
Revenue
Products Sales $ 9,971 8,199 21.6%
Cost of Revenues $ 113,937 102,924 10.7%
Gross Profit $ 60,152 54,578 10.2%
Total Operating Expenses $ 27,080 20,569 31.7%
Selling $ 12,152 10,022 21.3%
General and
Administrative $ 13,390 9,422 42.1%
Research and
Development $ 13,071 8,829 48.0%
VAT refunds and
government subsidy $ (11,533) (7,704) 49.7%
Income from Operations $ 33,072 34,009 -2.8%
Others $ 2,671 (53) -5,173.9%
Income Tax Expenses $ 3,209 3,061 4.8%
Non-GAAP Net income
attributable to non-
controlling interest $ 1,851 5,187 -64.3%
Non-GAAP Net Income
attributable to Hollysys
Automation Technologies
Ltd. $ 30,683 25,708 19.4%
Basic Non-GAAP EPS $ 0.60 0.57 4.7%
Diluted Non-GAAP EPS $ 0.59 0.57 3.5%
Stock-based Compensation
Cost for Options $ 524 319 64.3%
Stock-based Compensation
Cost for Incentive Shares $ -- 39,240 -100.0%
Net income attributable to
Hollysys Automation
Technologies Ltd.(GAAP) $ 30,159 (13,851) -317.7%
Basic GAAP EPS $ 0.59 (0.31) -289.5%
Diluted GAAP EPS $ 0.58 (0.31) -288.8%
Basic Weighted Average
Common Shares Outstanding 51,243,667 44,950,833 14.0%
Diluted Weighted Average
Common Shares Outstanding 51,838,294 44,950,833 15.3%
Operational Results Analysis for the three months ended June 30, 2010
For the three months ended June 30, 2010, total revenues increased by 25.9% to $56.4 million, from $44.8 million in the comparable prior fiscal year period. Of the total revenues, revenue from integrated contracts increased by 26.9% to $53.0 million, compared to $41.8 million for the same period of the prior year. The Company's integrated contract revenue by segment was as followings:
-- $24.0 million, or 45.3%, related to Industrial Automation & Control,
representing a 27.8% segment revenue growth year-over-year;
-- Rail and Subway was $26.5 million, or 50.0%, representing a 16.3%
increase year over year; of which $8.9 million, or 16.9%, was from Rail
Signaling and Control projects, and $17.6 million, or 33.1%, was from
Subway Automation and Control; and
-- $2.5 million, or 4.7%, related to Nuclear Plant Control projects and
miscellaneous, compared to $0.2 million year-over-year.
As a percentage of total revenues, overall gross margin was 33.9% for the three months ended June 30, 2010, as compared to 33.5% for the same period of last year, mainly due to the fact that the gross margin for product sales increased from 42.5% for the prior year period, to 51.8% in this quarter. The gross margin for integrated contracts was 32.8% for the three months ended June 30, 2010, which was unchanged compared to the same period of last year.
For the three months ended June 30, 2010, selling expenses were $3.1 million, compared to $2.3 million year over year, and was increased by $0.8 million, or 33.8%, which was mainly due to the Company's increased marketing activities. As a percentage of total revenues, selling expenses were 5.5% and 5.2% for the three months ended June 30, 2010 and 2009, respectively.
General and administrative expenses, excluding non-cash stock-based compensation expense, were $4.5 million for the fourth quarter, representing an increase of $1.7 million, or 64.0%, compared to $2.8 million for the same period of last year. The increase is consisted of $1.3 million in bad debt allowance and $0.7 million in provision for fixed assets. Including the non- cash stock compensation cost recorded on a GAAP basis, G&A expenses were $4.6 million and $25.1 million for three months ended June 30, 2010 and 2009, respectively.
Research and development expenses were $3.9 million for the three months ended June 30, 2010, compared to $3.6 million for the same period of last year. As a percentage of total revenue, R&D expenses were 6.8% and 8.0% for three months ended June 30, 2010 and 2009, respectively.
For the fourth quarter ended June 30, 2010, the share of net gains of equity investees amounted to $3.3 million, of which $3.2 million was contributed by Beijing Techenergy Ltd., the 50/50 joint venture between Hollysys and China Guangdong Nuclear Power Corp. (CGNPC) that mainly engages in providing automation and control products and services to China's nuclear industry.
For the three months ended June 30, 2010, non-GAAP net income attributable to Hollysys, excluding non-cash stock compensation cost, was $10.7 million, or $0.20 per diluted share based on 55 million shares outstanding. This represents an increase of $4.4 million, or 69.2%, over the $6.3 million, or $0.14 per share based on 46 million shares outstanding, reported in the prior year period. On a GAAP basis, net income attributable to Hollysys was $10.6 million, or $0.19 per diluted share based on 55 million shares outstanding, compared to net loss attributable to Hollysys of $16.0 million, or $(0.35) per diluted share based on 46 million shares outstanding, for the same period of the prior year.
Operational Results Analysis for the fiscal year ended June 30, 2010
For the fiscal year 2010, total revenues increased by 10.5% to $174.1 million, from $157.5 million of the prior year. Of the total revenues, revenue from integrated contracts increased by 9.9% to $164.1 million, from $149.3 million for the prior fiscal year. The Company's integrated contract revenue by segment was as followings:
-- $94.2 million, or 57.4%, related to Industrial Automation & Control,
representing a 15.6% increase year over year;
-- Rail and Subway was $60.0 million, or 36.5%, representing a 0.4%
increase year over year; of which $28.8 million, or 17.5%, was from
Rail Signaling and Control projects, and $31.2 million, or 19.0%, was
from Subway Automation and Control; and
-- $9.9 million, or 6.0%, related to Nuclear Automation and Control and
miscellaneous, representing a 23.2% increase.
For the fiscal year 2010, as a percentage of total revenues, overall gross margin was 34.6%, as compared to 34.7% for the prior year. The gross margin for integrated contracts was 32.8% for fiscal 2010, compared to 33.4% for the prior year, mainly due to the decrease of high-margin high-speed rail revenue in both absolute dollar value and its percentage of total revenue.
For fiscal 2010, selling expenses were $12.2 million, which increased by $2.2 million, or 21.3%, as compared to $10.0 million for the prior year. The increase is mainly due to increased marketing activities. As a percentage to total revenues, selling expenses were 7.0% and 6.4% for year ended June 30, 2010 and 2009, respectively.
General and administrative expenses, excluding non-cash stock-based compensation expense, were $13.4 million, as compared to $9.4 million for the prior year, representing an increase of $4.0 million, or 42.1%. The increase is mainly consisted of $1.6 million in bad debt allowance, the increase of $1.2 million in staff salaries and bonus, and $0.7 million in provision for fixed assets. Including the non-cash stock compensation recorded on a GAAP basis, G&A expenses were $13.9 million and $49.0 million for fiscal years 2010 and 2009, respectively.
Research and development expenses were $13.1 million for fiscal 2010, compared to $8.8 million for the prior year, with an increase of $4.2million, or 48.0%, which was mainly due to the increase in R&D staff. As a percentage to total revenue, R&D expenses were 7.5% and 5.6% for year ended June 30, 2010 and 2009, respectively.
The share of net gains of equity investees amounted to $4.0 million for fiscal 2010, of which $2.9 million was contributed by Beijing Techenergy Ltd.
For the fiscal year 2010, the non-GAAP net income excluding non-cash stock compensation cost was $30.7 million, or $0.59 per diluted share based on 52 million shares outstanding. This represents an increase of $5.0 million, or 19.4%, over the $25.7 million, or $0.57 per share based on 45 million shares outstanding, reported for the prior year. On a GAAP basis, net income attributable to Hollysys was $30.2 million, or $0.58 per diluted share based on 52 million shares outstanding, compared to net loss attributable to Hollysys of $13.9 million, or $(0.31) per diluted share based on 45 million shares outstanding, for the prior year.
Backlog Highlights
Hollysys' backlog as of June 30, 2010 was $252.9 million, compared to $242.3 million on March 31, 2010, and $188.9 million on June 30, 2009. The detailed breakdown of the backlog by segment is as followings:
(In USD million)
Quarter-over-Quarter Year-over-Year
Analysis Analysis
2010-6-30 2010-3-31 2009-6-30
% to % to % % to %
$ Total $ Total Change $ Total Change
Backlog Backlog Backlog
Industrial
Automation &
Control 86.0 34.0% 62.7 25.9% 36.9% 65.3 34.6% 31.5%
Rail
Automation &
Control 50.5 20.0% 53.8 22.2% -6.0% 58.1 30.7% -13.0%
Subway
Automation &
Control 106.2 42.0% 115.0 47.4% -7.6% 60.1 31.8% 76.8%
Nuclear
automation
and control
and
miscellaneous 10.2 4.0% 10.9 4.5% -6.0% 5.5 2.9% 87.3%
Total 252.9 100.0% 242.3 100.0% 4.3% 188.9 100.0% 33.8%
Cash Flow Highlights
Hollysys generated operating cash flow of $1.8 million and $30.1 million for the three months and the fiscal year ended June 30, 2010 respectively. Including investing and financing activities, the total net cash outflow for the three months ended June 30, 2010 was $0.4 million. For the fiscal year ended June 30, 2010, the total cash outflow was $9.4 million including investing and financing activities, mainly due to the usage of $9.7 million to acquire the 25.89% minority interests of Beijing Hollysys, in addition to the Company's cash inflow and outflow during the ordinary course of business.
Balance Sheet Highlights
As of June 30, 2010, Hollysys' cash and cash equivalents were $119.5 million, compared to $119.9 million on March 31, 2010, and $128.9 million on June 30, 2009. Days Sales Outstanding ("DSO") for fiscal 2010 is 140 days, reduced from 147 days for the prior year. Inventory turnover is 73 days for the year ended June 30 2010, as compared to 79 days the prior year.
Outlook for FY 2011
Dr. Wang concluded, "Given the backlog balance and strong pipeline across all of our business segments, we believe our revenue and net income growth will accelerate to approximate 35% and 25% respectively in our fiscal 2011. At the same time, the company has decided to grow our industrial automation sales team by an exponential rate and increase the investment in corporate research and development initiatives to further establish Hollysys as a dominant leader in automation and control field, across industrial, rail, and subway industries in China. "
Based on our operating results for fiscal 2010, we project our fiscal 2011 revenues to be in the range of USD 233M to USD 237M. We expect our fiscal 2011 non-GAAP net income to be in the range of USD 38M to USD 39M, which will translate into net income per share of USD 0.69 to USD 0.71, based on expected 55 million shares outstanding.
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 Thursday, August 12, 2010. 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 90847140.
1-866-519-4004 (USA) 800-930-346 (HK) 800-819-0121 (China Landline) 400-620-8038 (China Mobile) +65-67239281 (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/pubdown/180809.zip
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 2,300 employees with 9 sales centers and 13 service centers in 21 cities in China and serves over 1700 customers in the industrial, railway, subway & nuclear industries. Its proprietary technologies are applied in product lines including Distributed Control System (DCS) and Programmable Logic Controller (PLC) for industrial sector, high-speed railway signaling system of TCC (Train Control Center) and ATP (Automatic Train Protection), 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. http://www.hollysys.com/ Jennifer Zhang Investor Relations Tel: +86-10-5898-1386 Email: investors@hollysys.com Ling Zhang Investor Relations Tel: +1-646-593-8125 Email: investors@hollysys.com HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (In US Dollars) Three months ended June 30, Fiscal year ended June 30, 2010 2009 2010 2009 (Unaudited) (Unaudited) (Unaudited) Revenues Integrated contract revenue $ 53,016,254 $ 41,791,402 $ 164,118,183 $ 149,303,309 Products sales 3,354,531 2,980,910 9,971,013 8,198,758 Total revenues 56,370,785 44,772,312 174,089,196 157,502,067 Cost of integrated contracts 35,629,054 28,065,525 110,268,475 99,423,487 Cost of products sold 1,616,890 1,713,861 3,668,899 3,500,471 Gross profit 19,124,841 14,992,926 60,151,822 54,578,109 Operating expenses Selling 3,113,064 2,326,647 12,152,019 10,021,832 General and administrative 4,644,693 25,122,689 13,914,091 48,981,078 Research and development 3,859,217 3,592,739 13,071,318 8,829,402 VAT refunds and government subsidy (2,198,523) (2,278,303) (11,533,006) (7,703,724) Total operating expenses 9,418,451 28,763,772 27,604,422 60,128,588 Income (loss) from operations 9,706,390 (13,770,846) 32,547,400 (5,550,479) Other income (expense), net (151,160) (60,291) (215,277) 723,269 Share of net gains of equity investees 3,313,781 45,619 3,958,073 178,167 Interest expense, net (123,201) (227,587) (1,070,772) (954,078) Income (loss) before income taxes 12,745,810 (14,013,105) 35,219,424 (5,603,121) Income taxes expenses 2,097,450 841,276 3,209,034 3,061,141 Net income (loss) 10,648,360 (14,854,381) 32,010,390 (8,664,262) Less: Net income attributable to non-controlling interest 46,523 1,174,409 1,851,453 5,186,802 Net income (loss) attributable to Hollysys Automation Technologies Ltd. $ 10,601,837 $ (16,028,790) $ 30,158,937 $(13,851,064) Weighted average number of common shares 54,385,044 45,986,570 51,243,667 44,950,833 Weighted average number of diluted common shares 54,984,420 46,233,857 51,838,294 44,950,833 Basic earnings (loss) per share attributable to Hollysys Automation Technologies Ltd. 0.19 (0.35) 0.59 (0.31) Diluted earnings (loss) per share attributable to Hollysys Automation Technologies Ltd. 0.19 (0.35) 0.58 (0.31) Other comprehensive income (loss) Net income (loss) 10,648,360 (14,854,381) 32,010,390 (8,664,262) Translation adjustments 1,089,939 119,328 1,239,750 605,582 Comprehensive income (loss) 11,738,299 (14,735,053) 33,250,140 (8,058,680) Less: Comprehensive income attributable to non-controlling interest 50,699 1,186,774 1,876,297 5,254,351 Comprehensive income (loss) attributable to Hollysys Automation Technologies Ltd. $ 11,687,600 $ (15,921,827 )$ 31,373,843 $(13,313,031) HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED BALANCE SHEETS (In US Dollars) June 30, March 31, 2010 2010 (Unaudited) (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 119,501,945 $ 119,930,627 Contract commitment deposit in banks 4,383,684 4,237,057 Accounts receivable, net of allowance for doubtful accounts of $8,408,318 and 7,321,655 64,384,519 64,902,638 Cost and estimated earnings in excess of billings, net of allowance for doubtful accounts of $1,102,016 and $688,158 60,928,056 44,234,355 Other receivables, net of allowance for doubtful accounts of $214,789 and $182,000 4,102,136 4,551,142 Advances to suppliers 10,676,175 13,185,758 Amount due from related parties 10,764,828 10,536,598 Inventories, net of provision of $2,393,546 and $1,444,708 23,554,331 21,267,445 Prepaid expenses 1,022,803 1,124,323 Income tax recoverable 1,083,640 1,004,314 Deferred tax assets 956,969 1,667,283 Deposit for acquisition of equity interest from non- controlling interest -- 6,206,237 Total current assets 301,359,086 292,847,777 Property, plant and equipment, net 65,345,618 47,969,800 Long term investments 17,348,159 14,169,174 Goodwill -- 285,124 Deferred tax assets 677,388 688,119 Total assets 384,730,251 355,959,994 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term bank loans 1,472,559 1,464,922 Current portion of long- term loans 1,472,559 732,461 Bonds payable 11,780,471 11,719,379 Accounts payable 41,479,662 35,120,711 Deferred revenue 33,552,968 37,227,125 Accrued payroll and related expense 4,386,681 3,623,791 Income tax payable 1,496,796 1,449,243 Warranty liabilities 1,916,654 2,075,347 Other tax payables 10,632,611 8,115,604 Accrued liabilities 8,078,783 7,764,485 Amounts due to related parties 2,610,599 2,560,252 Deferred tax liabilities -- 79,654 Construction cost payable 12,562,565 2,749,923 Total current liabilities 131,442,908 114,682,897 Long-term bank loans 35,341,413 35,890,600 Long-term bonds payable -- -- Total liabilities 166,784,321 150,573,497 Commitments and contingencies Stockholder's equity Common stock, par value $0.001 per share, 100,000,000 shares authorized, 54,449,129 and 54,356,562 shares issued and outstanding 54,450 54,357 Additional paid-in capital 138,751,162 140,909,078 Appropriated earnings 17,396,777 15,135,442 Retained earnings 43,391,191 32,789,354 Accumulated comprehensive income - translation adjustments 17,577,485 16,491,722 Total Hollysys Automation Technologies Ltd. stockholder's equity 217,171,065 205,379,953 Non-controlling interest 774,865 6,544 Total equity 217,945,930 205,386,497 Total liabilities and equity $ 384,730,251 $ 355,959,994 HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (In US Dollars) Three months ended Fiscal year ended June 30, June 30, 2010 2010 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 10,648,360 $ 32,010,390 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 297,833 2,683,042 Allowance for doubtful accounts 1,788,580 2,790,078 Provision for inventories 948,838 1,279,406 Loss on disposal of property, plant and equipment (188,909) 14,112 Impairment loss for long-term assets 1,154,588 1,154,588 Share of net losses from equity investees (3,313,781) (3,958,073) Amortization of expenses accrued for bond payable 15,371 61,281 Stock-based compensation 131,019 524,076 Deferred tax assets/liabilities, net 641,391 (885,014) Changes in operating assets and liabilities: Accounts receivable (723,726) (10,131,840) Cost and estimated earnings in excess of billings (17,107,559) (10,191,299) Inventories (3,235,723) (5,996,365) Advance to suppliers 2,509,816 (2,598,327) Other receivables 316,045 (93,051) Deposits and other assets 944,058 1,497,584 Due from related parties (159,399) (3,143,615) Accounts payable 8,171,184 5,032,941 Deferred revenue (3,674,157) 12,480,428 Accruals and other payable 1,064,987 5,953,753 Due to related parties 50,347 1,145,916 Tax payable 1,480,920 495,864 Net cash provided by operating activities 1,760,083 30,125,875 Cash flows from investing activities: Purchase of property, plant and equipment (9,942,041) (20,918,968) Proceeds from disposing 275 9,251 property, plant and equipment Receipt from related parties -- 653,325 Acquisition of long term investments -- (1,001,569) Dividends from equity investees -- 58,640 Acquisition of a subsidiary, net of cash acquired (147,939) (279,120) Acquisition of equity interest from non-controlling interest -- (10,373,600) Refund of deposit for acquisition of equity interest from non-controlling interest 6,203,874 -- Net cash used in investing activities (3,885,831) (31,852,041) Cash flows from financing activities: Repayments of short-term bank loans -- (4,397,989) Repayments of long-term bank loans -- (5,130,987) Capital injection from non- controlling interest 718,338 718,338 Net cash used in financing activities 718,338 (8,810,638) Effect of foreign exchange rate changes 978,728 1,156,083 Net decrease in cash and cash equivalents $ (428,682) $ (9,380,721) Cash and cash equivalents, beginning of period $ 119,930,627 $ 128,882,666 Cash and cash equivalents, end of period 119,501,945 119,501,945 Reconcile GAAP Net Income (Loss) 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 June 30, Fiscal year ended June 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income (loss)
attributable to
Hollysys $ 10,601,837 $(16,028,790) $ 30,158,937 $(13,851,064)
Automation
Technologies Ltd.
Adjustments:
Stock-based
compensation
cost for
options 131,019 131,019 524,076 319,026
Stock-based
compensation
cost for
incentive
shares -- 22,240,000 -- 39,240,000
Non-GAAP Net
Income
attributable
to Hollysys
Automation
Technologies
Ltd. $ 10,732,856 $ 6,342,229 $ 30,683,013 $ 25,707,962
SOURCE: Hollysys Automation Technologies, Ltd.
CONTACT: Hollysys Automation Technologies, Ltd., Jennifer Zhang, Investor
Relations, +86-10-5898-1386, or investors@hollysys.com; Or Ling Zhang,
Investor Relations, +1-646-593-8125, or investors@hollysys.com
Web site: http://www.hollysys.com/