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Hollysys Automation Technologies Reports Unaudited Financial Results for the Fiscal Year 2010 Third Quarter Ended March 31, 2010
May 12, 2010 (06:05 PM EDT)


Q3 FY 2010 Highlights

-- Unprecedented backlog reported at $242.3 million as of March 31, 2010

-- Revenues of $33.4 million, as compared to $22.9 million year over year, representing a 45.7% increase

-- Non-GAAP net income attributable to Hollysys of $5.2 million, as compared to $2.1 million year over year, representing a 154.0% increase

BEIJING, May 12 /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 third quarter of fiscal year 2010 ended March 31, 2010 (see attached tables).

Dr. Changli Wang, Hollysys' Chief Executive Officer, stated, "We are pleased to report a strong fiscal 2010 third quarter with solid financial and operational results. Our financials were significantly improved on a year-on-year basis, and our operational status and sales pipeline remained solid. I would like to discuss some of the key events that took place during this quarter."

"We are excited to report that during the March quarter, we signed a USD $2.26 million high-speed railway signaling contract to supply our on-ground control product TCC for the Changchun-Jilin intercity high-speed railway. The 108.16km Changchun-Jilin high-speed railway line is designed with travelling speed of 200kph with five railway stations, and is expected to be commissioned by the end of 2010. We will continue to leverage on our solid leading positioning in China's high-speed rail signaling market to capture our fair share in China's aggressive high-speed railway network expansion.

"Also in the March quarter, we signed a follow-on contract to supply our proprietary subway SCADA systems for the Phase Two of Beijing Subway Line 10, with the contract size of USD $17.2 million, pursuant to our successful SCADA system implementation for the Phase One portion of the same line. The Phase Two of Subway Line 10 is 32.44 km in length with 24 stops. This follow-on contract win with Beijing Subway Authority is a further validation of Hollysys' well-established brand name in China's fast-growing subway automation market, which we believe will continue to lay solid grounds for the Company to gain quick market acceptance for its future subway automation product offerings, such as the safety-critical subway signaling systems.

"In the March quarter, we have successfully completed the non-controlling interest buyout of acquiring 24.11% of non-controlling interest in Beijing Hollysys, one of the operating subsidiaries of the listing entity. Hollysys Automation Technologies Ltd. now owns 100% of Beijing Hollysys, which mainly engages in high-speed railway, subway, and nuclear automation businesses. As these national high-growth infrastructure sectors continue its momentum, Beijing Hollysys will contribute its earnings growth in the years to come. The total consideration of the transaction is in-line with the management's estimates, hovering around USD 59 - 61 million, with approximately 4.4 million new shares issued and RMB 67.6M paid out at the end of March."

Dr. Wang continued, "I'd also like to take note of the exciting nuclear automation breakthrough achieved by our nuclear joint venture with China Guangdong Nuclear Power Holding Co., Ltd (CGNPC), China Techenergy Co., Ltd. (CTEC), in being granted China's first-ever permit to design and manufacture its proprietary China-made nuclear island automation and control systems. The permit was granted by the National Nuclear Safety Administration of China (NNSA) on March 26, 2010, which signifies that in the near-term future, China will achieve 100% localization of automation and control for nuclear stations, and will place Hollysys and its JV with proprietary technologies at the dominant leading position in China's fast growing nuclear industry."

Q3 Fiscal Year 2010 Unaudited Financial Results Summary

To facilitate a clear understanding of Hollysys' operational results, a summary of unaudited non-GAAP financial results is included below.



    In USD thousands, except share numbers and EPS

                                       Three Months ended                %
                                 Mar 31, 2010      Mar 31, 2009        Change

    Revenues                        $33,362            22,899          45.7%
        Integrated Contract
         Revenue                    $31,262            21,329          46.6%
        Products Sales               $2,100             1,570          33.7%
    Cost of Revenues                $20,938            14,544          44.0%
    Gross Profit                    $12,424             8,355          48.7%
    Total Operating
     Expenses                        $6,563             5,576          17.7%
        Selling                      $2,740             2,279          20.2%
        General and
         Administrative              $2,435             2,487          -2.1%
        Research and
         Development                 $2,963             2,128          39.3%
        VAT refunds and
         government subsidy         $(1,575)           (1,318)         19.5%
    Income from Operations           $5,861             2,779         110.9%
    Others                            $(417)             (473)        -11.9%
    Income Tax Expenses                $190                 3       6,493.4%
    Non-GAAP Net income
     attributable to non-
     controlling interest               $11               228         -95.3%
    Non-GAAP Net Income
     attributable to
     Hollysys Automation
     Technologies Ltd.               $5,243             2,075         152.6%

    Basic Non-GAAP EPS                $0.10              0.05         128.8%
    Diluted Non-GAAP EPS              $0.10              0.05         125.7%

    Stock-based
     Compensation
     Cost for Options                  $131                99          32.1%
    Stock-based
     Compensation
     Cost for Incentive
     Shares                             $--                --            --
    Net income attributable
     to Hollysys Automation
     Technologies Ltd.(GAAP)         $5,112             1,976         158.7%
    Basic GAAP EPS                    $0.10              0.04         134.3%
    Diluted GAAP EPS                  $0.10              0.04         131.2%

    Basic Weighted Average
     Common Shares
     Outstanding                 50,727,316        45,942,614          10.4%
    Diluted Weighted
     Average Common
     Shares Outstanding          51,460,003        45,987,015          11.9%


                                        Nine Months ended                %
                                 Mar 31, 2010      Mar 31, 2009        Change

    Revenues                       $117,718           112,730           4.4%
        Integrated Contract
         Revenue                   $111,102           107,512           3.3%
        Products Sales               $6,616             5,218          26.8%
    Cost of Revenues                $76,691            73,145           4.8%
    Gross Profit                    $41,027            39,585           3.6%
    Total Operating
     Expenses                       $17,793            14,177          25.5%
        Selling                      $9,039             7,695          17.5%
        General and
         Administrative              $8,876             6,670          33.1%
        Research and
         Development                 $9,212             5,237          75.9%
        VAT refunds and
         government subsidy         $(9,334)           (5,425)         72.1%
    Income from Operations          $23,234            25,408          -8.6%
    Others                            $-367               190        -293.8%
    Income Tax Expenses              $1,112             2,220         -49.9%
    Non-GAAP Net income
     attributable to non-
     controlling interest            $1,805             4,012         -55.0%
    Non-GAAP Net Income
     attributable to
     Hollysys Automation
     Technologies Ltd.              $19,950            19,366           3.0%

    Basic Non-GAAP EPS                $0.40              0.43          -8.5%
    Diluted Non-GAAP EPS              $0.39              0.43          -9.5%

    Stock-based
     Compensation
     Cost for Options                  $393               188         109.1%
    Stock-based
     Compensation
     Cost for Incentive
     Shares                             $--            17,000        -100.0%
    Net income attributable
     to Hollysys Automation
     Technologies Ltd.(GAAP)        $19,557             2,178         798.1%
    Basic GAAP EPS                    $0.39              0.05         698.0%
    Diluted GAAP EPS                  $0.39              0.05         688.9%

    Basic Weighted Average
     Common Shares
     Outstanding                 50,200,363        44,606,848          12.5%
    Diluted Weighted
     Average Common
     Shares Outstanding          50,793,407        44,621,648          13.8%


For the three months ended March 31, 2010, total revenues amounted to $33.4 million, increased by $10.5 million, or 45.7%, compared to $22.9 million year over year. Of the total revenues, revenue from integrated contracts amounted to $31.3 million, and that of each segment was as follows:

    -- $16.4 million, or 52.5%, related to Industrial Automation & Control;
    -- Rail and subway was $14.0 million, or 44.7%, of which $6.0 million, or
       19.0%, was from Rail Signaling and Control projects, and $8.0 million,
       or 25.7%, was from Subway System Integration projects; and
    -- $0.9 million, or 2.8%, related to Nuclear Plant Control projects and
       miscellaneous.

As a percentage of total revenues, overall gross margin was 37.2% for the three months ended March 31, 2010, as compared to 36.5% for the same period of last year, mainly due to the gross margin for product sales increased from 76.4% for three months ended March 31, 2009, to 88.4% for this March quarter. The gross margin for integrated contracts was 33.8% for the three months ended March 31, 2010, compared to 33.5% for the same period of the prior year.

For the three months ended March 31, 2010, selling expenses were $2.7 million, compared to $2.3 million year over year. The increase in selling expenses was mainly due to the Company's increased marketing activities. As a percentage to total revenues, selling expenses accounted for 8.2% and 10.0% for quarter ended March 31, 2010 and 2009, respectively.

General and administrative expenses, excluding non-cash share compensation expenses, were $2.4 million, or 7.3% to total revenues, for the quarter ended March 31, compared to $2.5 million, or 10.9% to total revenues, for the same period of the prior year.

Research and development expenses were $3.0 million for the three months ended March 31, 2010, a 39.3% increase as compared to $2.1 million for the same period of the prior year. The increase was mainly due to increased R&D activities. As a percentage to total revenues, R&D expenses were 8.9% and 9.3% for quarter ended March 31, 2010 and 2009, respectively.

For the three months ended March 31, 2010, non-GAAP net income attributable to Hollysys excluding non-cash share compensation expense was $5.2 million, or $0.10 per diluted share based on approximately 51.5 million shares outstanding, as compared to $2.1 million, or $0.05 per share based on approximately 46 million shares outstanding, reported in the prior year period. On a GAAP basis, net income attributable to Hollysys was $5.1 million, or $0.10 per diluted share based on approximately 51.5 million shares outstanding, compared to $2.0 million, or $0.04 per diluted share based on 46 million shares outstanding, for the same period of the prior year.

Backlog Highlights

Hollysys' backlog as of March 31, 2010 was $242.3 million, compared to $219.6 million at December 31, 2009. The detailed breakdown for the backlog by segment is as followings:

    -- $115.0 million related to subway business , or 47.4% of the total
       backlog;
    -- $62.7 million related to industrial automation, or 25.9% of the total
       backlog;
    -- $53.8 million related to high-speed rail, or 22.2% of the total backlog;
    -- $10.8 million related to Nuclear and other miscellaneous contracts, or
       4.5% of the total backlog.

Cash Flow Highlights

Hollysys generated operating cash flow of $0.4 million for the three months ended March 31, 2010. Including investing and financing activities, the total net cash outflow for the three months ended March 31, 2010 was $19.0 million.

Balance Sheet Highlights

As of March 31, 2010, Hollysys' cash and cash equivalents were $119.9 million, compared to $138.9 million at December 31, 2009. Days Sales Outstanding ("DSO") for Q3 FY 2010 is 192 days, as compared to 250 days year over year. Inventory turnover is 94 days for the quarter ended March 31, 2010, compared to 136 days year over year.

Outlook for FY 2010

Dr. Wang concluded, "Due to the delay of a few subway projects because of external factors and unexpected delay of new project granting for high-speed rail, we are revising previously communicated revenue guidance of $185.9M to 192.2M, down to 173.3M to 181.1M, and non-GAAP net income guidance of $30.3M and $31.4M, down to $28.3M to $29.6M respectively."

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, May 13, 2010. Interested parties may participate in the call by dialing the following numbers approximately 5 minutes before the call is scheduled to begin and asking to be connected to the Hollysys Automation Technologies conference call. The conference call identification number is 71691830.

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

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

http://www.hollysys.com.sg/home/pubdown/130510.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 2,100 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), high-speed railway Train Control Center (TCC) and Automatic Train Protection (ATP), subway supervisory and control platform (SCADA), and nuclear conventional island automation and control products. Hollysys is the largest SCADA systems supplier to China's subway automation market, and is the only certified domestic automation control systems provider to the nuclear industry in China. Hollysys is also one of only five automation control systems and products providers approved by China's Ministry of Railways in the 200km to 250km high-speed rail segment, and is one of only two automation control systems and products providers approved in the 300km to 350km high-speed rail segment.

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.
     Web:   http://www.hollysys.com
     Jennifer Zhang
     Investor Relations
     Tel:   +86-10-5898-1386
     Email: investors@hollysys.com

    Or

     Serena Wu
     Investor Relations
     Tel:   +1-646-593-8125
     Email: serena.wu@hollysys.com




                      HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                 (In US Dollars)

                         Three months ended            Nine months ended
                              March 31,                    March 31,
                         2010           2009          2010           2009
                     (Unaudited)    (Unaudited)   (Unaudited)    (Unaudited)
    Revenues
    Integrated
     contract
     revenue         $31,261,552    $21,328,566  $111,101,929   $107,511,907
    Products sales     2,100,144      1,570,426     6,616,482      5,217,848
    Total
     revenues         33,361,696     22,898,992   117,718,411    112,729,755

    Cost of
     integrated
     contracts        20,694,888     14,173,795    74,639,421     71,357,962
    Cost of
     products sold       243,227        370,402     2,052,009      1,786,610
    Gross profit      12,423,581      8,354,795    41,026,981     39,585,183

    Operating
     expenses
    Selling            2,739,835      2,278,944     9,038,955      7,695,185
    General and
     administrative    2,566,057      2,586,052     9,269,398     23,858,389
    Research and
     development       2,963,496      2,127,975     9,212,101      5,236,663
    VAT refunds
     and government
     subsidy          (1,574,613)    (1,317,504)   (9,334,483)    (5,425,421)
    Total
     operating
     expenses          6,694,775      5,675,467    18,185,971     31,364,816

    Income from
     operations        5,728,806      2,679,328    22,841,010      8,220,367


    Other income
    (expenses),
     net                (108,918)       (89,013)      (64,117)       783,560

    Share of net
     gains (losses)
     of equity
     investees            44,318       (252,907)      644,292        132,548
    Interest
     expense, net       (352,039)      (130,833)     (947,571)      (726,491)
    Income before
     income taxes      5,312,167      2,206,575    22,473,614      8,409,984

    Income taxes
     expenses            189,778          2,878     1,111,584      2,219,865
    Net income         5,122,389      2,203,697    21,362,030      6,190,119

    Less: Net
     income
     attributable
     to non-
     controlling
     interest             10,636        227,514     1,804,930      4,012,393
    Net income
     attributable
     to Hollysys
     Automation
     Technologies
     Ltd.             $5,111,753     $1,976,183   $19,557,100     $2,177,726

    Weighted
     average number
     of common
     shares           50,727,316     45,942,614    50,200,363     44,606,848

    Weighted
     average number
     of diluted
     common shares    51,460,003     45,987,015    50,793,407     44,621,648

    Basic earnings
     per share
     attributable
     to Hollysys
     Automation
     Technologies
     Ltd.                   0.10           0.04          0.39           0.05

    Diluted
    earnings per
    share
    attributable
    to Hollysys
    Automation
    Technologies
    Ltd.                    0.10           0.04          0.39           0.05

    Other
     comprehensive
     income
    Net income         5,122,389      2,203,697    21,362,030      6,190,119
    Translation
     adjustments          31,923       (365,048)      149,811        486,254
    Comprehensive
     income            5,154,312      1,838,649    21,511,841      6,676,373

    Less:
     Comprehensive
     income
     attributable
     to non-
     controlling
     interest             12,355        187,394     1,825,598      4,067,577
    Comprehensive
     income
     attributable
     to Hollysys
     Automation
     Technologies
     Ltd.             $5,141,957     $1,651,255   $19,686,243     $2,608,796




                      HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
                           CONSOLIDATED BALANCE SHEETS
                                 (In US Dollars)

                                            March 31,            December 31,
                                               2010                    2009
                                           (Unaudited)           (Unaudited)
    ASSETS
     Current Assets
      Cash and cash equivalents           $119,930,627          $138,934,585
      Contract commitment deposit
       in banks                              4,237,057             3,623,312
      Accounts receivable, net of
       allowance for doubtful
       accounts of $7,321,655 and
       $7,470,817                           64,902,638            62,471,833
      Cost and estimated earnings
       in excess of billings, net
       of allowance for doubtful
       accounts of $688,158 and
       $908,735                             44,234,355            42,257,121
      Other receivables, net of
       allowance for doubtful
       accounts of $182,000 and
       $183,175                              4,551,142             4,173,793
      Advances to suppliers                 13,185,758             5,435,659
      Amount due from related
       parties                              10,536,598             9,918,280
      Inventories, net of provision
       of $1,444,708 and $1,187,717         21,267,445            19,704,487
      Prepaid expenses                       1,124,323               994,471
      Income tax recoverable                 1,004,314                    --
      Deferred tax assets                    1,667,283             1,282,775
      Deposit for acquisition of
       equity interest from
       non-controlling interest              6,206,237                    --
     Total current assets                  292,847,777           288,796,316

     Property, plant and equipment,
      net                                   47,969,800            48,640,944
     Long term investments                  14,169,174            13,751,983
     Goodwill                                  285,124               284,936
     Deferred tax assets                       688,119               767,822

     Total assets                          355,959,994           352,242,001

    LIABILITIES AND STOCKHOLDERS'
     EQUITY
     Current liabilities
      Short-term bank loans                  1,464,922             1,464,493
      Current portion of long-term
       loans                                   732,461                    --
      Bonds payable                         11,719,379            11,715,947
      Accounts payable                      35,120,711            34,789,135
      Deferred revenue                      37,227,125            26,507,895
      Accrued payroll and related
       expense                               3,623,791             5,195,086
      Income tax payable                     1,449,243               822,727
      Warranty liabilities                   2,075,347             2,000,454
      Other tax payables                     8,115,604             7,283,233
      Accrued liabilities                    7,764,485             7,482,159
      Amounts due to related
       parties                               2,560,252             2,901,648
      Deferred tax liabilities                  79,654               231,686
      Construction cost payable              2,749,923             5,221,674
     Total current liabilities             114,682,897           105,616,137

      Long-term bank loans                  35,890,600            36,612,334
      Long-term bonds payable                       --                    --

     Total liabilities                     150,573,497           142,228,471

     Commitments and contingencies                  --                    --






                      HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
                           CONSOLIDATED BALANCE SHEETS
                                 (In US Dollars)

                                                    March 31,   December 31,
                                                      2010           2009
                                                   (Unaudited)   (Unaudited)
    Stockholder's equity
       Common stock, par value $0.001 per share,
        100,000,000 shares authorized, 54,356,562
        and 49,942,614 shares issued and
        outstanding                                    54,357         49,943
       Additional paid-in capital                 140,909,078    130,393,281
       Appropriated earnings                       15,135,442     15,135,442
       Retained earnings                           32,789,354     27,677,602
       Accumulated comprehensive income -
        translation adjustments                    16,491,722     14,000,994
    Total Hollysys Automation Technologies Ltd.
     stockholder's equity                         205,379,953    187,257,262

       Non-controlling interest                         6,544     22,756,268
    Total equity                                  205,386,497    210,013,530

    Total liabilities and equity                  $355,959,994  $352,242,001




                      HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In US Dollars)

                                                   Three months  Nine months
                                                      ended         ended
                                                     March 31,     March 31,
                                                       2010          2010
                                                   (Unaudited)   (Unaudited)
    Cash flows from operating activities:
     Net income                                     $5,122,389   $21,362,030
    Adjustments to reconcile net income to net
     cash provided by (used in) operating
     activities:
      Depreciation and amortization                    798,185     2,385,209
      Allowance (reversal) for doubtful accounts      (409,971)    1,001,498
      Provision for inventories                        256,991       330,568
      Loss on disposal of property, plant and
       equipment                                         4,363       203,021
      Share of net gains from equity investees         (44,318)     (644,292)
      Amortization of expenses accrued for bond
       payable                                          15,307        45,910
      Stock-based compensation                         131,019       393,057
      Deferred tax liabilities                        (456,837)   (1,526,405)
    Changes in operating assets and liabilities:
      Accounts receivable                           (2,215,964)   (9,408,114)
      Cost and estimated earnings in excess of
       billings                                     (1,754,933)    6,916,260
      Inventories                                   (1,819,949)   (2,760,642)
      Advance to suppliers                          (7,540,340)   (5,108,143)
      Other receivables                               (407,237)     (409,096)
      Deposits and other assets                     (1,763,202)      553,526
      Due from related parties                        (991,332)   (2,984,216)
      Accounts payable                                 691,246    (3,138,243)
      Deferred revenue                              10,719,230    16,154,585
      Accruals and other payable                    (1,067,777)    4,888,766
      Due to related parties                          (341,396)    1,095,569
      Tax payable                                    1,458,887      (985,056)
      Net cash provided by operating activities        384,361    28,365,792

    Cash flows from investing activities:
      Purchase of property, plant and equipment     (3,159,261)  (10,976,927)
      Proceeds from disposing property, plant and
       equipment                                         4,942         8,976
      Advance to related parties                         4,699       649,937
      Acquisition of long term investments                  --    (1,000,454)
      Dividends from equity investees                       --        58,575
      Acquisition of a subsidiary, net of cash
       acquired                                       (146,483)     (131,181)
      Acquisition of equity interest from non-
       controlling interest                         (9,910,265)  (10,348,540)
      Deposit for acquisition of equity interest
       from non-controlling interest                (6,203,874)   (6,203,874)
      Net cash used in investing activities        (19,410,242)  (27,943,488)

    Cash flows from financing activities:
      Repayments of short-term loans                        --    (4,393,094)
      Repayments of long-term bank loans                    --    (5,125,276)
      Net cash used in financing activities                 --    (9,518,370)
      Effect of foreign exchange rate changes           21,923       144,027
      Net decrease in cash and cash equivalents   $(19,003,958)  $(8,952,039)
      Cash and cash equivalents, beginning of
       period                                     $138,934,585  $128,882,666
      Cash and cash equivalents, end of period     119,930,627   119,930,627



    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      Nine months ended
                                       March 31,              March 31,
                                    2010       2009       2010        2009
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)

    Net income attributable
     to Hollysys Automation
     Technologies Ltd.        $5,111,753  $1,976,183  $19,557,100   $2,177,726
    Adjustments:
      Stock-based
       compensation cost
       for options               131,019      99,219      393,057      188,007
      Stock-based
       compensation cost
       for incentive shares           --          --           --   17,000,000
    Non-Gaap Net Income
     attributable to
     Hollysys Automation
     Technologies Ltd.        $5,242,772  $2,075,402  $19,950,157  $19,365,733

SOURCE Hollysys Automation Technologies, Ltd.