FOR IMMEDIATE RELEASE

Hollysys Automation Technologies Reports Unaudited

Financial Results for the Fourth Quarter and Fiscal Year 2010 Ended June 30, 2010

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

Hollysys Automation Technologies Ltd	Page 2
August 12, 2010

Beijing, China – August 11, 2010 – 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).

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.”

Hollysys Automation Technologies Ltd	Page 3
August 12, 2010

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									Fiscal year ended
	June 30, 2010			June 30, 2009			% Change			June 30, 2010			June 30, 2009			% Change
Revenues	$	56,371			44,772			25.9	%	$	174,089			157,502			10.5	%
Integrated Contract Revenue	$	53,016			41,791			26.9	%	$	164,118			149,303			9.9	%
Products Sales	$	3,355			2,981			12.5	%	$	9,971			8,199			21.6	%
Cost of Revenues	$	37,246			29,779			25.1	%	$	113,937			102,924			10.7	%
Gross Profit	$	19,125			14,993			27.6	%	$	60,152			54,578			10.2	%
Total Operating Expenses	$	9,287			6,394			45.3	%	$	27,080			20,569			31.7	%
Selling	$	3,113			2,327			33.8	%	$	12,152			10,022			21.3	%
General and Administrative	$	4,514			2,752			64.0	%	$	13,390			9,422			42.1	%
Research and Development	$	3,859			3,593			7.4	%	$	13,071			8,829			48.0	%
VAT refunds and government subsidy	$	(2,199	)		(2,278	)		-3.5	%	$	(11,533	)		(7,704	)		49.7	%
Income from Operations	$	9,838			8,599			14.4	%	$	33,072			34,009			-2.8	%
Others	$	3,039			(242	)		-1,354.6	%	$	2,671			(53	)		-5,173.9	%
Income Tax Expenses	$	2,097			841			149.3	%	$	3,209			3,061			4.8	%
Non-GAAP Net income attributable to non-controlling interest	$	47			1,174			-96.0	%	$	1,851			5,187			-64.3	%
Non-GAAP Net Income attributable to Hollysys Automation Technologies Ltd.	$	10,733			6,342			69.2	%	$	30,683			25,708			19.4	%
Basic Non-GAAP EPS	$	0.20			0.14			43.1	%	$	0.60			0.57			4.7	%
Diluted  Non-GAAP EPS	$	0.20			0.14			42.3	%	$	0.59			0.57			3.5	%
Stock-based Compensation Cost for Options	$	131			131			0.0	%	$	524			319			64.3	%
Stock-based Compensation Cost for Incentive Shares	$	-			22,240					$	-			39,240			-100.0	%
Net income attributable to Hollysys Automation Technologies Ltd.(GAAP)	$	10,602			(16,029	)		-166.1	%	$	30,159			(13,851	)		-317.7	%
Basic GAAP EPS	$	0.19			(0.35	)		-155.9	%	$	0.59			(0.31	)		-289.5	%
Diluted GAAP EPS	$	0.19			(0.35	)		-155.6	%	$	0.58			(0.31	)		-288.8	%
Basic Weighted Average Common Shares Outstanding		54,385,044			45,986,570			18.3	%		51,243,667			44,950,833			14.0	%
Diluted Weighted Average Common Shares Outstanding		54,984,420			46,233,857			18.9	%		51,838,294			44,950,833			15.3	%

Hollysys Automation Technologies Ltd	Page 4
August 12, 2010

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, 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.

Hollysys Automation Technologies Ltd	Page 5
August 12, 2010

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 years2010 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.

Hollysys Automation Technologies Ltd	Page 6
August 12, 2010

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 Analysis								Year-over-Year Analysis
	2010-6-30					2010-3-31								2009-6-30
		$	% to Total Backlog				$	% to Total Backlog			% Change				$	% to Total Backlog			% Change
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	%

Hollysys Automation Technologies Ltd	Page 7
August 12, 2010

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

Hollysys Automation Technologies Ltd	Page 8
August 12, 2010

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.

Hollysys Automation Technologies Ltd	Page 9
August 12, 2010

For further information, please contact:

Hollysys Automation Technologies, Ltd.

www.hollysys.com

Jennifer Zhang

Investor Relations

(8610) 5898-1386

investors@hollysys.com

Or

Ling Zhang

Investor Relations

+1-646-593-8125

investors@hollysys.com

Hollysys Automation Technologies Ltd	Page 10
August 12, 2010

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	Page 11
August 12, 2010

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	Page 12
August 12, 2010

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In US Dollars)

	Three months ended June 30, 2010			Fiscal year ended June 30, 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 property, plant and equipment		275			9,251
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

Hollysys Automation Technologies Ltd	Page 13
August 12, 2010

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 Automation Technologies Ltd.	$	10,601,837	$	(16,028,790	)	$	30,158,937	$	(13,851,064	)
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