Page |
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Unaudited condensed consolidated balance sheets as of June 30, 2020 and December 31, 2020 |
F-2 | |||
Unaudited condensed consolidated statements of comprehensive income for the six months ended December 31, 2019 and 2020 |
F-4 | |||
Unaudited condensed consolidated statements of cash flows for the six months ended December 31, 2019 and 2020 |
F-5 | |||
Unaudited condensed consolidated statements of stockholders’ equity for the six months ended December 31, 2019 and 2020 |
F-7 | |||
Notes to unaudited condensed consolidated financial statements for the six months ended December 31, 2019 and 2020 |
F-8 |
Notes |
June 30, 2020 |
December 31, 2020 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||||
Short-term investments |
5 |
|||||||||
Restricted cash |
||||||||||
Accounts receivable, net of allowance for credit losses of $ |
||||||||||
Costs and estimated earnings in excess of billings, net of allowance for credit losses of $ |
7 | |||||||||
Accounts receivable retention |
7 | |||||||||
Other receivables, net of allowance for credit losses of $ |
||||||||||
Advances to suppliers |
||||||||||
Amounts due from related parties |
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Inventories |
4 | |||||||||
Prepaid expenses |
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Income tax recoverable |
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Total current assets |
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Non-current assets: |
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Restricted cash |
||||||||||
Costs and estimated earnings in excess of billings |
7 |
|||||||||
Accounts receivable retention |
7 | |||||||||
Prepaid expenses |
||||||||||
Property, plant and equipment, net |
||||||||||
Prepaid land leases , net |
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Intangible assets, net |
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Investments in equity investees |
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Investment securities |
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Goodwill |
||||||||||
Deferred tax assets |
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Operating lease right-of-use |
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Total non-current assets |
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Total assets |
$ |
$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
1 | |||||||||
Current portion of long-term loans |
8 |
|||||||||
Accounts payable |
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||||||||
Construction costs payable |
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Deferred revenue |
7 | |||||||||
Accrued payroll and related expenses |
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Income tax payable |
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Warranty liabilities |
6 | |||||||||
Other tax payables |
||||||||||
Accrued liabilities |
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Amounts due to related parties |
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Operating lease liabilities |
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Total current liabilities |
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Accrued liabilities |
||||||||||
Long-term loans |
8 |
|||||||||
Accounts payable |
||||||||||
Deferred tax liabilities |
||||||||||
Warranty liabilities |
6 | |||||||||
Operating lease liabilities |
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Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
13 |
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Stockholders’ equity: |
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Ordinary shares, par value $ |
10 |
|||||||||
Additional paid-in capital |
||||||||||
Statutory reserves |
||||||||||
Retained earnings |
||||||||||
Accumulated other comprehensive (loss) income |
( |
) | ||||||||
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Total Hollysys Automation Technologies Ltd. stockholders’ equity |
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Non-controlling interests |
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Total equity |
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Total liabilities and equity |
$ |
$ |
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Six months ended December 31, |
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Notes |
2019 |
2020 |
||||||||
(Unaudited) |
(Unaudited) |
|||||||||
Net revenues |
||||||||||
Integrated solutions contract revenue |
$ | $ | ||||||||
Product sales |
||||||||||
Revenue from services |
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Total net revenues |
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Costs of integrated solutions contracts |
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Costs of products sold |
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Costs of services rendered |
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Gross profit |
||||||||||
Operating expenses |
||||||||||
Selling |
||||||||||
General and administrative |
||||||||||
Research and development |
||||||||||
VAT refunds and government subsidies |
( |
) | ( |
) | ||||||
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|||||||
Total operating expenses |
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Income from operations |
||||||||||
Other income, net |
||||||||||
Foreign exchange gain (loss) |
( |
) | ||||||||
Gains on disposal of an investment in an equity investee |
||||||||||
Share of net income of equity investees |
||||||||||
Interest income |
||||||||||
Interest expenses |
( |
) | ( |
) | ||||||
Dividend income from equity security investments |
||||||||||
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Income before income taxes |
||||||||||
Income tax expenses |
1 1 |
|||||||||
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|||||||
Net income |
||||||||||
Less: net losses attributable to non-controlling interests |
( |
) | ( |
) | ||||||
|
|
|
|
|||||||
Net income attributable to Hollysys Automation Technologies Ltd. |
$ |
$ |
||||||||
|
|
|
|
|||||||
Other comprehensive ( income, net of tax of nilloss ) |
||||||||||
Translation adjustments |
$ | ( |
) | $ | ||||||
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|||||||
Comprehensive income |
||||||||||
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|
|||||||
Less: comprehensive income attributable to non-controlling interests |
||||||||||
|
|
|
|
|||||||
Comprehensive income attributable to Hollysys Automation Technologies Ltd. |
$ |
|||||||||
|
|
|
|
|||||||
Net income per share: |
||||||||||
Basic |
1 2 |
$ | $ | |||||||
Diluted |
1 2 |
$ | $ | |||||||
Shares used in net income per share computation: |
||||||||||
Basic |
12 |
|||||||||
Diluted |
12 |
Six months ended December 31, |
||||||||
2019 |
2020 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation of property, plant and equipment |
||||||||
Amortization of prepaid land leases |
||||||||
Amortization of intangible assets |
||||||||
Allowance for credit losses |
||||||||
Loss (gain) on disposal of property, plant and equipment |
( |
) | ||||||
Share of net income of equity investees |
( |
) | ( |
) | ||||
Gains on disposal of an investment in an equity investee |
( |
) | ||||||
Share-based compensation expenses |
||||||||
Deferred income tax expense (benefit) |
( |
) | ||||||
Accretion of convertible bond |
||||||||
Fair value adjustments of a bifurcated derivative |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable and retention |
( |
) | ||||||
Costs and estimated earnings in excess of billings |
( |
) | ( |
) | ||||
Inventories |
||||||||
Advances to suppliers |
( |
) | ||||||
Other receivables |
||||||||
Prepaid expenses and other assets |
( |
) | ||||||
Due from related parties |
( |
) | ||||||
Accounts payable |
||||||||
Deferred revenue |
||||||||
Accruals and other payables |
||||||||
Due to related parties |
( |
) | ||||||
Income tax payable |
||||||||
Other tax payables |
||||||||
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|
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|
|||||
Net cash provided by operating activities |
$ |
$ |
||||||
Cash flows from investing activities: |
||||||||
Purchases of short-term investments |
( |
) | ( |
) | ||||
Maturity of short-term investments |
||||||||
Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
Proceeds from disposal of property, plant and equipment |
||||||||
Proceeds received for the disposal of an equity investee |
||||||||
Acquisition of a subsidiary, net of cash acquired |
( |
) | ||||||
|
|
|
|
|||||
Net cash ( used in) generated by investing activities |
$ |
( |
) |
$ |
Cash flows from financing activities: |
||||||||
Proceeds from short-term bank loans |
||||||||
Repayments of short-term bank loans |
( |
) | ||||||
Proceeds from long-term bank loans |
|
|||||||
Repayments of long-term bank loans |
( |
) | ( |
) | ||||
Payment of dividends |
( |
) | ( |
) | ||||
Repayments of convertible bond |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in financing activities |
( |
) |
( |
) | ||||
Effect of foreign exchange rate changes |
( |
) | ||||||
|
|
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|
|||||
Net increase in cash, cash equivalents and restricted cash |
$ |
$ |
||||||
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|
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|
|||||
Cash, cash equivalents and restricted cash, beginning of period |
||||||||
Cash, cash equivalents and restricted cash, end of period |
$ |
$ |
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Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: |
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Cash and cash equivalents |
||||||||
Current portion of restricted cash |
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Non-current portion of restricted cash |
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Total cash, cash equivalents and restricted cash |
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Supplemental cash flow data |
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Non-cash investing activities: |
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Acquisition of property, plant and equipment included in construction costs payable and accrued liabilities |
Ordinary shares |
Additional paid-in capital |
Statutory reserves |
Retained earnings |
Accumulated other comprehensive ( loss) income |
Total Hollysys Automation Technologies Ltd. stockholders’ equity |
Non- controlling interests |
Total equity |
|||||||||||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||||||
Issuance of restricted shares |
( |
) | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Net income (loss) for the period |
— | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||
Appropriations to statutory reserves |
— | — | — | ( |
) | — | — | — | — | |||||||||||||||||||||||||||
Dividend paid |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Translation adjustments |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
Balance at December 31, 2019 (Unaudited) |
( |
) |
$ |
|||||||||||||||||||||||||||||||||
Balance at June 30, 2020 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||||||
Issuance of restricted shares* |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Net income (loss) for the period |
— | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||
Appropriations to statutory reserves |
— | — | — | ( |
) | — | — | — | — | |||||||||||||||||||||||||||
Dividend s paid |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Translation adjustments |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Effect of change in accounting principle - ASC 326 (note 2) |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Balance at December 31, 2020 (Unaudited) |
$ |
|||||||||||||||||||||||||||||||||||
June 30, |
December 31, |
|||||||
2020 |
2020 |
|||||||
(Unaudited) |
||||||||
Current assets |
$ | $ | ||||||
Non-current assets |
||||||||
Total assets |
||||||||
Current liabilities |
$ | $ | ||||||
Total liabilities |
||||||||
Six months ended December 31, |
||||||||
2019 |
2020 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Net revenue |
$ | $ | ||||||
Cost of revenue |
||||||||
Net profit |
||||||||
Net cash provided by (used in) operating activities |
( |
) |
Buildings |
- | |
Machinery |
| |
Software |
| |
Vehicles |
- | |
Electronic and other equipment |
Category |
Estimated useful life | |||
Patents and copyrights |
years |
Level 1 |
- |
Quoted prices in active markets for identical assets or liabilities. | ||
Level 2 |
- |
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3 |
- |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Balance at June 30, 2020 |
Adjustment due to ASU 2016-13 |
Balance at July 1, 2020 |
||||||||||
Assets |
||||||||||||
Accounts receivable |
( |
) |
||||||||||
Accounts receivable retention |
( |
) |
||||||||||
Costs and estimated earnings in excess of billings |
( |
) |
||||||||||
Other receivables |
( |
) |
||||||||||
Deferred tax assets |
||||||||||||
Equity |
||||||||||||
Retained earnings |
( |
) |
December 31, 2020 |
||||
(Unaudited) |
||||
Beginning balance, July 1, 2020 |
||||
Adoption of ASU 2016-13 |
||||
Provision for expected credit losses, net of recoveries |
||||
Amounts written off charged against the allowance |
( |
) | ||
Translation adjustments |
||||
Ending balance, December 31, 2020 |
||||
December 31, 2020 |
||||
(Unaudited) |
||||
Beginning balance, July 1, 2020 |
||||
Adoption of ASU 2016-13 |
||||
Provision for expected credit losses, net of recoveries |
||||
Amounts written off charged against the allowance |
||||
Translation adjustments |
||||
Ending balance, December 31, 2020 |
||||
As of December 31, 2020 |
||||
(Unaudited) |
||||
January 1, 2021 – December 31, 2021 |
$ | |||
January 1, 2022 – December 31, 2022 |
||||
January 1, 2023 – December 31, 2023 |
||||
January 1, 2024 – December 31, 2024 |
||||
January 1, 2025 – December 31, 2025 |
||||
|
|
|||
Total |
$ | |||
|
|
June 30, |
December 31, |
|||||||
2020 |
2020 |
|||||||
(Unaudited) |
||||||||
Raw materials |
$ | $ | ||||||
Work in progress |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
As of June 30, 2020 |
||||||||||||||||||||||||
Cost or Amortized cost |
Gross unrecognized holding gains |
Gross unrecognized holding losses |
Gross unrecognized gains |
Gross unrecognized losses |
Fair value |
|||||||||||||||||||
Held-to-maturity debt investments |
— |
— |
||||||||||||||||||||||
As of December 31, 2020 |
||||||||||||||||||||||||
Cost or Amortized cost |
Gross unrecognized holding gains |
Gross unrecognized holding losses |
Gross unrecognized gains |
Gross unrecognized losses |
Fair value |
|||||||||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
Held-to-maturity debt investments |
— |
— |
Six months ended |
||||||||
December 31, |
December 31, |
|||||||
2019 |
2020 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Beginning balance |
$ | $ | ||||||
Expense accrued |
||||||||
Expense incurred |
( |
) | ( |
) | ||||
Translation adjustment |
( |
) | ||||||
|
|
|
|
|||||
$ | $ | |||||||
Less: current portion of warranty liabilities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Long-term warranty liabilities |
$ | $ | ||||||
|
|
|
|
Six months ended December 31, 2020 |
||||||||||||
PRC |
Non-PRC |
Total |
||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||||||
Integrated solutions contracts revenue |
$ | |||||||||||
Product sales |
||||||||||||
Maintenance service contracts |
||||||||||||
Extended warranty service revenue |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | |||||||||||
|
|
|
|
|
|
June 30, 2020 |
December 31, 2020 |
|||||||
(Unaudited) |
||||||||
Contract assets, current |
$ | |||||||
Contract assets, non-current |
||||||||
Contract liabilities |
June 30, |
December 31, |
|||||||
2020 |
2020 |
|||||||
(Unaudited) |
||||||||
MYR denominated loans |
||||||||
SGD denominated loans |
||||||||
USD denominated loan |
||||||||
$ | $ | |||||||
Less: current portion |
( |
) | ( |
) | ||||
$ | $ | |||||||
December 31, |
||||
2020 |
||||
(Unaudited) |
||||
January 1, 2021 – December 31, 2021 |
$ | |||
January 1, 2022 – December 31, 2022 |
||||
January 1, 2023 – December 31, 2023 |
||||
January 1, 2024 – December 31, 2024 |
||||
January 1, 2025 and onwards |
||||
$ | ||||
June 30, 2020 |
||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
Total |
|||||||||||||
Assets: |
||||||||||||||||
Goodwill related to Bond reporting unit (i) |
||||||||||||||||
Total assets measured at fair value on a non-recurring basis |
$ |
$ |
$ |
$ |
||||||||||||
(i) |
As of June 30, 2020, the Company recorded a goodwill impairment charge of $ |
Six months ended December 31, |
||||||||
2019 |
2020 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Numerator: |
||||||||
Net income attributable to common stockholders - basic |
$ | $ | ||||||
Add: |
|
|
|
|
|
|
|
|
Effect of Convertible Bond |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to common stockholders – diluted(i ) |
$ | $ | ||||||
|
|
|
|
|||||
Denominator: |
||||||||
Weighted average ordinary shares outstanding used in computing basic income per share |
||||||||
Effect of dilutive securities |
||||||||
Convertible Bond |
||||||||
Restricted shares |
||||||||
|
|
|
|
|||||
Weighted average ordinary shares outstanding used in computing diluted income per share |
||||||||
|
|
|
|
|||||
Income per share - basic |
$ | |||||||
|
|
|
|
|||||
Income per share - diluted |
$ | |||||||
|
|
|
|
(i) | For the six months ended December 31, 2019, interest accretion related to the Convertible Bond of $is added back to derive net income attributable to common stockholders of the Company for computing diluted income per share. The Convertible Bond was repaid on August 29, 2019, therefore, there is no impact of income per share for the six months period ended December 31, 2020. |
Six months ended December 31, 2019 |
||||||||||||||||
(Unaudited) |
||||||||||||||||
IA |
Rail |
M&E |
Consolidated |
|||||||||||||
Revenues from external customers |
||||||||||||||||
Integrated solutions contract revenue |
$ | |||||||||||||||
Product sales |
||||||||||||||||
Maintenance service revenue |
||||||||||||||||
Extended warranty service revenue |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
Costs of revenue |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
$ | |||||||||||||||
|
|
|
|
|
|
|
|
Six months ended December 31, 2020 |
||||||||||||||||
(Unaudited) |
||||||||||||||||
IA |
Rail |
M&E |
Consolidated |
|||||||||||||
Revenues from external customers |
||||||||||||||||
Integrated solutions contract revenue |
$ | |||||||||||||||
Product sales |
||||||||||||||||
Maintenance service revenue |
||||||||||||||||
Extended warranty service revenue |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
Costs of revenue |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
$ | |||||||||||||||
|
|
|
|
|
|
|
|
Six months ended December 31, |
||||||||
2019 |
2020 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Revenues: |
||||||||
PRC |
$ | $ | ||||||
Non-PRC |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
June 30, |
December 31, |
|||||||
2020 |
2020 |
|||||||
(Unaudited) |
||||||||
Long-lived assets other than goodwill and acquired intangible assets |
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PRC |
$ | $ | ||||||
Non-PRC |
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$ | $ | |||||||
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