EXHIBIT 2
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
| At | At | |||||||||
| December 31 | December 31 | |||||||||
| 2002 | 2001 | |||||||||
| (Unaudited) | ||||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 37,208 | $ | 20,236 | ||||||
| Accounts receivable, net | 4,169 | 5,710 | ||||||||
| Receivables from sales representatives | 2,932 | 709 | ||||||||
| Receivables from related party sales representatives | — | 2,900 | ||||||||
| Inventory of paper | 545 | 856 | ||||||||
| Prepaid expenses and other current assets | 1,147 | 1,122 | ||||||||
Total Current Assets | 46,001 | 31,533 | ||||||||
| Property and equipment, net | 14,110 | 19,058 | ||||||||
| Intangible assets, net | — | 3 | ||||||||
| Long term investments | 100 | 100 | ||||||||
| Bonds held to maturity, at amortized cost | 1,358 | 1,709 | ||||||||
| Other assets | 1,081 | 1,199 | ||||||||
Total Assets | $ | 62,650 | $ | 53,602 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
| Accounts payable | $ | 4,284 | $ | 3,625 | ||||||
| Deferred income and customer prepayments | 18,259 | 17,122 | ||||||||
| Accrued liabilities | 5,361 | 5,127 | ||||||||
| Income taxes payable | 368 | 164 | ||||||||
Total Current Liabilities | 28,272 | 26,038 | ||||||||
| Liabilities for incentive and bonus plans | 1,025 | 1,434 | ||||||||
| Amount due to parent company | 11,404 | 11,404 | ||||||||
| Minority interest | 2,823 | 2,515 | ||||||||
| Deferred tax liability | 604 | 610 | ||||||||
Total Liabilities | 44,128 | 42,001 | ||||||||
Shareholders’ equity: | ||||||||||
| Ordinary shares, US$0.01 par value; 50,000,000 shares authorized; 26,308,949 (2001: 26,303,949) shares issued and outstanding | 263 | 263 | ||||||||
| Additional paid in capital | 80,486 | 80,196 | ||||||||
| Retained deficit | (57,680 | ) | (61,987 | ) | ||||||
| Less : Unearned compensation | (4,547 | ) | (6,871 | ) | ||||||
Total shareholders’ equity | 18,522 | 11,601 | ||||||||
Total liabilities and shareholders’ equity | $ | 62,650 | $ | 53,602 | ||||||
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
| Three months ended | Year ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Revenues: | |||||||||||||||||
| Online services | $ | 12,607 | $ | 13,503 | $ | 51,268 | $ | 55,468 | |||||||||
| Other media services | 9,443 | 9,675 | 35,587 | 39,010 | |||||||||||||
| Miscellaneous | 154 | 208 | 631 | 807 | |||||||||||||
| 22,204 | 23,386 | 87,486 | 95,285 | ||||||||||||||
Operating Expenses: | |||||||||||||||||
| Sales | 7,359 | 7,750 | 29,592 | 32,047 | |||||||||||||
| Circulation | 2,840 | 2,874 | 11,581 | 11,757 | |||||||||||||
| General and administrative | 7,780 | 7,643 | 29,785 | 33,726 | |||||||||||||
| Online services development | 1,293 | 1,404 | 5,378 | 8,393 | |||||||||||||
| Non-cash compensation expense (Note 1) | 565 | 536 | 2,564 | 2,501 | |||||||||||||
| Amortization of intangibles/Software development cost | 1,025 | 869 | 3,740 | 3,476 | |||||||||||||
Total Operating Expenses | 20,862 | 21,076 | 82,640 | 91,900 | |||||||||||||
Income/(Loss) from Operations | 1,342 | 2,310 | 4,846 | 3,385 | |||||||||||||
| Interest expense | — | (8 | ) | — | (172 | ) | |||||||||||
| Interest income | 209 | 63 | 439 | 357 | |||||||||||||
| Foreign exchange gains (losses), net | (7 | ) | (52 | ) | 50 | (470 | ) | ||||||||||
| Write-down of investment | — | — | — | (1,150 | ) | ||||||||||||
Income/(Loss) before Income Taxes | 1,544 | 2,313 | 5,335 | 1,950 | |||||||||||||
Income Tax Provision | (123 | ) | (281 | ) | (720 | ) | (1,143 | ) | |||||||||
Net Income/(Loss) before minority interest | $ | 1,421 | $ | 2,032 | $ | 4,615 | $ | 807 | |||||||||
| Equity in income of affiliate | $ | — | $ | — | $ | — | $ | 51 | |||||||||
| Minority interest | $ | (140 | ) | $ | (43 | ) | $ | (308 | ) | $ | (83 | ) | |||||
Net Income/(Loss) | $ | 1,281 | $ | 1,989 | $ | 4,307 | $ | 775 | |||||||||
Retained earnings/(deficit) brought forward | $ | (61,987 | ) | $ | (62,762 | ) | |||||||||||
Retained earnings/(deficit) carried forward | (57,680 | ) | $ | (61,987 | ) | ||||||||||||
Basic and diluted net income/(loss) per share | $ | 0.05 | $ | 0.08 | $ | 0.16 | $ | 0.03 | |||||||||
Share used in basic and diluted net income per share calculations | 26,308,949 | 26,303,949 | 26,308,154 | 26,303,949 | |||||||||||||
| Notes : | 1. | Reflects the non-cash compensation expenses associated with the employee equity compensation plans. Non-cash compensation represents the following categories of expenses: |
| Three months ended December 31 | Year ended December 31 | |||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Sales | $ | 229 | $ | 127 | $ | 623 | $ | 381 | ||||||||
| Circulation | 21 | 38 | 238 | 87 | ||||||||||||
| General and administrative | 218 | 310 | 1,179 | 1,546 | ||||||||||||
| Online services development | 97 | 61 | 524 | 487 | ||||||||||||
| $ | 565 | $ | 536 | $ | 2,564 | $ | 2,501 | |||||||||
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
| Year ended December 31 | |||||||||||
| 2002 | 2001 | ||||||||||
| (Unaudited) | |||||||||||
Cash flows from operating activities: | |||||||||||
| Net income/(Loss) | $ | 4,307 | $ | 775 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation and amortization | 8,989 | 8,934 | |||||||||
| (Profit)/Loss on sale of property and equipment | (1 | ) | 34 | ||||||||
| Accretion of U.S. Treasury strips zero % coupons | (99 | ) | (122 | ) | |||||||
| Bad debt expense | 670 | 765 | |||||||||
| Non-cash compensation expense | 2,564 | 2,501 | |||||||||
| Write-down of investment | — | 1,150 | |||||||||
| Income attributable to minority shareholder | 308 | 83 | |||||||||
| Equity in income of affiliate | — | (51 | ) | ||||||||
| Property and equipment written off | 153 | 108 | |||||||||
| 16,891 | 14,177 | ||||||||||
Changes in assets and liabilities: | |||||||||||
| Accounts receivables | 871 | 1,328 | |||||||||
| Receivables from sales representatives | (2,223 | ) | (153 | ) | |||||||
| Receivables from related party sales representatives | 2,900 | 538 | |||||||||
| Inventory of paper | 311 | 357 | |||||||||
| Prepaid expenses and other current assets | (25 | ) | 646 | ||||||||
| Long term assets | 118 | 147 | |||||||||
| Accounts payable | 659 | (1,911 | ) | ||||||||
| Accrued liabilities and liabilities for incentive and bonus plans | (175 | ) | (1,061 | ) | |||||||
| Deferred income and customer prepayments | 1,137 | 1,234 | |||||||||
| Tax liability | 198 | 162 | |||||||||
Net cash provided by operating activities | 20,662 | 15,464 | |||||||||
Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (4,193 | ) | (4,874 | ) | |||||||
| Proceeds from sales of property and equipment | 3 | 315 | |||||||||
| Proceeds from matured bonds | 450 | 440 | |||||||||
Net cash used for investing activities | (3,740 | ) | (4,119 | ) | |||||||
Cash flows from financing activities: | |||||||||||
| Repayment of short-term borrowings | — | (4,000 | ) | ||||||||
| Amount received towards directors stock option plan | 50 | 164 | |||||||||
Net cash generated (used for) from financing activities | 50 | (3,836 | ) | ||||||||
| Net increase in cash and cash equivalents | 16,972 | 7,509 | |||||||||
| Cash and cash equivalents, beginning of the year | 20,236 | 12,727 | |||||||||
Cash and cash equivalents, end of the Year | 37,208 | 20,236 | |||||||||
Supplemental cash flow disclosures: | |||||||||||
| Income tax paid | $ | 522 | $ | 981 | |||||||
| Interest paid | — | 172 | |||||||||
