Global Sources LTD /bermuda 6-K Global Sources LTD

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
			March 31			December 31
			2003			2002
			(Unaudited)
	ASSETS
Current Assets:
	Cash and cash equivalents		$	40,887		$	37,208
	Accounts receivable, net			3,923			4,169
	Receivables from sales representatives			2,858			2,932
	Inventory of paper			439			545
	Prepaid expenses and other current assets			1,340			1,147
		Total Current Assets		49,447			46,001
Property and equipment, net				12,301			14,110
Long term investments				100			100
Bonds held to maturity, at amortized cost				1,193			1,358
Other assets				1,026			1,081
		Total Assets	$	64,067		$	62,650
	LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Accounts payable		$	3,877		$	4,284
	Deferred income and customer prepayments			17,562			18,259
	Accrued liabilities			5,665			5,361
	Income taxes payable			329			368
		Total Current Liabilities		27,433			28,272
Liabilities for incentive and bonus plans				1,025			1,025
Amount due to parent company				11,404			11,404
Minority interest				2,927			2,823
Deferred tax liability				673			604
		Total Liabilities		43,462			44,128
Shareholders’ equity:
	Ordinary shares, US$0.01 par value; 50,000,000 shares authorized; 26,313,949 (2002: 26,308,949) shares issued and outstanding			263			263
	Additional paid in capital			81,335			80,486
	Retained deficit			(56,165	)		(57,680	)
	Less : Unearned compensation			(4,828	)		(4,547	)
		Total shareholders’ equity		20,605			18,522
		Total liabilities and shareholders’ equity	$	64,067		$	62,650

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
		March 31,
		2003			2002
		(Unaudited)			(Unaudited)
Revenues:
	Online services	$	12,585		$	12,901
	Other media services		8,872			8,697
	Miscellaneous		183			161
			21,640			21,759
Operating Expenses:
	Sales		7,278			7,361
	Circulation		2,668			2,872
	General and administrative		7,295			7,162
	Online services development		1,315			1,441
	Non-cash compensation expense (Note 1)		537			719
	Amortization of intangibles/Software development cost		1,025			867
Total Operating Expenses			20,118			20,422
Income from Operations			1,522			1,337
	Interest income		212			48
	Foreign exchange gains (losses), net		(24	)		(72	)
Income before Income Taxes			1,710			1,313
Income Tax Provision			(91	)		(279	)
Income before minority interest		$	1,619		$	1,034
Minority interest		$	(104	)	$	(20	)
Net Income		$	1,515		$	1,014
Retained earnings/(deficit) brought forward			(57,680	)		(61,987	)
Retained earnings/(deficit) carried forward			(56,165	)		(60,973	)
Basic net income per share		$	0.06		$	0.04
Share used in basic net income per share calculations			26,310,727			26,305,727
Diluted net income per share		$	0.06		$	0.04
Share used in diluted net income per share calculations			26,315,350			26,306,323

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
	March 31,
	2003		2002
	(Unaudited)		(Unaudited)
Sales		81		130
Circulation		26		131
General and administrative		328		259
Online services development		102		199
		537		719

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

			Three months ended March 31
			2003			2002
			(Unaudited)			(Unaudited)
Cash flows from operating activities:
	Net income/(Loss)		$	1,515		$	1,014
Adjustments to reconcile net income to net cash provided by (used for) operating activities
	Depreciation and amortization			2,220			2,220
	(Profit)/Loss on sale of property and equipment			(4	)		1
	Accretion of U.S. Treasury strips zero % coupons			(19	)		(26	)
	Bad debt expense			122			274
	Non-cash compensation expense			537			719
	Income attributable to minority shareholder			104			20
	Property and equipment written off			—			17
				4,475			4,239
	Changes in assets and liabilities:
	Accounts receivables			124			625
	Receivables from sales representatives			74			(689	)
	Receivables from related party sales representatives			—			(282	)
	Inventory of paper			106			180
	Prepaid expenses and other current assets			(193	)		(247	)
	Long term assets			55			59
	Accounts payable			(407	)		(411	)
	Accrued liabilities and liabilities for incentive and bonus plans			304			(82	)
	Deferred income and customer prepayments			(697	)		(675	)
	Tax liability			30			177
		Net cash provided by operating activities		3,871			2,894
Cash flows from investing activities:
	Purchase of property and equipment			(413	)		(1,148	)
	Proceeds from sales of property and equipment			6			—
	Proceeds from matured bonds			185			—
		Net cash used for investing activities		(222	)		(1,148	)
Cash flows from financing activities:
	Amount received towards directors stock option plan			30			50
		Net cash generated from financing activities		30			50
Net increase/(decrease) in cash and cash equivalents				3,679			1,796
Cash and cash equivalents, beginning of the year				37,208			20,236
Cash and cash equivalents, end of the year				40,887			22,032
Supplemental cash flow disclosures:
	Income tax paid			61			102
	Interest paid			—			—