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 | ||||||||||
| June 30 | December 31 | ||||||||||
| 2003 | 2002 | ||||||||||
| (Unaudited) | |||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 47,343 | $ | 37,208 | |||||||
| Accounts receivable, net | 3,865 | 4,169 | |||||||||
| Receivables from sales representatives | 2,953 | 2,932 | |||||||||
| Inventory of paper | 388 | 545 | |||||||||
| Prepaid expenses and other current assets | 1,622 | 1,147 | |||||||||
Total Current Assets | 56,171 | 46,001 | |||||||||
| Property and equipment, net | 11,038 | 14,110 | |||||||||
| Long term investments | 100 | 100 | |||||||||
| Bonds held to maturity, at amortized cost | 1,211 | 1,358 | |||||||||
| Other assets | 1,017 | 1,081 | |||||||||
Total Assets | $ | 69,537 | $ | 62,650 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current Liabilities: | |||||||||||
| Accounts payable | $ | 4,703 | $ | 4,284 | |||||||
| Deferred income and customer prepayments | 20,224 | 18,259 | |||||||||
| Accrued liabilities | 5,885 | 5,361 | |||||||||
| Income taxes payable | 546 | 368 | |||||||||
Total Current Liabilities | 31,358 | 28,272 | |||||||||
| Liabilities for incentive and bonus plans | 912 | 1,025 | |||||||||
| Amount due to parent company | 11,404 | 11,404 | |||||||||
| Minority interest | 3,104 | 2,823 | |||||||||
| Deferred tax liability | 347 | 604 | |||||||||
Total Liabilities | 47,125 | 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 | 81,508 | 80,486 | |||||||||
| Retained deficit | (54,612 | ) | (57,680 | ) | |||||||
| Less : Unearned compensation | (4,747 | ) | (4,547 | ) | |||||||
Total shareholders’ equity | 22,412 | 18,522 | |||||||||
Total liabilities and shareholders’ equity | $ | 69,537 | $ | 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 | Six months ended | ||||||||||||||||
| June 30 | June 30 | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Revenues: | |||||||||||||||||
| Online services | $ | 12,438 | $ | 12,750 | $ | 25,023 | $ | 25,651 | |||||||||
| Other media services | 8,784 | 8,328 | 17,656 | 17,025 | |||||||||||||
| Miscellaneous | 174 | 159 | 357 | 320 | |||||||||||||
| 21,396 | 21,237 | 43,036 | 42,996 | ||||||||||||||
Operating Expenses: | |||||||||||||||||
| Sales | 7,150 | 7,300 | 14,428 | 14,661 | |||||||||||||
| Circulation | 2,664 | 3,091 | 5,332 | 5,963 | |||||||||||||
| General and administrative | 7,379 | 7,279 | 14,674 | 14,441 | |||||||||||||
| Online services development | 1,316 | 1,244 | 2,631 | 2,685 | |||||||||||||
| Non-cash compensation expense (Note 1) | 255 | 629 | 792 | 1,348 | |||||||||||||
| Amortization of intangibles/Software development cost | 1,024 | 865 | 2,049 | 1,732 | |||||||||||||
Total Operating Expenses | 19,788 | 20,408 | 39,906 | 40,830 | |||||||||||||
Income from Operations | 1,608 | 829 | 3,130 | 2,166 | |||||||||||||
| Interest income | 229 | 48 | 441 | 96 | |||||||||||||
| Foreign exchange gains (losses), net | 14 | 358 | (10 | ) | 286 | ||||||||||||
Income before Income Taxes | 1,851 | 1,235 | 3,561 | 2,548 | |||||||||||||
Income Tax Provision | (120 | ) | (198 | ) | (211 | ) | (477 | ) | |||||||||
Net Income before minority interest | $ | 1,731 | $ | 1,037 | $ | 3,350 | $ | 2,071 | |||||||||
| Minority interest | $ | (178 | ) | $ | (67 | ) | $ | (282 | ) | $ | (87 | ) | |||||
Net Income | $ | 1,553 | $ | 970 | $ | 3,068 | $ | 1,984 | |||||||||
Retained earnings/(deficit) brought forward | — | — | (57,680 | ) | (61,987 | ) | |||||||||||
Retained earnings/(deficit) carried forward | — | — | (54,612 | ) | (60,003 | ) | |||||||||||
Basic net income per share | $ | 0.06 | $ | 0.04 | $ | 0.12 | $ | 0.08 | |||||||||
Shares used in basic net income per share Calculations | 26,313,949 | 26,308,949 | 26,312,347 | 26,307,347 | |||||||||||||
Diluted net income per share | $ | 0.06 | $ | 0.04 | $ | 0.12 | $ | 0.08 | |||||||||
Shares used in diluted net income per share Calculations | 26,329,763 | 26,313,708 | 26,322,551 | 26,311,627 | |||||||||||||
| 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 June 30 | Six months ended June 30 | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Sales | $ | 68 | $ | 149 | $ | 149 | $ | 279 | ||||||||
| Circulation | — | 25 | 26 | 156 | ||||||||||||
| General and administrative | 121 | 344 | 449 | 603 | ||||||||||||
| Online services development | 66 | 111 | 168 | 310 | ||||||||||||
| $ | 255 | $ | 629 | $ | 792 | $ | 1,348 | |||||||||
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
| Six months ended June 30 | ||||||||||
| 2003 | 2002 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||
Cash flows from operating activities: | ||||||||||
| Net income/(Loss) | $ | 3,068 | $ | 1,984 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
| Depreciation and amortization | 4,379 | 4,391 | ||||||||
| Profit on sale of property and equipment | (5 | ) | — | |||||||
| Accretion of U.S. Treasury strips zero % coupons | (38 | ) | (52 | ) | ||||||
| Bad debt expense | 162 | 432 | ||||||||
| Non-cash compensation expense | 792 | 1,348 | ||||||||
| Income attributable to minority shareholder | 282 | 87 | ||||||||
| Property and equipment written off | 10 | 108 | ||||||||
| 8,650 | 8,298 | |||||||||
Changes in assets and liabilities: | ||||||||||
| Accounts receivables | 142 | 568 | ||||||||
| Receivables from sales representatives | (21 | ) | (1,231 | ) | ||||||
| Receivables from related party sales representatives | — | 1,871 | ||||||||
| Inventory of paper | 157 | 344 | ||||||||
| Prepaid expenses and other current assets | (475 | ) | (302 | ) | ||||||
| Long term assets | 64 | 71 | ||||||||
| Accounts payable | 419 | (508 | ) | |||||||
| Accrued liabilities and liabilities for incentive and bonus plans | 411 | (344 | ) | |||||||
| Deferred income and customer prepayments | 1,965 | 47 | ||||||||
| Tax liability | (80 | ) | 193 | |||||||
Net cash provided by operating activities | 11,232 | 9,007 | ||||||||
Cash flows from investing activities: | ||||||||||
| Purchase of property and equipment | (1,319 | ) | (2,347 | ) | ||||||
| Proceeds from sales of property and equipment | 7 | — | ||||||||
| Proceeds from matured bonds | 185 | 160 | ||||||||
Net cash used for investing activities | (1,127 | ) | (2,187 | ) | ||||||
Cash flows from financing activities: | ||||||||||
| Amount received towards directors stock option plan | 30 | 50 | ||||||||
Net cash generated from financing activities | 30 | 50 | ||||||||
| Net increase in cash and cash equivalents | 10,135 | 6,870 | ||||||||
| Cash and cash equivalents, beginning of the year | 37,208 | 20,236 | ||||||||
Cash and cash equivalents, end of the period | 47,343 | 27,106 | ||||||||
Supplemental cash flow disclosures: | ||||||||||
| Income tax paid | $ | 290 | $ | 284 | ||||||
| Interest paid | — | — | ||||||||
