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
	2004			2003
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	12,065		$	26,227
Available-for-sale securities		51,978			35,140
Accounts receivable, net		3,860			4,507
Receivables from sales representatives		3,550			3,883
Inventory of paper		747			703
Prepaid expenses and other current assets		3,373			1,883
Total Current Assets		75,573			72,343
Property and equipment, net		7,169			7,870
Long term investments		100			100
Bonds held to maturity, at amortized cost		1,008			992
Other assets		2,944			1,236
Total Assets	$	86,794		$	82,541
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	4,149		$	4,432
Deferred income and customer prepayments		28,191			27,454
Accrued liabilities		5,223			5,803
Income taxes payable		872			804
Total Current Liabilities		38,435			38,493
Liabilities for incentive and bonus plans		682			682
Amount due to a shareholder		11,404			11,404
Minority interest		4,156			3,684
Deferred tax liability		341			298
Total Liabilities		55,018			54,561
Shareholders’ Equity:
Common shares, US$0.01 par value; 50,000,000 shares authorized; 28,952,194 (2003: 28,946,694) shares issued and outstanding		290			289
Additional paid in capital		86,390			81,925
Retained deficit		(47,718	)		(50,346	)
Less : Unearned compensation		(8,103	)		(4,563	)
Accumulated other comprehensive income		917			675
Total Shareholders’ Equity		31,776			27,980
Total Liabilities and Shareholders’ Equity	$	86,794		$	82,541

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
	2004			2003
	(Unaudited)			(Unaudited)
Revenue:
Online services	$	12,906		$	12,585
Other media services		9,118			8,071
Exhibitions		1,509			801
Miscellaneous		129			183
		23,662			21,640
Operating Expenses:
Sales		7,504			7,042
Event production		180			236
Community		3,136			2,879
General and administrative		7,437			7,084
Online services development		1,072			1,315
Non-cash compensation expense (Note 1)		833			537
Amortization of software development cost		369			1,025
Total Operating Expenses		20,531			20,118
Income from Operations		3,131			1,522
Interest income		36			22
Foreign exchange gains (losses), net		52			(24	)
Income before Income Taxes		3,219			1,520
Income Tax Provision		(194	)		(91	)
Net Income before Minority Interest	$	3,025		$	1,429
Minority interest	$	(397	)	$	(104	)
Net Income	$	2,628		$	1,325
Retained deficit brought forward	$	(50,346	)	$	(57,680	)
Retained deficit carried forward		(47,718	)		(56,355	)
Basic net income per share	$	0.09		$	0.05
Shares used in basic net income per share calculations		28,948,628			28,943,150
Diluted net income per share	$	0.09		$	0.05
Shares used in diluted net income per share calculations		29,062,255			28,943,150

Note: 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
	2004		2003
	(Unaudited)		(Unaudited)
Sales	$	261	$	81
Community		31		26
General and administrative		463		328
Online services development		78		102
	$	833	$	537

2. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

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
	2004			2003
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	2,628		$	1,325
Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization		993			2,220
Profit on sale of property and equipment		—			(4	)
Accretion of U.S. Treasury strips zero % coupons		(16	)		(19	)
Bad debt expense		21			122
Non-cash compensation expense		833			537
Income attributable to minority shareholder		397			104
		4,856			4,285
Changes in assets and liabilities:
Accounts receivables		626			124
Receivables from sales representatives		333			74
Inventory of paper		(44	)		106
Prepaid expenses and other current assets		(1,562	)		(188	)
Long term assets		(1,708	)		55
Accounts payable		(283	)		(407	)
Accrued liabilities and liabilities for incentive and bonus plans		(580	)		304
Deferred income and customer prepayments		737			(697	)
Tax liability		111			30
Net cash provided by operating activities		2,486			3,686
Cash flows from investing activities:
Purchase of property and equipment		(292	)		(413	)
Proceeds from sales of property and equipment		—			6
Proceeds from matured bonds		—			185
Purchase of available-for-sale securities		(16,448	)		(2,500	)
Net cash used for investing activities		(16,740	)		(2,722	)
Cash flows from financing activities:
Amount received towards directors purchase plan		92			30
Net cash generated from financing activities		92			30
Net increase (decrease) in cash and cash equivalents		(14,162	)		994
Cash and cash equivalents, beginning of the period		26,227			11,009
Cash and cash equivalents, end of the period	$	12,065		$	12,003
Supplemental cash flow disclosures:
Income tax paid	$	83		$	61