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
	September 30		December 31
	2007		2006
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	31,393	$	25,192
Available-for-sale securities		153,475		130,603
Accounts receivable, net		6,362		6,468
Receivables from sales representatives		9,742		13,238
Inventory		937		889
Prepaid expenses and other current assets		20,433		14,174
Total Current Assets		222,342		190,564
Property and equipment, net		35,293		28,374
Intangible assets		3,000		—
Long term investments		100		100
Bonds held to maturity, at amortized cost		301		289
Other assets		3,582		1,562
Total Assets	$	264,618	$	220,889
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	6,500	$	6,804
Deferred income and customer prepayments		80,545		62,036
Accrued liabilities		11,413		12,427
Income taxes payable		959		751
Total Current Liabilities		99,417		82,018
Liabilities for incentive and bonus plans		102		102
Deferred income and customer prepayments — long term		7,554		1,802
Deferred tax liability		293		403
Total Liabilities		107,366		84,325
Minority interest		4,583		2,913
Shareholders’ equity:
Common shares, US$0.01 par value; 75,000,000 shares authorized; 42,337,568 (2006: 42,271,568) shares issued and outstanding		423		423
Additional paid in capital		130,460		125,832
Retained earnings		20,681		4,830
Accumulated other comprehensive income		1,105		2,566
Total Shareholders’ Equity		152,669		133,651
Total Liabilities and Shareholders’ Equity	$	264,618	$	220,889

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 September 30						Nine months ended September 30
	2007			2006			2007			2006
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue:
Online and other media services (Note 1)	$	32,270		$	28,594		$	91,849		$	82,762
Exhibitions		454			435			26,153			20,514
Miscellaneous		1,059			291			3,273			901
		33,783			29,320			121,275			104,177
Operating Expenses:
Sales (Note 2)		12,330			10,675			41,132			34,929
Event production		163			129			10,240			9,245
Community (Note 2)		5,051			4,423			17,759			16,654
General and administrative (Note 2)		10,484			9,133			31,929			28,340
Online services development (Note 2)		1,614			1,232			4,200			3,354
Amortization of software costs		38			315			118			922
Total Operating Expenses		29,680			25,907			105,378			93,444
Income from Operations		4,103			3,413			15,897			10,733
Interest and dividend income		1,758			1,426			4,874			3,774
Gain on sale of available-for-sale securities		-			9			-			309
Loss on investment, net		-			-			(1,846	)		-
Foreign exchange gains (losses), net		(294	)		(228	)		(758	)		(456	)
Income before Income Taxes		5,567			4,620			18,167			14,360
Income Tax Expense		(89	)		(153	)		(646	)		(576	)
Net Income before Minority Interest	$	5,478		$	4,467		$	17,521		$	13,784
Minority interest		(345	)		(332	)		(1,670	)		(1,465	)
Net Income before cumulative effect of change in accounting principle	$	5,133		$	4,135		$	15,851		$	12,319
Cumulative effect of change in accounting principle (Note 3)		-			-			-			251
Net Income	$	5,133		$	4,135		$	15,851		$	12,570
Basic net income per common share before cumulative effect of change in accounting principle	$	0.12		$	0.10		$	0.37		$	0.29
Cumulative effect of change in accounting principle		-			-			-		$	0.01
Basic net income per common share	$	0.12		$	0.10		$	0.37		$	0.30
Diluted net income per common share before cumulative effect of change in accounting principle	$	0.12		$	0.10		$	0.37		$	0.29
Cumulative effect of change in accounting principle		-			-			-		$	0.01
Diluted net income per common share	$	0.12		$	0.10		$	0.37		$	0.30
Common shares used in basic net income per common share calculations		40,911,499			40,615,512			40,904,103			40,627,995
Common shares used in diluted net income per common share calculations		41,091,922			40,673,027			41,063,380			40,687,210
Basic net income per non-vested restricted share before cumulative effect of change in accounting principle	$	0.12		$	0.10		$	0.37		$	0.29
Cumulative effect of change in accounting principle		-			-			-		$	0.01
Basic net income per non-vested restricted share	$	0.12		$	0.10		$	0.37		$	0.30
Diluted net income per non-vested restricted share before cumulative effect of change in accounting principle	$	0.12		$	0.10		$	0.37		$	0.29
Cumulative effect of change in accounting principle		-			-			-		$	0.01
Diluted net income per non-vested restricted share	$	0.12		$	0.10		$	0.37		$	0.30
Non-vested restricted shares used in basic net income per non-vested restricted share calculations		1,426,069			1,656,056			1,419,443			1,623,007
Non-vested restricted shares used in diluted net income per non-vested restricted share calculations		1,785,967			1,656,056			1,650,593			1,623,007

Note : 1. Online and other media services consists of:

	Three months ended September 30				Nine months ended September 30
	2007		2006		2007		2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Online services	$	19,656	$	16,690	$	55,418	$	47,469
Print services		12,614		11,904		36,431		35,293
	$	32,270	$	28,594	$	91,849	$	82,762

Note : 2. Non-cash compensation expenses associated with the several employee equity compensation plans and Directors Purchase Plan included under various categories of expenses are as follows:

	Three months ended September 30				Nine months ended September 30
	2007		2006		2007		2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Sales	$	483	$	701	$	1,869	$	1,084
Community		55		27		157		80
General administrative		311		746		1,956		1,567
Online services development		65		44		225		142
	$	914	$	1,518	$	4,207	$	2,873

Note : 3. Represents the cumulative effect of change in accounting principle, resulting from the adoption of SFAS No. 123(R) with effect from January 1, 2006.

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

	Nine months ended September 30
	2007			2006
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	15,851		$	12,570
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		3,354			3,370
Accretion of U.S. Treasury strips zero % coupons		(12	)		(21	)
Unrealised dividend income on available-for-sale securities		-			(19	)
Unrealised interest income on available-for-sale securities		(961	)		(762	)
Impairment of investment		2,301			-
Profit on sale of equipment		-			(30	)
Bad debt expense		293			131
Non-cash compensation expense		4,207			2,873
Income attributable to minority shareholder		1,670			1,465
Equipment written off		264			1
Cumulative effect of change in accounting principle		-			(251	)
		26,967			19,327
Changes in assets and liabilities:
Accounts receivables		(187	)		(114	)
Receivables from sales representatives		3,496			(5,107	)
Inventory		(49	)		(85	)
Prepaid expenses and other current assets		(6,259	)		(8,882	)
Long term assets		(2,020	)		(1,006	)
Accounts payable		(304	)		1,525
Accrued liabilities and liabilities for incentive and bonus plans		(1,014	)		4,506
Deferred income and customer prepayments		24,261			15,721
Tax liability		98			204
Net cash provided by operating activities		44,989			26,089
Cash flows from investing activities:
Purchase of property and equipment		(10,537	)		(2,307	)
Proceeds from sale of equipment		-			30
Purchase of intangible assets		(3,000	)		-
Purchase of available-for-sale securities		(365,535	)		(403,751	)
Proceeds fromsale of available-for-sale securities		339,862			311,412
Net cash used in investing activities		(39,210	)		(94,616	)
Cash flows from financing activities:
Amount received towards directors purchase plan		422			359
Net cash generated from financing activities		422			359
Net increase in cash and cash equivalents		6,201			(68,168	)
Cash and cash equivalents, beginning of the period		25,192			94,321
Cash and cash equivalents, end of the period	$	31,393		$	26,153
Supplemental cash flow disclosures:
Income tax paid	$	548		$	372