Mail Stop 3561
August 10, 2005
Via U.S. Mail and Fax: (65) 6547-2223
Eddie Heng
Chief Financial Officer
Global Sources Ltd.
1 Sims Lane #08-01
Singapore 387355
RE: Global Sources Ltd.
Form 20-F for the year ended December 31, 2004
Filed May 13, 2005
File No. 0-30678
Dear Mr. Heng:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your documents in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 20-F for the year ending December 31, 2004
Item 5. Operating and Financial Review and Prospects
Results of Operations - Fiscal 2004 and 2003, page 28
1. Your current disclosures mostly indicate areas of change, but
they
do not provide the reader with an understanding of the underlying
business and other drivers affecting your results of operations
and
financial position, they do not quantify or indicate the relevant
weight of revenue categories, and the disclosures do not provide
an
indication that past results are indicative of future performance.
In this respect, your disclosures do not comply fully with the
requirements or intent of Item 303 of Regulation S-K.
For example, you indicate in your discussion of revenue, that
revenue
derived from your online and other media services segment
increased
5% from 2003. It is not clear from your disclosures what specific
segment revenue categories contributed to the increase and why. It
is
not clear whether the revenue surge was due to creating and
hosting
websites, banner advertising, trade magazine subscriptions or
magazine advertising, etc. It is not clear what the underlying
business drivers were that contributed to the year-over-year
revenue
category increase or if you expect this trend to continue.
Please revise to provide a comprehensive discussion of your
results
of operations in accordance with Item 303 of Regulation S-K.
Liquidity and Capital Resources, page 34
2. Your discussions of cash flows from operating, investing and
financing activities appear to be a mechanical recitation of your
cash flow statement. Please revise to provide not only a
"discussion" but also an "analysis" of historical information as
well
as known trends, demands, commitments, events or uncertainties
that
will result in your liquidity increasing or decreasing in any
material way. In addition, revise your disclosures of capital
resources in a similar fashion to provide the reader with a clear,
cohesive view of your liquidity and capital resource needs as seen
through the eyes of management. For example, you should have
discussed and analyzed the business demands, events and needs that
led management to purchase $131.4 million and sell $157.3 million
worth of securities.
Item 8. Financial Information
Note 2 Summary of Significant Accounting Policies
(d) Available-for-sale Securities, page 54
3. Please tell us how you determined, in accordance with paragraph
12
of SFAS 115, the classification of securities bought and sold in
2004
as available for sale and not trading.
(q) Minority Interest, page 57
4. Quantify in this footnote the amount of dividends that must be
paid by eMedia Asia Ltd. in order to trigger CMP`s obligation to
pay
$6,000 to the company. Discuss under Liquidity in MD&A the
business
purpose of this arrangement and management`s expectations of
receiving this payment from CMP, and advise us.
Note 14 Income Taxes, page 66
5. We note, notwithstanding the fact that the company`s
subsidiaries
subject to income tax have apparently generated taxable income in
each of the last three fiscal years; the company continues to
fully
reserve its deferred tax assets. This policy suggests it is
management`s belief that it is more likely than not that the
company
will not realize any of the net deferred tax assets, which would
mean
management has concluded that there is a greater than 50 percent
likelihood that the company`s subsidiaries subject to tax will not
generate any future taxable income through the date the company`s
net
operating loss carryforwards expire. If this is so, we believe
comprehensive disclosure should be provided to alert investors of
this negative view held by management. In this disclosure you
should
explain to investors, in detail, your consideration of all
available
negative and positive evidence that formed the basis for your
conclusion and why this conclusion is reasonable given that
deferred
tax assets were realized by the company in past fiscal years.
Also,
please advise us in detail of your basis for the full valuation
allowance. We refer you to paragraphs 20 -25 of SFAS No. 109.
Note 19 Segment and Geographic Information, page 69
6. Tell us in detail how you determined your operating segments
under
paragraphs 10-16 of SFAS 131. Also if you have aggregated
operating
segments into reportable segments, tell us how you determined that
you met the criteria for aggregation in paragraph 17 of SFAS 131,
including the requirement that the segments have similar economic
characteristics. To help us better understand your analysis and
conclusion provide us with a copy of the report(s) that the chief
operating decision maker uses to allocate resources and assess
performance. We may have further comments after the review of
your
response.
Note 24 Directors Purchase Plan, page 73
7. Please tell to us your accounting treatment of the options in
your
directors purchase plan, including any reference to authoritative
accounting literature.
Other
8. We note you have significant operations in China and Hong Kong
SAR. In light of the restriction on the payment of dividends and
other restrictions under PRC law, it appears it may be necessary
for
you to provide condensed financial information of the registrant
prepared in accordance with 12-04 of Regulation S-X and the
disclosures required by 4-08(e) of Regulation S-X, pursuant to
Item
17(a) of Form 20-F. Please revise accordingly or advise us in
detail.
* * * *
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Joe Cascarano, Staff Accountant, at (202)
551-
3376 or Robert Littlepage, Accountant Branch Chief, at (202) 551-
3361
if you have questions regarding comments on the financial
statements
and related matters. Please contact me at (202) 551-3810 with any
other questions.
Sincerely,
Larry Spirgel
Assistant Director
Eddie Heng
Global Sources Ltd.
August 10, 2005
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