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
----------- -----------
2002 2001
----------- -----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ....................................... $22,032 $20,236
Accounts receivable, net ........................................ 4,811 5,710
Receivables from sales representatives .......................... 1,398 709
Receivables from related party sales representatives ............ 3,182 2,900
Inventory of paper .............................................. 676 856
Prepaid expenses and other current assets ....................... 1,369 1,122
------- -------
TOTAL CURRENT ASSETS ........................................ 33,468 31,533
------- -------
Property and equipment, net ....................................... 17,971 19,058
Intangible assets, net ............................................ - 3
Long term investments ............................................. 100 100
Bonds held to maturity, at amortized cost ......................... 1,735 1,709
Other assets ...................................................... 1,140 1,199
------- -------
TOTAL ASSETS ................................................ $54,414 $53,602
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................ $ 3,214 $ 3,625
Deferred income and customer prepayments ........................ 16,447 17,122
Accrued liabilities ............................................. 5,045 5,127
Income taxes payable ............................................ 203 164
------- -------
TOTAL CURRENT LIABILITIES ................................... 24,909 26,038
------- -------
Liabilities for incentive and bonus plans ......................... 1,434 1,434
Amount due to parent company ...................................... 11,404 11,404
Minority interest ................................................. 2,535 2,515
Deferred tax liability ............................................ 748 610
------- -------
TOTAL LIABILITIES ........................................... 41,030 42,001
------- -------
SHAREHOLDERS' EQUITY:
Ordinary shares, US$0.01 par value; 50,000,000 shares authorized;
26,308,949 (2001: 26,303,949) shares issued and outstanding .... 263 263
Additional paid in capital ...................................... 80,894 80,196
Retained deficit ................................................ (60,973) (61,987)
Less: Unearned compensation ..................................... (6,800) (6,871)
------- -------
TOTAL SHAREHOLDERS' EQUITY .................................. 13,384 11,601
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .................. $54,414 $53,602
======= =======
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,
-----------------------------
2002 2001
----------- -----------
(UNAUDITED) (UNAUDITED)
REVENUES:
Online services (Note 1) ...................................... $ 12,901 $ 14,388
Other media services (Note 1) ................................. 8,697 9,904
Miscellaneous ................................................. 161 194
----------- -----------
21,759 24,486
OPERATING EXPENSES:
Sales (Note 1) ................................................ 7,361 8,593
Circulation ................................................... 2,872 3,053
General and administrative .................................... 7,162 9,970
Online services development ................................... 1,441 3,131
Non-cash compensation expense (Note 2) ........................ 719 586
Amortization of intangibles/Software development cost ......... 867 869
----------- -----------
TOTAL OPERATING EXPENSES ........................................ 20,422 26,202
----------- -----------
INCOME/(LOSS) FROM OPERATIONS ................................... 1,337 (1,716)
----------- -----------
Interest expense .............................................. - (76)
Interest income ............................................... 48 90
Foreign exchange gains (losses), net .......................... (72) 37
----------- -----------
INCOME/(LOSS) BEFORE INCOME TAXES ............................... 1,313 (1,665)
INCOME TAX PROVISION ............................................ (279) (354)
----------- -----------
NET INCOME/(LOSS) BEFORE MINORITY INTEREST ...................... $ 1,034 $ (2,019)
----------- -----------
Minority interest ............................................... $ (20) $ (67)
----------- -----------
NET INCOME/(LOSS) ............................................... $ 1,014 $ (2,086)
RETAINED EARNINGS/ (DEFICIT) BROUGHT FORWARD .................... (61,987) (62,762)
----------- -----------
RETAINED EARNINGS/ (DEFICIT) CARRIED FORWARD .................... (60,973) (64,848)
=========== ===========
BASIC AND DILUTED NET INCOME/(LOSS) PER SHARE ................... $ 0.04 $ (0.08)
=========== ===========
SHARE USED IN BASIC AND DILUTED NET INCOME PER SHARE CALCULATIONS 26,305,727 26,303,949
=========== ===========
Notes: 1. As of December 31, 2001, the Company adopted the Emerging Issues
Task Force Issue No. 00-14, "Accounting for Certain Sales
Incentives" (EITF 00-14). EITF 00-14 stipulates that the reduction
in the selling price of the product or service resulting from any
cash sales incentive should be classified as a reduction of
revenue. The adoption of this EITF resulted in the Company
reclassifying certain sales incentives from a sales expense to a
reduction of revenue for the period of three months ended March
31, 2001. This reclassification represented less than 3% of
revenues for the said period and did not impact net income.
2. 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,
-----------------------------
2002 2001
----------- -----------
(UNAUDITED) (UNAUDITED)
Sales.................................................. 130 130
Circulation............................................ 131 34
General and administrative............................. 259 325
Online services development............................ 199 97
--- ---
719 586
--- ---
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
---------------------------
2002 2001
----------- -------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(Loss) ............................................... $ 1,014 $(2,086)
Adjustments to reconcile net income to net cash provided by
(used for) operating activities
Depreciation and amortization ................................... 2,220 2,191
Loss on sale of property and equipment .......................... 1 2
Accretion of U.S. Treasury strips zero % coupons ................ (26) (31)
Bad debt expense ................................................ 274 298
Non-cash compensation expense ................................... 719 586
Income attributable to minority shareholder ..................... 20 67
Property and equipment written off .............................. 17 -
------- -------
4,239 1,027
CHANGES IN ASSETS AND LIABILITIES:
Accounts receivables ............................................ 625 233
Receivables from sales representatives .......................... (689) 556
Receivables from related party sales representatives ............ (282) (246)
Inventory of paper .............................................. 180 138
Prepaid expenses and other current assets ....................... (247) (220)
Long term assets ................................................ 59 (43)
Accounts payable ................................................ (411) (2,430)
Accrued liabilities and liabilities for incentive and bonus plans (82) 676
Deferred income and customer prepayments ........................ (675) 245
Tax liability ................................................... 177 60
------- -------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES .......... 2,894 (4)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .............................. (1,148) (562)
Proceeds from sales of property and equipment ................... - 4
------- -------
NET CASH USED FOR INVESTING ACTIVITIES ........................ (1,148) (558)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Amount received towards directors stock option plan ............. 50 164
------- -------
NET CASH GENERATED FROM FINANCING ACTIVITIES .................. 50 164
------- -------
Net (decrease)/increase in cash and cash equivalents .............. 1,796 (398)
Cash and cash equivalents, beginning of the year .................. 20,236 12,727
------- -------
CASH AND CASH EQUIVALENTS, END OF THE YEAR ........................ 22,032 12,329
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income tax paid ................................................. 102 294
Interest paid ................................................... - 36
======= =======