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Global Sources reports second quarter 2009 results
Posted by: gurufocus (IP Logged)
Date: August 17, 2009 12:14AM

Press Release: Global Sources reports second quarter 2009 results

NEW YORK, Aug. 17 /PRNewswire-Asia-FirstCall/ -- Global Sources Ltd.(Nasdaq: GSOL) ( [www.globalsources.com] ) reported financial results forthe second quarter ended June 30, 2009.

(Logo: [www.newscom.com] )

Global Sources\' chairman and CEO, Merle A. Hinrichs, said: "Asanticipated, during the quarter Global Sources\' business continued to beaffected by the slowdown in exports from mainland China and the rest of Asia.As such, we managed the business prudently, delivering profit of $5.1 millionon revenue of $54.2 million as well as improving our already robust balancesheet.

"We continue to focus on addressing our customers\' core needs by providinga complete product offering of online, trade shows and print that addressesall stages of the buying process. Although we are carefully managing ourcosts, we are also focused on enhancing our overall market position to achievetop and bottom line growth when the economic environment improves," concludedHinrichs.

Financial highlights -- Second quarter: 2009 compared to 2008
    -- Revenue was $54.2 million, compared to $63.7 million.
       -- Online revenue was $22.0 million, compared to $24.1 million.
       -- Exhibitions revenue was $24.0 million, compared to $25.3 million.
       -- Print revenue was $7.1 million, compared to $12.8 million.
       -- Revenue from mainland China was $39.3 million, compared to
          $42.0 million.
    -- GAAP net income was $5.1 million, or $0.11 per diluted share, which
       included a non-cash stock based compensation (SBC) expense of $1.7
       million based on the June 30, 2009 stock price of $7.21. For the second
       quarter of 2008, GAAP net income was $8.4 million, or $0.16 per diluted
       share, which included a $1.5 million in non-cash SBC expense based on
       the June 30, 2008 stock price of $15.18.
    -- Non-GAAP net income was $6.8 million, or $0.15 per diluted share,
       compared to $9.9 million, or $0.19 per diluted share, for the second
       quarter of 2008.
    -- Total deferred income and customer prepayments were $72.8 million as at
       June 30, 2009, compared to $86.8 million as at June 30, 2008.

Global Sources\' non-GAAP metrics

Management believes non-GAAP metrics are useful measures of operations andprovides GAAP to non-GAAP reconciliation tables at the end of this pressrelease. Global Sources defines non-GAAP net income as net income excludingnon-cash, stock-based compensation (SBC) expense or credit, gains or losses onacquisitions and investments, and/or impairment charges, for all historicaland future references to non-GAAP metrics. Non-GAAP EPS is defined as non-GAAPnet income divided by the weighted average of diluted common sharesoutstanding.

Financial highlights -- Six Months Ended June 30: 2009 compared to 2008
    -- Revenue was $89.0 million, compared to $104.3 million.
    -- GAAP net income was $6.3 million, or $0.14 per diluted share, compared
       to $16.6 million, or $0.32 per diluted share.
    -- Non-GAAP net income was $8.5 million, or $0.19 per diluted share,
       compared to $16.5 million, or $0.32 per diluted share, for the six
       months ended June 30, 2008.

Global Sources\' CFO, David Gillan, said: "Although revenue continues tobe challenged, we are managing the business through this cycle with theobjective of continued profitability. Regarding costs, we reduceddiscretionary spending and delayed infrastructure investments. As a result,total operating expenses declined by 9% in the second quarter, as compared tothe same period last year.

"In the second quarter, we grew our cash position to $143.7 million andcontinued to benefit from a strong balance sheet that includes no short-termor long-term bank debt. In the third quarter of 2009, we anticipate revenueand earnings to continue to be impacted by the difficult economic situation,and those results will be compared to a very strong third quarter in 2008."

Recent Corporate Highlights
    -- Held China Sourcing Fairs in Dubai in June. The event featured over
       1,100 booths, representing 40% growth compared to last year.
    -- Held six China Sourcing Fairs and an India Sourcing Fair in April and
       early May at the AsiaWorld-Expo in Hong Kong. Many of the world\'s top
       buying organizations attended including Carrefour, Coles Group, Dollar
       General, LG Sourcing, Li & Fung, Marks & Spencer, Otto International,
       Samsung, Sears, Staples and The Home Depot.
    -- Twenty-four group and custom Private Sourcing Events were held in June
       and July in mainland China, India, Russia and Vietnam. Participating
       buyers included A.R.E.N.A., Atico, Auto Audio Center, BTK, Casino,
       Groupe Adeo, El Corte Ingles, ICA, M. Video, LPP, Lowe\'s, Pacific
       Brands, RadioShack, Rolsen, Sears, Test Rite, The Home Depot and
       ThreeSixty Sourcing.
    -- Appointed David Gillan as Chief Financial Officer effective July 1,
       following the retirement of Eddie Heng. Mr. Heng remains on the board
       as a director.
    -- Achieved record lead generation, which is measured as requests for
       information (RFIs) from buyers to suppliers through Global Sources
       Online. There were more than 81 million RFIs during the 12 months ended
       June 30, 2009, up by 124% compared to the same period last year.
    -- Increased Global Sources\' independently certified community of active
       buyers to more than 829,000 at the end of the second quarter, 14%
       higher than the same time last year.

Conference call for Global Sources second quarter 2009 earnings

Chairman and CEO Merle A. Hinrichs and CFO David Gillan are scheduled toconduct a conference call at 8:00 a.m. ET on August 17, 2009 (8:00 p.m. onAugust 17, 2009 in Hong Kong) to review these results in more detail. Toparticipate please call at least 10 minutes in advance to ensure all callersare placed into the call at start time. Investors in the United States mayparticipate in the call by dialing (888) 212-8315, and internationalparticipants may dial (1-706) 643-0144. Investors in Hong Kong are required toprovide the conference ID 16846155; are encouraged to dial into the call 10 to15 minutes prior to the call to prevent delay in joining; and may participateby dialing (852) 3011-4522. A live webcast of the conference call is scheduledto be available on Global Sources\' corporate site at[www.investor.globalsources.com] .

For those who cannot listen to the live broadcast, a webcast replay of thecall is scheduled to be available on the company\'s corporate site for at least30 days. A telephone replay of the call is also scheduled to be availablethrough August 24, 2009. To listen to the telephone replay, dial (800) 642-1687, or dial (1-706) 645-9291 outside the United States, and enter pass code16846155#. For those in the Hong Kong area, the replay dial-in number is (852)3011-4541, and the pass code is 16846155#.

About Global Sources

Global Sources is a leading business-to-business media company and aprimary facilitator of trade with Greater China. The core business usesEnglish-language media to facilitate trade from Greater China to the world.The other business segment utilizes Chinese-language media to enable companiesto sell to, and within Greater China.

The company provides sourcing information to volume buyers and integratedmarketing services to suppliers. It helps a community of over 829,000 activebuyers source more profitably from complex overseas supply markets. With thegoal of providing the most effective ways possible to advertise, market andsell, Global Sources enables suppliers to sell to hard-to-reach buyers in over240 countries.

The company offers the most extensive range of media and export marketingservices in the industries it serves. It delivers information on 4.3 millionproducts and more than 196,000 suppliers annually through 14 onlinemarketplaces, 13 monthly magazines, over 100 sourcing research reports and 12specialized trade shows which run 29 times a year across 10 cities.

Suppliers receive more than 81 million sales leads annually from buyersthrough Global Sources Online ( [www.globalsources.com] ) alone.

Global Sources has been facilitating global trade for 38 years. GlobalSources\' network covers more than 60 cities worldwide. In mainland China,Global Sources has over 2,500 team members in more than 40 locations, and acommunity of over 1 million registered online users and magazine readers forits Chinese-language media.

Safe Harbor Statement

This news release contains forward-looking statements within the meaningof Section 27-A of the Securities Act of 1933, as amended and Section 21-E ofthe Securities Exchange Act of 1934, as amended. The company\'s actual resultscould differ materially from those set forth in the forward-looking statementsas a result of the risks associated with the company\'s business, changes ingeneral economic conditions, and changes in the assumptions used in makingsuch forward-looking statements.

- Tables Follow -



                     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,
                                                       2009          2008
                                                   (Unaudited)
    ASSETS
    Current Assets:
     Cash and cash equivalents                       $86,799       $70,225
     Term deposits with banks                         50,961            --
     Available-for-sale securities                     5,927        60,786
     Accounts receivable, net                          3,600         6,025
     Receivables from sales representatives            5,531         5,574
     Inventory                                           769         1,306
     Prepaid expenses and other current assets        13,405        16,513
     Deferred tax assets                                 149            28
       Total Current Assets                          167,141       160,457

    Property and equipment, net                       80,326        82,657
    Long term investments                                100           100
    Deferred tax assets                                  273           323
    Other noncurrent assets                            2,559         1,561
       Total Assets                                 $250,399      $245,098

    LIABILITIES AND SHAREHOLDERS\' EQUITY
    Current Liabilities:
     Accounts payable                                 $8,622       $10,117
     Deferred income and customer prepayments         67,482        73,636
     Accrued liabilities                              12,774        11,579
     Income taxes payable                                424           261
       Total Current Liabilities                      89,302        95,593
    Deferred income and customer prepayments           5,278         3,044
    Deferred tax liability                               210           318
       Total Liabilities                              94,790        98,955

    Shareholders\' equity:
     Common shares, US$0.01 par value;
      75,000,000 shares authorized;
      51,418,330 (2008: 51,376,335) shares
      issued and 44,543,330
      (2008: 44,501,335) outstanding                     514           514
     Additional paid in capital                      136,163       133,922
     Treasury shares, at cost -- 6,875,000
      (2008: 6,875,000) shares                       (50,000)      (50,000)
     Retained earnings                                61,548        55,259
     Accumulated other comprehensive income            2,527         2,225
       Total Company Shareholders\' Equity            150,752       141,920

    Non-controlling interest                           4,857         4,223
       Total Equity                                  155,609       146,143
       Total Liabilities and Equity                 $250,399      $245,098



                     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,
                                     2009        2008       2009        2008
                               (Unaudited) (Unaudited)(Unaudited) (Unaudited)

    Revenue:
      Online and other media
       services (Note 1)          $29,156     $36,884    $58,651     $70,416
      Exhibitions                  23,983      25,259     28,471      31,220
      Miscellaneous                 1,081       1,517      1,886       2,638
                                   54,220      63,660     89,008     104,274
    Operating Expenses:
      Sales (Note 2)               19,995      20,557     33,733      32,873
      Event production              8,892      10,074      9,713      11,079
      Community (Note 2)            7,892       9,406     13,089      15,449
      General and
       administrative
       (Note 2)                    11,323      12,839     22,918      24,067
      Online services
       development
       (Note 2)                     1,353       1,502      2,764       2,981
      Amortization of
       software costs                  38          57         80          97
    Total Operating Expenses       49,493      54,435     82,297      86,546
    Income from Operations          4,727       9,225      6,711      17,728
      Interest and dividend
       income                         348         649        413       1,946
      Foreign exchange gains
       (losses), net                   66      (1,039)       (27)     (1,295)
    Income before Income Taxes      5,141       8,835      7,097      18,379
    Income Tax Expense                (36)       (188)      (174)       (421)
    Net Income                     $5,105      $8,647     $6,923     $17,958
      Net income attributable to
       non-controlling interest       (13)       (227)      (634)     (1,333)
    Net Income Attributable to
     the Company                   $5,092      $8,420     $6,289     $16,625
    Diluted net income per
     share attributable to the
     Company\'s shareholders         $0.11       $0.16      $0.14       $0.32
    Shares used in diluted net
     income per share
     calculations              45,729,535  52,298,597 45,700,362  52,181,571


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


                                   Three months ended       Six months ended
                                          June 30,               June 30,
                                     2009        2008       2009        2008
                               (Unaudited) (Unaudited)(Unaudited) (Unaudited)


      Online services             $22,054     $24,104    $44,024     $46,034
      Print services                7,102      12,780     14,627      24,382
                                  $29,156     $36,884    $58,651     $70,416


      Note: 2. Non-cash compensation expenses associated with the employee
               equity compensation plans, Global Sources Directors Share Grant
               Award Plan and Directors Purchase Plan included under various
               categories of expenses are as follows:


                                   Three months ended       Six months ended
                                          June 30,               June 30,
                                     2009        2008       2009        2008
                               (Unaudited) (Unaudited)(Unaudited) (Unaudited)

      Sales                          $831        $585       $840       $(808)
      Community                       142         165        149         180
      General administrative          640         647      1,076         400
      Online services development     102          77        176         125
                                   $1,715      $1,474     $2,241       $(103)



                       GLOBAL SOURCES LTD. AND SUBSIDIARIES
                      ACTUAL GAAP to NON-GAAP RECONCILIATION
     (In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

                                   Three months ended      Six months ended
                                         June 30,               June 30,
                                     2009        2008       2009        2008

    GAAP diluted EPS                $0.11       $0.16      $0.14       $0.32

    GAAP Net Income                $5,092      $8,420     $6,289     $16,625

    Non-cash stock based
     compensation expense /
     (credit)  (Note 1)             1,715       1,474      2,241        (103)

    Non-GAAP Net Income            $6,807      $9,894     $8,530     $16,522

    Non-GAAP diluted net
     income per share               $0.15       $0.19      $0.19       $0.32


    Total shares used in non-
     GAAP diluted net income
     per share calculations    45,729,535  52,298,597 45,700,362  52,181,571

    Note:
    (1) Actual SBC is calculated based on actual share price on date of the
        awards for employees and revaluation based on the share price of the
        last day of the quarter for consultants.


    For financial matrix, please visit:
   [www.prnasia.com]

    Global Sources Press Contact in Asia
     Camellia So
     Tel:   +852-2555-5021
     Email: cso@globalsources.com

    Global Sources Press Contact in U.S.
     James W.W. Strachan
     Tel:   +1-480-664-8309
     Email: strachan@globalsources.com

    Global Sources Investor Contact in Asia
     Investor Relations Department
     Tel:   +852-2555-4777
     Email: investor@globalsources.com

    Global Sources Investor Contact in U.S.
     Kirsten Chapman & Timothy Dien
     Lippert/Heilshorn & Associates, Inc.
     Tel:   +1-415-433-3777
     Email: tdien@lhai.com

Conference call for Global Sources second quarter 2009 earnings

Chairman and CEO Merle A. Hinrichs and CFO David Gillan are scheduled toconduct a conference call at 8:00 a.m. ET on August 17, 2009 (8:00 p.m. onAugust 17, 2009 in Hong Kong) to review these results in more detail. Toparticipate please call at least 10 minutes in advance to ensure all callersare placed into the call at start time. Investors in the United States mayparticipate in the call by dialing (888) 212-8315, and internationalparticipants may dial (1-706) 643-0144. Investors in Hong Kong are required toprovide the conference ID 16846155; are encouraged to dial into the call 10 to15 minutes prior to the call to prevent delay in joining; and may participateby dialing (852) 3011-4522. A live webcast of the conference call is scheduledto be available on Global Sources\' corporate site at[www.investor.globalsources.com] .

For those who cannot listen to the live broadcast, a webcast replay of thecall is scheduled to be available on the company\'s corporate site for at least30 days. A telephone replay of the call is also scheduled to be availablethrough August 24, 2009. To listen to the telephone replay, dial (800) 642-1687, or dial (1-706) 645-9291 outside the United States, and enter pass code16846155#. For those in the Hong Kong area, the replay dial-in number is (852)3011-4541, and the pass code is 16846155#.

About Global Sources

Global Sources is a leading business-to-business media company and aprimary facilitator of trade with Greater China. The core business usesEnglish-language media to facilitate trade from Greater China to the world.The other business segment utilizes Chinese-language media to enable companiesto sell to, and within Greater China.

The company provides sourcing information to volume buyers and integratedmarketing services to suppliers. It helps a community of over 829,000 activebuyers source more profitably from complex overseas supply markets. With thegoal of providing the most effective ways possible to advertise, market andsell, Global Sources enables suppliers to sell to hard-to-reach buyers in over240 countries.

The company offers the most extensive range of media and export marketingservices in the industries it serves. It delivers information on 4.3 millionproducts and more than 196,000 suppliers annually through 14 onlinemarketplaces, 13 monthly magazines, over 100 sourcing research reports and 12specialized trade shows which run 29 times a year across 10 cities.

Suppliers receive more than 81 million sales leads annually from buyersthrough Global Sources Online ( [www.globalsources.com] ) alone.

Global Sources has been facilitating global trade for 38 years. GlobalSources\' network covers more than 60 cities worldwide. In mainland China,Global Sources has over 2,500 team members in more than 40 locations, and acommunity of over 1 million registered online users and magazine readers forits Chinese-language media.

Safe Harbor Statement

This news release contains forward-looking statements within the meaningof Section 27-A of the Securities Act of 1933, as amended and Section 21-E ofthe Securities Exchange Act of 1934, as amended. The company\'s actual resultscould differ materially from those set forth in the forward-looking statementsas a result of the risks associated with the company\'s business, changes ingeneral economic conditions, and changes in the assumptions used in makingsuch forward-looking statements.

Source: PRNewsWire



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