- Achieved 7% total revenue increase; 22% online revenue growth and $0.14 GAAP EPS for the fourth quarter of 2008 compared to fourth quarter 2007 -
- Achieved 14% total revenue growth; 24% online revenue growth and $0.51 GAAP EPS for the full year 2008 compared to 2007 -
- Maintained strong balance sheet with $131 million in cash and securities and no debt -
NEW YORK, March 12 /PRNewswire-Asia-FirstCall/ -- Global Sources Ltd. (Nasdaq: GSOL) ( http://www.globalsources.com ) reported financial results for the fourth quarter and year ended Dec. 31, 2008.
(Logo: http://www.prnasia.com/sa/200708071747.jpg )
Global Sources' chairman and CEO, Merle A. Hinrichs, said: "Fourth quarter revenue grew by 7% to $65.0 million, driven by continued strength in online revenue, which increased by 22% from the fourth quarter of 2007. For 2009, the difficult economic environment will impact revenue and profitability. However, we have overcome many challenges in our 38-year history, and we are committed to profitability. We have excellent product positioning, a very experienced management team, a solid customer base of professional buyers and suppliers, and a strong balance sheet. Our objectives are to enhance our competitive position and be well positioned to thrive when the economy improves."
Financial highlights -- Fourth quarter: 2008 compared to 2007
-- Revenue was $65.0 million, up 7% from $60.8 million.
-- Online revenue was $25.0 million, up 22% from $20.5 million.
-- Exhibitions revenue was $26.4 million, up 4% from $25.5 million.
-- Print revenue was $11.4 million, down 15% from $13.5 million.
-- Revenue from mainland China was $45.4 million, up 18% from $38.6
million.
-- GAAP net income was $7.5 million, or $0.14 per diluted share, which
included a $939,000 write-down on the fair value of securities, and a
credit of $420,000 for non-cash stock based compensation expense (SBC)
based on the Dec. 31, 2008 stock price of $5.45. For the fourth
quarter of 2007, GAAP net income was $8.1 million, or $0.16 per
diluted share, which included a $2.4 million gain from the sale of
equity interests in HC International, Inc.; a $3.1 million write-down
on the investment in Blue Bamboo; and a $3.6 million non-cash SBC
expense based on the Dec. 31, 2007 stock price of $28.22.
-- Non-GAAP net income was $8.0 million, or $0.15 per diluted share,
compared to $12.5 million, or $0.24 per diluted share, for the fourth
quarter of 2007.
-- Total deferred income and customer prepayments were $76.7 million as
at Dec. 31, 2008, compared to $83.1 million as at Dec. 31, 2007.
-- Cash, cash equivalents and available-for-sale securities were $131.0
million as at Dec. 31, 2008, compared to $197.8 million as at Dec. 31,
2007. The change reflects the tender offer for 6,250,000 common
shares for a total purchase price of $50 million paid in December as
well as real estate purchases totaling $47.9 million throughout the
year.
-- No short-term or long-term debt.
Global Sources' non-GAAP metrics
Management believes non-GAAP metrics are useful measures of operations and provides GAAP to non-GAAP reconciliation tables at the end of this press release. Global Sources defines non-GAAP net income as net income excluding non-cash, stock-based compensation (SBC) expense or credit, gains or losses on acquisitions and investments, and/or impairment charges, for all historical and future references to non-GAAP metrics. Non-GAAP EPS is defined as non-GAAP net income divided by the weighted average of diluted common shares outstanding.
Financial highlights - Twelve months ended Dec. 31: 2008 compared to 2007
-- Revenue was $206.9 million, up 14% from $182.1 million.
-- Online revenue was $94.5 million, up 24% from $75.9 million.
-- Exhibitions revenue was $58.2 million, up 13% from $51.6 million.
-- Print revenue was $47.6 million, down 5% from $49.9 million.
-- Revenue from mainland China was $135.8 million, up 24% from $109.4
million.
-- GAAP net income was $26.4 million, or $0.51 per diluted share,
$939,000 write-down on the fair value of securities and a credit of
$902,000 for non-cash SBC expense based on the Dec. 31, 2008 stock
price of $5.45. This compares to $24.0 million, or $0.46 per diluted
share, for the twelve months ended Dec. 31, 2007, which included a
$1.8 million impairment, net charge on the HC International, Inc.
investment; a $2.4 million gain from the sale of equity interests in
HC International, Inc.; a $3.1 million write-down on the investment in
Blue Bamboo; and a $7.8 million SBC based upon stock prices at the end
of the year.
-- Non-GAAP net income was $26.5 million, or $0.51 per diluted share,
compared to $34.4 million, or $0.66 per diluted share, for the twelve
months ended Dec. 31, 2007.
Global Sources' Deputy CFO, David Gillan, said: "The dramatic slowdown in global consumer demand has led to declining revenue and profitability. The business climate remains uncertain; as such, we have suspended guidance. Nonetheless, we continue to be committed to profitability. We have a solid operating model, which is supported by a very strong balance sheet, comprised of a liquid and unencumbered cash position, and no debt. Furthermore, our collections remain very healthy, with only 12 days sales outstanding."
Recent Corporate Highlights
-- Reported results for cash tender offer for 6.25 million common shares
at a price of $8.00 per share. As more than 6.25 million common shares
were tendered by shareholders, the final proration percentage of
tendered shares finally accepted was 15.977642%.
-- Ten Private Sourcing Events were held in December 2008 and January 2009
for more than 50 of the world's largest and most well known buying
organizations including Carrefour, Dollar General, Metro and Lowe's.
-- Held China Sourcing Fairs: Fashion Accessories and Baby & Children's
Products for the second time in Shanghai in December. The shows
featured 470 booths and attracted approximately 4,600 domestic and
international buyers including Ahlens, C&A, Creata, Marks & Spencer,
Otto International, Pacific Brands and Redcats.
-- Attracted more than 13,600 importers, retailers, wholesalers,
distributors and other volume buyers to the first annual Mumbai China
Sourcing Fairs in India in November 2008.
-- Achieved record lead generation, which is measured as requests for
information (RFIs) from buyers to suppliers through Global Sources
Online. There were 53 million RFIs for the 12 months ended Dec. 31,
2008, up more than 92% compared to the same period last year.
-- Increased Global Sources' independently certified community of active
buyers to more than 790,000 at the end of the fourth quarter, 20%
higher than the same time last year.
Conference call for Global Sources fourth quarter 2008 earnings
Chairman and CEO, Merle A. Hinrichs, Eddie Heng, CFO and David Gillan, Deputy CFO, are scheduled to conduct a conference call at 8:00 a.m. ET on Mar. 12, 2009 (8:00 p.m. on Mar. 12, 2009 in Hong Kong) to review these results in more detail. To participate please call at least 10 minutes in advance to ensure all callers are placed into the call at start time. Investors in the United States may participate in the call by dialing (888) 212-8315, and international participants may dial (1-706) 643-0144. Investors in Hong Kong may call (852) 3011-4522. A live webcast of the conference call is scheduled to be available on Global Sources' corporate site at http://www.investor.globalsources.com .
For those who cannot listen to the live broadcast, a webcast replay of the call is scheduled to be available on the company's corporate site for at least 30 days. A telephone replay of the call is also scheduled to be available through Mar. 16, 2009. To listen to the telephone replay, dial (800) 642-1687, or dial (1-706) 645-9291 outside the United States, and enter pass code 83730628#. For those in the Hong Kong area, the replay dial-in number is (852) 3011-4541, and the pass code is 83730628#.
About Global Sources
Global Sources is a leading business-to-business media company and a primary facilitator of trade with Greater China. The core business uses English-language media to facilitate trade from Greater China to the world. The other business segment utilizes Chinese-language media to enable companies to sell to, and within Greater China.
The company provides sourcing information to volume buyers and integrated marketing services to suppliers. It helps a community of over 790,000 active buyers source more profitably from complex overseas supply markets. With the goal of providing the most effective ways possible to advertise, market and sell, Global Sources enables suppliers to sell to hard-to-reach buyers in over 240 countries.
The company offers the most extensive range of media and export marketing services in the industries it serves. It delivers information on 4.3 million products and more than 196,000 suppliers annually through 14 online marketplaces, 13 monthly magazines, over 100 sourcing research reports and 11 specialized trade shows which run 32 times a year across 11 cities.
Suppliers receive more than 53 million sales leads annually from buyers through Global Sources Online ( http://www.globalsources.com ) alone.
Global Sources has been facilitating global trade for 38 years. Global Sources' network covers more than 69 cities worldwide. In mainland China, Global Sources has over 2,800 team members in more than 44 locations, and a community of over 1 million registered online users and magazine readers for Chinese-language media.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended and Section 21-E of the Securities Exchange Act of 1934, as amended. The company's actual results could differ materially from those set forth in the forward-looking statements as a result of the risks associated with the company's business, changes in general economic conditions, and changes in the assumptions used in making such forward-looking statements.
-- Tables To Follow --
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
At At
December 31 December 31
2008 2007
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 70,225 $197,825
Available-for-sale securities 60,786 --
Accounts receivable, net 6,025 6,665
Receivables from sales representatives 5,574 12,303
Inventory 1,306 1,108
Prepaid expenses and other current assets 16,513 15,333
Deferred taxes assets 28 46
Total Current Assets 160,457 233,280
Property and equipment, net 82,657 35,352
Long term investments 100 100
Bonds held to maturity, at amortized cost -- 99
Deferred taxes assets -- long term 323 196
Other assets 1,561 2,781
Total Assets $245,098 $271,808
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $10,117 $5,577
Deferred income and customer prepayments 73,636 78,141
Accrued liabilities 11,579 12,546
Income taxes payable 261 694
Total Current Liabilities 95,593 96,958
Deferred income and customer prepayments --
long term 3,044 4,934
Deferred tax liability 318 283
Total Liabilities 98,955 102,175
Non-controlling interest 4,223 4,940
Shareholders' equity:
Common shares, US$0.01 par value; 75,000,000
shares authorized; 51,374,682 (2007: 51,229,300)
shares issued and 44,499,682 (2007: 51,229,300)
shares outstanding 514 512
Additional paid in capital 133,922 133,941
Treasury shares, at cost -- 6,875,000
(2007: NIL) shares (50,000) --
Retained earnings 55,259 28,829
Accumulated other comprehensive income 2,225 1,411
Total Shareholders' Equity 141,920 164,693
Total Liabilities and Shareholders'
Equity $245,098 $271,808
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 Year ended
December 31, December 31,
2008 2007 2008 2007
(Unaudited)(Unaudited) (Unaudited)
Revenue:
Online and other media
services (Note 1) $ 36,363 $ 33,969 $ 142,129 $ 125,818
Exhibitions 26,448 25,455 58,179 51,608
Miscellaneous 2,230 1,360 6,584 4,633
$ 65,041 $ 60,784 $ 206,892 $ 182,059
Operating Expenses:
Sales (Note 2) 24,716 20,641 73,625 61,773
Event production 10,134 9,915 21,493 20,155
Community (Note 2) 9,063 9,327 30,488 27,086
General and administrative
(Note 2) 11,716 12,238 47,525 44,167
Online services development
(Note 2) 1,462 1,503 5,992 5,703
Amortization of software
costs 46 75 193 193
Total Operating Expenses 57,137 53,699 179,316 159,077
Income from Operations 7,904 7,085 27,576 22,982
Interest and dividend income 268 1,721 2,884 6,595
Gain on sale of
available-for-sale
securities -- 2,937 -- 2,937
Loss on investment, net (939) -- (939) (1,846)
Impairment of goodwill and
intangible assets -- (3,101) -- (3,101)
Foreign exchange gains
(losses), net 662 (455) (657) (1,213)
Income before Income Taxes 7,895 8,187 28,864 26,354
Income Tax Expense (116) 318 (677) (328)
Net Income before
Non-controlling Interest $ 7,779 $ 8,505 $ 28,187 $ 26,026
Non-controlling interest (249) (357) (1,757) (2,027)
Net Income $ 7,530 $ 8,148 $ 26,430 $ 23,999
Diluted net income per share $ 0.14 $ 0.16 $ 0.51 $0.46
Total shares used in diluted
net income per share
calculations 52,271,588 51,885,933 52,228,640 51,679,682
Note: 1. Online and other media services consists of:
Three months ended Year ended
December 31, December 31,
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Online services $ 24,967 $ 20,501 $ 94,481 $ 75,919
Print services 11,396 13,468 47,648 49,899
$ 36,363 $ 33,969 $ 142,129 $ 125,818
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 Year ended
December 31, December 31,
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Sales $ (664) $ 2,417 $ (2,054) $ 4,286
Community (21) 112 173 269
General administrative 206 918 742 2,874
Online services development 59 122 237 347
$ (420) $ 3,569 $ (902) $ 7,776
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 December 31,
2008 2007
GAAP EPS $ 0.14 $ 0.16
GAAP Net Income $ 7,530 $ 8,148
Non-cash stock
based compensation
expense / (credit)
(Note 1) (420) 3,569
Gain on sale of
HC shares -- (2,361) Note 2
Impairment charge
for Blue Bamboo -- 3,101 Note 3
Loss on investment, net 939 Note 5 --
Non-GAAP Net
Income $ 8,049 $ 12,457
Non-GAAP diluted
net income per
share $ 0.15 $ 0.24
Total shares used
in non-GAAP
diluted net
income per share
calculations 52,271,588 51,885,933
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONTINUED ACTUAL GAAP to NON-GAAP RECONCILIATION
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
Year ended December 31,
2008 2007
GAAP EPS $ 0.51 $ 0.46
GAAP Net Income $ 26,430 $ 23,999
Non-cash stock
based compensation
expense / (credit)
(Note 1) (902) 7,776
Gain on sale of
HC shares -- (2,361) Note 2
Impairment charge
for Blue Bamboo -- 3,101 Note 3
Loss on investment, net 939 Note 5 1,846 Note 4
Non-GAAP Net
Income $26,467 $34,361
Non-GAAP diluted
net income per
share $0.51 $0.66
Total shares used
in non-GAAP
diluted net
income per share
calculations 52,228,640 51,679,682
Notes:
(1) Non-cash stock based compensation expense / (credit).
(2) A gain of approximately $2.4 million arising from the sale of the
shares of HC International.
(3) Impairment charge of approximately $3.1 million recorded by the
company on intangible assets and goodwill pertaining to the
business acquisition of Blue Bamboo China Ventures.
(4) An impairment charge of approximately $2.3 million on the company's
HC International investment, net of $0.5 million received
pursuant to indemnification obligations of the vendor under the
purchase agreement for HC International investment.
(5) Impairment on available-for-sale securities.
For financial matrix, please visit:
http://www.prnasia.com/hkinfo/GSOL/20090312/HKTH002.pdf
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
