omniture

Global Sources reports third quarter 2010 results

2010-11-11 12:23 1202

-Grew revenue by 29% to $39.4 million, as compared to the same period a year ago, driven by exhibition revenue growth-

-Posted GAAP EPS of $0.06 and Non-GAAP EPS of $0.08-

-Increased revenue growth expectations for second half of 2010 to be between 16% and 17%-

NEW YORK, Nov. 11, 2010 /PRNewswire-Asia/ -- Global Sources Ltd. (Nasdaq: GSOL) (http://www.globalsources.com ) reported financial results for the third quarter ended September 30, 2010.

Global Sources' chairman and CEO, Merle A. Hinrichs, said: "We delivered a solid third quarter, increasing revenue by 29% from the same period last year. Our performance was driven by two shows that were new to the quarter and by a healthy rebound in our online business. 

"Online revenue grew by 19%, reflecting our initiatives to further integrate our multi-channel offering and add digital value to our magazines and trade shows.  For example, our online and magazine advertisers now have a trade show presence through our digital product displays, we now provide digital magazines for each of our export verticals and our trade show exhibitors can have an online presence.  As we continue to extend the integration and functionality of each of our media, our key objectives are to boost market adoption and cross-selling." 

   Financial highlights -- Third quarter: 2010 compared to 2009

    -- Revenue was $39.4 million, as compared to $30.6 million.
       -- Online revenue was $24.8 million, as compared to $20.9 million.
       -- Exhibitions revenue was $7.7 million, as compared to $901,000.
       -- Print revenue was $5.7 million, as compared to $7.9 million.
       -- Revenue from mainland China was $30.6 million, as compared to $21.8
          million.

    -- GAAP net income, including a non-cash stock based compensation (SBC)
       expense of $722,000, and amortization of intangibles as it relates to
       certain equity compensation plans of $154,000, was $2.3 million, or
       $0.06 per diluted share, as compared to third quarter 2009 GAAP net
       income of $1.2 million, or $0.03 per diluted share, which included a
       non-cash SBC expense of $940,000.

    -- Non-GAAP net income was $3.2 million, or $0.08 per diluted share, as
       compared to $2.1 million, or $0.05 per diluted share, for the third
       quarter of 2009. 

    -- Adjusted EBITDA was $6.0 million, as compared to $3.4 million for the
       third quarter of 2009.

    -- Total deferred income and customer prepayments were $100.5 million as
       at September 30, 2010, as compared to $89.3 million as at September 30,
       2009.

    Financial highlights -- Nine Months Ended September 30th: 2010 compared to 2009

    -- Revenue was $131.8 million, as compared to $119.6 million.

    -- GAAP net income was $12.1 million, or $0.28 per diluted share, which
       included a non-cash SBC expense of $2.5 million, and amortization of
       intangibles as it relates to certain equity compensation plans of
       $371,000, as compared to $7.5 million, or $0.16 per diluted share,
       which included a non-cash SBC expense of $3.2 million. 

    -- Non-GAAP net income was $15.0 million, or $0.34 per diluted share, as
       compared to $10.7 million, or $0.23 per diluted share, for the nine
       months ended September 30, 2009. 

    -- Adjusted EBITDA was $21.2 million, as compared to $15.6 million for the
       nine months ended September 30, 2009. 

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, SBC expense or credit, amortization of intangibles as it relates to certain equity compensation plans, 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.  Adjusted EBITDA is defined at earnings before interest, taxes, depreciation, amortization, stock-based compensation and impairment of goodwill and intangible assets.

Global Sources' CFO, Connie Lai, said:  "A meaningful portion of the 29% revenue growth was from two shows that did not occur in last year's third quarter. This was the first time we recognized revenue for the China International Optoelectronic Expo (CIOE) in which we acquired an interest in December 2009, and we also recognized revenue for the China Sourcing Fairs in Mumbai which were held in the fourth quarter of last year. 

"We are increasing our second half 2010 revenue and earnings guidance.  In the fourth quarter, we expect online revenue to grow the fastest, exhibitions to achieve healthy growth and print to decline.  For the second half of 2010, the company expects the revenue mix to range between 48% and 50% for online, 36% and 38% for exhibitions, 11% and 13% for print, and approximately 2% for miscellaneous. This compares to the mix for the second half of 2009, which was approximately 48% for online, 31% for exhibitions, 18% for print, and 3% for miscellaneous."

    Financial expectations for the second half of 2010

    -- For the second half of 2010 ending Dec. 31, 2010:
       -- Revenue is now expected to be in the range of $99.0 million to
          $100.0 million, representing an increase of 16% to 17%, as compared
          to $85.5 million for the second half of 2009.
       -- GAAP EPS is expected to be in the range of $0.28 to $0.30, as
          compared to $0.21 per diluted share in the second half of 2009.
          Using the stock price of $7.63 on Oct. 28, 2010, SBC and the
          amortization of intangibles as it relates to certain equity
          compensation plans are estimated to be an expense of $0.03 per
          diluted share for the three months ended Dec. 31 2010.
       -- Non-GAAP EPS is expected to be in the range of $0.33 to $0.35, as
          compared to $0.23 per diluted share for the same period in 2009.
       -- Adjusted EBITDA is expected to be $16.2 million, as compared to
          $13.1 million in the second half of 2009.

    Recent Corporate Highlights

    -- Launched new verticals for Solar & Energy Saving Products, Medical
       Products & Supplies and In-Car Electronics & GPS. Each vertical is
       supported by an online marketplace, e-magazine, and print magazine for
       the trade shows, and China Sourcing Fairs are scheduled for the solar
       and medical categories next spring in Hong Kong.

    -- Held three trade shows in September.
       -- The 12th China International Optoelectronic Expo was held in
          Shenzhen. Co-located with the 15th IIC-China Conference & Exhibition
          Fall edition, it featured more than 2,300 exhibitors.
       -- In Mumbai, China Sourcing Fairs were held for six categories and
          featured almost 700 booths.

    -- In October in Hong Kong, eight China Sourcing Fairs, two India
       Sourcing Fairs and one Korea Sourcing Fair were held, featuring over
       6,900 booths.

    -- Announced the planned launch of five China Sourcing Fairs in Miami in
       July 2011, which will enable Asian exporters to meet face-to-face with
       American, Canadian, and Latin American buyers.

    -- Private Sourcing Events were held from July 1st through the end of
       October, 2010 for more than 118 sourcing teams from very large buying
       organizations including Carrefour, Hermes-Otto International, Kmart
       Australia, Metro, Office Depot, QVC, Sears, Staples, and Woolworths
       Australia. These events created more than 490 high quality, one-on-one
       selling opportunities for Global Sources suppliers.

Conference call for Global Sources third quarter 2010 earnings

Chairman and CEO Merle A. Hinrichs and CFO Connie Lai are scheduled to conduct a conference call at 8:00 a.m. ET on November 11, 2010 (9:00 p.m. on November 11, 2010 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 the start time. Investors in the United States may participate by dialing (877) 941-2069, and international participants may dial (1-480) 629-9713. Investors in Hong Kong are required to provide the conference ID 4377068; are encouraged to dial into the call 10 to 15 minutes prior to the call to prevent delay in joining; and may participate by dialing (852) 3009-5027. 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 November 18, 2010. To listen to the telephone replay, please dial (800) 406-7325, or (1-303) 590-3030 outside the United States, and enter pass code 4377068. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4377068.

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 967,000 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 over 4.7 million products and more than 262,000 suppliers annually through 14 online marketplaces, 13 monthly print and 18 digital magazines, over 80 sourcing research reports and 20 specialized trade shows which run 57 times a year across 9 cities.

Suppliers receive more than 192 million sales leads annually from buyers through Global Sources Online (http://www.globalsources.com ) alone.

Global Sources has been facilitating global trade for 40 years. Global Sources’ network covers more than 60 cities worldwide. In mainland China, Global Sources has about 2,700 team members in more than 40 locations, and a community of over 2 million registered online users and magazine readers for its 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 Follow -



                  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
                                                      2010           2009
                                                   (Unaudited)

    ASSETS
    Current Assets:
     Cash and cash equivalents                    $     85,292    $    91,553
     Term deposits with banks                            1,467         60,357
     Available-for-sale securities                       6,763          6,423
     Accounts receivable, net                            4,646          3,438
     Receivables from sales representatives              6,511          5,607
     Inventory                                             425            600
     Prepaid expenses and other current assets          19,805         13,603
     Deferred tax assets                                    96             13
        Total Current Assets                           125,005        181,594

    Property and equipment, net                         76,305         77,815
    Goodwill                                             2,497             --
    Intangible assets, net                               7,572          8,770
    Long term investments                                  100            100
    Deferred tax assets                                    445            446
    Other noncurrent assets                              2,967          1,667
        Total Assets                              $    214,891    $   270,392

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities:
     Accounts payable                             $      8,528    $    10,901
     Deferred income and customer prepayments           95,721         73,841
     Accrued liabilities                                14,892         11,585
     Income taxes payable                                  880            435
        Total Current Liabilities                      120,021         96,762
    Deferred income and customer prepayments             4,819          2,516
    Deferred tax liability                               1,432            141
        Total Liabilities                              126,272         99,419

    Shareholders' equity: 
     Common shares, US$0.01 par value; 
      75,000,000 shares authorized;
      51,565,725 (2009: 51,427,642) shares
      issued and 33,569,725 (2009: 44,552,642)
      outstanding                                          516            514
     Additional paid in capital                        142,038        138,468
     Treasury shares, at cost
      -- 17,996,000 (2009: 6,875,000) shares          (150,089)       (50,000)
     Retained earnings                                  83,490         71,369
     Accumulated other comprehensive income              4,363          2,859
        Total Company Shareholders’ Equity              80,318        163,210

     Non-controlling interests                           8,301          7,763
        Total Equity                              $     88,619    $   170,973
        Total Liabilities and Equity              $    214,891    $   270,392



                       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      Nine months ended
                                    September 30,           September 30, 
                                  2010        2009        2010        2009
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)

    Revenue:                       
      Online and other media 
       services (Note 1)       $    30,541 $    28,780 $    88,641 $    87,431
      Exhibitions                    7,674         901      39,554      29,372
      Miscellaneous                  1,202         931       3,597       2,817
                                    39,417      30,612     131,792     119,620
    Operating Expenses:                                                  
      Sales (Note 2)                15,492      12,087      48,840      45,820
      Event production               2,635         319      13,576      10,032
      Community (Note 2)             4,069       4,796      15,533      17,885
      General and 
       administrative (Note 2)      11,810      11,057      35,201      33,975
      Online services                                      
       development (Note 2)          1,440       1,408       4,078       4,172
      Amortization of 
       intangibles and                                     
       software costs                  492          26       1,079         106
    Total Operating Expenses        35,938      29,693     118,307     111,990
    Income from Operations           3,479         919      13,485       7,630
      Interest and dividend
       income                           66         312         425         725
      Foreign exchange gains                                           
       (losses), net                   (14)         85         (26)         58
    Income before Income Taxes $     3,531 $     1,316 $    13,884 $     8,413
    Income Tax Expense                (407)        (96)       (636)       (270)
    Net Income                 $     3,124 $     1,220 $    13,248 $     8,143
      Net income attributable                                           
       to non-controlling
       interests                      (842)        (35)     (1,127)       (669)
    Net Income Attributable to                                       
     the Company               $     2,282 $     1,185 $    12,121 $     7,474 
    Diluted net income per                                         
     share attributable to the
     Company’s shareholders    $      0.06 $      0.03 $      0.28 $      0.16
    Shares used in diluted net                                    
     income per share
     calculations               39,873,952  45,877,214  44,010,618  45,759,320
                                       
      Note: 1. Online and other media services consists of:


                                  Three months ended      Nine months ended
                                    September 30,           September 30, 
                                  2010        2009        2010        2009
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)

      Online services          $    24,811 $    20,904 $    68,985 $    64,928 
      Print services                 5,730       7,876      19,656      22,503 
                               $    30,541 $    28,780 $    88,641 $    87,431 

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


                                  Three months ended      Nine months ended
                                    September 30,           September 30, 
                                  2010        2009        2010        2009
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)

      Sales                    $       163 $       213 $       675 $     1,053
      Community                         60         155         221         304
      General and
       administrative                  431         493       1,354       1,569
      Online services
       development                      68          79         222         255
                               $       722 $       940 $     2,472 $     3,181



                      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      Nine months ended
                                    September 30,           September 30, 
                                  2010        2009        2010        2009
                                                                         
    GAAP EPS                   $  0.06     $  0.03    $   0.28     $   0.16 
                                                                         
    GAAP Net Income            $ 2,282     $ 1,185    $ 12,121     $  7,474 
                                                                         
    Non-cash stock based                                                 
    compensation expense                                                 
     (Note 1)                      722         940       2,472        3,181 
                                                                         
    Amortization of                                                      
     intangibles (Note 2)          154          --         371           -- 
                                                                         
    Non-GAAP Net Income        $ 3,158     $ 2,125    $ 14,964     $ 10,655 
                                                                         
    Non-GAAP diluted net                                                 
     income per share          $  0.08     $  0.05    $   0.34     $   0.23 
                                                                                                                             
    Total shares used in                                        
     non-GAAP diluted net                                                  
     income per share       
     calculations           39,873,952  45,877,214  44,010,618   45,759,320
                                                                         
    Notes:                                                               
    (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.            
                                                                         
    (2) Amortization of intangible assets relating to certain non-compete
        agreements.                                     
 
                                                                         
                                                                         
                      GLOBAL SOURCES LTD. AND SUBSIDIARIES               
                         ADJUSTED EBITDA RECONCILIATION                
                           (In U.S. Dollars Thousands)                  
                                                                          
                                  Three months ended      Nine months ended
                                    September 30,           September 30,
                                  2010        2009        2010        2009 

    US GAAP Income from                                                  
     operations                $ 3,479     $   919    $ 13,485     $ 7,630 
                                                                         
    Depreciation and                                                     
     amortization                1,840       1,557       5,197       4,764 
                                                                         
    EBITDA                       5,319       2,476      18,682      12,394 
                                                                         
    Non-cash stock based                                                 
     compensation expense          722         940       2,472       3,181 
                                                                         
    Adjusted EBITDA            $ 6,041     $ 3,416    $ 21,154     $15,575 



                      GLOBAL SOURCES LTD. AND SUBSIDIARIES                   
                    GUIDANCE GAAP to NON-GAAP RECONCILIATION                 
      (In U.S. Dollars Million, Except Number of Shares and Per Share Data)  
                                                                     
                                                                         
                                              GUIDANCE            ACTUAL    
                                             Six months         Six months  
                                       ended December 31,    ended December 31,
                                              2010                  2009 
                                                                         
    Revenue                             $99.0  to   $100.0          $85.5 
                                                                         
    GAAP EPS                            $0.28  to    $0.30          $0.21 
                                                                         
    Non-cash stock based                                    
     compensation expense (Note 1)      $0.04        $0.04         ($0.01)
                                                                         
    Amortization of intangibles                                   
     (Note 2)                           $0.01        $0.01          $0.03 
                                                                         
    Non-GAAP diluted net income per                                      
     share                              $0.33  to    $0.35          $0.23 
                                                                         
    Total shares used in non-GAAP                     
     diluted net income                     
     per share calculations        37,460,493   37,460,493     45,893,215
                                                                         
                                                                         
    Notes:                                                               
    (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.              
                                                                         
    (2) Amortization of intangible assets relating to certain non-compete
        agreements.                                                  

                                            

For financial matrix, please visit:
http://www.prnasia.com/sa/attachment/2010/11/20101111149555.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:
Suzanne Wang
Tel:   +852-2555-4747
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

Source: Global Sources
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