Moduslink Global Solutions Concludes Restatement Process

Fri Jan 11, 2013 4:32pm EST

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130111:nBw115785a

http://www.businesswire.com/news/home/20130111005785/en

Outlines additional turnaround actions

Announces intent to sell its Tech for Less business

Concludes strategic alternatives review process

Returns to current SEC reporting as required under NASDAQ listing rules

Reports financial results for third and fourth quarters of fiscal 2012 and first
quarter of fiscal 2013

Conference call scheduled for 5:00 p.m. ET, Monday, January 14, 2013
WALTHAM, Mass.--(Business Wire)--
ModusLink Global Solutions™ Inc. (NASDAQ: MLNK) today filed with the Securities
and Exchange Commission (SEC) an annual report on Form 10-K for the fiscal year
ended July 31, 2012, which includes a restatement of the Company`s financial
statements for fiscal years 2009 through 2011 and unaudited selected financial
data for fiscal years 2007 and 2008, as well as unaudited interim financial
statements for the four fiscal quarters of each of 2010 and 2011, and the first
two quarters of fiscal 2012. The Company also filed a Form 10-Q for the third
quarter of fiscal 2012 ended April 30, 2012 and a Form 10-Q for the first
quarter of fiscal 2013 ended October 31, 2012. With these filings, the Company
has become current in its SEC reporting as required under NASDAQ Listing Rules. 

Results of Restatement

The restated periods from fiscal 2007 through the first two quarters of fiscal
2012 include cumulative downward adjustments to revenue of $32.9 million, or
0.6% of restated aggregate revenue of $5.4 billion. These restated periods
include cumulative downward adjustments to net income of $18.0 million on a
restated aggregate net loss of $231.1 million, inclusive of $231.6 million of
impairments related to goodwill and intangible assets. Details related to the
restatement are contained in the Company`s Form 10-K for the fiscal year ended
July 31, 2012, filed with the SEC earlier today. 

"The restatement process took longer than we originally expected due to the
volume of work involved and number of historical periods reviewed," said Francis
J. Jules, chairman of the board of directors of ModusLink Global Solutions. "We
undertook a comprehensive process designed to ensure that our financial
statements are accurate and are strengthening our financial controls to prevent
this from reoccurring. We thank our shareholders for their patience as we worked
to complete this necessary and extensive review. 

"As we continue to navigate through a challenging business environment,
management is focused on executing a turnaround plan to improve operational and
financial results. Our actions are well underway and include reducing operating
costs, increasing our focus on our core services, improving our balance sheet
and appointing new leadership. While executing on our plan, we continue to
provide the high level of service our clients have come to expect from us. We
are confident that we have the right plan in place to improve results, and
ModusLink remains committed to building long-term, sustainable value for our
shareholders," said Jules. 

Executing on Additional Turnaround Actions

Following the conclusion of the restatement process, the management team is
continuing to execute its turnaround plan to improve operational and financial
results. Actions include:

* Reducing operating costs - The Company plans to reduce total annualized
employee costs by $20 million to $24 million, or by 13% to 16%, with the
majority of the reductions being implemented in the first half of fiscal 2013.
This includes actions taken in the first quarter of fiscal 2013, which have
reduced total annualized employee costs by $7.3 million. In the full year fiscal
2013, the Company expects to record between $13 million and $16 million of
restructuring costs associated with cost reduction actions.
As part of these cost reduction actions, ModusLink is consolidating its business
unit structure and centralizing key functions. The Company has combined its
Integrated Service Group, which includes Aftermarket Services and e-Business
solutions, with its Supply Chain operations. This consolidation enables
ModusLink to centralize key functions where such resources were previously
organized regionally or for a specific facility. These actions are expected to
result in improved efficiencies and cost reduction.

* Increasing focus on core services - The Company is increasing its focus on its
core global supply chain and logistics business. As part of this focus,
ModusLink intends to sell its Tech for Less operations and is in advanced
discussions with a third party regarding a transaction. The Company will
continue to offer a strong remarketing capability to its clients through
partnerships. Although the proceeds from a sale are not material to its cash
position, ModusLink believes a sale would immediately improve the Company`s
profitability. In fiscal 2012, the Tech for Less operations generated revenue of
$25.9 million and an operating loss of $11.0 million. 
* Strengthening balance sheet - The Company is working to reduce operating
expenses and working capital needs to improve cash flow, without compromising
client service. In addition, during the first quarter of fiscal 2013, ModusLink
took steps to support the Company`s financial flexibility and established an
asset secured revolving credit facility, which replaced a credit facility that
expired on October 31, 2012. At October 31, 2012, no debt was outstanding and
the amount available under the new credit facility was approximately $36.0
million. 
* Appointing new leadership - The Company is at an advanced stage in its CEO
search and expects to announce a new CEO in the near future. In addition, during
the first quarter of fiscal 2013, the Company appointed Scott Crawley to the
role of President, Global Operations and he is now responsible for the
management of ModusLink`s worldwide operations. Crawley joined ModusLink in
August 2011 as President, Integrated Services and is among the half of
ModusLink`s executive leadership team that has joined the Company since the
beginning of fiscal 2011.

Status of Strategic Alternative Review Process

As previously announced, the Company`s Board of Directors has been exploring
strategic alternatives. As part of the review process, the Company and its
financial advisors engaged in detailed reviews and discussions with both
potential financial and strategic partners. The Board has now completed this
process and concluded that the best opportunity to enhance the value of its
operating business is the continued execution of the Company`s business plan,
including the turnaround actions discussed above, and it is not currently
pursuing the sale of its operations. The Board believes that the Company
possesses a strong platform for growth and world class capabilities that are not
appropriately valued in the market today. 

In the course of the strategic alternatives review, the Company was presented
with proposals by parties attracted to the Company due to its non-operating
assets, in particular its tax attributes. The Board intends to continue to
review such opportunities and to explore ways to accelerate the realization of
the value of the Company`s federal net operating loss carry forwards, which had
a balance of $2.0 billion at July 31, 2012. 

Financial Summary - First Quarter Fiscal 2013

* Net revenue of $200.7 million, compared to $205.9 million in the first quarter
of fiscal 2012 
* Gross margin as a percentage of revenue of 9.3%, compared to 12.4% in the
first quarter of fiscal 2012 
* SG&A expenses of $25.0 million, compared to $22.2 million in the same quarter
of fiscal 2012. Included in SG&A for the first quarter of fiscal 2013 were
expenses of $4.1 million related primarily to the restatement process and other
corporate actions. 
* Operating loss of $8.1 million, compared to operating income of $2.2 million
in the first quarter of fiscal 2012. 
* Net loss of $10.7 million, or $(0.24) per share, compared to net income of
$1.1 million, or $0.03 per share, in the first quarter of fiscal 2012 
* Non-GAAP operating loss of $2.2 million, compared to income of $7.9 million in
the first quarter of fiscal 2012

"As we entered fiscal 2013, we continued to face industry and client-specific
challenges particularly from those programs related to notebook computers and
microprocessors," said Steven G. Crane, chief financial officer, ModusLink
Global Solutions. "We are encouraged, however, by the growth in revenue from new
programs, which more than doubled in the fiscal first quarter compared to the
same period of last year, and we expect to achieve growth in revenue from new
programs for fiscal 2013. Moving forward, we remain focused on executing on our
stated plans to improve operational and financial performance." 

Consolidated Financial Results - First Quarter Fiscal 2013

ModusLink reported net revenue of $200.7 million for the first quarter of fiscal
2013, a decrease of 2.6% compared to net revenue of $205.9 million reported in
the first quarter of fiscal 2012. The decline was primarily due to lower unit
volumes from significant client programs related to notebook computers and
microprocessors, which impacted financial results in each of the Company`s
geographical segments. 

Revenue generated from new programs for the first quarter of fiscal 2013 was
$39.0 million, an increase of 169.0% compared to the first quarter of fiscal
2012 (1). The increase in revenue from new programs was primarily driven by a
previously disclosed large new client program in the consumer products market,
which drove total revenue growth in Europe, and a new program for a consumer
electronics company. 

Gross profit for the first quarter of fiscal 2013 was $18.7 million, or 9.3% of
revenue, compared to $25.5 million, or 12.4% of revenue, in the first quarter of
fiscal 2012. The decline was primarily driven by unfavorable revenue mix. 

Operating loss for the first quarter of fiscal 2013 was $8.1 million, compared
to operating income of $2.2 million in the first quarter of fiscal 2012. The
operating loss was due to lower gross margin and higher selling general and
administrative costs, and restructuring expenses, compared to the same period in
fiscal 2012. 

Included in the Company`s operating results for the first quarter of fiscal 2013
were selling, general and administrative expenses (SG&A) of $25.0 million,
compared to $22.2 million in the same quarter of fiscal 2012. Included in SG&A
for the first quarter of fiscal 2013 were expenses of $4.1 million related
primarily to the restatement process and other corporate actions. 

Restructuring charges for the first quarter of fiscal 2013 were $1.5 million
related to reductions in the Company`s indirect labor workforce, compared to
$0.8 million in the first quarter of the previous year related to employee
severance costs and actions to restructure facilities. 

Other income (expense) was an expense of $1.7 million in the first quarter of
fiscal 2013, compared to income of $0.8 million in the first quarter of fiscal
2012. The $2.5 million change was primarily the result of foreign exchange
transaction losses recognized in the first quarter of fiscal 2013, compared to
foreign exchange transaction gains in the first quarter of fiscal 2012. 

Net income (loss) for the first quarter of fiscal 2013 was a loss of $10.7
million, or $(0.24) per share, compared to net income of $1.1 million, or $0.03
per share, for the same period in fiscal 2012. 

Excluding net charges related to depreciation, amortization of intangible
assets, share-based compensation and restructuring, the Company reported
non-GAAP operating loss of $2.2 million for the first quarter of fiscal 2013,
compared to income of $7.9 million for the same period in fiscal 2012. 

As of October 31, 2012, the Company had working capital of $105.5 million, which
included cash, cash equivalents and marketable securities totaling $58.4
million. The Company concluded the quarter with no outstanding bank debt. 

For the first quarter of fiscal 2013, cash flow from operating activities was
$8.8 million and additions to property and equipment were $2.1 million,
resulting in free cash flow from operations of $6.6 million, an improvement
compared to $3.5 million in the same period in 2012. 

Outlook

The Company`s outlook takes into account the macroeconomic environment and the
challenges that certain of its clients tied to the market for personal computers
are experiencing. Based on these factors, the Company expects revenue for the
second quarter of fiscal 2013 to be in line with, or modestly higher than,
revenue of $178 million reported in the second quarter of fiscal 2012. 

In the second quarter of fiscal 2013, the Company expects to report a lower cash
position compared to the first quarter of fiscal 2013 due to expenses primarily
related to the restatement process and its restructuring actions, and begin to
increase its cash position in the second half of the fiscal year. 

Financial Summary - Fourth Quarter Fiscal 2012

* Net revenue of $177.1 million, compared to $198.7 million in the fourth
quarter of fiscal 2011 
* Gross margin, as a percentage of revenue, of 4.3%, compared to 8.9% in the
fourth quarter of fiscal 2011. Inventory write-downs negatively impacted gross
margin by 400 basis points or 4.0% of revenue. 
* Operating loss of $23.4 million, compared to operating loss of $4.4 million in
the fourth quarter of fiscal 2011 
* Non-GAAP operating loss of $17.5 million, compared to non-GAAP operating
income of $1.5 million in the fourth quarter of fiscal 2011

"Revenue in the fourth fiscal quarter was primarily affected by lower unit
volumes, including those from a significant client with programs related to
notebook computers, and the previously disclosed discontinuation of certain
client programs," said Crane. "During fiscal 2012, our cash position was
primarily impacted by operating losses, which include expenses related to
restructuring, the restatement and other corporate actions, as well as
significant working capital needs for two new client programs. We expect to
reverse these trends by reducing operating expenses and working capital needs,"
concluded Crane. 

Consolidated Financial Results - Fourth Quarter Fiscal 2012

ModusLink reported net revenue of $177.1 million for the fourth quarter of
fiscal 2012, a decrease of 10.9% compared to net revenue of $198.7 million
reported in the fourth quarter of fiscal 2011. The decline was primarily due to
lower unit volumes including those from a significant client with programs
related to notebook computers as well as lower volumes from certain discontinued
client programs. 

Revenue generated from new programs for the fourth quarter of fiscal 2012 was
$22.8 million, an increase of 47.5% compared to $15.4 million in the fourth
quarter of fiscal 2011(1). Driving the increase was a large new client supply
chain program in Europe and a significant new client program for aftermarket
services, both of which commenced in the third quarter of fiscal 2012. 

Gross profit for the fourth quarter of fiscal 2012 was $7.6 million, or 4.3% of
revenue, compared to $17.6 million, or 8.9% of revenue, in the fourth quarter of
fiscal 2011. Negatively impacting gross margin was unfavorable revenue mix as
well as a $3.4 million write-down of inventory in the Company`s Tech for Less
operations, and $3.6 million inventory write-off related to a canceled client
program. Combined, the inventory adjustments negatively impacted gross margin by
400 basis points or 4.0% of revenue. 

SG&A expenses for the fourth quarter of fiscal 2012 were $29.1 million, compared
to $21.4 million in the same quarter of fiscal 2011. The increase was primarily
due to $2.1 million of higher costs related to severance expenses, $4.6 million
of expenses related to the restatement process, review of strategic alternatives
and other activities, and a $0.6 million increase related to investments in
sales and marketing. 

Restructuring expenses for the fourth quarter of 2012 were $1.6 million related
to cost reduction actions, compared with a credit of $0.4 million in the fourth
quarter of fiscal 2011 related to a recovery of costs associated with a facility
that had been restructured in a previous year. 

Operating loss for the fourth quarter of fiscal 2012 was $23.4 million, compared
to operating loss of $4.4 million in the fourth quarter of fiscal 2011. 

Other income was $5.2 million in the fourth quarter of fiscal 2012 compared to
an expense of $2.9 million in the fourth quarter of fiscal 2011. Included in
other income for the fourth quarter of fiscal 2012 was foreign exchange
transaction gains of $1.4 million and $4.3 million of gains from the
derecognition of accrued pricing liabilities. Other expense for the fourth
quarter of fiscal 2011 was comprised primarily of losses associated with the
Company`s @Ventures portfolio. 

Net loss for the fourth quarter of fiscal 2012 was $20.2 million, or $(0.46) per
share, compared to net loss of $4.5 million, or $(0.10) per share, for the same
period in fiscal 2011. 

Excluding net charges related to depreciation, amortization of intangible
assets, share-based compensation, restructuring and impairment of goodwill, the
Company reported non-GAAP operating loss of $17.5 million for the fourth quarter
of fiscal 2012, compared to non-GAAP operating income of $1.5 million for the
same period in fiscal 2011. 

As of July 31, 2012, the Company had working capital of $113.5 million, compared
to $152.4 million at July 31, 2011. Included in working capital as of July 31,
2012 were cash, cash equivalents and marketable securities totaling $52.4
million compared to $111.2 million at July 31, 2011. The reduction in cash was
primarily due to operating losses and significant working capital needs for two
new client programs. The Company concluded the quarter with no outstanding bank
debt. 

Financial Summary - Third Quarter Fiscal 2012

* Net revenue of $178.6 million, compared to $206.6 million in the third quarter
of fiscal 2011 
* Gross margin, as a percentage of revenue, of 8.6%, compared to 9.5% in the
third quarter of fiscal 2011 
* Operating loss of $11.0 million, compared to operating loss of $2.2 million in
the third quarter of fiscal 2011 
* Non-GAAP operating loss of $4.2 million, compared to non-GAAP operating income
of $3.7 million in the third quarter of fiscal 2011

Consolidated Financial Results - Third Quarter Fiscal 2012

ModusLink reported net revenue of $178.6 million for the third quarter of fiscal
2012, a decrease of 13.6%, compared to net revenue of $206.6 million reported in
the third quarter of fiscal 2011. The decline in revenue was primarily due to
client-specific conditions previously disclosed by the Company as well as the
economic environment, especially in Europe. 

Revenue from new programs in the third quarter of fiscal 2012 was $21.1 million,
compared to $20.9 million in the same period in fiscal 2011.(1)

Gross profit for the third quarter of fiscal 2012 was $15.4 million, or 8.6% of
revenue, compared to $19.7 million, or 9.5% of revenue, in the third quarter of
fiscal 2011. The decrease in gross margin as a percentage of revenue was
primarily due to lower revenue. 

Included in the Company`s operating results for the third quarter of fiscal 2012
were SG&A expenses of $23.5 million, compared to $20.8 million in the same
quarter of fiscal 2011. The increase in SG&A was primarily due to professional
fees related to the Company`s evaluation of strategic alternatives, the
previously disclosed SEC inquiry, planned investments in sales and marketing,
and other expenses. 

ModusLink reported impairment of long-lived assets of $2.1 million for the third
quarter of fiscal 2012. These non-cash charges primarily relate to a solution
center in Europe that had experienced lower volumes from client programs managed
in that facility, and its Tech for Less operations. Restructuring expenses for
the third quarter of fiscal 2012 were $0.5 million related to the Company`s cost
reduction initiatives. 

Operating loss for the third quarter of fiscal 2012 was $11.0 million, compared
to operating loss of $2.2 million in the third quarter of fiscal 2011. 

Other income for the third quarter of fiscal 2012 was $3.7 million, compared to
$5.1 million in the third quarter of fiscal 2011. Other income for the third
quarter of fiscal 2012 included a $2.8 million impairment charge associated with
the Company`s @Ventures portfolio, which was offset by a gain of $7.5 million as
a result of the derecognition of accrued pricing liabilities. Other income for
the third quarter of fiscal 2011 included foreign exchange transaction losses of
$1.5 million, offset by a gain of $7.2 million as a result of the derecognition
of accrued pricing liabilities. 

Net loss for the third quarter of fiscal 2012 was $6.1 million, or $(0.14) per
share, compared to net income of $1.5 million, or $0.03 per share, for the same
period in fiscal 2011. 

Excluding net charges related to depreciation, amortization of intangible
assets, impairment of goodwill and intangible assets, share-based compensation,
and restructuring, the Company reported a non-GAAP operating loss of $4.2
million for the third quarter of fiscal 2012, compared to non-GAAP operating
income of $3.7 million for the same period in fiscal 2011. 

Conference Call Information

ModusLink Global Solutions, Inc. will hold a conference call to discuss today`s
announcement at 5:00 p.m. ET on January 14, 2013. To access the conference call,
please dial (877) 212-4894 from the United States or (312) 429-0467 for
international access. 

A live webcast of the call will be available on the Investor Relations section
of the Company`s web site, www.ir.moduslink.com. To listen to the live call, go
to the web site at least 15 minutes prior to the start time to download and
install the necessary audio software. 

For those who cannot listen to the live broadcast, a replay of the call will be
available from January 14, 2013 at 7:00 p.m. until January 21, 2013 at 5:00 p.m.
The replay can be accessed by dialing (800) 633-8284 or (402) 977-9140, using
access code 21645682. 

About ModusLink Global Solutions, Inc.

ModusLink Global Solutions Inc. (NASDAQ: MLNK) executes comprehensive supply
chain and logistics services that improve clients` revenue, cost, sustainability
and customer experience objectives. ModusLink is a trusted and integrated
provider to the world`s leading companies in consumer electronics,
communications, computing, medical devices, software, luxury goods and retail.
The Company`s operating infrastructure annually supports more than $80 billion
of its clients` revenue and manages approximately 470 million product shipments
through more than 30 sites in 15 countries across North America, Europe, and the
Asia/Pacific region. For details on ModusLink's flexible and scalable solutions
visit www.moduslink.com and www.valueunchained.com, the blog for supply chain
professionals. 

(1) New programs defined as client programs that have been executed for fewer
than 12 months. Base business defined as client programs that have been executed
for 12 months or more. 

Non-GAAP Information

The Company believes that its non-GAAP measure of operating income/(loss)
("non-GAAP operating income/(loss)") provides investors with a useful,
supplemental measure of the Company`s operating performance by excluding the
impact of non-cash charges and restructuring activities. Each of the excluded
items was excluded because it may be considered to be of a non-operational or
non-cash nature. Historically, the Company has recorded significant impairment
and restructuring charges. These charges, as well as charges related to
depreciation, amortization of intangible assets and stock-based compensation,
have been excluded for the purpose of enhancing the understanding by both
management and investors of the underlying baseline operating results and trends
of the business, which management uses to evaluate our financial performance for
purposes of planning and forecasting future periods. Non-GAAP operating
income/(loss) does not have any standardized definition and, therefore, is
unlikely to be comparable to similar measures presented by other reporting
companies. Non-GAAP operating income/(loss) should not be evaluated in isolation
of, or as a substitute for, the Company`s financial results prepared in
accordance with United States generally accepted accounting principles. The
Company`s usage of non-GAAP operating income/(loss), and the underlying
methodology in excluding certain charges, is not necessarily an indication of
the results of operations that may be expected in the future, or that the
Company will not, in fact, incur such charges in future periods. A table
reconciling the Company`s non-GAAP operating income/(loss) to its GAAP operating
income/(loss) and its GAAP net income/(loss) is included in the statement of
operations information in this release. 

ModusLink Global Solutions is a registered trademark of ModusLink Global
Solutions, Inc. All other company names and products are trademarks or
registered trademarks of their respective companies. 

This release contains forward-looking statements, which address a variety of
subjects including, for example, the expectation that the Company`s controls
have been strengthened; the expected actions to appoint new leadership, reducing
cost and improving the balance sheet; the expectation that the business plan
will yield improved results and sustained shareholder value; the expectation of
growth in revenue from new programs in fiscal 2013; the expectation as to
revenue results in the second quarter of fiscal 2013; the expectation as to cash
use in the second quarter of fiscal 2013 and begin to increase cash position in
the second half of fiscal 2013; and the expectation that the cash trends will be
reversed and the Company will be successful in efforts to reduce inventory
requirements, operating costs and other expenses.All statements other than
statements of historical fact, including without limitation, those with respect
to the Company`s goals, plans, expectations and strategies set forth herein are
forward-looking statements. The following important factors and uncertainties,
among others, could cause actual results to differ materially from those
described in these forward-looking statements: the Company`s ability to execute
on its business strategy, including its cost reduction plans and the continued
and increased demand for and market acceptance of its services, which could
negatively affect the Company`s ability to meet its revenue, operating income
and cost savings targets, maintain and improve its cash position, expand its
operations and revenue, lower its costs, improve its gross margins, reach and
sustain profitability, reach its long-term objectives and operate optimally;
uncertainties and volatility relating to global economic conditions, especially
in the technology sector; unanticipated declines in, or failure to achieve the
anticipated levels of, the demand for our clients` products; potential strains
on managerial and operational resources resulting from expanded operations;
failure to realize expected benefits of restructuring and cost-cutting actions;
inability to expand operations in accordance with the Company`s business
strategy; insufficient cash balances that could prevent the Company from meeting
business or investment goals; difficulties integrating technologies, operations
and personnel in accordance with the Company`s business strategy; customer
losses; demand variability in supply chain management clients, to which the
Company sells on a purchase order basis rather than pursuant to contracts with
minimum purchase requirements; risks inherent with conducting international
operations; changes in tax rates in jurisdictions where profits are determined
to be earned and taxed; changes in estimates of tax credits, benefits and
deductions; unfavorable resolution of issues arising from tax audits with
various tax authorities, including payment of interest and penalties and the
ability to realize deferred tax assets; adverse conditions in the mergers and
acquisitions or IPO markets, which could prevent liquidity for securities in the
Company`s venture capital portfolio; and increased competition and technological
changes in the markets in which the Company competes.For a detailed discussion
of cautionary statements that may affect the Company`s future results of
operations and financial results, please refer to the Company's filings with the
Securities and Exchange Commission, including the Company's most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking
statements represent management's current expectations and are inherently
uncertain. We do not undertake any obligation to update forward-looking
statements made by us except as otherwise required under federal securities
laws.

 ModusLink Global Solutions, Inc. and Subsidiaries                                                                                                                                     
 Condensed Consolidated Statements of Operations                                                                                                                                       
 (In thousands, except per share data)                                                                                                                                                 
 (Unaudited)                                                                                                                                                                           
                                                                                                                                                                                       
                                                                 Three months ended                                          Nine months ended                                         
                                                                 April 30                                                    April 30                                                  
                                                                     2012                 2011             Fav (Unfav)           2012                 2011             Fav (Unfav)     
                                                                 (restated)                                                  (restated)                                                
 Net revenue                                                     $   178,565          $   206,579          (13.6   %)        $   562,797          $   675,061          (16.6   %)      
 Cost of revenue                                                     163,146              186,912          12.7    %             506,101              611,706          17.3    %       
 Gross margin                                                        15,419               19,667           (21.6   %)            56,696               63,355           (10.5   %)      
                                                                     8.6      %           9.5      %       (0.9    %)            10.1     %           9.4      %       0.7     %       
 Operating expenses:                                                                                                                                                                   
 Selling, general and administrative                                 23,515               20,788           (13.1   %)            70,320               63,797           (10.2   %)      
 Amortization of intangible assets                                   331                  1,062            68.8    %             995                  4,420            77.5    %       
 Impairment of goodwill & intangible assets                          2,062                -                100.0   %             2,062                27,166           92.4    %       
 Restructuring, net                                                  495                  -                100.0   %             5,847                1,201            (386.8  %)      
 Total operating expenses                                            26,403               21,850           (20.8   %)            79,224               96,584           18.0    %       
                                                                                                                                                                                       
 Operating income (loss)                                             (10,984  )           (2,183   )       (403.2  %)            (22,528  )           (33,229  )       32.2    %       
                                                                                                                                                                                       
 Other income (expense)                                              3,744                5,083            (26.3   %)            5,137                7,227            (28.9   %)      
                                                                                                                                                                                       
 Income (loss) from continuing operations before taxes               (7,240   )           2,900            (349.7  %)            (17,391  )           (26,002  )       33.1    %       
 Income tax expense (benefit)                                        (1,202   )           1,331            190.3   %             1,050                3,772            72.2    %       
 Income (loss) from continuing operations                            (6,038   )           1,569            (484.8  %)            (18,441  )           (29,774  )       38.1    %       
                                                                                                                                                                                       
 Discontinued operations, net of income taxes:                                                                                                                                         
 Income (loss) from discontinued operations                          (98      )           (91      )       (7.7    %)            572                  (239     )       339.3   %       
                                                                                                                                                                                       
 Net Income (loss)                                               $   (6,136   )       $   1,478            (515.2  %)        $   (17,869  )       $   (30,013  )       40.5    %       
                                                                                                                                                                                       
 Basic and diluted earnings (loss) per share:                                                                                                                                          
 Income (loss) from continuing operations                        $   (0.14    )       $   0.03             (559.1  %)        $   (0.42    )       $   (0.68    )       37.7    %       
                                                                                                                                                                                       
 Income (loss) from discontinued operations                          (0.00    )           (0.00    )       0.0     %             0.01                 (0.01    )       337.9   %       
                                                                                                                                                                                       
 Net income (loss)                                               $   (0.14    )       $   0.03             (559.1  %)        $   (0.41    )       $   (0.69    )       40.8    %       
                                                                                                                                                                                       
 Shares used in computing basic earnings (loss) per share            43,844               43,303                                 43,546               43,289                           
                                                                                                                                                                                       
 Shares used in computing diluted earnings (loss) per share          43,844               43,502                                 43,546               43,289                           
                                                                                                                                                                                       
                                                                                                                                                                                       
                                                                                                                                                                                       


 ModusLink Global Solutions, Inc. and Subsidiaries                                                                                                                           
 Condensed Consolidated Statements of Operations                                                                                                                             
 (In thousands, except per share data)                                                                                                                                       
 (Unaudited)                                                                                                                                                                 
                                                                                                                                                                             
                                                             Three months ended                                             12 months ended                                  
                                                             July 31                                                        July 31                                          
                                                             2012                           2011             Fav (Unfav)    2012              2011              Fav (Unfav)  
                                                             (restated)                                                     (restated)                                       
 Net revenue                                                 $ 177,094                      $ 198,688        (10.9%)        $ 739,891         $ 873,748         (15.3%)      
 Cost of revenue                                             169,477                        181,103          6.4%           675,579           792,809           14.8%        
 Gross margin                                                7,617                          17,585           (56.7%)        64,312            80,939            (20.5%)      
                                                             4.3%                           8.9%             (4.5%)         8.7%              9.3%              (0.6%)       
 Operating expenses:                                                                                                                                                         
 Selling, general and administrative                         29,090                         21,390           (36.0%)        99,409            85,187            (16.7%)      
 Amortization of intangible assets                           284                            1,037            72.6%          1,279             5,457             76.6%        
 Impairment of goodwill & intangible assets                  -                              -                0.0%           2,062             27,166            92.4%        
 Restructuring, net                                          1,608                          (406)            (496.1%)       7,455             795               (837.7%)     
 Total operating expenses                                    30,982                         22,021           (40.7%)        110,205           118,605           7.1%         
                                                                                                                                                                             
 Operating income (loss)                                     (23,365)                       (4,436)          (426.7%)       (45,893)          (37,666)          (21.8%)      
                                                                                                                                                                             
 Other income (expense)                                      5,191                          (2,878)          280.4%         10,329            4,350             137.4%       
                                                                                                                                                                             
 Income (loss) from continuing operations before taxes       (18,174)                       (7,314)          (148.5%)       (35,564)          (33,316)          (6.7%)       
 Income tax expense (benefit)                                1,985                          (2,954)          (167.2%)       3,035             819               (270.6%)     
 Income (loss) from continuing operations                    (20,159)                       (4,360)          (362.4%)       (38,599)          (34,135)          (13.1%)      
                                                                                                                                                                             
 Discontinued operations, net of income taxes:                                                                                                                               
 Income (loss) from discontinued operations                  (81)                           (91)             11.0%          491               (330)             248.8%       
                                                                                                                                                                             
 Net Income (loss)                                           $ (20,240)                     $ (4,451)        (354.7%)       $ (38,108)        $ (34,465)        (10.6%)      
                                                                                                                                                                             
 Basic and diluted earnings (loss) per share:                                                                                                                                
 Income (loss) from continuing operations                    $ (0.46)                       $ (0.10)         (357.1%)       $ (0.88)          $ (0.79)          (11.1%)      
                                                                                                                                                                             
 Income (loss) from discontinued operations                  (0.00)                         (0.00)           0.0%           0.01              (0.01)            247.9%       
                                                                                                                                                                             
 Net income (loss)                                           $ (0.46)                       $ (0.10)         (357.1%)       $ (0.87)          $ (0.80)          (9.9%)       
                                                                                                                                                                             
 Shares used in computing basic earnings (loss) per share    43,811                         43,317                          43,565            43,294                         
                                                                                                                                                                             
 Shares used in computing diluted earnings (loss) per share  43,811                         43,317                          43,565            43,294                         
                                                                                                                                                                             
                                                                                                                                                                             
                                                                                                                                                                             


 ModusLink Global Solutions, Inc. and Subsidiaries                                                                              
 Condensed Consolidated Statements of Operations                                                                                
 (In thousands, except per share data)                                                                                          
 (Unaudited)                                                                                                                    
                                                                                                                                
                                                                 Three months ended                                             
                                                                 October 31                                                     
                                                                     2012                   2011               Fav (Unfav)      
                                                                                      (restated)                                
 Net revenue                                                     $   200,656          $     205,908            (2.6     %)      
 Cost of revenue                                                     181,973                180,437            (0.9     %)      
 Gross margin                                                        18,683                 25,471             (26.6    %)      
                                                                     9.3      %             12.4     %         (3.1     %)      
 Operating expenses:                                                                                                            
 Selling, general and administrative                                 25,024                 22,198             (12.7    %)      
 Amortization of intangible assets                                   285                    332                14.2     %       
 Impairment of goodwill & intangible assets                          -                      -                  0.0      %       
 Restructuring, net                                                  1,479                  755                (95.9    %)      
 Total operating expenses                                            26,788                 23,285             (15.0    %)      
                                                                                                                                
 Operating income (loss)                                             (8,105   )             2,186              (470.8   %)      
                                                                                                                                
 Other income (expense)                                              (1,650   )             830                (298.8   %)      
                                                                                                                                
 Income (loss) from continuing operations before taxes               (9,755   )             3,016              (423.4   %)      
 Income tax expense (benefit)                                        909                    1,871              51.4     %       
 Income (loss) from continuing operations                            (10,664  )             1,145              (1031.4  %)      
                                                                                                                                
 Discontinued operations, net of income taxes:                                                                                  
 Income (loss) from discontinued operations                          4                      -                  100.0    %       
                                                                                                                                
 Net Income (loss)                                               $   (10,660  )       $     1,145              (1031.0  %)      
                                                                                                                                
 Basic and diluted earnings (loss) per share:                                                                                   
 Income (loss) from continuing operations                        $   (0.24    )       $     0.03               (1025.5  %)      
 Income (loss) from discontinued operations                          0                      -                  0.0      %       
                                                                                                                                
 Net income (loss)                                               $   (0.24    )       $     0.03               (1025.5  %)      
                                                                                                                                
 Shares used in computing basic earnings (loss) per share            43,589                 43,315                              
                                                                                                                                
 Shares used in computing diluted earnings (loss) per share          43,589                 43,318                              
                                                                                                                                
                                                                                                                                
                                                                                                                                


 ModusLink Global Solutions, Inc. and Subsidiaries                                                                                                               
 Condensed Consolidated Balance Sheets                                                                                                                           
 (In thousands)                                                                                                                                                  
 (Unaudited)                                                                                                                                                     
                                                                                                                                                                 
                                                     April 30                            July 31                             October 31                          
                                                         2012                 2011           2012                 2011            2012                  2011     
                                                                      (restated)                          (restated)                            (restated)       
 Assets:                                                                                                                                                         
 Cash and cash equivalents                           $   78,450       $       119,120    $   52,369       $       111,225    $    58,355        $       111,526  
 Available-for-sale securities                           132                  130            131                  131             130                   133      
 Trade accounts receivable, net                          163,824              135,622        148,931              146,411         164,707               187,952  
 Inventories, net                                        93,653               83,263         83,990               76,883          89,793                94,909   
 Prepaid and other current assets                        9,250                13,803         10,466               10,876          10,323                10,120   
 Total current assets                                    345,309              351,938        295,887              345,526         323,308               404,640  
 Property and equipment, net                             42,648               50,052         40,772               47,403          39,951                44,807   
 Investments in affiliates                               10,796               13,276         10,803               12,016          11,080                12,642   
 Goodwill                                                3,058                3,058          3,058                3,058           3,058                 3,058    
 Intangible assets, net                                  3,182                5,736          2,897                4,699           2,612                 4,360    
 Other assets                                            10,081               10,402         5,465                9,545           6,686                 9,510    
                                                     $   415,074              434,462        358,882      $       422,247    $    386,695       $       479,017  
 Liabilities:                                                                                                                                                    
 Current portion of capital lease obligations        $   79           $       89         $   73           $       94         $    93            $       88       
 Accounts payable                                        135,775              111,000        110,520              114,588         141,630               164,196  
 Current portion of accrued restructuring                1,721                1,618          1,724                1,456           1,751                 1,909    
 Accrued income taxes                                    -                    -              -                    180             335                   1,260    
 Accrued expenses                                        40,037               40,572         41,753               36,384          46,074                42,407   
 Other current liabilities                               31,735               39,228         26,778               38,624          26,542                39,765   
 Current liabilities of discontinued operations          1,485                1,686          1,528                1,817           1,393                 1,817    
 Total current liabilities                               210,832              194,193        182,376              193,143         217,818               251,442  
 Long-term portion of accrued restructuring              98                   299            -                    8               -                     36       
 Long-term portion of capital leases obligations         87                   80             69                   86              72                    90       
 Other long-term liabilities                             11,107               16,894         11,012               12,585          10,627                12,326   
 Non-current liabilities of discontinued operations      673                  2,241          293                  1,883           101                   1,623    
                                                         11,965               19,514         11,374               14,562          10,800                14,075   
 Stockholders' equity                                    192,277              220,755        165,132              214,542         158,077               213,500  
                                                     $   415,074      $       434,462    $   358,882      $       422,247    $    386,695       $       479,017  


 ModusLink Global Solutions, Inc. and Subsidiaries                                                                                            
 Condensed Consolidated Statements of Operations Information                                                                                  
 (In thousands)                                                                                                                               
 (Unaudited)                                                                                                                                  
                                                                                                                                              
                                                  Three months ended                             Nine months ended                            
                                                  April 30                                       April 30                                     
                                                       2012                     2011                  2012                     2011           
                                                                          (restated)                                     (restated)           
 Net revenue:                                                                                                                                 
 Americas                                         $    58,825             $     70,652           $    187,835            $     227,438        
 Asia                                                  56,642                   56,934                168,506                  176,722        
 Europe                                                50,706                   63,444                159,020                  218,008        
 TFL                                                   5,012                    6,415                 21,979                   23,943         
 All other                                             7,380                    9,134                 25,457                   28,950         
                                                  $    178,565            $     206,579          $    562,797            $     675,061        
                                                                                                                                              
 Operating income (loss):                                                                                                                     
 Americas                                         $    (3,112   )         $     (3,318   )       $    (6,260   )         $     (25,029  )     
 Asia                                                  4,671                    6,741                 18,216                   19,272         
 Europe                                                (4,222   )               (2,425   )            (12,983  )               (2,565   )     
 TFL                                                   (3,114   )               (275     )            (5,720   )               (14,847  )     
 All other                                             (498     )               483                   378                      1,476          
                                                       (6,275   )               1,206                 (6,369   )               (21,693  )     
 Other reconciling items                               (4,709   )               (3,389   )            (16,159  )               (11,536  )     
                                                  $    (10,984  )         $     (2,183   )       $    (22,528  )         $     (33,229  )     
                                                                                                                                              
 Non-GAAP operating income (loss):                                                                                                            
 Americas                                         $    (2,004   )         $     (1,673   )       $    (1,907   )         $     (2,802   )     
 Asia                                                  5,785                    8,363                 22,355                   24,800         
 Europe                                                (1,966   )               (825     )            (4,412   )               2,201          
 TFL                                                   (1,560   )               (197     )            (3,862   )               (2,814   )     
 All other                                             27                       956                   1,850                    2,934          
                                                       282                      6,624                 14,024                   24,319         
 Other reconciling items                               (4,452   )               (2,883   )            (14,543  )               (9,783   )     
                                                  $    (4,170   )         $     3,741            $    (519     )         $     14,536         
                                                                                                                                              
 Note: The Company defines non-GAAP operating income (loss) as total operating income (loss), excluding net charges related to depreciation, amortization of intangible assets, impairment of goodwill and long-lived assets, share-based compensation, and restructuring. 
                                                                                                                                              
 TABLE RECONCILING NON-GAAP OPERATING INCOME (LOSS) TO GAAP OPERATING INCOME AND NET INCOME (LOSS)                                            
                                                                                                                                              
 NON-GAAP Operating income (loss)                 $    (4,170   )         $     3,741            $    (519     )         $     14,536         
                                                                                                                                              
 Adjustments:                                                                                                                                 
 Depreciation                                          (3,398   )               (4,140   )            (10,698  )               (12,359  )     
 Amortization of intangible assets                     (331     )               (1,062   )            (995     )               (4,420   )     
 Impairment of goodwill & intangible assets            (2,062   )               -                     (2,062   )               (27,166  )     
 Stock-based compensation                              (528     )               (722     )            (2,407   )               (2,619   )     
 Restructuring, net                                    (495     )               -                     (5,847   )               (1,201   )     
 GAAP Operating income (loss)                          (10,984  )               (2,183   )            (22,528  )               (33,229  )     
                                                                                                                                              
 Other income (expense), net                           3,744                    5,083                 5,137                    7,227          
 Income tax benefit (expense)                          1,202                    (1,331   )            (1,050   )               (3,772   )     
 Income (loss) from discontinued operations            (98      )               (91      )            572                      (239     )     
 Net income (loss)                                $    (6,136   )         $     1,478            $    (17,869  )         $     (30,013  )     
                                                                                                                                              
                                                                                                                                              
                                                                                                                                              


 ModusLink Global Solutions, Inc. and Subsidiaries                                                                                       
 Condensed Consolidated Statements of Operations Information                                                                             
 (In thousands)                                                                                                                          
 (Unaudited)                                                                                                                             
                                                                                                                                         
                                             Three months ended                             12 months ended                              
                                             July 31                                        July 31                                      
                                                  2012                     2011                  2012                     2011           
                                                                     (restated)                                     (restated)           
 Net revenue:                                                                                                                            
 Americas                                    $    62,105             $     68,926           $    249,940            $     296,362        
 Asia                                             50,374                   57,003                218,880                  233,724        
 Europe                                           52,299                   57,056                211,319                  275,065        
 TFL                                              3,965                    5,528                 25,944                   29,471         
 All other                                        8,351                    10,175                33,808                   39,126         
                                             $    177,094            $     198,688          $    739,891            $     873,748        
                                                                                                                                         
 Operating income (loss):                                                                                                                
 Americas                                    $    (7,848   )         $     (4,808   )       $    (14,108  )         $     (29,984  )     
 Asia                                             3,234                    9,879                 21,450                   29,168         
 Europe                                           (2,735   )               (3,606   )            (15,718  )               (6,181   )     
 TFL                                              (5,312   )               (1,292   )            (11,032  )               (16,139  )     
 All other                                        256                      272                   634                      1,889          
                                                  (12,405  )               445                   (18,774  )               (21,247  )     
 Other reconciling items                          (10,960  )               (4,881   )            (27,119  )               (16,419  )     
                                             $    (23,365  )         $     (4,436   )       $    (45,893  )         $     (37,666  )     
                                                                                                                                         
 Non-GAAP operating income (loss):                                                                                                       
 Americas                                    $    (5,768   )         $     (3,113   )       $    (7,675   )         $     (6,029   )     
 Asia                                             4,456                    11,342                26,811                   36,155         
 Europe                                           (1,649   )               (1,997   )            (6,061   )               198            
 TFL                                              (4,919   )               (1,212   )            (8,781   )               (4,026   )     
 All other                                        1,091                    769                   2,941                    3,811          
                                                  (6,789   )               5,789                 7,235                    30,109         
 Other reconciling items                          (10,742  )               (4,259   )            (25,285  )               (14,043  )     
                                             $    (17,531  )         $     1,530            $    (18,050  )         $     16,066         
                                                                                                                                         
 Note: The Company defines non-GAAP operating income (loss) as total operating income (loss), excluding net charges related to depreciation, amortization of intangible assets, impairment of goodwill and long-lived assets, share-based compensation, and restructuring. 
                                                                                                                                         
 TABLE RECONCILING NON-GAAP OPERATING INCOME (LOSS) TO GAAP OPERATING INCOME AND NET INCOME (LOSS)                                       
                                                                                                                                         
 NON-GAAP Operating income (loss)            $    (17,531  )         $     1,530            $    (18,050  )         $     16,066         
                                                                                                                                         
 Adjustments:                                                                                                                            
 Depreciation                                     (3,360   )               (4,474   )            (14,057  )               (16,833  )     
 Amortization of intangible assets                (284     )               (1,037   )            (1,279   )               (5,457   )     
 Impairment of goodwill & intangible assets       -                        -                     (2,062   )               (27,166  )     
 Stock-based compensation                         (582     )               (861     )            (2,990   )               (3,481   )     
 Restructuring, net                               (1,608   )               406                   (7,455   )               (795     )     
 GAAP Operating income (loss)                     (23,365  )               (4,436   )            (45,893  )               (37,666  )     
                                                                                                                                         
 Other income (expense), net                      5,191                    (2,878   )            10,329                   4,350          
 Income tax benefit (expense)                     (1,985   )               2,954                 (3,035   )               (819     )     
 Income (loss) from discontinued operations       (81      )               (91      )            491                      (330     )     
 Net income (loss)                           $    (20,240  )         $     (4,451   )       $    (38,108  )         $     (34,465  )     
                                                                                                                                         
                                                                                                                                         


                                                                                                                      
 ModusLink Global Solutions, Inc. and Subsidiaries                                                                    
 Condensed Consolidated Statements of Operations Information                                                          
 (In thousands)                                                                                                       
 (Unaudited)                                                                                                          
                                                                                                                      
                                                                         Three months ended                           
                                                                         October 31                                   
                                                                              2012                     2011           
 Net revenue:                                                                                    (restated)           
 Americas                                                                $    63,909             $     69,511         
 Asia                                                                         56,375                   60,739         
 Europe                                                                       68,930                   57,605         
 TFL                                                                          3,605                    8,079          
 All other                                                                    7,837                    9,974          
                                                                         $    200,656            $     205,908        
 Operating income (loss):                                                                                             
 Americas                                                                $    (2,036   )         $     (120     )     
 Asia                                                                         7,174                    9,292          
 Europe                                                                       (3,829   )               (1,688   )     
 TFL                                                                          (832     )               (1,395   )     
 All other                                                                    405                      856            
                                                                              882                      6,945          
 Other reconciling items                                                      (8,987   )               (4,759   )     
                                                                         $    (8,105   )         $     2,186          
 Non-GAAP operating income (loss):                                                                                    
 Americas                                                                $    (604     )         $     1,326          
 Asia                                                                         9,026                    10,965         
 Europe                                                                       (1,999   )               (296     )     
 TFL                                                                          (816     )               (1,315   )     
 All other                                                                    848                      1,343          
                                                                              6,455                    12,023         
 Other reconciling items                                                      (8,685   )               (4,120   )     
                                                                         $    (2,230   )         $     7,903          
                                                                                                                      
 Note: The Company defines non-GAAP operating income (loss) as total operating income (loss), excluding net charges related to depreciation, amortization of intangible assets, impairment of goodwill and long-lived assets, share-based compensation, and restructuring. 
                                                                                                                      
 TABLE RECONCILING NON-GAAP OPERATING INCOME (LOSS) TO GAAP OPERATING INCOME AND NET INCOME (LOSS):                   
                                                                                                                      
                                                                                                                      
 NON-GAAP Operating income (loss)                                        $    (2,230   )         $     7,903          
 Adjustments:                                                                                                         
 Depreciation                                                                 (3,618   )               (3,748   )     
 Amortization of intangible assets                                            (285     )               (332     )     
 Impairment of goodwill & intangible assets                                   -                        -              
 Stock-based compensation                                                     (493     )               (882     )     
 Restructuring, net                                                           (1,479   )               (755     )     
 GAAP operating income (loss)                                                 (8,105   )               2,186          
 Other income (expense), net                                                  (1,650   )               830            
 Income tax expense (benefit)                                                 (909     )               (1,871   )     
 Income (loss) from discontinued operations                                   4                        -              
 Net income (loss)                                                       $    (10,660  )         $     1,145          
                                                                                                                      
                                                                                                                      
                                                                                                                      
 Reconciliations for non-GAAP measure:                                                                                
                                                                                                                      
                                                                         Three months ended                           
                                                                         October 31                                   
                                                                              2012                     2011           
                                                                                                 (restated)           
 Net cash provided by operating activities of continuing operations           8,780                    5,234          
 Additions to property and equipment                                          (2,134   )               (1,750   )     
 Free cash flow from operations                                               6,646                    3,484          


ModusLink Investor Relations
Robert Joyce, 781-663-5120
ir@moduslink.com

Copyright Business Wire 2013