ModusLink Global Solutions Reports Financial Results for Third Quarter of Fiscal 2013

  ModusLink Global Solutions Reports Financial Results for Third Quarter of
  Fiscal 2013

Business Wire

WALTHAM, Mass. -- June 10, 2013

ModusLink Global Solutions^™, Inc. (NASDAQ: MLNK) today reported financial
results for its third quarter of fiscal year 2013 ended April 30, 2013. A
quarterly report on Form 10-Q for the period can be accessed through
www.moduslink.com.

Financial Summary

  *Net revenue of $173.0 million, comparable to $173.6 million in the third
    quarter of fiscal 2012
  *Gross margin, as a percentage of revenue, of 8.9%, compared to 9.2% in the
    third quarter of fiscal 2012
  *SG&A expenses of $19.3 million, a 13.9% decline compared to $22.4 million
    in the same quarter of the previous year
  *Operating loss of $6.8 million, compared to operating loss of $7.9 million
    in the third quarter of fiscal 2012
  *Non-GAAP operating income of $0.4 million, compared to non-GAAP operating
    loss of $2.6 million in the third quarter of fiscal 2012
  *Working capital of $120.2 million, compared to $113.5 million at July 31,
    2012

Consolidated Financial Results

For the third quarter of fiscal 2013, ModusLink reported net revenue of $173.0
million, comparable to net revenue of $173.6 million reported in the third
quarter of fiscal 2012. Revenue results for the third quarter of fiscal 2013
reflect growth from a program for a consumer electronics client and a consumer
products client, as well as the negative effects of lower unit volumes from
certain client programs related to the personal computer market.

Revenue from new programs in the third quarter of fiscal 2013 was $23.8
million, compared to $21.1 million in the same period last year, an increase
of 12.8%. Driving the increase was the engagement with the consumer
electronics client, which commenced several new programs in recent quarters
and contributed to revenue in all regions. ^(1)

Gross profit was $15.4 million, or 8.9% of revenue, in the third quarter of
fiscal 2013, compared to $15.9 million, or 9.2% of revenue, in the third
quarter of fiscal 2012. The decrease in gross margin was primarily due to
unfavorable revenue mix, partially offset by favorable effects of the
Company’s cost reduction actions.

Selling, general and administrative expenses (SG&A) for the third quarter of
fiscal 2013 declined 13.9% to $19.3 million, compared to $22.4 million in the
same quarter of fiscal 2012. The reduction was primarily due to cost reduction
actions taken by the Company.

Restructuring expenses for the third quarter of fiscal 2013 were $2.6 million.
The restructuring expenses primarily related to cost reduction actions and
included employee severance costs, mainly from actions taken in Europe. Since
the beginning of fiscal 2013, ModusLink has reduced its global workforce by
approximately 13%, which includes the effects of the sale of the Tech for Less
business.

Operating loss for the third quarter of fiscal 2013 was $6.8 million, compared
to operating loss of $7.9 million in the third quarter of fiscal 2012.

Other expense for the third quarter of fiscal 2013 was $1.1 million, compared
to other income of $3.8 million in the third quarter of fiscal 2012. Other
expense for the third quarter of fiscal 2013 was comprised primarily of losses
associated with the Company’s @Ventures portfolio and foreign exchange
transaction losses. Other income for the third quarter of the previous year
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 extinguishment of accrued pricing liabilities.

Net loss from continuing operations for the third quarter of fiscal 2013 was
$8.2 million, or ($0.17) per share, compared to net loss from continuing
operations of $2.9 million, or ($0.07) per share, for the third quarter of
fiscal 2012.

Including results from discontinued operations, net loss for the third quarter
of fiscal 2013 was $8.3 million, or ($0.17) per share, compared to net loss of
$6.1 million, or ($0.14) per share, for the same period in fiscal 2012.

Excluding net charges related to depreciation, amortization of intangible
assets, impairment of goodwill and long-lived assets, share-based
compensation, and restructuring, the Company reported non-GAAP operating
income of $0.4 million for the third quarter of fiscal 2013, compared to a
non-GAAP operating loss of $2.6 million for the same period in fiscal 2012.

The Company had working capital of $120.2 million as of April 30, 2013,
compared to $113.5 million at July 31, 2012. Included in working capital as of
April 30, 2013 were cash, cash equivalents and marketable securities totaling
$71.2 million, compared to $52.5 million at July 31, 2012. The increase in
cash, cash equivalents and marketable securities was primarily due to the
previously announced Steel Partners Holdings L.P. investment of $30 million to
acquire 7.5 million newly issued shares of common stock. The Company concluded
the quarter with no outstanding bank debt.

Inventory ended the third quarter of fiscal 2013 at $70.3 million, down 13
days from the same period last year to 37 days. Accounts receivable was $151.7
million, down 5 days from the same period last year to 73 days, and accounts
payable ended the third quarter at $112.4 million, down 13 days from the same
period last year to 59 days. The Company’s cash conversion cycle improved by 5
days from the same period in fiscal 2012 to 51 days.

For the third quarter of fiscal 2013, net cash used in operating activities of
continuing operations was $4.9 million, compared to $11.6 million in the same
period in fiscal 2012.

As previously reported, the Company sold its Tech for Less (“TFL”) operations
on January 11, 2013. Therefore revenue and results from continuing operations
exclude the results of TFL, which have been reclassified to discontinued
operations in the Company’s statements of operations for all periods.

About ModusLink Global Solutions

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 and retail. The Company’s
operating infrastructure annually supports more than $80 billion of its
clients’ revenue and manages approximately 451 million product shipments
through more than 25 sites 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 share-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. 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.

                                                              
                                                                     
ModusLink Global Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                                     
                                         April 30,     July 31,      April 30,
                                         2013          2012          2012
Assets:
Cash and cash equivalents                $ 71,176      $ 52,369      $ 78,450
Available-for-sale securities              51            131           132
Trade accounts receivable, net             151,660       148,931       163,824
Inventories, net                           70,331        83,990        93,653
Prepaid and other current assets           10,796        10,466        9,250
Current assets of discontinued            200          -            -
operations
Total current assets                      304,214      295,887      345,309
Property and equipment, net                35,329        40,772        42,648
Investments in affiliates                  9,326         10,803        10,796
Goodwill                                   3,058         3,058         3,058
Intangible assets, net                     2,045         2,897         3,182
Other assets                              6,991        5,465        10,081
                                         $ 360,963     $ 358,882     $ 415,074
Liabilities:
Current portion of capital lease         $ 64          $ 73            79
obligations
Accounts payable                           112,417       110,520       135,775
Current portion of accrued                 3,347         1,724         1,721
restructuring
Accrued expenses                           39,328        41,753        40,037
Other current liabilities                  27,885        26,778        31,735
Current liabilities of discontinued       987          1,528        1,485
operations
Total current liabilities                 184,028      182,376      210,832
Long-term portion of accrued               -             -             98
restructuring
Long-term portion of capital leases        44            69            87
obligations
Other long-term liabilities                9,761         11,012        11,107
Non-current liabilities of                -            293          673
discontinued operations
                                           9,805         11,374        11,965
Stockholders' equity                      167,130      165,132      192,277
                                         $ 360,963     $ 358,882     $ 415,074

                                                                                      
                                                                                                   
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,
                                                                                                   
                    2013        2012       Fav (Unfav)      2013        2012       Fav
                                                                                                   (Unfav)
                                                                                                   
Net revenue        $ 173,016       $ 173,553       (0.3     %)     $ 573,503       $ 540,818       6.0    %
Cost of              157,641         157,625       (0.0     %)       519,226         483,709       (7.3   %)
revenue
                                                                                              
Gross margin        15,375        15,928       (3.5     %)      54,277        57,109       (5.0   %)
                     8.9     %       9.2     %     (0.3     %)       9.5     %       10.6    %     (1.1   %)
Operating
expenses:
Selling,
general and          19,287          22,407        13.9     %        67,149          66,737        (0.6   %)
administrative
Amortization
of intangible        283             285           0.7      %        852             855           0.4    %
assets
Impairment of
long-lived           -               1,128         100.0    %        -               1,128         100.0  %
assets
Restructuring,      2,565         (22     )     (11759.1 %)      8,833         5,197        (70.0  %)
net
Total
operating           22,135        23,798       7.0      %       76,834        73,917       (3.9   %)
expenses
                                                                                                   
Operating loss       (6,760  )       (7,870  )     14.1     %        (22,557 )       (16,808 )     (34.2  %)
                                                                                                   
Other income        (1,095  )      3,753        (129.2   %)      (5,963  )      5,143        (215.9 %)
(expense)
                                                                                                   
                                                                                                   
Loss from
continuing           (7,855  )       (4,117  )     (90.8    %)       (28,520 )       (11,665 )     (144.5 %)
operations
before taxes
Income tax
expense             392           (1,202  )     132.6    %       1,975         1,050        (88.1  %)
(benefit)
Loss from
continuing           (8,247  )       (2,915  )     (182.9   %)       (30,495 )       (12,715 )     (139.8 %)
operations
                                                                                                   
Discontinued
operations,
net of income
taxes:
Loss from
discontinued        (59     )      (3,221  )     98.2     %       (1,019  )      (5,154  )     80.2   %
operations
                                                                                                   
                                                                                                   
Net loss           $ (8,306  )     $ (6,136  )     (35.4    %)     $ (31,514 )     $ (17,869 )     (76.4  %)
                                                                                                   
                                                                                                   
Basic and
diluted loss
per share:
                                                                                                   
Loss from
continuing         $ (0.17   )     $ (0.07   )     (158.6   %)     $ (0.68   )     $ (0.29   )     (131.8 %)
operations
                                                                                                   
Loss from
discontinued        (0.00   )      (0.07   )     98.2     %       (0.02   )      (0.12   )     80.9   %
operations
                                                                                                   
Net loss           $ (0.17   )     $ (0.14   )     (26.9    %)     $ (0.70   )     $ (0.41   )     (70.5  %)
                                                                                                   
Shares used in
computing
basic earnings      47,968        43,844                        45,046        43,546  
(loss) per
share
                                                                                                   
Shares used in
computing
diluted             47,968        43,844                        45,046        43,546  
earnings
(loss) per
share

                                                          
                                                                   
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,       April 30,       April 30,
                   2013            2012            2013            2012
                                                                   
Net revenue:
                                                                   
Americas           $ 64,496        $ 58,825        $ 196,137       $ 187,835
Asia                 48,133          56,642          164,864         168,506
Europe               51,952          50,706          188,700         159,020
All other           8,435         7,380         23,802        25,457  
                   $ 173,016      $ 173,553      $ 573,503      $ 540,818 
                                                                   
Operating
income (loss):
                                                                   
Americas           $ 679           $ (3,112  )     $ (1,820  )     $ (6,260  )
Asia                 3,614           4,671           16,379          18,216
Europe               (5,868  )       (4,222  )       (13,579 )       (12,983 )
All other           301           (498    )      (256    )      378     
                     (1,274  )       (3,161  )       724             (649    )
Other
reconciling         (5,486  )      (4,709  )      (23,281 )      (16,159 )
items
                   $ (6,760  )     $ (7,870  )     $ (22,557 )     $ (16,808 )
                                                                   
Non-GAAP
operating
income (loss):
                                                                   
Americas           $ 1,856         $ (2,004  )     $ 2,916         $ (1,907  )
Asia                 4,745           5,785           21,756          22,355
Europe               (2,309  )       (1,966  )       (5,494  )       (4,412  )
All other           758           27            1,889         1,850   
                     5,050           1,842           21,067          17,886
Other
reconciling         (4,675  )      (4,452  )      (21,887 )      (14,543 )
items
                   $ 375          $ (2,610  )     $ (820    )     $ 3,343   

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 LOSS AND
NET LOSS
                                                          
NON-GAAP
Operating income     $ 375          $ (2,610 )     $ (820    )     $ 3,343
(loss)
                                                                   
Adjustments:
Depreciation           (3,362 )       (3,341 )       (10,211 )       (10,564 )
Amortization of
intangible             (283   )       (285   )       (852    )       (855    )
assets
Impairment of
long-lived             -              (1,128 )       -               (1,128  )
assets
Share-based            (925   )       (528   )       (1,841  )       (2,407  )
compensation
Restructuring,        (2,565 )      22           (8,833  )      (5,197  )
net
GAAP Operating       $ (6,760 )     $ (7,870 )     $ (22,557 )     $ (16,808 )
loss
                                                                   
Other income           (1,095 )       3,753          (5,963  )       5,143
(expense), net
Income tax
(expense)              (392   )       1,202          (1,975  )       (1,050  )
benefit
Loss from
discontinued          (59    )      (3,221 )      (1,019  )      (5,154  )
operations
Net loss             $ (8,306 )     $ (6,136 )     $ (31,514 )     $ (17,869 )

Contact:

ModusLink Global Solutions, Inc.
Robert Joyce, 781-663-5120
ir@moduslink.com