This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ModusLink Global Solutions Reports Financial Results For Second Quarter Of Fiscal 2013

Stocks in this article: MLNK

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 success and impact of the Company’s initiatives to reduce costs; the Company’s ability to develop a long-term strategic plan to achieve profitable growth; the Company’s ability to achieve its near-term priorities to reduce costs, evaluate its global operations, improve asset efficiency and maintain high levels of customer services; the Company’s expectations regarding an improved cost structure and the expectation as to the closing of the Steel Holdings transaction. 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; increased competition and technological changes in the markets in which the Company competes; and the Steel Holdings transaction is subject to certain enumerated closing conditions and there can be no assurance that such conditions will be met and the transaction will be consummated. 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 Balance Sheets
(In thousands)
(Unaudited)
     
January 31, July 31, January 31,
  2013   2012   2012
Assets:
Cash and cash equivalents $ 51,790 $ 52,369 $ 95,618
Available-for-sale securities 14 131 132
Trade accounts receivable, net 151,573 148,931 156,195
Inventories, net 83,053 83,990 94,675
Prepaid and other current assets 11,807 10,466 10,325
Current assets of discontinued operations   283   -   -
Total current assets   298,520   295,887   356,945
Property and equipment, net 38,193 40,772 43,493
Investments in affiliates 9,556 10,803 12,352
Goodwill 3,058 3,058 3,058
Intangible assets, net 2,327 2,897 4,029
Other assets   6,671   5,465   10,318
$ 358,325 $ 358,882 $ 430,195
Liabilities:
Current portion of capital lease obligations $ 99

$

73

$

89
Accounts payable 125,472 110,520 135,970
Current portion of accrued restructuring 4,575 1,724 4,978
Accrued expenses 40,422 41,753 37,776
Other current liabilities 27,411 26,778 39,489
Current liabilities of discontinued operations   1,471   1,528   1,452
Total current liabilities   199,450   182,376   219,754
Long-term portion of accrued restructuring - - 109
Long-term portion of capital leases obligations 40 69 104
Other long-term liabilities 11,037 11,012 12,030
Non-current liabilities of discontinued operations   101   293   983
11,178 11,374 13,226
Stockholders' equity   147,697   165,132   197,215
$ 358,325 $ 358,882 $ 430,195
 
 
 
ModusLink Global Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
           
Three months ended Six months ended
January 31, January 31,
  2013    

2012(As Restated)

  Fav (Unfav)   2013    

2012(As Restated)

  Fav (Unfav)
 
Net revenue $ 203,436 $ 169,435 20.1 % $ 400,487 $ 367,265 9.0 %
Cost of revenue 183,158 154,026 (18.9 %) 361,585 326,084 (10.9 %)
           
Gross margin   20,278     15,409   31.6 %   38,902     41,181   (5.5 %)
10.0 % 9.1 % 0.9 % 9.7 % 11.2 % (1.5 %)
Operating expenses:
Selling, general and administrative 23,721 23,181 (2.3 %) 47,862 44,330 (8.0 %)
Amortization of intangible assets 285 285 - 569 569 -
Restructuring, net   4,798     4,463   (7.5 %)   6,268     5,219   (20.1 %)
Total operating expenses   28,804     27,929   (3.1 %)   54,699     50,118   (9.1 %)
 
Operating income (loss) (8,526 ) (12,520 ) 31.9 % (15,797 ) (8,937 ) (76.8 %)
 
Other income (expense)   (3,217 )   559   (675.5 %)   (4,868 )   1,390   (450.2 %)
 
 
Income (loss) from continuing operations before taxes (11,743 ) (11,961 ) 1.8 % (20,665 ) (7,547 ) (173.8 %)
Income tax expense (benefit)   674     380   (77.4 %)   1,583     2,251   29.7 %
Income (loss) from continuing operations (12,417 ) (12,341 ) (0.6 %) (22,248 ) (9,798 ) (127.1 %)
 
Discontinued operations, net of income taxes:
Income (loss) from discontinued operations   (133 )   (535 ) 75.1 %   (960 )   (1,933 ) 50.3 %
 
 
Net Income (loss) $ (12,550 ) $ (12,876 ) 2.5 % $ (23,208 ) $ (11,731 ) (97.8 %)
 
 
Basic and diluted earnings (loss) per share:
 
Income (loss) from continuing operations $ (0.29 ) $ (0.29 ) - $ (0.51 ) $ (0.23 ) (121.7 %)
 
Income (loss) from discontinued operations   -     (0.01 ) -     (0.02 )   (0.04 ) 50.0 %
 
Net income (loss) $ (0.29 ) $ (0.30 ) 3.3 % $ (0.53 ) $ (0.27 ) (96.3 %)
 
Shares used in computing basic earnings (loss) per share   43,654     43,434     43,629     43,367  
 
Shares used in computing diluted earnings (loss) per share   43,654     43,434     43,629     43,367  
 
 
 
ModusLink Global Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
       
 
Three months ended Six months ended
January 31, January 31, January 31, January 31,
  2013     2012     2013     2012  
 

Net revenue:

 
Americas $ 67,731 $ 59,498 $ 131,641 $ 129,009
Asia 60,356 51,124 116,731 111,863
Europe 67,818 50,710 136,748 108,316
All other   7,531     8,103     15,367     18,077  
$ 203,436   $ 169,435   $ 400,487   $ 367,265  
 

Operating income (loss):

 
Americas $ (445 ) $ (3,084 ) $ (2,470 ) $ (3,204 )
Asia 5,586 4,513 12,756 13,805
Europe (3,902 ) (7,177 ) (7,750 ) (8,865 )
All other   (954 )   (79 )   (536 )   777  
285 (5,827 ) 2,000 2,513
Other reconciling items   (8,811 )   (6,693 )   (17,797 )   (11,450 )
$ (8,526 ) $ (12,520 ) $ (15,797 ) $ (8,937 )
 

Non-GAAP operating income (loss):

 
Americas $ 1,673 $ (1,272 ) $ 1,073 $ 54
Asia 7,982 5,795 17,004 16,760
Europe (1,198 ) (2,225 ) (3,206 ) (2,521 )
All other   289     409     1,145     1,752  
8,746 2,707 16,016 16,045
Other reconciling items   (8,527 )   (5,970 )   (17,212 )   (10,090 )
$ 219   $ (3,263 ) $ (1,196 ) $ 5,955  
 

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 $ 219 $ (3,263 ) $ (1,196 ) $ 5,955
 
Adjustments:
Depreciation (3,240 ) (3,511 ) (6,849 ) (7,224 )
Amortization of intangible assets (285 ) (285 ) (569 ) (569 )
Stock-based compensation (422 ) (998 ) (915 ) (1,880 )
Restructuring, net   (4,798 )   (4,463 )   (6,268 )   (5,219 )
GAAP Operating income (loss) $ (8,526 ) $ (12,520 ) $ (15,797 ) $ (8,937 )
 
Other income (expense), net (3,217 ) 559 (4,868 ) 1,390
Income tax expense (674 ) (380 ) (1,583 ) (2,251 )
Income (loss) from discontinued operations   (133 )   (535 )   (960 )   (1,933 )
Net income (loss) $ (12,550 ) $ (12,876 ) $ (23,208 ) $ (11,731 )
 
 
Reconciliations for non-GAAP measure:
Three months ended Six months ended
January 31, January 31,
  2013     2012     2013     2012  
Net cash provided by (used in) operating activities of continuing operations $ (4,947 ) $ (10,189 ) $ 3,833 $ (4,955 )
Additions to property and equipment   (1,436 )   (3,015 )   (3,570 )   (4,765 )
Free cash flow from operations $ (6,383 ) $ (13,204 ) $ 263   $ (9,720 )




5 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,890.34 +85.54 0.48%
S&P 500 2,071.99 +1.34 0.06%
NASDAQ 4,762.7540 -2.6260 -0.06%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs