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Exhibit 99.1

News Release

MODUSLINK REPORTS FINANCIAL RESULTS FOR THIRD QUARTER OF FISCAL 2014

WALTHAM, Mass.—June 9, 2014—ModusLink Global Solutions™, Inc. (NASDAQ: MLNK) today reported financial results for its third quarter of fiscal year 2014 ended April 30, 2014. Results for that period are summarized in the following paragraphs. For a full discussion of the results, please see the Company’s quarterly report on Form 10-Q, which can be accessed through www.moduslink.com.

Third Quarter Financial Summary

 

  Net revenue of $173.3 million compared to $173.0 million in the third quarter of fiscal 2013

 

  Gross margin of 9.1% compared to 8.9% in the third quarter of fiscal 2013

 

  SG&A expenses of $17.1 million, a 11.3% reduction compared to the third quarter of fiscal 2013

 

  Operating loss of $5.1 million compared to operating loss of $6.8 million in the third quarter of fiscal 2013

 

  Net loss of $9.5 million, or $0.18 per share, compared with net loss of $8.3 million, or $0.17 per share, in the third quarter of fiscal 2013

 

  Adjusted EBITDA of $3.4 million compared to $2.2 million in the third quarter of fiscal 2013

ModusLink reported net revenue of $173.3 million for the third quarter of fiscal 2014, compared to $173.0 million in the third quarter of fiscal 2013. The change in net revenue was primarily driven by increased revenue from an aftermarket services program in the Americas related to the repair and refurbishment of mobile devices, and revenue growth from programs for a consumer electronics client, which primarily benefited results in the Americas and Europe. Revenue growth from those programs was partially offset by lower revenues from certain programs for clients in the computing, software and communications markets.

Operating loss for the third quarter of fiscal 2014 was $5.1 million, compared to an operating loss of $6.8 million in the third quarter of the previous year. The improvement in operating loss for the third quarter of fiscal 2014 was primarily driven by a more favorable revenue mix, lower professional fees and improved operational cost efficiency. Net loss for the third quarter of fiscal 2014 was $9.5 million, or $0.18 per share, compared to a net loss of $8.3 million, or $0.17 per share.

For the third quarter of fiscal 2014, Adjusted EBITDA was $3.4 million compared to $2.2 million for the same period in fiscal 2013. EBITDA represents earnings before interest, income tax expense, depreciation and amortization, and Adjusted


EBITDA represents EBITDA excluding certain items. Please refer to the non-GAAP information and table reconciling the Company’s Adjusted EBITDA to its GAAP net income/(loss) below.

About ModusLink

ModusLink Corporation, a wholly owned subsidiary of ModusLink Global Solutions, Inc. (NASDAQ: MLNK), executes comprehensive supply chain and logistics services that are designed to 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 operations are supported by 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.

Non-GAAP Information

In addition to the financial measures prepared in accordance with generally accepted accounting principles, the Company uses Adjusted EBITDA, a non-GAAP financial measure, to assess its performance. EBITDA represents earnings before interest, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding the effects of professional fees associated with our SEC inquiry and financial restatement, strategic alternatives and other professional fees, executive severance and employee retention, restructuring, share-based compensation, impairments of goodwill and long-lived assets, unrealized foreign exchange gains or losses, net, other non-operating gains or losses, net, equity in losses of affiliates and impairments, and discontinued operations.

We believe that providing Adjusted EBITDA to investors is useful as this measure provides important supplemental information of our performance to investors and permits investors and management to evaluate the operating performance of our core supply chain business. We use Adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, determining a component of incentive compensation for executive officers and other key employees based on operating performance and evaluating short-term and long-term operating trends in our core supply chain business. We believe that the Adjusted EBITDA financial measure assists in providing an enhanced understanding of our underlying operational measures to manage the core supply chain business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision making.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

 

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A table reconciling the Company’s EBITDA and Adjusted EBITDA to its GAAP net income/(loss) is included 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 any 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; failure to realize expected benefits of restructuring and cost-cutting actions; difficulties integrating technologies, operations and personnel in accordance with the Company’s business strategy; client or program 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; 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. The Company does not undertake any obligations to update forward-looking statements made by it.

Contact:

Robert Joyce

781-663-5120

ir@moduslink.com

 

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ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     April 30,
2014
     July 31,
2013
     April 30,
2013
 

Assets:

        

Cash and cash equivalents

   $ 170,554       $ 77,916       $ 71,176   

Accounts receivable, net

     139,051         142,098         151,660   

Inventories

     62,275         61,322         70,331   

Prepaid expenses and other current assets

     11,747         9,750         11,047   
  

 

 

    

 

 

    

 

 

 

Total current assets

     383,627         291,086         304,214   
  

 

 

    

 

 

    

 

 

 

Property and equipment, net

     27,009         34,290         35,329   

Investments in affiliates

     7,000         7,970         9,326   

Goodwill

     3,058         3,058         3,058   

Other intangible assets, net

     935         1,764         2,045   

Other assets

     7,357         5,528         6,991   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 428,986       $ 343,696       $ 360,963   
  

 

 

    

 

 

    

 

 

 

Liabilities:

        

Accounts payable

   $ 99,977       $ 110,148       $ 112,417   

Accrued restructuring

     2,538         4,670         3,347   

Accrued expenses

     39,681         34,748         39,328   

Other current liabilities

     25,488         26,865         28,936   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     167,684         176,431         184,028   
  

 

 

    

 

 

    

 

 

 

Long-term portion of accrued restructuring

     235         494         —     

Notes payable

     72,320         —           —     

Other long-term liabilities

     9,950         9,866         9,805   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     250,189         186,791         193,833   
  

 

 

    

 

 

    

 

 

 

Total stockholders’ equity:

     178,797         156,905         167,130   
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 428,986       $ 343,696       $ 360,963   
  

 

 

    

 

 

    

 

 

 


ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

     Three months ended
April 30,
    Nine months ended
April 30,
 
     2014     2013     Fav (Unfav)     2014     2013     Fav (Unfav)  

Net revenue

   $ 173,274      $ 173,016        0.1   $ 558,700      $ 573,503        (2.6 %) 

Cost of revenue

     157,575        157,641        0.0     498,426        519,226        4.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     15,699        15,375        2.1     60,274        54,277        11.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     9.1     8.9     0.1     10.8     9.5     1.3

Operating expenses:

            

Selling, general and administrative

     17,100        19,287        11.3     54,787        67,149        18.4

Amortization of intangible assets

     269        283        4.9     829        852        2.7

Impairment of long-lived assets

     —          —          0.0     500        —          (100.0 %) 

Restructuring, net

     3,468        2,565        (35.2 %)      5,440        8,833        38.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,837        22,135        5.9     61,556        76,834        19.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (5,138     (6,760     24.0     (1,282     (22,557     94.3

Other income (expense), net

     (3,640     (677     (437.7 %)      (3,871     (4,510     14.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (8,778     (7,437     (18.0 %)      (5,153     (27,067     81.0

Income tax expense

     700        392        (78.6 %)      2,590        1,975        (31.1 %) 

Equity in losses of affiliates, net of tax

     —          418        100.0     134        1,453        90.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (9,478     (8,247     (14.9 %)      (7,877     (30,495     74.2

Discontinued operations, net of income taxes:

            

Income (loss) from discontinued operations

     —          (59     100.0     80        (1,019     107.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (9,478   $ (8,306     (14.1 %)    $ (7,797   $ (31,514     75.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share:

            

Income (loss) from continuing operations

   $ (0.18   $ (0.17     (7.0 %)    $ (0.15   $ (0.68     77.4

Income (loss) from discontinued operations

     —          —          0.0     —          (0.02     100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (0.18   $ (0.17     (7.0 %)    $ (0.15   $ (0.70     78.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing income (loss) per share:

            

Basic

     51,498        47,968          51,502        45,046     

Diluted

     51,498        47,968          51,502        45,046     


ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Information by Operating Segment

(in thousands)

(unaudited)

 

     Three months ended     Nine months ended  
     April 30,
2014
    April 30,
2013
    April 30,
2014
    April 30,
2013
 

Net revenue:

        

Americas

   $ 74,429      $ 64,496      $ 229,791      $ 196,137   

Asia

     41,387        48,133        134,307        164,864   

Europe

     48,423        51,952        165,790        188,700   

All other

     9,035        8,435        28,812        23,802   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenue

   $ 173,274      $ 173,016      $ 558,700      $ 573,503   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss):

        

Americas

   $ 2,736      $ 679      $ 8,304      $ (1,820

Asia

     2,342        3,614        14,001        16,379   

Europe

     (4,439     (5,868     (8,934     (13,579

All other

     (411     301        98        (256
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment operating income (loss)

     228        (1,274     13,469        724   

Other reconciling items

     (5,366     (5,486     (14,751     (23,281
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

   $ (5,138   $ (6,760   $ (1,282   $ (22,557
  

 

 

   

 

 

   

 

 

   

 

 

 


ModusLink Global Solutions, Inc. and Subsidiaries

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(in thousands)

(unaudited)

Net Income (Loss) to Adjusted EBITDA1

 

     Three months ended     Nine months ended  
     April 30,
2014
    April 30,
2013
    April 30,
2014
    April 30,
2013
 

Net income (loss)

   $ (9,478   $ (8,306   $ (7,797   $ (31,514

Interest income

     (159     (64     (326     (229

Interest expense

     2,049        324        2,461        524   

Income tax expense

     700        392        2,590        1,975   

Depreciation

     3,627        3,362        10,198        10,211   

Amortization of intangible assets

     269        283        829        852   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     (2,992     (4,009     7,955        (18,181

SEC inquiry and financial restatement costs

     103        1,604        3,320        8,239   

Strategic alternatives and other professional fees

     30        (155     85        1,235   

Executive severance and employee retention

     1,080        224        1,080        1,262   

Restructuring

     3,468        2,565        5,440        8,833   

Share-based compensation

     513        925        1,663        1,841   

Impairment of goodwill and long-lived assets

     —          —          500        —     

Unrealized foreign exchange (gains) losses, net

     25        483        (323     2,750   

Other non-operating (gains) losses, net

     (30     127        (391     366   

Equity in losses of affiliates and impairments

     1,243        418        1,554        2,953   

Discontinued operations

     —          59        (80     1,019   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 3,440      $ 2,241      $ 20,803      $ 10,317   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1  The Company defines Adjusted EBITDA as net income (loss) excluding net charges related to interest income, interest expense, income tax expense, depreciation, amortization of intangible assets, SEC inquiry and financial restatement costs, strategic alternatives and other professional fees, executive severance and employee retention, restructuring, share-based compensation, impairment of goodwill and long-lived assets, unrealized foreign exchange (gains) losses, net, other non-operating (gains) losses, net, equity in losses of affiliates and impairments and discontinued operations.