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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Apr. 30, 2012	Jan. 04, 2013
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	MLNK
Entity Registrant Name	MODUSLINK GLOBAL SOLUTIONS INC
Entity Central Index Key	0000914712
Current Fiscal Year End Date	--07-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		43,841,024

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Apr. 30, 2012

Jul. 31, 2011

Current assets:

Cash and cash equivalents

$ 78,450

$ 111,225

^[1]

Available-for-sale securities

132

131

^[1]

Accounts receivable, trade, net of allowance for doubtful accounts of $385 and $473, at April 30, 2012 and July 31, 2011, respectively

163,824

146,411

^[1]

Inventories, net

93,653

76,883

^[1]

Prepaid expenses and other current assets

9,250

10,876

^[1]

Total current assets

345,309

345,526

^[1]

Property and equipment, net

42,648

47,403

^[1]

Investments in affiliates

10,796

12,016

^[1]

Goodwill

3,058

^[1]

Other intangible assets, net

3,182

4,699

^[1]

Other assets

10,081

9,545

^[1]

Total assets

415,074

422,247

^[1]

Current liabilities:

Current installments of obligations under capital leases

^[1]

Accounts payable

135,775

114,588

^[1]

Current portion of accrued restructuring

1,721

1,456

^[1]

Accrued income taxes

^[1]

180

Accrued expenses

40,037

36,384

^[1]

Other current liabilities

31,735

38,624

^[1]

Current liabilities of discontinued operations

1,485

1,817

^[1]

Total current liabilities

210,832

193,143

^[1]

Long-term portion of accrued restructuring

^[1]

Obligations under capital leases, less current installments

^[1]

Other long-term liabilities

11,107

12,585

^[1]

Non-current liabilities of discontinued operations

673

1,883

^[1]

Stockholders' equity:

Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; zero issued or outstanding at April 30, 2012 and July 31, 2011

^[1]

Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 44,255,430 issued and outstanding shares at April 30, 2012; 43,829,097 issued and outstanding shares at July 31, 2011

443

438

^[1]

Additional paid-in capital

7,389,452

7,387,135

^[1]

Accumulated deficit

(7,216,536)

(7,198,667)

^[1]

Accumulated other comprehensive income

18,918

25,636

^[1]

Total stockholders' equity

192,277

214,542

^[1]

Total liabilities and stockholders' equity

$ 415,074

$ 422,247

^[1]

[1]	As Restated

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands

Apr. 30, 2012

Jul. 31, 2011

^[1]

Accounts receivable, trade, allowance for doubtful accounts

$ 385

$ 473

Preferred stock, par value

$ 0.01

Preferred stock, shares authorized

5,000,000

Preferred stock, shares issued

Preferred stock, shares outstanding

Common stock, par value

$ 0.01

Common stock, shares authorized

1,400,000,000

Common stock, shares issued

44,255,430

43,829,097

Common stock, shares outstanding

44,255,430

43,829,097

[1]	As Restated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Apr. 30, 2012

Apr. 30, 2011

^[1]

Apr. 30, 2012

Apr. 30, 2011

^[1]

Net revenue

$ 178,565

$ 206,579

$ 562,797

$ 675,061

Cost of revenue

163,146

186,912

506,101

611,706

Gross profit

15,419

19,667

56,696

63,355

Operating expenses:

Selling, general and administrative

23,515

20,788

70,320

63,797

Amortization of intangible assets

331

1,062

995

4,420

Impairment of goodwill and long-lived assets

2,062

27,166

Restructuring, net

495

5,847

1,201

Total operating expenses

26,403

21,850

79,224

96,584

Operating loss

(10,984)

(2,183)

(22,528)

(33,229)

Other income:

Interest income

310

191

Interest expense

(90)

(110)

(278)

(357)

Other gains, net

6,875

5,532

8,930

9,607

Equity in losses of affiliates and impairments

(3,108)

(401)

(3,825)

(2,214)

Total other income

3,744

5,083

5,137

7,227

Income (loss) from continuing operations before income taxes

(7,240)

2,900

(17,391)

(26,002)

Income tax expense (benefit)

(1,202)

1,331

1,050

3,772

Income (loss) from continuing operations

(6,038)

1,569

(18,441)

(29,774)

Discontinued operations, net of income taxes:

Income (loss) from discontinued operations

(98)

(91)

572

(239)

Net income (loss)

$ (6,136)

$ 1,478

$ (17,869)

$ (30,013)

Basic and diluted earnings (loss) per share:

Income (loss) from continuing operations

$ (0.14)

$ 0.03

$ (0.42)

$ (0.68)

Income (loss) from discontinued operations

0.01

(0.01)

Net income (loss)

$ (0.14)

$ 0.03

$ (0.41)

$ (0.69)

Shares used in computing basic earnings per share:

43,844

43,303

43,546

43,289

Shares used in computing diluted earnings per share:

43,844

43,502

43,546

43,289

[1]	As Restated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

9 Months Ended

Apr. 30, 2012

Apr. 30, 2011

Cash flows from operating activities of continuing operations:

Net loss

$ (17,869)

$ (30,013)

^[1]

Income (loss) from discontinued operations

572

(239)

^[1]

Loss from continuing operations

(18,441)

(29,774)

^[1]

Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities of continuing operations:

Depreciation

10,698

12,359

^[1]

Impairment of goodwill and long-lived assets

2,062

27,166

^[1]

Amortization of intangible assets

995

4,420

^[1]

Share-based compensation

2,407

2,619

^[1]

Non-operating gains, net

(8,930)

(9,607)

^[1]

Equity in losses of affiliates and impairments

3,825

2,214

^[1]

Changes in operating assets and liabilities:

Trade accounts receivable, net

(21,429)

32,333

^[1]

Inventories

(18,701)

(4,336)

^[1]

Prepaid expenses and other current assets

698

790

^[1]

Accounts payable, accrued restructuring and accrued expenses

29,245

(39,440)

^[1]

Refundable and accrued income taxes, net

(5,700)

675

^[1]

Other assets and liabilities

6,944

929

^[1]

Net cash (used in) provided by operating activities of continuing operations

(16,327)

348

^[1]

Cash flows from investing activities of continuing operations:

Additions to property and equipment

(9,076)

(6,523)

^[1]

Proceeds from the sale of available-for-sale securities

^[1]

115

Proceeds from the sale of equity investments in affiliates

^[1]

Investments in affiliates

(2,604)

(2,473)

^[1]

Net cash used in investing activities of continuing operations

(11,656)

(8,829)

^[1]

Cash flows from financing activities of continuing operations:

Payment of dividends

^[1]

(40,001)

Proceeds from revolving line of credit

10,000

Repayments of revolving line of credit

(10,000)

Repayments on capital lease obligations

(92)

(78)

^[1]

Proceeds from issuance of common stock

168

^[1]

Repurchase of common stock

(176)

(1,622)

^[1]

Net cash used in financing activities of continuing operations

(177)

(41,533)

^[1]

Cash flows from discontinued operations:

Operating cash flows

(1,237)

(1,263)

^[1]

Net cash used in discontinued operations

(1,237)

(1,263)

^[1]

Net effect of exchange rate changes on cash and cash equivalents

(3,378)

9,033

^[1]

Net decrease in cash and cash equivalents

(32,775)

(42,244)

^[1]

Cash and cash equivalents at beginning of period

^[1]

111,225

161,364

Cash and cash equivalents at end of period

$ 78,450

$ 119,120

^[1]

[1]	As Restated

NATURE OF OPERATIONS

9 Months Ended

Apr. 30, 2012

NATURE OF OPERATIONS

(1) NATURE OF OPERATIONS

ModusLink Global Solutions, Inc. (together with its consolidated subsidiaries, “ModusLink Global Solutions” or the “Company”), through its wholly owned subsidiaries, ModusLink Corporation (“ModusLink”), ModusLink PTS, Inc. (“ModusLink PTS”) and Tech For Less LLC (“TFL”), is a leader in global supply chain business process management serving clients in markets such as consumer electronics, communications, computing, medical devices, software, luxury goods and retail. The Company designs and executes critical elements in its clients’ global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. These benefits are delivered through a combination of industry expertise, innovative service solutions, integrated operations, proven business processes, expansive global footprint and world-class technology.

The Company has an integrated network of strategically located facilities in various countries, including numerous sites throughout North America, Europe and Asia. The Company previously operated under the names CMGI, Inc. and CMG Information Services, Inc. and was incorporated in Delaware in 1986.

BASIS OF PRESENTATION

9 Months Ended

Apr. 30, 2012

BASIS OF PRESENTATION

(2) BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2011, as restated, which will be contained in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2012, which will be filed with the Securities and Exchange Commission (“SEC”) immediately after the filing of this Form 10-Q. The Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2012 also contains restated financial information for the fiscal quarters ended October 31, 2011 and January 31, 2012, which affect the nine month period April 30, 2012 discussed in this Form 10-Q. The results for the three and nine months ended April 30, 2012 are not necessarily indicative of the results to be expected for the full fiscal year.

All significant intercompany transactions and balances have been eliminated in consolidation.

The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the period ended April 30, 2012, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

9 Months Ended

Apr. 30, 2012

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

(3) RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

On February 15, 2012, the Division of Enforcement of the Securities and Exchange Commission (“SEC”) initiated with the Company an informal inquiry, and later a formal action, regarding the Company’s treatment of rebates associated with volume discounts provided by vendors (the “SEC Inquiry”). Concurrent with the SEC Inquiry, the Audit Committee of the Company’s Board of Directors commenced an internal investigation of the Company’s practices with regard to rebates received from vendors.

On March 12, 2012, in its Form 10-Q for the quarterly period ended January 31, 2012, the Company announced the pendency of the SEC Inquiry.

In providing its supply chain services, the Company enters into contracts with its clients that employ various arrangements for pricing, including “fixed-price,” “cost-plus,” or “cost-pass-through” pricing models. Although the specifications and terms of the pricing model can frequently vary from client to client, and among the products or programs for a single client, under a “fixed-price” model, the Company and its client will typically negotiate a fixed unit price for the supply chain services to be provided, where the level of costs incurred by the Company does not affect the contractual, negotiated price. Under a “cost-plus” model, the client agrees to pay the costs incurred by the Company to purchase materials, together with an agreed-to percentage mark-up on those costs. Finally, with regard to a “cost-pass-through” model, materials and other costs incurred by the Company are passed through directly to the client, and the client agrees to pay a separate negotiated fee for specified services provided by the Company. Arrangements with clients can include the use of any one or more of these pricing models, depending on the client program involved and the location from which the Company services the client. In addition, continued price and cost discussions with clients through the course of the relationship can sometimes result in an accepted change in the pricing model applied. Consequently, the implication and interpretation of the cost and price terms applicable to any particular client relationship can vary across client programs and products, at different periods in time, and based on the locations from which a client may be serviced.

In the course of the Company’s contractual relationships, clients often demand lower costs over time, typically attributable to efficiency gains in service offerings. The Company accomplishes this in various ways, including for example, by shifting production to lower cost regions, redesigning clients’ packaging and supply chains, and strategically sourcing materials. As part of these services and in the normal course of its business, the Company purchases certain commodity types of materials, including, but not limited to, print, packaging, media and labels, to meet client requirements, often in quantities well in excess of those required by any one client. As a result, the Company receives improved pricing on materials. Frequently, the Company also received and retained rebates based on aggregate volumes of purchases or other criteria established by the vendor. The retention of rebates produced a positive impact on the Company’s revenue, and, therefore, also positively affected the Company’s profitability and operating income.

As previously reported in the Company’s Current Report on Form 8-K dated June 9, 2012, the Audit Committee, in consultation with management and the Board of Directors, concluded that the Company’s previously issued financial statements for the fiscal years ended July 31, 2009 through 2011 and the first two quarters of fiscal year 2012, and selected unaudited financial data for fiscal years 2007 and 2008, should no longer be relied upon. Accordingly, the Company’s consolidated financial statements for the fiscal years ended July 31, 2011, 2010 and 2009 have been restated.

Several principal adjustments were made to historic financial statements as a result of the restatement. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract (collectively referred to as “pricing adjustments”), the Company concluded that these amounts were not properly recorded as revenue. Accordingly, revenue was reduced by an equivalent amount for the period that the rebate was estimated to have affected. A corresponding liability for the same amount was recorded in that period (referred to as “accrued pricing liabilities”), which decreased working capital in the period. The Company believes that it may not ultimately be required to pay the accrued pricing liabilities, due in part to the nature of the interactions with its clients. When, and to the extent that, the Company is able to conclude that the accrued pricing liabilities have been extinguished for less than the amounts accrued, the Company will record the difference as other income. In the course of its business with certain clients, the Company has received releases of claims from such clients which have resulted in the Company concluding that the accrued pricing liabilities for those clients have been extinguished. The amounts derecognized and recorded in other income were $7.5 million for both the three and nine months ended April 30, 2012, and $7.2 million and $13.5 million, respectively, during the three and nine months ended April 30, 2011. The remaining accrued pricing liabilities at April 30, 2012 will be derecognized when there is sufficient information for the Company to conclude that such liabilities have been extinguished, which may occur through payment, legal release, or other legal or factual determination.

In addition to the errors described above, the restated financial statements include a $3.7 million adjustment in the quarter ended July 31, 2011 to correct a reserve for an uncertain tax position (the “tax adjustment”). Based on the date of effective settlement of the uncertain tax position, the reserve should have been reversed in the quarter ended July 31, 2011.

The restated financial statements also include other adjustments to correct certain immaterial errors for previously unrecorded adjustments identified in audits of prior years’ financial statements (the “other adjustments”). The previously unrecorded audit adjustments are being recorded as part of the restatement process although none of these adjustments is individually material.

In the tables appearing below, the column labeled “Restatement Pricing Adjustments” sets forth the pricing adjustments and the column labeled “Restatement Other Adjustments” sets forth the tax adjustment (where applicable) and the other adjustments.

The restatement adjustments decreased revenues by $0.6 million and $2.6 million, increased net income by $6.6 million and $10.1 million, and increased basic and diluted earnings per share by $0.15 and $0.24 for the three and nine months ended April 30, 2011, respectively.

Certain of the adjustments described above also affected periods prior to July 31, 2011. Any adjustments from periods prior to the condensed consolidated balance sheet as of July 31, 2011 contained within this Form 10-Q are reflected in a $28.6 million increase to accumulated deficit from $7,170.0 million to $7,198.6 million, as compared to the previously reported amount as of July 31, 2011.

The effects of the restatement adjustments on the Company’s unaudited condensed consolidated balance sheet as of July 31, 2011 are as follows:


	July 31, 2011 (Unaudited)
	As Previously Reported			Restatement Pricing Adjustments			Restatement Other Adjustments			As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	111,225		$	—		$	—		$	111,225
Available-for-sale securities		131			—			—			131
Accounts receivable, trade, net of allowance for doubtful accounts of $473		146,411			—			—			146,411
Inventories, net		77,102			—			(219	)		76,883
Prepaid expenses and other current assets		10,876			—			—			10,876

Total current assets		345,745			—			(219	)		345,526
Property and equipment, net		47,299			—			104			47,403
Investments in affiliates		12,016			—			—			12,016
Goodwill		3,058			—			—			3,058
Other intangible assets, net		4,699			—			—			4,699
Other assets		9,545			—			—			9,545

Total assets	$	422,362		$	—		$	(115	)	$	422,247


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Current installments of obligations under capital leases	$	43		$	—		$	51		$	94
Accounts payable		114,588			—			—			114,588
Current portion of accrued restructuring		1,456			—			—			1,456
Accrued income taxes		180			—			—			180
Accrued expenses		36,384			—			—			36,384
Other current liabilities		7,029			30,706			889			38,624
Current liabilities of discontinued operations		1,817			—			—			1,817

Total current liabilities		161,497			30,706			940			193,143
Long-term portion of accrued restructuring		8			—			—			8
Obligations under capital leases, less current installments		22			—			64			86
Other long-term liabilities		15,773			—			(3,188	)		12,585
Non-current liabilities of discontinued operations		1,883			—			—			1,883
Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; zero issued or outstanding		—			—			—			—
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 43,829,097 issued and outstanding shares		438			—			—			438
Additional paid-in capital		7,387,135			—			—			7,387,135
Accumulated deficit		(7,170,030	)		(30,706	)		2,069			(7,198,667	)
Accumulated other comprehensive income		25,636			—			—			25,636

Total stockholders’ equity		243,179			(30,706	)		2,069			214,542

Total liabilities and stockholders’ equity	$	422,362		$	—		$	(115	)	$	422,247

The effects of the restatement adjustments on the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended April 30, 2011 are as follows:


	Three months ended April 30, 2011 (Unaudited)
	As Previously Reported			Restatement Pricing Adjustments			Restatement Other Adjustments			As Restated

Net revenue	$	207,140		$	(426	)	$	(135	)	$	206,579
Cost of revenue		186,906			—			6			186,912

Gross profit		20,234			(426	)		(141	)		19,667

Operating expenses:
Selling, general and administrative		20,788			—			—			20,788
Amortization of intangible assets		1,062			—			—			1,062
Impairment of goodwill and long-lived assets		—			—			—			—
Restructuring, net		—			—			—			—

Total operating expenses		21,850			—			—			21,850

Operating loss		(1,616	)		(426	)		(141	)		(2,183	)


Other income (expense):
Interest income		62			—			—			62
Interest expense		(108	)		—			(2	)		(110	)
Other gains (losses), net		(1,641	)		7,173			—			5,532
Equity in losses of affiliates and impairments		(401	)		—			—			(401	)

Total other income (expense)		(2,088	)		7,173			(2	)		5,083


Income (loss) from continuing operations before income taxes		(3,704	)		6,747			(143	)		2,900
Income tax expense		1,331			—			—			1,331

Income (loss) from continuing operations		(5,035	)		6,747			(143	)		1,569
Discontinued operations, net of income taxes:
Loss from discontinued operations		(91	)		—			—			(91	)

Net income (loss)	$	(5,126	)	$	6,747		$	(143	)	$	1,478


Basic and diluted earnings (loss) per share:
Income (loss) from continuing operations	$	(0.12	)	$	0.15		$	—		$	0.03
Loss from discontinued operations		—			—			—			—

Net income (loss)	$	(0.12	)	$	0.15		$	—		$	0.03

Shares used in computing basic loss per share:		43,303			—			—			43,303


Shares used in computing diluted loss per share:		43,303			—			—			43,502


	Nine months ended April 30, 2011 (Unaudited)
	As Previously Reported			Restatement Pricing Adjustments			Restatement Other Adjustments			As Restated

Net revenue	$	677,668		$	(1,569	)	$	(1,038	)	$	675,061
Cost of revenue		611,689			—			17			611,706

Gross profit		65,979			(1,569	)		(1,055	)		63,355

Operating expenses:
Selling, general and administrative		63,797			—			—			63,797
Amortization of intangible assets		4,420			—			—			4,420
Impairment of goodwill and long-lived assets		27,166			—			—			27,166
Restructuring, net		1,201			—			—			1,201

Total operating expenses		96,584			—			—			96,584

Operating loss		(30,605	)		(1,569	)		(1,055	)		(33,229	)


Other income (expense):
Interest income		191			—			—			191
Interest expense		(350	)		—			(7	)		(357	)
Other gains (losses), net		(3,938	)		13,545			—			9,607
Equity in losses of affiliates and impairments		(1,417	)		—			(797	)		(2,214	)

Total other income (expense)		(5,514	)		13,545			(804	)		7,227


Loss from continuing operations before income taxes		(36,119	)		11,976			(1,859	)		(26,002	)
Income tax expense		3,772			—			—			3,772

Loss from continuing operations		(39,891	)		11,976			(1,859	)		(29,774	)
Discontinued operations, net of income taxes:
Loss from discontinued operations		(239	)		—			—			(239	)

Net loss	$	(40,130	)	$	11,976		$	(1,859	)	$	(30,013	)


Basic and diluted loss per share:
Loss from continuing operations	$	(0.92	)	$	0.28		$	(0.04	)	$	(0.68	)
Loss from discontinued operations		(0.01	)		—			—			(0.01	)

Net loss	$	(0.93	)	$	0.28		$	(0.04	)	$	(0.69	)

Shares used in computing basic loss per share:		43,289			—			—			43,289

Shares used in computing diluted loss per share:		43,289			—			—			43,289

The effects of the restatement adjustments on the Company’s unaudited condensed consolidated statement of cash flows for the nine months ended April 30, 2011 are as follows:


	Nine months ended April 30, 2011 (Unaudited)
	As Previously Reported			Restatement Pricing Adjustments			Restatement Other Adjustments			As Restated
Cash flows from operating activities of continuing operations:
Net loss	$	(40,130	)	$	11,976		$	(1,859	)	$	(30,013	)
Loss from discontinued operations		(239	)		—			—			(239	)

Loss from continuing operations		(39,891	)		11,976			(1,859	)		(29,774	)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) continuing operations:
Depreciation		12,321			—			38			12,359
Impairment of goodwill and long-lived assets		27,166			—			—			27,166
Amortization of intangible assets		4,420			—			—			4,420
Share-based payments		2,619			—			—			2,619
Non-operating losses (gains)		3,938			(13,545	)		—			(9,607	)
Equity in losses of affiliates and impairments		1,417			—			797			2,214
Changes in operating assets and liabilities, excluding effects from acquisition:
Trade accounts receivable, net		32,333			—			—			32,333
Inventories		(4,336	)		—			—			(4,336	)
Prepaid expenses and other current assets		790			—			—			790
Accounts payable, accrued restructuring and accrued expenses		(39,464	)		—			24			(39,440	)
Refundable and accrued income taxes, net		675			—			—			675
Other assets and liabilities		(1,678	)		1,569			1,038			929

Net cash provided by (used in) operating activities of continuing operations		310			—			38			348

Cash flows from investing activities of continuing operations:
Additions to property and equipment		(6,523	)		—			—			(6,523	)
Proceeds from the sale of available-for-sale securities		115			—			—			115
Proceeds from the sale of equity investments in affiliates		52			—			—			52
Investments in affiliates		(2,473	)		—			—			(2,473	)

Net cash used in investing activities of continuing operations		(8,829	)		—			—			(8,829	)

Cash flows from financing activities of continuing operations:
Payments of dividends		(40,001	)		—			—			(40,001	)
Repayments on capital lease obligations		(40	)		—			(38	)		(78	)
Proceeds from issuance of common stock		168			—			—			168
Repurchase of common stock		(1,622	)		—			—			(1,622	)


Net cash used in financing activities of continuing operations		(41,495	)		—			(38	)		(41,533	)

Cash flows from discontinued operations:
Operating cash flows		(1,263	)		—			—			(1,263	)

Net cash used in discontinued operations		(1,263	)		—			—			(1,263	)

Net effect of exchange rate changes on cash and cash equivalents		9,033									9,033

Net decrease in cash and cash equivalents		(42,244	)		—			—			(42,244	)
Cash and cash equivalents at beginning of year		161,364			—			—			161,364

Cash and cash equivalents at end of year	$	119,120		$	—		$	—		$	119,120

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References + Details

RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Apr. 30, 2012

RECENT ACCOUNTING PRONOUNCEMENTS

(4) RECENT ACCOUNTING PRONOUNCEMENTS

In December 2011, the Financial Accounting Standards Board (“FASB”) issued a final standard to defer the new requirement to present components of reclassifications of other comprehensive income on the face of the income statement. This update allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Accounting Standard Update (“ASU”) 2011-05, “Presentation of Comprehensive Income”. All other requirements included within ASU 2011-05 are not affected and entities must report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The effective date of this update is for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company believes adoption of this new guidance will not have a material impact on the Company’s financial statements as these updates have an impact on presentation only.

In September 2011, the FASB issued ASU 2011-08, “Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment” which is intended to reduce the complexity and costs related to testing goodwill for impairment. ASU 2011-08 allows an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment in order to determine whether it is necessary to perform the two-step quantitative goodwill impairment test already included in Topic 350. An entity will no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on its qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. ASU 2011-08 also expands upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amended guidance became effective for the Company on August 1, 2012. We do not anticipate that this new guidance will have a material impact on our financial statements.

In June 2011, the FASB issued guidance on the presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of stockholders’ equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or two separate but consecutive statements. The new guidance became effective for the Company on August 1, 2012. The Company believes adoption of this new guidance will not have a material impact on the Company’s financial statements as this update has an impact on presentation only.

In May 2011, the FASB issued guidance to amend the accounting and disclosure requirements on fair value measurements. The new guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credits risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value changes in unobservable inputs. The new guidance became effective for the Company on February 1, 2012. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

- Definition

The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Direct Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6510796

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6507316

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22583-107794

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Indirect Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6515603

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01.(b)(6))
-URI http://asc.fasb.org/extlink&oid=6958853&loc=d3e46468-122699

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22580-107794

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Accounting Change
-URI http://asc.fasb.org/extlink&oid=6503790

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22499-107794

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Retrospective Application
-URI http://asc.fasb.org/extlink&oid=6523989

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e725-108305

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e765-108305

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 01
-Paragraph b
-Subparagraph 6
-Article 10

+ Details

GOODWILL AND LONG-LIVED ASSETS

9 Months Ended

Apr. 30, 2012

GOODWILL AND LONG-LIVED ASSETS

(5) GOODWILL AND LONG-LIVED ASSETS

The Company conducts its goodwill impairment test on July 31 of each fiscal year. In addition, if and when events or circumstances change that could reduce the fair value of any of its reporting units below its carrying value, an interim test would be performed. In making this assessment, the Company relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and marketplace data. The Company’s reporting units are the same as its operating segments: Americas, Asia, Europe, e-Business, ModusLink PTS and TFL.

The Company’s remaining goodwill of $3.1 million as of April 30, 2012 relates to the Company’s e-Business reporting unit. There were no indicators of impairment identified related to the Company’s e-Business reporting unit during the three and nine months ended April 30, 2012.

The carrying amount of goodwill allocated to the Company’s reportable segments is as follows:


	Americas			Asia			Europe			TFL			All Other			Consolidated Total
	(In thousands)

Balance as of July 31, 2011
Goodwill	$	94,477		$	73,948		$	30,108		$	16,299		$	5,857		$	220,689
Accumulated impairment charges		(94,477	)		(73,948	)		(30,108	)		(16,299	)		(2,799	)		(217,631	)

	$	—		$	—		$	—		$	—		$	3,058		$	3,058


Balance as of April 30, 2012
Goodwill	$	94,477		$	73,948		$	30,108		$	16,299		$	5,857		$	220,689
Accumulated impairment charges		(94,477	)		(73,948	)		(30,108	)		(16,299	)		(2,799	)		(217,631	)

	$	—		$	—		$	—		$	—		$	3,058		$	3,058

During the third quarter of fiscal year 2012, indicators of potential impairment caused the Company to conduct an interim impairment test for the long-lived assets of TFL, which includes amortizable intangible assets. These indicators included continued operating losses and increasingly adverse trends that resulted in further deterioration of current operating results and future prospects of the TFL reporting unit. These adverse trends included increased competition for and a decline in the supply of quality products at a reasonable cost and the emergence and growth of new competitors for TFL.

As a result of the impairment test, in connection with preparation of financial statements for the quarter ended April 30, 2012, the Company concluded that TFL’s long-lived assets were impaired and recorded a $0.9 million non-cash impairment charge. The $0.9 million impairment charge consisted of $0.5 million of intangible assets and $0.4 million of fixed assets. The intangible asset impairment charge for TFL is deductible as amortization for tax purposes over time. The impairment charge did not affect the Company’s liquidity or cash flows.

In addition, during the third quarter of fiscal year 2012, indicators of potential impairment caused the Company to conduct an interim impairment test for the fixed assets of its facility in Kildare, Ireland. These indicators included declining revenues and increasingly adverse trends that resulted in further deterioration of current operating results and future prospects of the Kildare facility. These adverse trends included declines in sales volumes resulting from the loss of certain client programs, pricing pressure from existing clients, and the emergence and growth of new competitors for the services performed in Kildare.

As a result of the impairment test, in connection with preparation of financial statements for the quarter ended April 30, 2012, the Company concluded that Kildare’s fixed assets were impaired and recorded a $1.1 million non-cash impairment charge. This charge has been recorded as a component of “impairment of goodwill and long-lived assets” in the accompanying condensed consolidated statements of operations. The impairment charge did not affect the Company’s liquidity or cash flows.

During the second quarter of fiscal year 2011, indicators of potential impairment caused the Company to conduct an interim impairment test for goodwill and other long-lived assets, which includes amortizable intangible assets for its ModusLink PTS and TFL reporting units. These indicators included continued operating losses, the departure of key personnel, and increasingly adverse trends that resulted in further deterioration of operating results and future prospects for both the ModusLink PTS and TFL reporting units.

As a result of the impairment tests, in connection with preparation of financial statements for the quarter ended January 31, 2011, the Company concluded that its goodwill was impaired and recorded a $13.2 million non-cash goodwill impairment charge, consisting of $7.1 million for ModusLink PTS and $6.1 million for TFL during the three months ended January 31, 2011. The Company also determined that its intangible assets were impaired and recorded a $14.0 million non-cash intangible asset impairment charge, consisting of $8.8 million for ModusLink PTS and $5.2 million for TFL during the three months ended January 31, 2011. The goodwill and intangible asset impairment charges for ModusLink PTS are not deductible for tax purposes. The goodwill and intangible asset impairment charges for TFL are deductible as amortization for tax purposes over time. The impairment charge did not affect the Company’s liquidity or cash flows.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

SHARE-BASED PAYMENTS

9 Months Ended

Apr. 30, 2012

SHARE-BASED PAYMENTS

(6) SHARE-BASED PAYMENTS

Stock options for the purchase of approximately 1.0 million shares of the Company’s common stock were awarded to executives during the nine months ended April 30, 2012 at a weighted average exercise price of $4.24 per share. The weighted average option fair value was $1.99 per share. The weighted average option fair value was calculated using the binominal-lattice model with the following weighted average assumptions: expected volatility of 59.59%, risk-free rate of 0.85% and expected life of 4.66 years. No stock options were awarded to executives during the quarter ended April 30, 2012.

Additionally, approximately 14,000 nonvested shares were awarded to a new director of the Company during the three months ended April 30, 2012 at a fair value of $5.43 per share. The fair value of nonvested shares is determined based on the market price of the Company’s common stock on the grant date.

The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and nonvested shares for the three and nine months ended April 30, 2012 and 2011, which was allocated as follows:


	Three Months Ended April 30,				Nine Months Ended April 30,
	2012		2011		2012		2011
	(In thousands)
Cost of revenue	$	89	$	90	$	265	$	282
Selling, general and administrative		439		632		2,142		2,337

	$	528	$	722	$	2,407	$	2,619

- Definition

The entire disclosure for compensation costs, including compensated absences accruals, compensated absences liability, deferred compensation arrangements and income statement compensation items. Deferred compensation arrangements may include a description of an arrangement with an individual employee, which is generally an employment contract between the entity and a selected officer or key employee containing a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period, the number of shares (units) issued during the period under such arrangements, and the carrying amount as of the balance sheet date of the related liability.

+ References + Details

OTHER GAINS (LOSSES), NET

9 Months Ended

Apr. 30, 2012

OTHER GAINS (LOSSES), NET

(7) OTHER GAINS (LOSSES), NET

The following table reflects the components of “Other gains (losses), net”:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2012			2011 (As Restated)			2012			2011 (As Restated)
	(In thousands)
Derecognition of accrued pricing liabilities	$	7,540		$	7,173		$	7,540		$	13,545
Foreign currency exchange gains (losses)		(444	)		(1,523	)		1,551			(3,514	)
Gain on sale of investments		—			48			9			100
Gain (loss) on disposal of assets		(90	)		8			15			48
Other, net		(131	)		(174	)		(185	)		(572	)

	$	6,875		$	5,532		$	8,930		$	9,607

The Company recorded gains of $7.5 million during both the three and nine months ended April 30, 2012, and gains of $7.2 million and $13.5 million during the three and nine months ended April 30, 2011, respectively, from the extinguishment of accrued pricing liabilities related to the releases of claims received from certain clients.

The Company recorded foreign exchange losses of $0.4 million and foreign exchange gains of $1.6 million during the three and nine months ended April 30, 2012, respectively. For the three months ended April 30, 2012, the net losses primarily related to realized and unrealized losses from foreign currency exposures and settled transactions of approximately $0.4 million and $0.1 million in Asia and the Americas, respectively, offset by net gains of $0.1 million in Europe. For the nine months ended April 30, 2012, the net gains primarily related to realized and unrealized gains from foreign currency exposures and settled transactions of approximately $1.7 million and $0.3 million in Europe and Asia, respectively, offset by net losses of $0.4 million in the Americas.

The Company recorded foreign exchange losses of $1.5 million and $3.5 million during the three and nine months ended April 30, 2011, respectively. For the three months ended April 30, 2011, the net losses primarily related to realized and unrealized losses from foreign currency exposures and settled transactions of approximately $1.7 million and $0.8 million in Europe and Asia, respectively, offset by net gains of $1.0 million in the Americas. For the nine months ended April 30, 2011, the net losses primarily related to realized and unrealized losses from foreign currency exposures and settled transactions of approximately $3.5 million and $2.0 million in Europe and Asia, respectively, offset by net gains of $2.0 million in the Americas. During the three months ended April 30, 2011, the Company recorded a gain of approximately $0.1 million related to the sale of available-for-sale securities. During the three months ended April 30, 2011, the Company recorded a $0.1 million write-off of an investment in a private company, which had filed for bankruptcy. Additionally, during the nine months ended April 30, 2011, the Company recorded gains of approximately $0.1 million related to distribution of proceeds from the acquisition by third parties of H2Gen Innovations, Inc. and M2E Power, Inc. due to the satisfaction of conditions leading to the release of funds held in escrow.

OTHER CURRENT LIABILITIES

9 Months Ended

Apr. 30, 2012

OTHER CURRENT LIABILITIES

(8) OTHER CURRENT LIABILITIES

The following table reflects the components of “Other Current Liabilities”:


	April 30, 2012		July 31, 2011 (As Restated)
	(In thousands)
Accrued pricing liabilities	$	24,480	$	30,706
Other		7,255		7,918

	$	31,735	$	38,624

As of April 30, 2012 and July 31, 2011, the Company recorded accrued pricing liabilities of approximately $24.5 million and $30.7 million, respectively. These liabilities related to the equivalent reduction of revenue where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract. The remaining accrued pricing liabilities at April 30, 2012 will be derecognized when there is sufficient information for the Company to conclude that such liabilities have been extinguished, which may occur through payment, legal release, or other legal or factual determination.

RESTRUCTURING, NET

9 Months Ended

Apr. 30, 2012

RESTRUCTURING, NET

(9) RESTRUCTURING, NET

The following table summarizes the activity in the restructuring accrual for the three and nine months ended April 30, 2012:


	Employee Related Expenses			Contractual Obligations			Asset Impairments		Total
	(In thousands)
Accrued restructuring balance at July 31, 2011	$	296		$	1,168		$	—	$	1,464

Restructuring charges		633			138			—		771
Restructuring adjustments		(174	)		158			—		(16	)
Cash paid		(9	)		(271	)		—		(280	)
Non-cash adjustments		—			6			—		6

Accrued restructuring balance at October 31, 2011	$	746		$	1,199		$	—	$	1,945

Restructuring charges		4,119			487			—		4,606
Restructuring adjustments		(9	)		—			—		(9	)
Cash paid		(1,034	)		(534	)		—		(1,568	)
Non-cash adjustments		53			60			—		113

Accrued restructuring balance at January 31, 2012	$	3,875		$	1,212		$	—	$	5,087

Restructuring charges		592			2			—		594
Restructuring adjustments		(99	)		—			—		(99	)
Cash paid		(3,272	)		(492	)		—		(3,764	)
Non-cash adjustments		12			(11	)		—		1

Accrued restructuring balance at April 30, 2012	$	1,108		$	711		$	—	$	1,819

It is expected that the payments of employee-related charges will be substantially completed during the fiscal year ending July 31, 2013. The remaining contractual obligations primarily relate to facility lease obligations for vacant space resulting from the previous restructuring activities of the Company. The Company anticipates that contractual obligations will be substantially fulfilled by May 2013.

The net restructuring charges for the three and nine months ended April 30, 2012 and 2011 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities:


	Three Months Ended April 30,				Nine Months Ended April 30,
	2012		2011		2012		2011
	(In thousands)
Cost of revenue	$	120	$	—	$	4,321	$	1,022
Selling, general and administrative		375		—		1,526		179

	$	495	$	—	$	5,847	$	1,201

During the three and nine months ended April 30, 2012, the Company recorded a net restructuring charge of approximately $0.5 million and $5.8 million, respectively. For the three months ended April 30, 2012, approximately $0.5 million related to a workforce reduction of 87 employees within TFL and $0.1 million related to a workforce reduction of 4 employees within e-Business. These costs were partially offset by a $0.1 million reversal of restructuring costs associated with employee termination benefits within the Europe region.

In addition, for the nine months ended April 30, 2012, approximately $3.7 million related to a workforce reduction of 48 employees in Europe, $0.5 million related to a workforce reduction of 144 employees in China, $0.4 million related to a workforce reduction of 5 employees within the Company’s IT organization, and $0.4 million related to certain contractual obligations in connection with the restructuring of a facility in the ModusLink PTS business.

During the nine months ended April 30, 2011, the Company recorded a net restructuring charge of approximately $1.2 million. Of this amount, approximately $1.1 million related to the workforce reduction of 55 employees in the Americas and Asia and approximately $0.1 million of the recorded net restructuring charge related to changes in estimates for previously recorded facilities lease obligations primarily based on changes to the underlying assumptions.

The following table summarizes the restructuring accrual by reportable segment and the Corporate-level activity for the three and nine months ended April 30, 2012:


	Americas			Asia			Europe			TFL			All Other			Corporate-level Activity		Consolidated Total
	(In thousands)
Accrued restructuring balance at July 31, 2011	$	1,346		$	—		$	118		$	—		$	—		$	—	$	1,464

Restructuring charges		276			495			—			—			—			—		771
Restructuring adjustments		(16	)		—			—			—			—			—		(16	)
Cash paid		(280	)		—			—			—			—			—		(280	)
Non-cash adjustments		6			—			—			—			—			—		6

Accrued restructuring balance at October 31, 2011	$	1,332		$	495		$	118		$	—		$	—		$	—	$	1,945

Restructuring charges		488			190			3,776			133			19			—		4,606
Restructuring adjustments		—			(9	)		—			—			—			—		(9	)
Cash paid		(596	)		(567	)		(272	)		(133	)		—			—		(1,568	)
Non-cash adjustments		72			—			41			—			—			—		113

Accrued restructuring balance at January 31, 2012	$	1,296		$	109		$	3,663		$	—		$	19		$	—	$	5,087
Restructuring charges		4			4			—			517			69			—		594
Restructuring adjustments		—			—			(99	)		—			—			—		(99	)
Cash paid		(505	)		(70	)		(2,702	)		(466	)		(21	)		—		(3,764	)
Non-cash adjustments		(11	)		—			12			—			—			—		1

Accrued restructuring balance at April 30, 2012	$	784		$	43		$	874		$	51		$	67		$	—	$	1,819

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

SEGMENT INFORMATION

9 Months Ended

Apr. 30, 2012

SEGMENT INFORMATION

(10) SEGMENT INFORMATION

The Company has six operating segments: Americas; Asia; Europe; e-Business; ModusLink PTS and TFL. Based on the information provided to the Company’s chief operating decision-maker (“CODM”) for purposes of making decisions about allocating resources and assessing performance and quantitative thresholds, the Company has determined that it has four reportable segments: Americas; Asia; Europe and TFL. The Company reports the ModusLink PTS operating segment in aggregation with the Americas operating segment as part of the Americas reportable segment. In addition to its four reportable segments, the Company reports an All other category. The All other category represents the e-Business operating segment. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal and finance, which are not allocated to the Company’s reportable segments and administration costs related to the Company’s venture capital activities. The Corporate-level activity balance sheet information includes cash and cash equivalents, available-for-sale securities, investments and other assets, which are not identifiable to the operations of the Company’s operating segments.

Management evaluates segment performance based on segment net revenue, operating income (loss) and “adjusted operating income (loss)”, which is defined as the operating income (loss) excluding net charges related to depreciation, goodwill and long-lived asset impairment, restructuring, amortization of intangible assets and share-based compensation. These items are excluded because they may be considered to be of a non-operational or non-cash nature. Historically, the Company has recorded significant impairment and restructuring charges and therefore management uses adjusted operating income to assist in evaluating the performance of the Company’s core operations.

Summarized financial information of the Company’s continuing operations by operating segment is as follows:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2012			2011 (As Restated)			2012			2011 (As Restated)
	(In thousands)
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

Total segment operating income (loss)		(6,275	)		1,206			(6,369	)		(21,693	)

Corporate-level activity		(4,709	)		(3,389	)		(16,159	)		(11,536	)

Total operating loss	$	(10,984	)	$	(2,183	)	$	(22,528	)	$	(33,229	)


Adjusted 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

Total segment adjusted operating income		282			6,624			14,024			24,319
Corporate-level activity		(4,452	)		(2,883	)		(14,543	)		(9,783	)

Total adjusted operating income (loss)	$	(4,170	)	$	3,741		$	(519	)	$	14,536

Adjusted 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 and long-lived assets		(2,062	)		—			(2,062	)		(27,166	)
Share-based compensation		(528	)		(722	)		(2,407	)		(2,619	)
Restructuring, net		(495	)		—			(5,847	)		(1,201	)

Operating loss	$	(10,984	)	$	(2,183	)	$	(22,528	)	$	(33,229	)
Other income		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	)


	April 30, 2012		July 31, 2011 (As Restated)
	(In thousands)
Total assets of continuing operations:
Americas	$	115,657	$	121,481
Asia		142,808		125,059
Europe		116,851		120,422
TFL		6,968		11,029
All other		17,351		24,809

Sub-total		399,635		402,800
Corporate-level activity		15,439		19,447

	$	415,074	$	422,247

As of April 30, 2012, approximately 59%, 20% and 21% of the Company’s long-lived assets were located in North America, Asia and Europe, respectively. As of July 31, 2011, approximately 60%, 18% and 22%, of the Company’s long-lived assets were located in North America, Asia and Europe, respectively. As of April 30, 2012, approximately $9.9 million, $5.2 million, $5.5 million, $5.2 million, and $3.6 million of the Company’s long-lived assets were located in Singapore, Ireland, the Netherlands, China, and the Czech Republic, respectively. As of July 31, 2011, approximately $10.7 million, $7.1 million, $5.4 million, $4.1 million and $3.7 million of the Company’s long-lived assets were located in Singapore, Ireland, the Netherlands, China and the Czech Republic, respectively.

During the three and nine months ended April 30, 2012, the Company generated revenue of approximately $35.6 million and $111.2 million, respectively, in China and approximately $24.0 million and $82.8 million, respectively, in the Netherlands, from external clients. During the three and nine months ended April 30, 2011, the Company generated revenue of approximately $34.5 million and $105.5 million, respectively, in China and approximately $27.7 million and $95.6 million, respectively, in the Netherlands, from external clients.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

EARNINGS PER SHARE

9 Months Ended

Apr. 30, 2012

EARNINGS PER SHARE

(11) EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.” The Company adopted ASC Topic 260-10, formerly FASB Staff Position EITF No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” effective August 1, 2009. Under ASC Topic 260-10, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. All of the Company’s nonvested shares are considered participating securities because they contain non-forfeitable rights to dividends. However, holders of nonvested shares do not have an obligation to fund losses, and therefore, are only allocated a portion of the earnings for the earnings per share calculation when the Company reports net income.

Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income allocable to common shares by the weighted-average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per share for the three and nine months ended April 30, 2012 and 2011.


	Three Months Ended April 30,						Nine Months Ended April 30,
	2012			2011 (As Restated)			2012			2011 (As Restated)
	(In thousands)
BASIC
Income (loss) from continuing operations	$	(6,038	)	$	1,569		$	(18,441	)	$	(29,774	)
Income (loss) from discontinued operations		(98	)		(91	)		572			(239	)

Net income (loss)	$	(6,136	)	$	1,478		$	(17,869	)	$	(30,013	)
Less net income allocable to participating restricted stock		—			(17	)		—			—

Net income (loss) available for basic common shares	$	(6,136	)	$	1,461		$	(17,869	)	$	(30,013	)

Weighted average common shares outstanding		43,844			43,303			43,546			43,289

Basic net income (loss) per common share from continuing operations	$	(0.14	)	$	0.03		$	(0.42	)	$	(0.68	)
Basic net income (loss) per common share from discontinued operations		—			—			0.01			(0.01	)

Basic net income (loss) per common share	$	(0.14	)	$	0.03		$	(0.41	)	$	(0.69	)

DILUTED
Income (loss) from continuing operations	$	(6,038	)	$	1,569		$	(18,441	)	$	(29,774	)
Income (loss) from discontinued operations		(98	)		(91	)		572			(239	)

Net income (loss)	$	(6,136	)	$	1,478		$	(17,869	)	$	(30,013	)
Less net income allocable to participating restricted stock		—			(17	)		—			—

Net income (loss) available for diluted common shares	$	(6,136	)	$	1,461		$	(17,869	)	$	(30,013	)

Weighted average common shares outstanding		43,844			43,303			43,546			43,289
Weighted average common equivalent shares arising from: dilutive stock options		—			199			—			—

Weighted-average number of common and potential common shares		43,844			43,502			43,546			43,289

Diluted net loss per common share from continuing operations	$	(0.14	)	$	0.03		$	(0.42	)	$	(0.68	)
Diluted net income (loss) per common share from discontinued operations		—			—			0.01			(0.01	)

Diluted net income (loss) per common share	$	(0.14	)	$	0.03		$	(0.41	)	$	(0.69	)

For the three and nine months ended April 30, 2012, approximately 2.6 million and 3.3 million, respectively, common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive.

For the three and nine months ended April 30, 2011, approximately 2.6 million and 2.4 million, respectively, common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive.

COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Apr. 30, 2012

COMPREHENSIVE INCOME (LOSS)

(12) COMPREHENSIVE INCOME (LOSS)

The components of comprehensive income (loss), net of income taxes, were as follows:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2012			2011 (As Restated)			2012			2011 (As Restated)
	(In thousands)
Net income (loss)	$	(6,136	)	$	1,478		$	(17,869	)	$	(30,013	)
Net unrealized holding gain (loss) on securities		1			(24	)		1			(73	)
Foreign currency translation adjustment		642			7,605			(6,719	)		14,121

Comprehensive income (loss)	$	(5,493	)	$	9,059		$	(24,587	)	$	(15,965	)

The components of accumulated other comprehensive income were as follows:


	April 30, 2012			July 31, 2011
	(In thousands)
Net unrealized holding gains (losses) on securities	$	(25	)	$	(26	)
Cumulative foreign currency translation adjustment		16,633			23,352
Pension adjustment		2,310			2,310

Accumulated other comprehensive income	$	18,918		$	25,636

- Definition

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14-26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

INVENTORIES

9 Months Ended

Apr. 30, 2012

INVENTORIES

(13) INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined by both the moving average and the first-in, first-out methods. Materials that the Company typically procures on behalf of its clients that are included in inventory include materials such as compact discs, printed materials, manuals, labels, hardware accessories, hard disk drives, consumer packaging, shipping boxes and labels, power cords and cables for client-owned electronic devices.

Inventories consisted of the following:


	April 30, 2012		July 31, 2011 (As Restated)
	(In thousands)
Raw materials	$	61,630	$	46,940
Work-in-process		3,348		2,101
Finished goods		28,675		27,842

	$	93,653	$	76,883

The Company values the inventory at the lower of cost or market. The Company continuously monitors inventory balances and records inventory provisions for any excess of the cost of the inventory over its estimated market value. The Company also monitors inventory balances for obsolescence and excess quantities as compared to projected demands. The Company’s inventory methodology is based on assumptions about average shelf life of inventory, forecasted volumes, forecasted selling prices, write-down history of inventory and market conditions. While such assumptions may change from period to period, in determining the net realizable value of its inventories, the Company uses the best information available as of the balance sheet date. If actual market conditions are less favorable than those projected, or the Company experiences a higher incidence of inventory obsolescence because of rapidly changing technology and client requirements, additional inventory provisions may be required. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts.

As previously discussed, the restated financial statements also include adjustments to correct certain other immaterial errors, including previously unrecorded immaterial adjustments identified in audits of prior years’ financial statements. As of July 31, 2011, the Company recorded a $0.2 million reduction in its raw materials inventory balance which resulted from an understatement of the Company’s inventory reserve balance.

CONTINGENCIES

9 Months Ended

Apr. 30, 2012

CONTINGENCIES

(14) CONTINGENCIES

On February 15, 2012, the staff of the Division of Enforcement of the SEC initiated with the Company an informal inquiry, and later a formal action, regarding the Company’s treatment of rebates associated with volume discounts provided by vendors. To date, the SEC has not asserted any formal claims.

Following the June 11, 2012 announcement of the pending restatement (the “June 11, 2012 Announcement”), shareholders of the Company commenced three purported class actions in the United States District Court for the District of Massachusetts arising from the circumstances described in the June 11, 2012 Announcement (the “Securities Actions”), entitled, respectively:

•

Irene Collier, Individually And On Behalf Of All Others Similarly Situated, vs. ModusLink Global Solutions, Inc., Joseph C. Lawler and Steven G. Crane, Case 1:12-CV-11044-DJC, filed June 12, 2012 (the “Collier Action”);

•

Alexander Shnerer Individually And On Behalf Of All Others Similarly Situated, vs. ModusLink Global Solutions, Inc., Joseph C. Lawler and Steven G. Crane, Case 1:12-CV-11078-DJC, filed June 18, 2012 (the “Shnerer Action”); and

•

Harold Heszkel, Individually and on Behalf of All Others Similarly Situated v. ModusLink Global Solutions, Inc., Joseph C. Lawler, and Steven G. Crane, Case 1:12-CV-11279-DJC, filed July 11, 2012 (the “Heszkel Action”).

Each of the Securities Actions purports to be brought on behalf of those persons who purchased shares of the Company between September 26, 2007 through and including June 8, 2012 (the “Class Period”) and alleges that failure to timely disclose the issues raised in the June 11, 2012 Announcement during the Class Period rendered defendants’ public statements concerning the Company’s financial condition materially false and misleading in violation of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder.

On July 13, 2012, a fourth shareholder commenced a purported derivative action in United States District Court for the District of Massachusetts against the Company (as nominal defendants), and certain of its current and former directors and officers, entitled, Samuel Montini, Derivatively On Behalf Of ModusLink Global Solutions, Inc. v. Joseph C. Lawler, Steven G. Crane, Francis J. Jules, Virginia G. Breen, Michael J. Mardy, Edward E. Lucente, Jeffrey J. Fenton, Joseph M. O’Donnell, William R. McLennan, Thomas H. Johnson, And Anthony J. Bay, Defendants, And ModusLink Global Solutions, Inc., A Delaware Corporation, Nominal Defendant, Case 1:12-CV-11296-DJC and on July 31, 2012, a fifth shareholder commenced a purported derivative action in United States District Court for the District of Massachusetts against the Company (as nominal defendants), and certain of its current and former directors and officers, entitled, Edward Tansey, Derivatively On Behalf Of ModusLink Global Solutions, Inc. v. Joseph C. Lawler, Steven G. Crane, Francis J. Jules, Virginia G. Breen, Michael J. Mardy, Edward E. Lucente, Jeffrey J. Fenton, Joseph M. O’Donnell, William R. McLennan, Thomas H. Johnson, And Anthony J. Bay, Defendants, And ModusLink Global Solutions, Inc., A Delaware Corporation, Nominal Defendant, Civil Action No. 12-CV-11399 (DJC) (collectively, the “Derivative Actions”). The Derivative Actions further assert that as a result of the individual defendants’ alleged actions and course of conduct, the Company is now the subject of the Securities Actions and will incur related expenses and a possible judgment against it. These litigation matters also arise from the issues raised in the June 11, 2012 Announcement and allege that the individual defendants breached their duty of loyalty to the Company by allowing defendants to cause, or by themselves causing, the Company to make improper statements regarding its business prospects and/or by failing to prevent the other Individual Defendants from taking such purportedly illegal actions.

Although there can be no assurance as to the ultimate outcome, the Company believes it has meritorious defenses, will deny liability, and intends to defend this litigation vigorously.

On October 10, 2012, a sixth shareholder, Donald Reith, served upon the Company’s Board of Directors a demand to institute litigation and take other purportedly necessary, but unidentified, remedial measures to redress and prevent a recurrence of purported breaches of fiduciary duties on the part of the Board and unspecified corporate officers allegedly arising from the same facts and circumstances asserted in the Derivative Actions.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

SHARE REPURCHASE PROGRAMS

9 Months Ended

Apr. 30, 2012

SHARE REPURCHASE PROGRAMS

(15) SHARE REPURCHASE PROGRAMS

In June 2010, the Company’s Board of Directors authorized the repurchase of up to $10.0 million of the Company’s common stock from time to time on the open market or in privately negotiated transactions over an eighteen month period, (the “June 2010 Repurchase Program”). The timing and amount of any shares repurchased was to be determined by the Company’s management based on its evaluation of market conditions and other factors. Repurchases could also be made under a Rule 10b5-1 plan, which permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The Company retired and returned repurchased shares to the Company’s authorized, but not issued or outstanding common stock. The June 2010 Repurchase Program was funded using the Company’s working capital. In total, the Company repurchased an aggregate of approximately 0.5 million shares at a cost of approximately $3.4 million under the June 2010 Repurchase Program. These share repurchases occurred primarily during the fourth quarter and first quarter of our 2010 and 2011 fiscal years, respectively. During the fiscal year ended July 31, 2011, the Company declared and paid a special cash dividend of $40.0 million in the aggregate, which was funded with available cash on hand and included amounts remaining under the June 2010 Repurchase Program. Accordingly, no further repurchases were made under the June 2010 Repurchase Program.

INCOME TAXES

9 Months Ended

Apr. 30, 2012

INCOME TAXES

(16) INCOME TAXES

For the three and nine months ended April 30, 2012, the Company was profitable in certain jurisdictions where the Company operates, resulting in an income tax expense using enacted rates in those jurisdictions. The Company operates in multiple taxing jurisdictions, both within and outside of the United States. As of April 30, 2012 and July 31, 2011, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $1.3 million and $2.4 million, respectively.

In accordance with the Company’s accounting policy, interest related to unrecognized tax benefits is included in the provision of income taxes line of the Consolidated Statements of Operations. For the periods ended April 30, 2012 and July 31, 2011, the Company has not recognized any material interest expense related to uncertain tax positions. As of April 30, 2012 and July 31, 2011, the Company had recorded liabilities for interest expense related to uncertain tax positions in the amount of $70 thousand and $130 thousand, respectively. The Company did not accrue for penalties related to income tax positions as there were no income tax positions that required the Company to accrue penalties. The Company expects that approximately $0.6 million of unrecognized tax benefits will reverse in the next twelve months due to expiration of statute of limitations.

The Company is subject to U.S. federal income tax and various state, local and international income taxes in numerous jurisdictions. The federal and state tax returns are generally subject to tax examinations for the tax years ended July 31, 2009 through July 31, 2011. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe and Asia regions. In Europe, the Company’s 2006 through 2012 tax years remain subject to examination in most locations, while the Company’s 2002 through 2012 tax years remain subject to examination in most Asia locations.

The Company has certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes (collectively, the “Tax Benefits”). The Company’s ability to use these Tax Benefits could be substantially limited if it were to experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change would occur if there is a greater than 50-percentage point change in ownership of securities by stockholders owning (or deemed to own under Section 382 of the Code) five percent or more of a corporation’s securities over a rolling three-year period.

Accordingly, on October 17, 2011, the Company’s Board of Directors adopted a Tax Benefit Preservation Plan between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (as amended from time to time, the “Tax Plan”). The Tax Plan reduces the likelihood that changes in the Company’s investor base have the unintended effect of limiting the Company’s use of its Tax Benefits. The Tax Plan is intended to require any person acquiring shares of the Company’s securities equal to or exceeding 4.99% of the Company’s outstanding shares to obtain the approval of the Board of Directors. This would protect the Tax Benefits because changes in ownership by a person owning less than 4.99% of the Company’s stock are not included in the calculation of “ownership change” for purposes of Section 382 of the Code.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

@VENTURES INVESTMENTS

9 Months Ended

Apr. 30, 2012

@VENTURES INVESTMENTS

(17) @VENTURES INVESTMENTS

The Company maintains interests in several privately held companies primarily through its interests in two venture capital funds which invest as “@Ventures.” The Company invests in early stage technology companies. These investments are generally made in connection with a round of financing with other third-party investors.

During the three and nine months ended April 30, 2012, approximately $1.6 million and $2.6 million, respectively, was invested by @Ventures in privately held companies. During the three and nine months ended April 30, 2011, approximately $1.5 million and $2.5 million, respectively, was invested by @Ventures in privately held companies. At April 30, 2012 and July 31, 2011, the Company’s carrying value of investments in privately held companies was approximately $10.8 million and $12.0 million, respectively. During the nine months ended April 30, 2012 and 2011, the Company recorded $2.9 million and $1.2 million (restated), respectively, of impairment charges related to certain investments in the @Ventures portfolio of companies. During the nine months ended April 30, 2012 and April 30, 2011, @Ventures did not receive any material distributions from its investments.

During the three months ended April 30, 2012, the Company became aware that there may be indicators of impairment for a certain investment in the @Ventures portfolio of companies. The Company completed its evaluation for impairment in connection with the preparation of the financial statements for the quarter ended April 30, 2012 and determined that the investment was impaired. As a result, the Company recorded an impairment charge of approximately $2.8 million, during the quarter ended April 30, 2012.

Investments in which the Company’s interest is less than 20% and which are not classified as available-for-sale securities are carried at the lower of cost or net realizable value unless it is determined that the Company exercises significant influence over the investee company, in which case the equity method of accounting is used. For those investments in which the Company’s voting interest is between 20% and 50%, the equity method of accounting is generally used. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee company as they occur, limited to the extent of the Company’s investment in, advances to and commitments for the investee. These adjustments are reflected in “Equity in losses of affiliates and impairments” in the Company’s Consolidated Statements of Operations.

The Company assesses the need to record impairment losses on its investments and records such losses when the impairment of an investment is determined to be other than temporary in nature. The process of assessing whether a particular investment’s net realizable value is less than its carrying cost requires a significant amount of subjective judgment. In making this judgment, the Company carefully considers the investee’s cash position, projected cash flows (both short and long-term), financing needs, recent financing rounds, most recent valuation data, the current investing environment, management/ownership changes and competition. The valuation process is based primarily on information that the Company requests from these privately held companies and is not subject to the same disclosure and audit requirements as the reports required of U.S. public companies. As such, the reliability and the accuracy of the data may vary.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References + Details

SUBSEQUENT EVENTS

9 Months Ended

Apr. 30, 2012

SUBSEQUENT EVENTS

(18) SUBSEQUENT EVENTS

On June 13, 2012, the Company received notice from the NASDAQ Stock Market (“NASDAQ”) stating that the Company is not in compliance with Listing Rule 5250(c)(1) for continued listing due to the Company’s inability to file with the SEC the Company’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2012 (the “Initial Delinquent Filing”) on a timely basis. The notification was issued in accordance with standard NASDAQ procedures and had no immediate effect on the listing or trading of the Company’s common stock on the NASDAQ Global Select Market. Pursuant to NASDAQ’s letter dated June 13, 2012, the receipt of which was disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2012, the Company had until August 13, 2012 to submit a plan to regain compliance with respect to the Initial Delinquent Filing. On August 13, 2012, the Company submitted its plan to regain compliance. On August 28, 2012, the Company was informed that NASDAQ had granted an exception to its rules to enable the Company to regain compliance by December 10, 2012. On October 16, 2012, the Company received another letter from NASDAQ, as a result of its inability to file with the SEC its Annual Report on Form 10-K for the year ended July 31, 2012 by its required filing deadline (the “Second Delinquent Filing”). In that letter, the receipt of which was disclosed in the Company’s Current Report on Form 8-K filed with the SEC on October 17, 2012, NASDAQ noted that the Second Delinquent Filing was an additional instance of non-compliance which could lead to delisting from NASDAQ. On December 11, 2012, the Company received a third letter from NASDAQ, as a result of its failure to regain compliance with the NASDAQ listing requirements by December 10, 2012. In that letter, the receipt of which was disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2012, NASDAQ noted that the failure to file the Initial Delinquent Filing and the Second Delinquent Filing by December 10, 2012 led NASDAQ to determine that the Company’s common stock would be delisted, subject to the Company’s right to appeal such determination. On December 17, 2012, the Company requested a hearing to appeal such determination, which resulted in an automatic stay of the delisting for 15 days. On December 18, 2012, the Company received another letter from NASDAQ, as a result of its inability to file with the SEC its Quarterly Report on Form 10-Q for the quarter ended October 31, 2012 by its required filing deadline (the “Third Delinquent Filing”). In that letter, the receipt of which was disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2012, NASDAQ noted that the Third Delinquent Filing was an additional instance of non-compliance which could lead to delisting from NASDAQ. By letter dated December 31, 2012, the NASDAQ Hearings Panel has granted the Company’s request to extend the automatic stay of suspension of trading of the Company’s common stock pending completion of the hearing process and a final determination regarding continued listing.

On August 16, 2012, the Company and certain of its subsidiaries entered into the Third Amendment to Amended and Restated Credit Agreement and Forbearance Agreement (“Third Amendment to the Credit Facility”) with Bank of America, N.A., Silicon Valley Bank and HSBC Bank USA, National Association (the “Lenders”). Under the Third Amendment to the Credit Facility, (i) the aggregate revolving commitment of the Lenders was $15,000,000 and (ii) interest under the Credit Facility would accrue, depending on the type of borrowing, at the base rate or the Eurodollar rate, plus, in each case, an applicable rate that varied from 1.50% to 2.00% for the base rate and 2.50% to 3.00% for the Eurodollar rate, depending on the Company’s consolidated leverage ratio. The Third Amendment to the Credit Facility changed the Credit Facility termination date to October 31, 2012 and added a new financial covenant, minimum net global cash of $45,000,000. Additionally, the Third Amendment to the Credit Facility provided a forbearance from the Lenders exercising their rights and remedies related to certain events of default, including events of default resulting from failure to meet certain minimum EBITDA requirements and violations of the reporting requirements under the Credit Facility that were delayed due to the Company’s inability to file with the SEC the Company’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2012, as previously disclosed in its Form 12b-25 filed on June 11, 2012. The Credit Facility terminated, by its terms, on October 31, 2012.

On October 31, 2012, the Company and certain of its domestic subsidiaries entered into a Credit Agreement (the “New Credit Facility”) with Wells Fargo Bank, National Association as lender and agent for the lenders party thereto. The New Credit Facility provides a senior secured revolving credit facility up to an initial aggregate principal amount of $50.0 million or the calculated borrowing base and is secured by substantially all of the domestic assets of the Company. As of October 31, 2012, the calculated borrowing base was $36.0 million. The New Credit Facility terminates on October 31, 2015. Interest on the New Credit Facility is based, at the Company’s option at LIBOR plus 2.5% or a base rate (as defined in the New Credit Facility) plus 1.5%. The New Credit Facility includes a minimum EBITDA restrictive covenant.