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.