SEGMENT INFORMATION

12 Months Ended

Jul. 31, 2012

SEGMENT INFORMATION

(5) 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:

	Years Ended July 31,
	2012			2011 (As Restated)			2010 (As Restated)			2009 (As Restated)
	(in thousands)
Net revenue:
Americas	$	249,940		$	296,362		$	307,552		$	327,455
Asia		218,880			233,724			262,594			296,756
Europe		211,319			275,065			283,584			333,181
TFL		25,944			29,471			23,712			—
All other		33,808			39,126			41,003			44,588
	$	739,891		$	873,748		$	918,445		$	1,001,980
Operating income (loss):
Americas	$	(14,108	)	$	(29,984	)	$	(26,253	)	$	(98,896	)
Asia		21,450			29,168			47,364			(34,790	)
Europe		(15,718	)		(6,181	)		(4,865	)		(27,944	)
TFL		(11,032	)		(16,139	)		(12,244	)		—
All other		634			1,889			(2,933	)		2,120
Total segment operating income (loss)		(18,774	)		(21,247	)		1,069			(159,510	)
Other reconciling items		(27,119	)		(16,419	)		(14,038	)		(14,100	)
Total operating loss	$	(45,893	)	$	(37,666	)	$	(12,969	)	$	(173,610	)
Adjusted operating income (loss):
Americas	$	(7,675	)	$	(6,029	)	$	(3,644	)	$	(6,935	)
Asia		26,811			36,155			54,261			49,472
Europe		(6,061	)		198			(319	)		4,541
TFL		(8,781	)		(4,026	)		(1,226	)		—
All other		2,941			3,811			1,768			4,839
Total segment adjusted operating income (loss)		7,235			30,109			50,840			51,917
Other reconciling items		(25,285	)		(14,043	)		(11,594	)		(10,859	)
Total adjusted operating income (loss)	$	(18,050	)	$	16,066		$	39,246		$	41,058
Adjusted operating income (loss)	$	(18,050	)	$	16,066		$	39,246		$	41,058
Adjustments:
Depreciation		(14,057	)		(16,833	)		(16,918	)		(20,057	)
Amortization of intangible assets		(1,279	)		(5,457	)		(6,308	)		(5,485	)
Impairment of goodwill and long-lived assets		(2,062	)		(27,166	)		(25,800	)		(164,682	)
Share-based payments		(2,990	)		(3,481	)		(4,154	)		(5,103	)
Restructuring, net		(7,455	)		(795	)		965			(19,341	)
Operating loss	$	(45,893	)	$	(37,666	)	$	(12,969	)	$	(173,610	)
Other income (expense), net		10,329			4,350			(3,392	)		(15,068	)
Income tax expense		(3,035	)		(819	)		(5,162	)		(10,831	)
Income (loss) from discontinued operations		491			(330	)		(2,318	)		126
Net loss	$	(38,108	)	$	(34,465	)	$	(23,841	)	$	(199,383	)

	July 31,
	2012		2011 (As Restated)		2010 (As Restated)
	(in thousands)
Total assets of continuing operations:
Americas	$	101,931	$	121,481	$	186,643
Asia		111,660		125,059		113,820
Europe		105,472		120,422		135,135
TFL		2,750		11,029		23,256
All other		20,758		24,809		27,740
Sub-total		342,571		402,800		486,594
Corporate-level activity		16,311		19,447		39,347
	$	358,882	$	422,247	$	525,941

As of July 31, 2012, approximately 63%, 18% and 19% of the Company’s long-lived assets were located in the Americas, Asia and Europe, respectively. As of July 31, 2011, approximately 60%, 18% and 22% of the Company’s long-lived assets were located in the Americas, Asia and Europe, respectively. As of July 31, 2010, approximately 73%, 12% and 15% of the Company’s long-lived assets were located in the Americas, Asia and Europe, respectively. As of July 31, 2012, approximately $9.2 million, $4.8 million, $3.3 million, $2.3 million and $3.4 million of the Company’s long-lived assets were located in Singapore, Ireland, China, the Netherlands, and 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 Czech Republic, respectively. As of July 31, 2010, approximately $10.1 million, $6.8 million, $5.6 million, $3.6 million and $3.6 million of the Company’s long-lived assets were located in Singapore, Ireland, the Netherlands, China and Czech Republic, respectively.

The Company generated revenue of approximately $144.1 million and $107.0 million in China and the Netherlands, respectively, from external clients during the fiscal year ended July 31, 2012. The Company generated revenue of approximately $142.2 million and $124.0 million in China and the Netherlands, respectively, from external clients during the fiscal year ended July 31, 2011. The Company generated revenue of approximately $175.5 million and $132.7 million in China and the Netherlands, respectively, from external clients during the fiscal year ended July 31, 2010. The Company generated revenue of approximately $199.7 million and $161.0 million in China and the Netherlands, respectively, from external clients during the fiscal year ended July 31, 2009.