Edgar Filing: ModusLink Global Solutions Inc

Additional Materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant x Filed by a Party other than the Registrant ¨

Check the appropriate box:


¨	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨	Definitive Proxy Statement

x	Definitive Additional Materials

¨	Soliciting Material Pursuant to §240.14a-12

ModusLink Global Solutions, Inc.
(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)	Title of each class of securities to which transaction applies:

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:




¨	Fee paid previously with preliminary materials.

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(6)	Amount Previously Paid:

	(7)	Form, Schedule or Registration Statement No.:

	(8)	Filing Party:

	(9)	Date Filed:

Investor Presentation

December 2011 / January 2012

SEC Safe Harbor Statement

Forward looking Statement

This presentation contains forward-looking statements, which address a variety of subjects including, for example, the Company’s plan for sustained growth in revenue and profits, the

Company’s assessment of the long-term prospects for its market, the trend toward outsourcing key processes, the opportunity for new programs and integrated solutions in our client

base, the prospects for improved profitability over the long-term, the anticipated impact of the investment and cost reduction plan, the expected annualized costs savings and benefits

in fiscal 2012 and 2013 as a result of the investment and cost reduction plan, the impact of the tax benefit preservation plan and the estimated annualized revenue from a recent client

win. All statements other than statements of historical fact, including without limitation, those with respect to the Company’s goals, plans, expectations and strategies set forth herein

are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-

looking statements: the Company’s success, including its ability to meet its revenue, operating income and cost savings targets, maintain and improve its cash position, expand its

operations and revenue, lower its costs, improve its gross margins, reach and sustain profitability, reach its long-term objectives and operate optimally, depends on its ability to execut

on its business strategy, including the investment and costs savings plan and the continued and increased demand for and market acceptance of its services; global economic

conditions, especially in the technology sector are uncertain and subject to volatility; demand for our clients’ products may decline or may not achieve the levels anticipated by our

clients; the Company's management may face strain on managerial and operational resources as they try to oversee the expanded operations; the Company may not realize the

expected benefits of its restructuring and cost cutting actions; the Company may not be able to expand its operations in accordance with its business strategy; the Company’s cash

balances may not be sufficient to allow the Company to meet all of its business and investment goals; the Company may experience difficulties integrating technologies, operations

and personnel in accordance with its business strategy; the Company derives a significant portion of its revenue from a small number of customers and the loss of any of those

customers could significantly damage the Company’s financial condition and results of operations; the Company frequently sells to its supply chain management clients on a purchase

order basis rather than pursuant to contracts with minimum purchase requirements, and therefore its sales and the amount of projected revenue that is actually realized are subject to

demand variability; risks inherent with conducting international operations; tax rate expectations are based on current tax law and current expected income and may be affected by the

jurisdictions in which profits are determined to be earned and taxed, changes in estimates of credits, benefits and deductions, the resolution of issues arising from tax audits with

various tax authorities, including payment of interest and penalties and the ability to realize deferred tax assets; the potential tax benefits represented by the net operating loss

carryforwards may not be realized and the tax benefit preservation plan may not be effective in preserving those benefits; the mergers and acquisitions and IPO markets are inherently

unpredictable and liquidity events for companies in the Company’s venture capital portfolio may not occur; and increased competition and technological changes in the markets in

which the Company competes. For a detailed discussion of cautionary statements that may affect the Company’s future results of operations and financial results, please refer to the

Company's filings with the Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Forward-

looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

Important Additional Information

On December 2, 2011, ModusLink filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement in connection with its 2011 annual meeting of

stockholders (the “2011 Annual Meeting”) and has mailed the definitive proxy statement to its stockholders. The definitive proxy statement contains important information concerning

the identity and interests of ModusLink’s directors, director nominees and certain of its officers and employees that may be deemed, along with ModusLink, to be participants in the

solicitation of ModusLink’s stockholders in connection with the 2011 Annual Meeting.

Copies of ModusLink’s definitive proxy statement, any other relevant documents and other materials filed with the SEC concerning ModusLink, when filed, may be obtained free of

charge at www.sec.gov and www.ir.moduslink.com. The definitive proxy statement and any other relevant documents filed with the SEC contain (or will contain) important information,

and stockholders should carefully read the definitive proxy statement, the accompanying WHITE proxy card and other materials filed with the SEC when they become available before

making any voting decision.

Agenda

•

ModusLink Overview and Background

•

Taking Action to Best Position ModusLink for Long-Term Success

•

Board of Directors –

Experienced and Independent

•

Peerless Systems and the Proxy Contest

•

Conclusion: Vote for ModusLink Nominees on the WHITE Proxy Card

•

Improving Operations

–

Executing investments in sales and marketing and cost reduction plan to respond to adverse

economic conditions

–

Plan is focused on putting company on path to sustained growth in revenue and profits

•

Enhancing Corporate Governance

–

Appointed stockholder nominee, Jeff Fenton, to Board in leadership role in November 2010

–

Separated Chairman and CEO roles

•

Maximizing Stockholder Value

–

Returned

nearly

$97

million

cash

stockholders

since

fiscal

2008

–

Commenced review of strategic alternatives, chaired by Mr. Fenton

–

Adopted a tax benefit preservation plan

•

Delivering Results

–

Actions taken bearing fruit, and the Company’s performance is improving

–

For first quarter fiscal 2012, ModusLink reported its highest gross profit margin in nearly two

years, its first operating profit in six quarters and several new client program wins

Robust Change is Underway at ModusLink

ModusLink Overview and Background

Market Leader in Supply

Chain Business Process Outsourcing (BPO)

•

Provides clients with broad, integrated portfolio of forward and

reverse

supply chain solutions supported by a global footprint

–

25 solution centers in 15 countries

–

e-Business, factory supply, optimized configuration/postponement and aftermarket services

•

Focused on high-growth markets

–

Computing, software, communications, storage and consumer electronics

•

Approximately 4,000 full-time employees worldwide

•

Fiscal 2011 revenue of $876 million

ModusLink Provides

Superior Value Chain Solutions

design

and

execute

critical

processes

within

our

clients’

global

value

chains;

focus on speed to market and best cost to enable new business channels

and to unlock global market opportunities

Logistics

Providers

Fulfill to

Multiple

Channels

Configure

Product for

End Market

Needs

Manage

Returns

Processes

E-Business / Entitlement

Business Process Infrastructure

Asset

Repair &

Recovery

Source

Goods for

Manufacture

EMS,

ODM &

OEM

Manufacture

High-Level Strategy in Place to Drive Value

Continue to Drive

Operational

Efficiencies

Focus on Target

Markets With Long-

Term Growth

Prospects

Computing

Software

Storage

Factory Supply

Optimized

Product

Configuration/Postponement

Aftermarket Services

e-Business

Global Standardization

Facility Optimization

Continuous Improvement

Expand Client

Relationships

Through Innovative

Solutions

Communications

Consumer Electronics

New Verticals

Improving Outlook for BPO Market

Industry Environment:

Recession

created

adverse

conditions

for

our

clients, which in

turn impacted ModusLink in fiscal

2010/2011

Macroeconomic environment has

shown weakness, especially in

Europe

Despite challenges, we believe

long-term prospects for our market

are very good

Companies will continue to

outsource more key processes

within their supply chain to reduce

costs and manage the increasing

complexity that global companies

face in serving their customers

Source: Gartner -

Q2 2011.

ModusLink’s Addressable Market

Presents Compelling Opportunity

•

Supply Chain BPO Market is $25 billion across three sectors

–

Supply Chain Services represents 11%

0.2%

0.7%

0.8%

1.4%

1.7%

1.8%

4.2%

Globalware

Mentor

Media

Shin Shin

ATC

Donnelley

Arvato

ModusLink

ODM / Contract

Manufacturers

10%

Source: Company Estimates

In-House

providers &

other

79%

Supply Chain Services

11%

Competitors:

ModusLink is in a favorable competitive position,

given our global capability and Fortune 1000 client

base with opportunity for new programs that

include high value services, such as Aftermarket

and e-Business solutions

•

Strong balance sheet: no debt, approximately $110 million of cash*

•

$25 billion addressable market

•

Maintained strong liquidity: current ratio of 1.8x*

•

Net operating loss carryforwards of $2 billion

•

Improving profit margins over time

* As of October 31, 2011

Financial Strength

Sets Solid Foundation for Execution

* Non

GAAP

operating

income

represents

total

operating

income,

excluding

net

charges

depreciation,

amortization,

stock-based

compensation

restructuring

and

impairment of goodwill.

** Excludes goodwill and other intangible asset impairment charges in FY08, FY09 , FY10 and FY11. Operating income (loss) was $0.4 million, ($167.7) million, ($6.9) million,

and ($35.0) million in FY08, FY09 , FY10 and FY11 respectively.

See reconciliation to operating income in appendix

Financial Trend Analysis

ModusLink has Returned

Significant Capital to Stockholders

•

Since the beginning of FY

2008, ModusLink has

returned nearly $97 million of

cash to stockholders

–

$56.7 million of stock repurchases,

which represents a reduction of

12% of the Company’s outstanding

–

$40 million ($0.9134 per share)

special cash dividend distributed to

stockholders in March 2011

*Includes stock repurchased as of January 31, 2011 and special dividend paid on March 31, 2011

Taking Action to Best Position ModusLink

for Long-Term Success

•

Created durable competitive advantage through strategic acquisitions

–

Open

Channel

Solutions

(OCS)

–

entitlement

management

capability

that

strengthened

ModusLink’s e-Business solution

–

PTS

Electronics

(PTS)

and

Tech

For

Less

(TFL)

–

two

important

capabilities

that

now

comprise ModusLink’s Aftermarket Services

–

result,

ModusLink

can

now

offer

full

suite

value

chain

solutions,

that

enhance

ability

to cross-sell our solutions as well as improve margins

Over 50% of our top 30 clients utilize more than one of our solutions

•

Taken significant actions to improve the performance of our acquisitions

–

Leadership changes

Integrated these highly complementary services under common leadership; hired President, Integrated

Services in 2011

–

Restructured operations

Completed labor reductions of 14% at PTS and more than 25% at TFL in fiscal 2011

–

Implemented better methods to buy, process, repair and sell products

Becoming a Leader in

Global Supply Chain Management Services

Acquisitions are in line with our strategy to take advantage of our sizeable NOLs

and

provide

the

Company

with

the

right

mix

services

and

scale

necessary

position the Company for improved profitability over the long term

Strategic Plan to Put Company on

Path to Sustained Growth in Revenue and Profits

•

As market headwinds persisted,

Company conducted comprehensive

review of business to determine

additional ways to enhance operations

•

Developed and have begun to

execute an investment and

cost reduction plan to:

–

Increase revenue from new programs

–

Significantly improve profitability

–

Put new leadership in place to drive

improved results

Sales Acceleration

& Increased

Market Penetration

Strengthening

Leadership

Cost Alignment &

Working Capital

Improvements

Investment and Cost Reduction Plan:

Sales Acceleration and Increased Market Penetration

•

Increase new business revenue to annual levels of

$150 million to $200 million

•

Overcome challenges related to volatility in volumes

and use of less materials in packaged products, while

fulfilling our cost value proposition to clients

Objectives

•

Increasing quota-bearing sales people by at least 30%

•

Price optimization strategies

•

Improving sales targeting including subcategories within target markets

•

Sales force effectiveness and account planning

•

Integrate sales and marketing under common leadership

–

Hired new head of sales and marketing

Example Investments and Changes

Investment and Cost Reduction Plan:

Cost Alignment & Working Capital Improvements

•

Improve profitability as sales and marketing initiatives

gain traction

•

Increase capacity utilization and reduce redundancy

Objectives

•

Reducing direct and indirect labor costs

–

6% reduction in headcount from actions in last two quarters

•

Reducing facility costs

•

Strategic sourcing; better leverage purchasing power of collective facilities

•

Expanding shared services initiative

•

Further streamline inventory levels and accelerate inventory turns

Example Investments and Changes

•

Put new leaders in targeted places to drive improved

results

•

Fulfill vision for development of integrated services –

Aftermarket Services and e-Business solutions

Objectives

•

Recently hired:

President,

Sales

and

Marketing

drive

go-to

market

strategy

President,

Integrated

Services

drive

aftermarket

solutions

and

e-Business

capabilities

SVP,

Human

Resources

strengthen

training

and

talent

development

Example Investments and Changes

Investment and Cost Reduction Plan:

Strengthening Leadership

Investment and Cost Reduction Plan:

Already Delivering Results

•

The Investment and Cost Reduction plan is already contributing to results

–

For ModusLink’s first quarter fiscal 2012 earnings results, the Company reported its highest

gross profit margin in nearly two years and its first operating profit in six quarters

•

Cost reduction plans, including restructuring actions, are expected to result

in approximately $30 million to $40 million in annualized cost savings

–

On track to achieve the expected $15 million to $20 million in benefits in fiscal 2012, with

further benefit in fiscal 2013

•

Recently won several new client programs with global brands:

–

A major global consumer products company

Expected

contribute

annualized

revenue

approximately

$60

million

largest

program

win

since

before recession

–

GoPro -

one of the world's fastest growing camera companies

Program utilizes ModusLink’s Supply Chain, e-Business and Aftermarket solutions

–

Two new programs from Sony

Since starting first Sony program a year ago, we've grown relationship to five programs

Example of ModusLink’s ability to sell new programs to current clients and underscores opportunity

present in existing client base

ModusLink is Positioned

For Long-Term Success

•

Strong liquidity and balance sheet

•

An articulated plan for investment and cost reduction

•

Access to a global market

•

A client base of Fortune 1000 companies that provides additional

opportunities for ModusLink’s service offerings

–

Over 50% of our top 30 clients utilize more than one of ModusLink’s solutions

ModusLink has a robust financial foundation that provides a competitive

advantage and affords us the opportunity to act in the long-term interests

of our Company and stockholders

Board of Directors

Experienced and Independent

ModusLink has a Highly-

Qualified and Independent Board

•

Seven of eight Board members are independent

–

Virginia G. Breen

–

Jeffrey J. Fenton –

Director nominee at 2011 Annual Meeting

–

Thomas H. Johnson

–

Director nominee at 2011 Annual Meeting

–

Frank J. Jules –

Chairman

–

Joseph C. Lawler –

President and Chief Executive Officer

–

Edward E. Lucente

–

Michael J. Mardy

–

Joseph M. O’Donnell

•

Half of the current Board members have joined in the past five years

–

By pursuing this proxy contest, Peerless is seeking to replace two of ModusLink’s newest

Board members

ModusLink’s Board is comprised of seasoned executives,

all of whom are actively engaged in creating value for all stockholders

Board is Listening and Taking Action

ModusLink’s Highly-Qualified

Director Nominees

•

ModusLink’s nominees are experienced, qualified and committed to delivering value for

all stockholders

Tom Johnson:

–

Member of Board since April 2006

–

Mr. Johnson was identified by an outside search firm, Spencer Stuart, as part of a nationwide search for director candidates

–

Mr. Johnson brings more than 15 years of executive experience, including service as the chief executive officer of two large

multinational corporations, as well as four public company boards

–

Since January 2009, Mr. Johnson has served as the Chief Executive Officer of The Taffrail Group, LLC, an international

advisory firm

–

Mr. Johnson is also a director of Coca-Cola Enterprises, Inc., GenOn Energy, Inc. and Universal Corporation

Jeff Fenton:

–

Member of Board since November 2010

–

Mr. Fenton was appointed to the Board following the Governance and Nominating Committee’s review and evaluation of

director

candidates

put

forward

two

stockholders:

LCV

Capital

Management

and

Raging

Capital

Management

–

Mr. Fenton brings a proven record of leading large and diverse organizations, developing and executing market leading

strategies

–

Since March 2004, Mr. Fenton has served as Principal of Devonshire Advisors LLC, an investment advisory services firm

–

Mr. Fenton served as a director of Bluelinx Holdings Inc., Formica Corporation, IAP Worldwide Services and Transamerica

Trailer Leasing Co.

Losing these Directors would remove valuable experience and

important leadership from the ModusLink Board

Peerless Systems and the

Proxy Contest

ModusLink has been Reasonable

and Open to a Resolution with Peerless

•

ModusLink values the opinions of all stockholders and has a track record of

working with stockholders

–

Engaged in a dialogue with LCV Capital Management and Raging Capital Management that

enabled us to avoid the expense and disruption of a proxy contest in 2010

–

Resulted

ModusLink

appointing

stockholder

representation

the

Board

–

Mr.

Fenton,

who

has since been a valuable addition through his various leadership roles

•

ModusLink’s Board and management have tried to pursue a similar approach

with Peerless, actively engaging with the investor

•

Throughout the course of this interaction, and despite concerns about the

Peerless nominees, ModusLink made a concerted effort to resolve this matter

–

Offered Peerless a settlement agreement which included board representation and customary

confidentiality and standstill provisions

Despite opportunities to find common ground, Peerless has instead chosen

to engage the Company in a disruptive and costly proxy contest

Peerless has Not Articulated Any

Strategy or Plan for the Company

Peerless Nominees –

Not Right for ModusLink

In our view, electing the Peerless nominees could:

•

Interrupt ongoing implementation of ModusLink’s strategic plan;

•

Disrupt the ongoing strategic alternatives review process;

•

Reduce the level of relevant experience on the Board; and

•

Negatively impact stockholder value

There Are Concerns Regarding

Peerless Nominee Timothy Brog

Mr. Brog’s pattern of violations is troubling

and has no place on ModusLink’s Board

•

Nominee Timothy Brog has a troubling track record of SEC violations and

failure to disclose material information to stockholders:

–

2006:

Gyrodyne

proxy

contest

–

Mr.

Brog

was

part

group

that

received

comment

letter

from the Staff of the Securities and Exchange Commission (SEC) noting that because the group

failed to file a preliminary proxy statement, the participants in the solicitation had violated Rule

14a-6 of Regulation 14A.

The Staff directed the group to revise its proxy materials to affirmatively indicate the participants had

committed a federal securities law violation

–

2008:

TravelCenters

America

proxy

contest

–

lawsuit

filed

against

Mr.

Brog

his

failure to disclose the prior federal securities law violations in connection with the Gyrodyne

matter

Delaware Court of Chancery ruled in favor of TravelCenters, and deemed Mr. Brog’s notice of intent to

nominate directors deficient and invalid

–

2011:

ModusLink

proxy

contest

–

believe

that

Mr.

Brog

operating

Peerless

unregistered investment company in violation of federal securities laws

Based on public filings, we believe Peerless fails several quantitative and qualitative tests under the

Investment Company Act of 1940

We believe Mr. Brog has failed to disclose material information to ModusLink’s stockholders in this regard

Conclusion: Vote for ModusLink Nominees

on the WHITE Proxy Card

Protect Your Investment: Vote

FOR ModusLink Nominees on the WHITE Proxy Card

Support

your

Board’s

initiatives

drive

value

for

ALL

stockholders

–

vote

FOR the ModusLink nominees on the WHITE proxy card today

APPENDIX

Non-GAAP Reconciliation

FY04

Margin %

FY05

Margin %

FY06

Margin %

FY07

Margin %

Revenue

381,315

1,053,507

1,148,886

1,143,026

Operating income (loss)

(25,206)

-6.6%

7,769

0.7%

585

0.1%

14,765

1.3%

Less goodwill impairment charges

0.0%

Oper. income (loss) excl. GW impairment

(25,206)

-6.6%

7,769

0.7%

585

0.1%

14,765

1.3%

Adjustments :

Depreciation

6,771

1.8%

9,723

0.9%

11,021

1.0%

15,028

1.3%

Amortization of intangible assets

0.0%

5,226

0.5%

4,824

0.4%

4,821

0.4%

Share-based payments

333

0.1%

5,700

0.5%

6,417

0.6%

5,184

0.5%

Restructuring

5,604

1.5%

5,258

0.5%

9,521

0.8%

4,643

0.4%

Non-GAAP operating income (loss)

(12,498)

-3.3%

33,676

3.2%

32,368

2.8%

44,441

3.9%

FY08

Margin %

FY09

Margin %

FY10

Margin %

FY11

Margin %

Q1 FY12

Margin %

Revenue

1,068,207

1,008,554

923,996

876,466

206,151

Operating income (loss)

371

0.0%

(167,693)

-16.6%

(6,927)

-0.7%

(34,972)

-4.0%

2,208

1.1%

Less goodwill & intangible asset impairment charges

14,000

1.3%

164,682

16.3%

25,800

2.8%

27,166

3.1%

0.0%

Oper. income (loss) excl. GW & intangible asset impairment charges

14,371

1.3%

(3,011)

-0.3%

18,873

2.0%

(7,806)

-0.9%

2,208

1.1%

Adjustments :

Depreciation

17,008

1.6%

20,013

2.0%

16,867

1.8%

16,782

1.9%

3,735

1.8%

Amortization of intangible assets

3,773

0.4%

5,485

0.5%

6,308

0.7%

5,457

0.6%

332

0.2%

Share-based payments

5,599

0.5%

5,103

0.5%

4,154

0.4%

3,481

0.4%

882

0.4%

Restructuring

5,465

0.5%

19,552

1.9%

(1,433)

-0.2%

795

0.1%

755

0.4%

Non-GAAP operating income (loss)

46,216

4.3%

47,142

4.7%

44,769

4.8%

18,709

2.1%

7,912

3.8%