ModusLink CEO to retire, co. to restate results

ModusLink CEO and president of operations both stepping down, company plans to restate results

Associated Press

WALTHAM, Mass. (AP) -- ModusLink Global Solutions Inc., which manages corporate supply chains, said Monday that its CEO will retire once a replacement is found. The company also said Monday that it will restate its financial results since fiscal 2009 and delay filing its results for its most recent quarter because of accounting irregularities.

ModusLink's shares fell nearly 9 percent in morning trading.

President and CEO Joseph Lawler will immediately leave the Waltham, Mass.-based company's board. In addition, William McLennan, its president for global operations, will leave ModusLink immediately.

Francis Jules, the board's chairman, said the board is "taking steps to improve ModusLink's financial performance and stockholder returns." The company board has hired the executive recruiting firm Korn/Ferry International to help find permanent replacements for the two men.

ModusLink is in the midst of a review of "strategic alternatives," which traditionally explore ways for companies to boost value for shareholders and can include the possible sale of the company, some of its assets or businesses.

The company said that an investigation by its audit committee found that certain client contracts were not aligned correctly with their appropriate discounts. The Securities and Exchange Commission is also investigating the issues.

As a result, ModusLink said it plans to restate its financial results for the fiscal years 2009 through 2011, along with the first two quarters of fiscal 2012 and certain financial data for the fiscal years 2007 and 2008.

The restatements are expected to reduce the company's revenue by about $20 million to $30 million over a period in which ModusLink reported revenue of $5.4 billion and a net loss of $213 million, including $232 million in one-time charges. The company also expects the restatement to swell its net loss by a lesser amount.

Because of the restatements, ModusLink said it's delaying the filing of its financial results for fiscal third quarter, which ended on April 30. And as a result, the company said it expects to be notified by the Nasdaq that it's out of compliance with the exchange's listing rules.

Once the review process is finished, ModusLink said it expects to report third-quarter results that include revenue of between $175 million to $180 million.

ModusLink shares fell 37 cents, or 8.7 percent, to $3.89 in morning trading. Over the past 52 weeks, the company's shares have traded between $3.25 and $6.

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