Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Jul. 31, 2022 | Oct. 21, 2022 | Jan. 31, 2022 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --07-31 | ||
Document Period End Date | Jul. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-35319 | ||
Entity Registrant Name | Steel Connect, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 04-2921333 | ||
Entity Address, Address Line One | 2000 Midway Ln | ||
Entity Address, City or Town | Smyrna | ||
Entity Address, State or Province | TN | ||
Entity Address, Postal Zip Code | 37167 | ||
City Area Code | 914 | ||
Local Phone Number | 461-1276 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 67.7 | ||
Entity Common Stock, Shares Outstanding | 60,657,539 | ||
Documents Incorporated by Reference | Unless earlier included in an amendment to this Annual Report on Form 10-K, portions of the registrant's definitive proxy statement to be delivered to stockholders in connection with the Company's 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Entity Central Index Key | 0000914712 | ||
Common Stock | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Trading Symbol | STCN | ||
Security Exchange Name | NASDAQ | ||
Series D Preferred Stock | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | Rights to Purchase Series D Junior Participating Preferred Stock | ||
No Trading Symbol Flag | true | ||
Security Exchange Name | NASDAQ |
AUDIT INFORMATION
AUDIT INFORMATION | 12 Months Ended |
Jul. 31, 2022 | |
Auditor Information [Abstract] | |
Auditor name | BDO USA, LLP |
Auditor location | New York, NY |
Auditor firm ID | 243 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 53,142 | $ 58,117 |
Accounts receivable, trade, net of allowance for doubtful accounts of $44 and $49 at July 31, 2022 and 2021, respectively | 40,083 | 36,547 |
Inventories, net | 8,151 | 9,043 |
Funds held for clients | 4,903 | 8,212 |
Prepaid expenses and other current assets | 3,551 | 4,958 |
Current assets of discontinued operations | 0 | 96,522 |
Total current assets | 109,830 | 213,399 |
Property and equipment, net | 3,534 | 4,616 |
Operating lease right-of-use assets | 19,655 | 18,253 |
Other assets | 4,730 | 5,692 |
Long-term assets of discontinued operations | 0 | 434,421 |
Total assets | 137,749 | 676,381 |
Current liabilities: | ||
Accounts payable | 30,553 | 29,829 |
Accrued expenses | 28,396 | 32,653 |
Funds held for clients | 4,903 | 8,212 |
Current lease obligations | 6,466 | 9,630 |
Other current liabilities | 13,482 | 14,277 |
Current liabilities of discontinued operations | 0 | 123,392 |
Total current liabilities | 83,800 | 217,993 |
Convertible note payable | 11,047 | 9,343 |
Long-term lease obligations | 12,945 | 8,719 |
Other long-term liabilities | 3,983 | 3,863 |
Long-term liabilities of discontinued operations | 0 | 395,071 |
Total long-term liabilities | 27,975 | 416,996 |
Total liabilities | 111,775 | 634,989 |
Commitments and contingencies (Note 10) | ||
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2022 and 2021 | 35,180 | 35,180 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at July 31, 2022 and 2021; zero shares issued and outstanding at July 31, 2022 and 2021 | 0 | 0 |
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,529,558 issued and outstanding shares at July 31, 2022; 63,099,496 issued and outstanding shares at July 31, 2021 | 605 | 632 |
Additional paid-in capital | 7,479,366 | 7,478,638 |
Accumulated deficit | (7,493,317) | (7,480,220) |
Accumulated other comprehensive income | 4,140 | 7,162 |
Total stockholders' (deficit) equity | (9,206) | 6,212 |
Total liabilities, contingently redeemable preferred stock and stockholders' equity | $ 137,749 | $ 676,381 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Accounts receivable, trade, allowance for doubtful accounts | $ 44 | $ 49 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 4,965,000 | 4,965,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,400,000,000 | 1,400,000,000 |
Common stock, shares issued (in shares) | 60,529,558 | 63,099,496 |
Common stock, shares outstanding (in shares) | 60,529,558 | 63,099,496 |
Continuing operations, net of tax | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 35,000 | 35,000 |
Preferred stock, shares issued (in shares) | 35,000 | 35,000 |
Preferred stock, shares outstanding (in shares) | 35,000 | 35,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Income Statement [Abstract] | ||
Net revenue | $ 203,272 | $ 226,256 |
Cost of revenue | 161,736 | 178,552 |
Gross profit | 41,536 | 47,704 |
Operating expenses: | ||
Selling, general and administrative | 40,373 | 49,274 |
Total operating expenses | 40,373 | 49,274 |
Operating income (loss) | 1,163 | (1,570) |
Other income (expense): | ||
Interest income | 58 | 11 |
Interest expense | (3,120) | (2,615) |
Other gains, net | 4,031 | 1,176 |
Total other income (expense) | 969 | (1,428) |
Income (loss) from continuing operations before income taxes | 2,132 | (2,998) |
Income tax expense | 11,388 | 8,837 |
Loss from continuing operations | (9,256) | (11,835) |
Net loss from discontinued operations | (1,712) | (32,556) |
Net loss | (10,968) | (44,391) |
Less: Preferred dividends on redeemable preferred stock | (2,129) | (2,129) |
Net loss attributable to common stockholders | $ (13,097) | $ (46,520) |
Continuing operations (in usd per share) | $ (0.19) | $ (0.23) |
Discontinued operations (in usd per share) | (0.03) | (0.52) |
Basic net loss per share attributable to common stockholders (in usd per share) | (0.22) | (0.75) |
Diluted net loss per share attributable to common stockholders (in usd per share) | $ (0.22) | $ (0.75) |
Weighted average common shares used in: | ||
Basic loss per share (in shares) | 59,964 | 62,142 |
Diluted loss per share (in shares) | 59,964 | 62,142 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (10,968) | $ (44,391) |
Other comprehensive income: | ||
Foreign currency translation adjustment | (3,699) | 4,737 |
Pension liability adjustments, net of tax | 677 | (1,418) |
Other comprehensive (loss) income | (3,022) | 3,319 |
Comprehensive loss | $ (13,990) | $ (41,072) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Balance (in shares) at Jul. 31, 2020 | 62,787,919 | ||||
Balance at Jul. 31, 2020 | $ 48,818 | $ 628 | $ 7,478,047 | $ (7,433,700) | $ 3,843 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (44,391) | (44,391) | |||
Preferred dividends | (2,129) | (2,129) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 9,145 | ||||
Issuance of common stock pursuant to employee stock purchase plan | 4 | 4 | |||
Restricted stock grants, net of forfeitures (in shares) | 302,432 | ||||
Restricted stock grants, net of forfeitures | 0 | $ 4 | (4) | ||
Share-based compensation | 591 | 591 | |||
Other comprehensive items | $ 3,319 | 3,319 | |||
Balance (in shares) at Jul. 31, 2021 | 63,099,496 | 63,099,496 | |||
Balance at Jul. 31, 2021 | $ 6,212 | $ 632 | 7,478,638 | (7,480,220) | 7,162 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (10,968) | (10,968) | |||
Preferred dividends | (2,129) | (2,129) | |||
Issuance of common stock pursuant to employee stock purchase plan | 0 | ||||
Restricted stock grants, net of forfeitures (in shares) | (2,570,437) | ||||
Restricted stock grants, net of forfeitures | 0 | $ (27) | 27 | ||
Share-based compensation | 701 | 701 | |||
Other comprehensive items | $ (3,022) | (3,022) | |||
Balance (in shares) at Jul. 31, 2022 | 60,529,558 | 60,529,558 | |||
Balance at Jul. 31, 2022 | $ (9,206) | $ 605 | $ 7,479,366 | $ (7,493,317) | $ 4,140 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (10,968) | $ (44,391) |
Net loss from discontinued operations | 1,712 | 32,556 |
Loss from continuing operations | (9,256) | (11,835) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 2,220 | 3,403 |
Amortization of deferred financing costs | 102 | 137 |
Accretion of debt discount | 1,704 | 1,289 |
Share-based compensation | 701 | 591 |
Deferred taxes | 9,041 | 7,230 |
Non-cash lease expense | 9,425 | 9,953 |
Other (gains) losses, net | (4,087) | 439 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (5,256) | 13,548 |
Inventories, net | 323 | 1,628 |
Prepaid expenses and other current assets | 1,065 | (484) |
Accounts payable and accrued expenses | 801 | (18,726) |
Refundable and accrued income taxes, net | (471) | 15,667 |
Other assets and liabilities | (9,446) | (30,950) |
Net cash used in operating activities | (3,134) | (8,110) |
Cash flows from investing activities: | ||
Additions to property and equipment | (1,485) | (1,217) |
Proceeds from the disposition of property and equipment | 0 | 182 |
Net cash used in investing activities | (1,485) | (1,035) |
Cash flows from financing activities: | ||
Payments of preferred dividends | (2,129) | (2,129) |
Payment of deferred financing costs | (95) | |
Repayments on capital lease obligations | (73) | (70) |
Proceeds from issuance of common stock | 0 | 4 |
Net cash used in financing activities | (2,297) | (2,195) |
Net effect of exchange rate changes on cash and cash equivalents | (1,368) | 597 |
Net increase in cash, cash equivalents and restricted cash | (8,284) | (10,743) |
Cash, cash equivalents and restricted cash, beginning of period | 66,329 | 77,072 |
Cash, cash equivalents and restricted cash, end of period | 58,045 | 66,329 |
Cash flows from discontinued operations: | ||
Operating activities | (6,738) | 31,176 |
Investing activities | 625 | (2,291) |
Financing activities | 4,230 | (7,642) |
Net cash (used in) provided by discontinued operations | $ (1,883) | $ 21,243 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Jul. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Steel Connect, Inc., (the "Company"), is a holding company which operates through its wholly-owned subsidiary ModusLink Corporation ("ModusLink" or "Supply Chain"). ModusLink is a supply chain business process management company serving clients in markets such as consumer electronics, communications, computing, medical devices, software and retail. ModusLink designs and executes elements in its clients' global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. The Company also produces and licenses an entitlement management solution for activation, provisioning, entitlement subscription and data collection from physical goods (connected products) and digital products. Disposition of IWCO Direct On February 25, 2022, the Company entered into a transaction agreement (the “Transaction Agreement”) with (a) IWCO Direct Holding Inc. (''IWCO Direct" or "Direct Marketing") and its indirect subsidiaries, (b) Cerberus Business Finance, LLC, in its capacities as collateral agent and administrative agent under a financing agreement (in such capacities, the “Agent”), dated as of December 15, 2017, between IWCO Direct, IWCO Direct’s direct and indirect subsidiaries, the Agent and the lenders party thereto (the “Lenders”) (the “Financing Agreement”), (c) the Lenders, (d) the Lenders or their respective designees listed on the signature pages to the Transaction Agreement under the caption “Participating Lender Purchasers” (the “Participating Lender Purchasers”), (e) SPH Group Holdings LLC (the “Sponsor”) and (f) Instant Web Holdings, LLC (the “Buyer”), an entity owned by the Participating Lender Purchasers. On the Effective Date (as defined in the Transaction Agreement) and pursuant to the terms of the Transaction Agreement, the Company transferred all of its interests in IWCO Direct to the Buyer as part of a negotiated restructuring of the capital structure and certain financial obligations of IWCO Direct under the Financing Agreement as contemplated by the Transaction Agreement. The assets and liabilities and results of operations of the IWCO Direct business are reported as discontinued operations for all periods presented. See Note 3 for additional information. All references made to financial data in this Annual Report on Form 10-K are to the Company's continuing operations, unless otherwise specifically noted. Liquidity and Capital Resources Steel Connect, Inc.(as parent company, the “Parent”) Historically, the Parent has financed its operations and met its capital requirements primarily through funds generated from operations, the sale of its securities, borrowings from lending institutions and sale of facilities that were not fully utilized. The Parent believes it has access to adequate resources to meet its needs for normal operating costs, capital expenditures, debt obligations and working capital for at least the next twelve months. Upon a redemption request of the Preferred Stock (as discussed in Note 19), the Parent believes it is probable that it has access to adequate resources, including cash on hand and potential dividends from ModusLink, to pay the redemption price and continue its operations. As of July 31, 2022, these resources include cash and cash equivalents and and ModusLink's credit agreement with Umpqua Bank (the “Umpqua Revolver”), as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 16, 2024. There was $0.6 million outstanding on the Umpqua Revolver as of July 31, 2022. See Note 7 for further details regarding the Umpqua Revolver. ModusLink believes that if dividends to the Parent are required, it would have access to adequate resources to meet its operating needs while remaining in compliance with the Umpqua Revolver's covenants over the next twelve months. However, there can be no assurances that ModusLink will continue to have access to its line of credit if its financial performance does not satisfy the financial covenants set forth in its financing agreement, which could also result in the acceleration of its debt obligations by its lender, adversely affecting liquidity. As of July 31, 2022 and 2021, the Company had cash and cash equivalents of $53.1 million and $58.1 million, respectively. As of July 31, 2022, the Company's continuing operations had a net working capital of $26.0 million. Impact of COVID-19 The ongoing COVID-19 pandemic (in particular, the emergence of new variants of the virus across the globe) has caused, and continues to cause, significant disruptions in the U.S. and global economies. For example, national and local governments in the United States and around the world continue to implement measures to prevent the spread of COVID-19 and its variants, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, quarantines, curfews, and recommendations to practice physical distancing. Such measures have restricted and continue to restrict individuals’ daily activities and curtail or cease many businesses’ normal operations. The COVID-19 pandemic has adversely impacted, and is likely to further adversely impact, nearly all aspects of our business and markets, including our workforce and the operations of our clients, suppliers, and business partners. Beginning in March 2020, when the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency, we experienced impacts to our customers' demand, facility operations, supply chain, availability and productivity of personnel, while also working to comply with rapidly evolving international, federal, state and local restrictions and recommendations on travel and workplace health and safety. We experienced disruptions to our business continuity as a result of temporary closures of certain of ModusLink’s facilities in the third and fourth quarters of fiscal year 2020, as well as the fourth quarter of fiscal year 2021. However, these temporary closures did not have a significant impact on ModusLink’s operations. An outbreak in Mainland China forced temporary lockdown orders from March 14, 2022 to March 20, 2022 in several cities in which ModusLink operates. In April and May 2022, there were further temporary lockdown orders which impacted several ModusLink facilities in China; however, ModusLink was able to resume operations on May 5, 2022 at one site and at another site on May 31, 2022. In July 2022, there were further temporary lockdown orders which impacted one ModusLink facility in China. In September and October 2022, there were further temporary lockdown order which impacted several ModusLink facilities in China. The lockdowns in China have not had a significant impact to ModusLink’s operations through the filing of this Annual Report on Form 10-K. If the situation continues at this level or worsens, however, it could result in a potential adverse impact on our business, results of operations and financial condition. We will evaluate further actions if circumstances warrant. Beginning in the second quarter of 2020, with the shutdown of the U.S. economy due to the COVID-19 pandemic, IWCO Direct’s business was also significantly and adversely affected by a material reduction in customer mailing activities. Additionally, although IWCO Direct operated as an essential business, it had reduced operating levels and labor shifts due to lower sales volume during the third quarter of fiscal year 2020. To help combat these impacts and mitigate the financial impact of the COVID-19 pandemic on our business, during fiscal year 2020 we took proactive measures by initiating cost reduction actions, including the waiver of board fees, hiring freezes, staffing and force reductions, company-wide salary reductions, bonus payment deferrals and temporary 401(k) match suspension. The temporary waiver of board fees and company-wide salary reduction actions taken in the prior fiscal year were fully restored prior to the beginning of fiscal year 2021, and the majority of salary reductions were repaid prior to the fiscal quarter ended January 31, 2021. Additionally, against the backdrop of the reduction in IWCO Direct's business, the Company held extensive discussions with Cerberus about amending and extending IWCO Direct’s credit facility with Cerberus under which there was approximately $361.3 million outstanding as of January 31, 2022 that was to mature in December 2022. These discussions ultimately resulted in the disposition of IWCO Direct. For more information, see “Disposition of IWCO Direct” above and Note 3 below. We continue our focus on cash management and liquidity, which includes aggressive working capital management. We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including its impact on our clients, employees, suppliers, vendors, business partners and distribution channels. We believe that such impacts could include, the continued disruption to the demand for our businesses' products and services; disruptions in or closures of our business operations or those of our customers or suppliers; the impact of the global business and economic environment on liquidity and the availability of capital; increased costs and delays in payments of outstanding receivables beyond normal payment terms; supply chain disruptions; uncertain demand; and the effect of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers. Despite indications of economic recovery, the severity of the impact of the COVID-19 pandemic on the Company’s business in the fiscal year ending July 31, 2022 and beyond is difficult to predict and will depend on a number of uncertain factors and trends. Such factors and trends include, but are not limited to: the duration and severity of the virus and its current variants; the emergence of new variant strains; the availability and widespread use of vaccines; the impact of the global business and economic environment on liquidity and the availability of capital; the extent and severity of the impact on our customers and suppliers; and U.S. and foreign government actions that have been taken, or may be taken in the future, to mitigate adverse economic or other impacts or to mitigate the spread of the virus and its variants. The Company continues to monitor for any developments or updates to COVID-19 guidelines from public health and governmental authorities, as well as the protection of the health and safety of its personnel, and is continuously working to ensure that its health and safety protocols, business continuity plans and crisis management protocols are in place to help mitigate any negative impacts of the COVID-19 pandemic on the Company’s employees, business or operations. Proposed Merger with Steel Holdings On June 12, 2022, the Company, Steel Partners Holdings L.P. (“Steel Holdings”) and SP Merger Sub, Inc., a wholly owned subsidiary of Steel Holdings (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Steel Holdings. The Merger Agreement provides that each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger (other than dissenting shares and shares owned by the Company, Steel Holdings or any of their respective subsidiaries) will, subject to the terms and conditions set forth in the Merger Agreement, be converted into the right to receive (i) $1.35 in cash, without interest and (ii) one contingent value right to receive a pro rata share of the proceeds received by the Company, Steel Holdings or any of their affiliates with respect to the sale, transfer or other disposition of all or any portion of the assets currently owned by ModusLink within two years of the Merger’s closing date, to the extent such proceeds exceed $80 million plus certain related costs and expenses. Steel Holdings and certain of its affiliates have also entered into a Voting and Support Agreement pursuant to which, among other things, they have agreed to vote all shares of common stock and Series C Preferred Stock beneficially owned by them in favor of the adoption of the Merger Agreement and the Merger and any alternative acquisition agreement approved by the Company's Board of Directors (acting on the recommendation of the special committee (the “Special Committee”) of independent and disinterested directors formed to consider and negotiate the terms and conditions of the Merger and to make a recommendation to our Board of Directors). The Merger Agreement includes a "go-shop" period that expired at 11:59 p.m., Eastern time, on July 12, 2022, during which the Company was authorized to actively solicit and consider alternative acquisition proposals. The closing of the Merger is conditioned upon receipt of approval of the Merger from (i) the holders of a majority in voting power of the outstanding shares of common stock and Series C Preferred Stock of the Company (voting on an as converted to shares of common stock basis), voting together as a single class, (ii) a majority of the outstanding shares of common stock of the Company not owned, directly or indirectly, by Steel Holdings and its affiliates and related parties, and any other officers or directors of the Company, and (iii) the holders of a majority of the outstanding shares of Series C Preferred Stock of the Company, voting as a separate class, as well as other customary closing conditions. Accordingly, there can be no assurance that the Company will be able to complete the Merger on the expected timeline or at all. See “Part I, Item 1A. Risk Factors” included in this Report. Our Board of Directors, acting on the unanimous recommendation of the Special Committee, and the Board of Directors of Steel Partner Holdings GP Inc., the general partner of Steel Holdings, approved the Merger Agreement and the transactions contemplated by the Merger Agreement (such transactions, collectively, the “Transactions”) and resolved to recommend the stockholders adopt the Merger Agreement and approve the Transactions. The Special Committee, which is comprised solely of independent and disinterested directors of the Company who are unaffiliated with Steel Holdings, exclusively negotiated the terms of the Merger Agreement with Steel Holdings, with the assistance of its independent financial and legal advisors. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jul. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements reflect the application of certain significant accounting policies described below. Principles of Consolidation The accompanying consolidated financial statements of the Company include the results of its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company accounts for investments in businesses in which it owns between 20% and 50% of the voting interest using the equity method, if the Company has the ability to exercise significant influence over the investee company. All other investments in privately held businesses over which the Company does not have the ability to exercise significant influence, or for which there is not a readily determinable market value, are accounted for under the cost method of accounting. Use of Estimates The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to: (1) revenue recognition; (2) valuation allowances for trade and other receivables; (3) the valuation of long-lived assets; (4) contingencies, including litigation reserves; (5) restructuring charges and related severance expenses; (6) going concern assumptions; (7) accrued pricing and tax related liabilities; and, (8) incremental borrowing rate to determine present value of lease payments.. Accounting estimates are based on historical experience and various assumptions that are considered reasonable under the circumstances. However, because these estimates inherently involve judgments and uncertainties, actual results could differ materially from those estimated. Revenue Recognition The Company recognizes revenue from its contracts with customers primarily from the sale of marketing solutions offerings and supply chain management services. Revenue is recognized when control of the promised goods or services is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For ModusLink's supply chain management services arrangements, the goods and services are considered to be transferred over time as they are performed. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Supply Chain Management Services ModusLink's revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer's behalf as part of its service to them. The majority of these arrangements consist of two distinct performance obligations (i.e., warehousing/inventory management service and a separate kitting/packaging/assembly service), revenue related to each of which is recognized over time as services are performed using an input method based on the level of efforts expended. Other Other revenue consists of cloud-based software subscriptions, software maintenance and support service contracts, fees for professional services and fees for the sale of perpetual software licenses in ModusLink's e-Business operations. Except for perpetual software licenses, revenue related to these arrangements is recognized on a straight-line basis over the term of the agreement or over the term of the agreement in proportion to the costs incurred in satisfying the obligations under the contract. Revenue from the sale of perpetual licenses is recognized at a point in time upon execution of the relevant license agreement and when delivery has taken place. Performance Obligations and Standalone Selling Price The Company's contracts with customers may include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require certain judgment. For arrangements with multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company generally determines standalone selling prices based on the prices charged to customers and uses a range of amounts to estimate standalone selling prices when we sell each of the products and services separately and need to determine whether there is a discount that needs to be allocated based on the relative standalone selling prices of the various products and services. The Company typically has more than one range of standalone selling prices for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the type of customer and geographic region in determining the range of standalone selling prices. Variable Consideration The Company may provide credits or incentives to customers, which are accounted for as variable consideration when estimating the transaction price of the contract and amounts of revenue to recognize. The amount of variable consideration to include in the transaction price is estimated at contract inception using either the estimated value method or the most likely amount method based on the nature of the variable consideration. These estimates are updated at the end of each reporting period as additional information becomes available and revenue is recognized only to the extent that it is probable that a significant reversal of any amounts of variable consideration included in the transaction price will not occur. Principal Versus Agent Revenue Recognition For revenue generated from contracts with customers involving another party, the Company considers whether it maintains control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment and discretion in establishing price. Revenues are recognized on a gross basis if the Company is acting in the capacity of a principal and on a net basis if its acting in the capacity of an agent. Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records contract assets and liabilities related to its contracts with customers as follows: • Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time. • Contract assets when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to marketing solutions offerings and supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the Company's consolidated balance sheets. • Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's consolidated balance sheets. Accounts Receivable and Allowance for Doubtful Accounts The Company's unsecured accounts receivable are stated at original invoice amount less an estimate made for doubtful receivables based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition, credit history, current economic conditions, whether any amounts are currently past due and the length of time accounts may be past due. The Company writes off accounts receivable when management deems them uncollectible and records recoveries of accounts receivable previously written off when received. When accounts receivable are considered past due, the Company generally does not charge interest on past due balances. The allowance for doubtful accounts consisted of the following: July 31, July 31, (In thousands) Balance at beginning of year $ 49 $ 134 Provisions charged to expense — — Accounts written off — (6) Recovered (5) (79) Balance at end of year $ 44 $ 49 Foreign Currency Translation All assets and liabilities of the Company's foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars at the rates in effect at the balance sheet date. All amounts in the consolidated statements of operations are translated using the average exchange rates in effect during the year. Resulting translation adjustments are reflected in the accumulated other comprehensive income (loss) component of stockholders' equity. Settlement of receivables and payables in a foreign currency that is not the functional currency result in foreign currency transaction gains and losses. Foreign currency transaction gains and losses are included in "Other gains (losses), net" in the consolidated statements of operations. Cash, Cash Equivalents and Short-term Investments Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase. Investments with maturities greater than three months to twelve months at the time of purchase are considered short-term investments. Cash and cash equivalents consisted of the following: July 31, July 31, (In thousands) Cash and bank deposits $ 21,386 $ 20,915 Money market funds 31,756 37,202 $ 53,142 $ 58,117 Fair Value Measurements The Company measures certain assets and liabilities at fair value (see Note 20 - "Fair Value Measurements"). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values of assets and liabilities are determined based on a three-level measurement input hierarchy. Level 1 inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date. Level 2 inputs are other than quoted market prices that are observable, either directly or indirectly, for an asset or liability. Level 2 inputs can include quoted prices in active markets for similar assets or liabilities, quoted prices in a market that is not active for identical assets or liabilities, or other inputs that can be corroborated by observable market data. Level 3 inputs are unobservable for the asset or liability when there is little, if any, market activity for the asset or liability. Level 3 inputs are based on the best information available and may include data developed by the Company. Funds Held for Clients Funds held for clients represent cash that is restricted for use solely for the purposes of satisfying the obligations to remit clients' customer funds to the Company's clients. These funds are classified as a current asset and a corresponding current liability on the Company's consolidated balance sheets. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined by both moving averages and the first-in, first-out methods. A provision for excess or obsolete inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns and future sales expectations. Accounting for Impairment of Long-Lived Assets The Company tests long-lived assets or group of assets for recoverability whenever events or changes in circumstances indicate that the Company may not be able to recover the asset's carrying amount. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company evaluates recoverability generally by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group cover the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to recover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. Management may use third-party valuation experts to assist in its determination of fair value. Property and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation and amortization is computed by applying the straight-line method to the estimated useful lives of the respective assets. Changes in estimated useful lives and salvage values of the Company’s assets and the related depreciation and amortization expense are accounted for prospectively. The Company capitalizes certain computer software development costs when incurred in connection with developing or obtaining computer software for internal use. The estimated useful lives are as follows: Category Useful Lives Machinery and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful life of the asset Software 5 years Computer hardware 3 years Other 5 years Leases The Company leases office space, warehouse facilities, equipment and automobiles under operating leases. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance, or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities. The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. When discount rates implicit in leases cannot be readily determined, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. The determination of incremental borrowing rates involves significant judgment by management. The weighted average interest rate used for operating leases for the year ended July 31, 2022 and July 31, 2021 was 3.9% and 3.0%, respectively. The weighted average interest rate used for finance leases for the years ended July 31, 2022 and July 31, 2021 were 3.9% and 3.9%, respectively. For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term and are not recognized on the consolidated balance sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. Restructuring Costs Restructuring and other exit costs may include employee separation costs, asset impairment charges, contract exit costs and costs of facility consolidation and closure. The Company records restructuring and other exit costs at their fair value when incurred. In accordance with existing benefit arrangements, employee termination costs are accrued when the restructuring actions are probable and estimable. Employee separation costs may also include one-time termination benefits recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required beyond the minimum retention period, in which case the costs are recognized ratably over the future service period. Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology is subjective and requires significant estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Income tax accounting standards prescribe: (1) a minimum recognition threshold that an income tax benefit arising from an uncertain income tax position taken, or expected to be taken, on an income tax return is required to meet before being recognized in the financial statements and (2) the measurement of the income tax benefits recognized from such positions. The Company's accounting policy is to classify uncertain income tax positions that are not expected to be resolved in one year as non-current income tax liabilities and to classify potential interest and penalties on uncertain income tax positions as elements of the provision for income taxes in its financial statements. See Note 15 - "Income Taxes," for additional information. Pension Plans The Company sponsors defined benefit pension plans covering certain of its employees in the Netherlands and Japan. In accordance with accounting standards for employee pension benefits, the Company recognizes on a plan-by-plan basis the unfunded status of its pension plans in the consolidated financial statements and measures its pension plan assets and benefit obligations as of July 31. The obligation for the Company's pension plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates and expected mortality for employee benefit liabilities, rates of return on plan assets and expected annual rates for salary increases for employee participants. Share-Based Compensation Plans All share-based payment awards to employees and directors are measured based upon their grant date fair values and expensed over the period during with the employee or director is required to provide service in exchange for the award (the vesting period). The Company accounts for forfeitures in the period in which they occur. Deferred Debt Issue Costs Costs to issue revolving credit facilities are capitalized and deferred when incurred and subsequently amortized on a straight-line basis over the term of the credit facility. Deferred debt issuance costs are presented in the Company's consolidated balance sheets in Other Assets. Major Clients and Concentration of Credit Risk For the fiscal years ended July 31, 2022 and 2021, the Company's 10 largest clients accounted for approximately 78% and 81% of consolidated net revenue from continuing operations, respectively. Two customers accounted for approximately 31% and 12% of the Company's consolidated net revenue from continuing operations for the fiscal year ended July 31, 2022, and one customer accounted for 42% of the Company's consolidated net revenue from continuing operations for the fiscal year ended July 31, 2021. No other customers accounted for greater than 10% of consolidated net revenue in these periods. Three clients, associated with the Supply Chain segment, accounted for greater than 10% of the Company's consolidated net accounts receivables as of July 31, 2022. The first, second, and third client accounted for approximately 31%, 18%, and 17%, respectively, of the Company's consolidated net accounts receivable balance as of July 31, 2022. Three clients, associated with the Supply Chain segment, accounted for greater than 10% of the Company's consolidated net accounts receivables as of July 31, 2021. The first, second, and third client accounted for approximately 25%, 22%, and 13%, respectively, of the Company's consolidated net accounts receivable balance as of July 31, 2021. Financial instruments which potentially subject the Company to concentrations of credit risk are cash, cash equivalents and accounts receivable. The Company's cash equivalent portfolio is diversified and consists primarily of short-term investment grade securities placed with high credit quality financial institutions. Cash and cash equivalents are maintained at accredited financial institutions, and the balances associated with funds held for clients are at times without and in excess of federally insured limits. The Company has never experienced any losses related to these balances and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with financial institutions. Reclassification On the statement of cash flows for the years ended July 31, 2022 and 2021, the Company reclassified the non-cash portion of deferred tax expense which totaled $9.0 million and $7.2 million from Other Assets and Liabilities to Deferred Taxes. This reclassification was made to conform with current reporting and had no impact on net loss or stockholder's equity in either period. Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope , respectively (collectively, "Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by Topic 848 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted this standard after LIBOR was discontinued on December 31, 2021. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements as the Company did not have any hedging relationships or transactions impacted by the discontinuance of LIBOR. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Loses on Financial Instruments , an ASU that requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect how to assess the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) : Disclosures by Business Entities about Government Assistance. The ASU requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This guidance is effective for all entities for annual periods beginning after December 15, 2021 and early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Jul. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONSAs discussed in Note 1, on February 25, 2022, the Company completed the disposition of IWCO Direct. The Company received no cash consideration for the disposition (the entire transaction being referred to as the “IWCO Direct Disposal”). As of the Disposal Date and subject to the terms and conditions of the Transaction Agreement, the parties entered into certain mutual releases as fully set forth in the Transaction Agreement. In addition, as part of the overall transaction, the Buyer issued a note in the principal amount of $6.9 million payable to the Company as consideration for intercompany obligations owed by IWCO Direct to the Company (the “Subordinated Note”). The Subordinated Note is subordinated to the obligations under the Financing Agreement (including any amendments or other modifications thereto) and matures on the date that is the earlier of (a) the later of (i) August 25, 2027 and (ii) the date that is six months after the maturity of the Financing Agreement, or (b) the date that is six months after repayment in full of the obligations under the Financing Agreement. Due to the subordinated nature of the Subordinated Note and the assessment of collectability, the Company determined the fair value of the Subordinated Note was zero. The Company deconsolidated IWCO Direct as of the Disposal Date as the Company no longer held a controlling financial interest in IWCO Direct as of that date. The Company did not have any amounts included in accumulated other comprehensive loss associated with IWCO Direct at the time of deconsolidation. The disposal of IWCO Direct represents a strategic shift to exit the direct marketing business and its results are reported as discontinued operations for all periods presented. A summary of the results of the discontinued operations is as follows: Fiscal Year Ended July 31, 2022 2021 Net revenue $ 165,542 $ 387,510 Cost of revenue 156,697 305,601 Gross profit 8,845 81,909 Operating expenses: Selling, general and administrative (a) 30,744 47,254 Amortization of intangible assets (b) 9,303 20,258 Impairment of goodwill (c) — 25,658 Total operating expenses 40,047 93,170 Operating loss (31,202) (11,261) Other income (expense): Gain upon deconsolidation of IWCO Direct 35,457 — Interest income — 3 Interest expense (16,111) (28,524) Total other income (expense), net 19,346 (28,521) Loss from discontinued operations before income taxes (11,856) (39,782) Income tax benefit 10,144 7,226 Loss from discontinued operations, net of tax $ (1,712) $ (32,556) (a) During the year ended July 31, 2021, the Company recorded $3.7 million of restructuring expenses for IWCO Direct as a result of its Competitive Improvement Plan. (b)During the fiscal year ended July 31, 2022 and 2021, the Company recorded $9.3 million and $20.3 million of amortization expense for the Direct Marketing reporting unit. (c) During the fiscal year ended July 31, 2021, the Company recorded a pre-tax goodwill impairment charge of $25.7 million for the Direct Marketing reporting unit due to a decline in IWCO Direct's fair value as a result of customer exits and decreasing demand for direct marketing products. The major classes of assets and liabilities included in discontinued operations related to IWCO Direct are presented in the table below. July 31, (in thousands) ASSETS Cash and cash equivalents $ 38,814 Accounts receivable, trade, net 33,258 Inventories, net 7,186 Other current assets 17,264 Current assets of discontinued operations $ 96,522 Property and equipment, net 54,247 Goodwill (a) 231,470 Other intangible assets, net (b) 115,005 Operating lease right-of-use assets 32,583 Other assets 1,116 Long-term assets of discontinued operations $ 434,421 LIABILITIES Accounts payable $ 25,688 Accrued expenses 74,218 Current lease obligations 4,047 Current portion of long-term debt (c) 5,602 Other current liabilities 13,837 Current liabilities of discontinued operations $ 123,392 Long-term debt, net of current portion (c) 358,189 Lease obligations 30,207 Other long-term liabilities 6,675 Long-term liabilities of discontinued operations $ 395,071 (a) The Company performed an interim impairment test of Direct Marketing's goodwill and other long-lived assets as of April 30, 2021. The Company determined that the goodwill was impaired, and recorded a non-cash impairment charge of $25.7 million classified in Loss from discontinued operations, net of tax, for the three months ended April 30, 2021. This amount also represents the Company's accumulated goodwill impairment loss as of July 31, 2021. (b) The Company performed a qualitative assessment of whether it was more likely than not that its other intangibles assets were impaired as of July 31, 2021. The Company reviewed its previous forecasts and assumptions based on the Company's current projections, that are subject to various risks and uncertainties, including forecasted revenues, expenses and cash flows, including the duration and extent of impact to our businesses from the COVID-19 pandemic. Based upon that assessment, the Company concluded it was not more likely than not that the other intangible assets were impaired as of July 31, 2021. (c) The balances relate to the Cerberus Term Loan balance outstanding at July 31, 2021. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Jul. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories, net consisted of the following: July 31, 2022 2021 (In thousands) Raw materials $ 7,330 $ 8,299 Work-in-process 124 76 Finished goods 697 668 $ 8,151 $ 9,043 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jul. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment at cost, consists of the following: July 31, 2022 2021 (In thousands) Machinery and equipment 12,632 16,865 Leasehold improvements 9,994 11,921 Software 34,161 50,283 Computer hardware 5,317 9,788 Other 2,475 2,875 64,579 91,732 Less: accumulated depreciation and amortization (61,045) (87,116) Property and equipment, net $ 3,534 $ 4,616 During the year ended July 31, 2022, the Company disposed of approximately $25.9 million of property, plant and equipment, with a net book value of $5.0 thousand. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Jul. 31, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | ACCRUED EXPENSES AND OTHER LIABILITIES The following tables reflect the components of "Accrued expenses" and "Other current liabilities": July 31, 2022 2021 Accrued Expenses (In thousands) Accrued compensation $ 5,099 $ 7,163 Accrued audit, tax and legal 4,564 3,147 Accrued taxes 3,344 3,686 Accrued occupancy costs 1,671 1,728 Accrued IT costs 1,108 509 Accrued contract labor 792 930 Accrued freight 782 742 Accrued other 11,036 14,748 Total accrued expenses $ 28,396 $ 32,653 Accrued other for the year ended July 31, 2022 and 2021 was primarily comprised of accrued price concessions for customer programs that have unit price or management fee true-ups based on their contract agreements. July 31, 2022 2021 Other Current Liabilities (In thousands) Accrued pricing liabilities $ 9,435 $ 10,295 Deferred revenue - current 2,705 2,212 Other 1,342 1,770 Total other current liabilities $ 13,482 $ 14,277 As of July 31, 2022 and 2021, the Company had accrued pricing liabilities of approximately $9.4 million and $10.3 million, respectively. During the fiscal years ended July 31, 2022 and 2021, the Company concluded that certain accrued pricing liabilities had been extinguished, and the Company derecognized and recorded in Other gains, net $0.9 million and $3.2 million, respectively. As previously reported by the Company, several principal adjustments were made to its historic financial statements for periods ended on or before January 31, 2012, the most significant of which related to the treatment of vendor rebates in its pricing policies. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract, 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 been affected. A corresponding liability |
DEBT
DEBT | 12 Months Ended |
Jul. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: July 31, 2022 2021 (In thousands) Unsecured 7.50% Convertible Senior Note due March 1, 2024 $ 14,940 $ 14,940 Credit Facilities Umpqua Revolver — — Less: unamortized discounts and issuance costs (a) (3,972) (5,793) Total debt, net $ 10,968 $ 9,147 (a) Amounts include deferred debt issuance costs related to credit facilities of $79 thousand and $196 thousand as of July 31, 2022 and July 31, 2021, respectively, which are presented in Other Assets. 7.50% Convertible Senior Note On February 28, 2019, the Company entered into a 7.50% Convertible Senior Note Due 2024 Purchase Agreement (the "SPHG Note Purchase Agreement") with SPH Group Holdings LLC ("SPHG Holdings"), whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for a 7.50% Convertible Senior Note due 2024 (the "SPHG Note"). SPHG Holdings has the right, at its option, prior to the close of business on the business day immediately preceding the maturity date of the SPHG Note, to convert the SPHG Note or a portion thereof that is $1,000 or an integral multiple thereof, into shares of common stock (if the Company has not received a required stockholder approval) or cash, shares of common stock or a combination of cash and shares of common stock, as applicable (if the Company has received a required stockholder approval), at an initial conversion rate of 421.2655 shares of common stock, which is equivalent to an initial conversion price of approximately $2.37 per share (subject to adjustment as provided in the SPHG Note) per $1,000 principal amount of the SPHG Note, subject to, and in accordance with, the settlement provisions of the SPHG Note. As of July 31, 2022, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of July 31, 2022, the remaining period over which the unamortized discount will be amortized is 19 months. As of July 31, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $11.0 million and $9.3 million, respectively. As of July 31, 2022 and July 31, 2021, the effective interest rate on the SPHG Note, including accretion of the discount, is 27.8%. The following tables reflect the components of the SPHG Note: July 31, 2022 2021 (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (3,893) (5,597) Net carrying amount $ 11,047 $ 9,343 During the fiscal years ended July 31, 2022 and 2021, the Company recognized interest expense associated with the SPHG Note as follows: Fiscal Year Ended 2022 2021 (In thousands) Interest expense related to contractual interest coupon $ 1,136 $ 1,136 Interest expense related to accretion of the discount 1,704 1,290 $ 2,840 $ 2,426 Umpqua Revolver On March 16, 2022, ModusLink, as borrower, entered into a new credit agreement with Umpqua Bank as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 16, 2024. Concurrent with signing the Umpqua Revolver ModusLink submitted a notice of termination to MidCap Financial Trust for its $12.5 million revolving credit facility (the “MidCap Credit Facility”), which was set to expire on December 31, 2022. There was no balance outstanding on the Midcap Credit Facility at the time of its termination. As of July 31, 2022, ModusLink was in compliance with the Umpqua Revolver's covenants, and believes it will remain in compliance with the Umpqua Revolver’s covenants for the next twelve months. As of July 31, 2022, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million outstanding for letters of credit. The remaining interest expense of $0.3 million and $0.2 million recorded for the fiscal years ended July 31, 2022 and 2021 relate to bank fees for the Umpqua Revolver and MidCap Credit Facility, and bank fees for the MidCap Credit Facility, respectively. |
LEASES
LEASES | 12 Months Ended |
Jul. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company has operating and finance leases for office space, office equipment, warehouse space and automobiles. The leases have remaining terms of up to five years, some of which include options to purchase, extend or terminate the leases, and management has assessed such terms when determining the lease term for accounting purposes. The Company's current lease arrangements expire through 2027. The Company's leases do not include any residual value guarantees, and therefore none were considered in the calculation of the operating ROU and operating lease liability balances. The Company has leases that contain variable payments, most commonly in the form of common area maintenance charges, which are based on actual costs incurred. These variable payments were excluded from the calculation of the operating ROU asset and operating lease liability balances since they are not fixed or in-substance fixed payments. For leases with terms greater than 12 months, the Company records the related operating ROU assets and operating lease liabilities at the present value of lease payments over the lease terms. For leases with an initial term of 12 months or less (with purchase options or extension options that are not reasonably certain to be exercised), the Company does not record them on the balance sheet, but instead recognizes lease expense on a straight-line basis over the terms of the leases. Lease Expense The components of the Company's lease expense are presented below: Fiscal Year Ended 2022 2021 (In thousands) Operating lease cost $ 9,973 $ 10,555 Short-term lease expense 1,488 1,627 Sublease income 748 — Variable lease cost 24 28 Interest on finance lease liabilities 3 6 $ 12,236 $ 12,216 Lease Commitments The Company's future minimum lease payments required under operating and finance leases that have commenced as of July 31, 2022 were as follows: Operating Leases Finance Leases (In thousands) 2023 $ 7,151 $ 38 2024 4,254 — 2025 3,687 — 2026 2,718 — 2027 2,101 — Thereafter — — Total lease payments 19,911 38 Less: imputed interest 538 — Present value of lease payments 19,373 38 Less: current lease obligations 6,428 38 Long-term lease obligations $ 12,945 $ — In order to calculate the operating ROU asset and operating lease liability for a lease, a lessee is required to apply a discount rate equal to the rate implicit in the lease whenever that rate is readily determinable. The Company's lease agreements generally do not provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors and, therefore, the Company determines an incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value. Additional Lease Information Additional information related to the Company's leases as of July 31, 2022 was as follows: Weighted average remaining lease term: Operating leases 3.7 years Finance leases 0.4 years Weighted average discount rate: Operating leases 3.9% Finance leases 3.9% Supplemental Cash Flow Information Supplemental cash flow information related to the cash paid for amounts included in measurement of lease liabilities during the fiscal year ended July 31, 2022 and 2021 was as follows: Fiscal Year Ended 2022 2021 (In thousands) Operating cash flows from operating leases $ 9,653 $ 10,705 Operating cash flows from finance leases $ 3 $ 6 Financing cash flows from finance leases $ 73 $ 70 |
LEASES | LEASES The Company has operating and finance leases for office space, office equipment, warehouse space and automobiles. The leases have remaining terms of up to five years, some of which include options to purchase, extend or terminate the leases, and management has assessed such terms when determining the lease term for accounting purposes. The Company's current lease arrangements expire through 2027. The Company's leases do not include any residual value guarantees, and therefore none were considered in the calculation of the operating ROU and operating lease liability balances. The Company has leases that contain variable payments, most commonly in the form of common area maintenance charges, which are based on actual costs incurred. These variable payments were excluded from the calculation of the operating ROU asset and operating lease liability balances since they are not fixed or in-substance fixed payments. For leases with terms greater than 12 months, the Company records the related operating ROU assets and operating lease liabilities at the present value of lease payments over the lease terms. For leases with an initial term of 12 months or less (with purchase options or extension options that are not reasonably certain to be exercised), the Company does not record them on the balance sheet, but instead recognizes lease expense on a straight-line basis over the terms of the leases. Lease Expense The components of the Company's lease expense are presented below: Fiscal Year Ended 2022 2021 (In thousands) Operating lease cost $ 9,973 $ 10,555 Short-term lease expense 1,488 1,627 Sublease income 748 — Variable lease cost 24 28 Interest on finance lease liabilities 3 6 $ 12,236 $ 12,216 Lease Commitments The Company's future minimum lease payments required under operating and finance leases that have commenced as of July 31, 2022 were as follows: Operating Leases Finance Leases (In thousands) 2023 $ 7,151 $ 38 2024 4,254 — 2025 3,687 — 2026 2,718 — 2027 2,101 — Thereafter — — Total lease payments 19,911 38 Less: imputed interest 538 — Present value of lease payments 19,373 38 Less: current lease obligations 6,428 38 Long-term lease obligations $ 12,945 $ — In order to calculate the operating ROU asset and operating lease liability for a lease, a lessee is required to apply a discount rate equal to the rate implicit in the lease whenever that rate is readily determinable. The Company's lease agreements generally do not provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors and, therefore, the Company determines an incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value. Additional Lease Information Additional information related to the Company's leases as of July 31, 2022 was as follows: Weighted average remaining lease term: Operating leases 3.7 years Finance leases 0.4 years Weighted average discount rate: Operating leases 3.9% Finance leases 3.9% Supplemental Cash Flow Information Supplemental cash flow information related to the cash paid for amounts included in measurement of lease liabilities during the fiscal year ended July 31, 2022 and 2021 was as follows: Fiscal Year Ended 2022 2021 (In thousands) Operating cash flows from operating leases $ 9,653 $ 10,705 Operating cash flows from finance leases $ 3 $ 6 Financing cash flows from finance leases $ 73 $ 70 |
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES | 12 Months Ended |
Jul. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING ACTIVITIES | RESTRUCTURING ACTIVITIESModusLink Restructuring Activities During the fiscal year ended July 31, 2021, ModusLink implemented a strategic plan to reorganize its sales function and the e-Business operations. The restructuring charges associated with this plan were primarily composed of employee termination costs. In November 2021, ModusLink amended its strategic plan to include reorganizing its supply chain operations and recorded a restructuring charge of approximately $0.9 million during the three months ended January 31, 2022. In July 2022, ModusLink reorganized its supply chain operations in Ireland and recorded a restructuring charge of approximately $0.6 million during the three months ended July 31, 2022. The restructuring charges recorded in fiscal year ended July 31, 2022 were primarily composed of employee termination costs. The table below summarizes restructuring charges in the statements of operations for employee termination costs: Fiscal Year Ended (in thousands) 2022 2021 Cost of revenue $ 1,200 $ 888 Selling, general and administrative 313 867 $ 1,513 $ 1,755 Changes to the restructuring liability during the fiscal year ended July 31, 2022 were as follows: (in thousands) Balance as of July 31, 2021 $ 1,059 Costs incurred 1,513 Cash payments (1,580) Change in estimates (100) Balance as of July 31, 2022 $ 892 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jul. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings On April 13, 2018, a purported shareholder, Donald Reith, filed a verified complaint, Reith v. Lichtenstein, et al., 2018-277 (Del. Ch.) in the Delaware Court of Chancery. The complaint alleges class and derivative claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duty and unjust enrichment against the Board, Warren G. Lichtenstein, Glen M. Kassan, William T. Fejes, Jack L. Howard, Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald; and stockholders Steel Holdings, Steel Partners, Ltd., SPHG Holdings, Handy & Harman Ltd. and WHX CS Corp. (collectively, the "Steel Parties") in connection with the acquisition of $35.0 million of the Series C Convertible Preferred Stock by SPHG Holdings and equity grants made to Messrs. Lichtenstein, Howard and Fejes on December 15, 2017 (collectively, the "Challenged Transactions"). The Company is named as a nominal defendant. The complaint alleges that although the Challenged Transactions were approved by a Special Committee consisting of the independent members of the Board of Directors (Messrs. Fenton, Lengyel and Wald), the Steel Parties dominated and controlled the Special Committee, who approved the Challenged Transactions in breach of their fiduciary duty. Plaintiff alleges that the Challenged Transactions unfairly diluted shareholders and therefore unjustly enriched Steel Holdings, SPHG Holdings and Messrs. Lichtenstein, Howard and Fejes. The complaint also alleges that the Board of Directors made misleading disclosures in the Company's proxy statement for the 2017 Annual Meeting of Stockholders in connection with seeking approval to amend the 2010 Incentive Award Plan to authorize the issuance of additional shares to accommodate certain shares underlying the equity grants. Remedies requested include rescission of the Series C Convertible Preferred Stock and equity grants, disgorgement of any unjustly obtained property or compensation and monetary damages. On June 8, 2018, defendants moved to dismiss the complaint for failure to plead demand futility and failure to state a claim. On June 28, 2019, the Court denied most of the motion to dismiss allowing the matter to proceed. The defendants answered the complaint on September 6, 2019, denying all liability. On August 13, 2021, the Company, together with certain of its current and former directors of the Board, Warren Lichtenstein, Glen Kassan, William Fejes, Jr., Jack Howard, Jeffrey Fenton and Jeffrey Wald, as well as other named defendants (collectively, the “Defendants”), entered into a memorandum of understanding (the “MOU”) with Donald Reith (the “Plaintiff”) in connection with the settlement of the Reith v. Lichtenstein, et al., C.A. No. 2018-0277-MTZ (Del. Ch. 2018) class and derivative action. A definitive Stipulation of Settlement (the “Stipulation”) incorporating the terms of the MOU was filed with the Court on February 18, 2022. Pursuant to the MOU and Stipulation, and contingent on approval of the terms by the court, the Defendants agreed to cause their directors’ and officers’ liability insurance carriers to pay to the Company $2.75 million in cash. Additionally, under the MOU and separate letter agreements between the Company and such individuals (the “Surrender Agreements”), Messrs. Lichtenstein, Howard and Fejes agreed to surrender to the Company an aggregate 3.3 million shares that they had initially received in December 2017 in consideration for services to the Company. The surrenders and cancellations are in the following amounts: for Mr. Lichtenstein, 1,833,333 vested shares and 300,000 unvested shares; for Mr. Howard, 916,667 vested shares and 150,000 unvested shares; and for Mr. Fejes, 100,000 vested shares. On August 17, 2021, Mr. Lichtenstein and Mr. Howard surrendered the shares required under the MOU, the Stipulation and their respective Surrender Agreements, and in December 2021 Mr. Fejes did the same. All such shares were subsequently cancelled. Pursuant to the MOU and Stipulation, the Company has also agreed to pay the Plaintiff’s counsel legal fees for this matter in an amount up to $2.05 million, if approved by the court. After the parties filed papers in support of court approval of the settlement, and an objector filed papers in opposition to approval of the settlement, and after hearings held on August 12 and August 18, 2022, the parties submitted an amendment to the Stipulation: (i) increasing the proposed total contribution of the insurers to $3 million, (ii) reducing Plaintiff’s counsel’s fee request to $1.6 million, and (iii) providing that if the then pending proposed Merger was consummated, the $3 million, minus fees awarded to Plaintiff’s counsel and costs of distribution of up to $125,000, would be distributed to the holders of eligible shares of Common Stock (as defined in the Merger Agreement governing the Merger), other than the Defendants; provided, however, that no distribution is required to be made to any holder whose proportionate share of the distribution would be less than $1.00. On September 23, 2022, the court ruled that it was denying approval of the settlement. At the court’s instruction, the parties provided a status report on October 24, 2022, reporting that the vote on the proposed merger had been postponed to October 28, 2022, and proposing to file a revised status report on November 23, or on such date as the court may order. |
DEFINED BENEFIT PENSION PLANS
DEFINED BENEFIT PENSION PLANS | 12 Months Ended |
Jul. 31, 2022 | |
Retirement Benefits [Abstract] | |
DEFINED BENEFIT PENSION PLANS | DEFINED BENEFIT PENSION PLANS The Company sponsors two defined benefit pension plans covering certain of ModusLink's employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined. During the year ended July 31, 2020, the Netherlands defined benefit plan was amended so active participants no longer accrued benefits as of January 1, 2020 which resulted in a pre-tax curtailment gain of $2.4 million recognized in accumulated other comprehensive income. The plan assets of the two defined benefit plans associated with the ModusLink's Netherlands facility consist of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2022 and 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2022 Asset Level 1 Level 2 Level 3 Insurance contract $ 17,560 98 % $ — $ — $ 17,560 Other investments 416 2 % — — 416 $ 17,976 100 % $ — $ — $ 17,976 Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Asset Level 1 Level 2 Level 3 Insurance contract $ 28,554 98 % $ — $ — $ 28,554 Other investments 669 2 % — — 669 $ 29,223 100 % $ — $ — $ 29,223 The following table summarizes the changes in benefit obligation, plan assets and funded status for these plans: July 31, 2022 2021 (In thousands) Change in benefit obligation Benefit obligation at beginning of year $ 33,584 $ 33,927 Service cost 11 16 Interest cost 462 501 Actuarial gain (8,674) (664) Benefits and administrative expenses paid (227) (216) Settlements — (46) Currency translation (4,053) 66 Benefit obligation at end of year $ 21,103 $ 33,584 Change in plan assets Fair value of plan assets at beginning of year $ 29,223 $ 29,050 Actual return on plan assets (7,544) (29) Employer contributions, net 5 393 Settlements — (46) Benefits and administrative expenses paid (227) (216) Currency translation (3,481) 71 Fair value of plan assets at end of year $ 17,976 $ 29,223 Funded status Current liabilities $ (11) $ (13) Noncurrent liabilities (3,116) (4,348) Net amounts recognized on the consolidated balance sheets $ (3,127) $ (4,361) Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows: July 31, 2022 2021 (In thousands) Projected benefit obligation $ 21,103 $ 33,584 Accumulated benefit obligation $ 21,103 $ 33,584 Fair value of plan assets $ 17,976 $ 29,223 The following table summarizes the components of net periodic pension cost: Fiscal Year Ended 2022 2021 (In thousands) Service cost $ 11 $ 16 Interest costs 462 501 Expected return on plan assets (407) (437) Amortization of net actuarial loss 4 4 Net periodic pension costs $ 70 $ 84 Assumptions The table below summarizes the weighted average assumptions used to determine benefit obligations: Fiscal Year Ended 2022 2021 Discount rate 2.96 % 1.49 % Rate of compensation increase — % — % The table below summarizes weighted average assumptions used to determine net periodic pension cost: Fiscal Year Ended 2022 2021 Discount rate 2.58 % 1.24 % Expected long-term rate of return on plan assets 2.51 % 1.20 % Rate of compensation increase — % — % The discount rate reflects the Company's best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as of July 31, 2022 for the appropriate duration of the plan. To develop the expected long-term rate of return on assets assumptions, consideration is given to the current level of expected returns on risk free investments, the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for the future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio. Benefit Payments The following table summarizes expected benefit payments from the plans through fiscal year 2032. Actual benefit payments may differ from expected benefit payments. The minimum employer required contributions to the plans are expected to be approximately $0.2 million in fiscal year 2023. Pension Benefit (In thousands) For the fiscal year ending July 31: 2023 $ 265 2024 414 2025 340 2026 430 2027 413 Thereafter 2,896 The current target allocations for plan assets are primarily insurance contracts. Valuation Technique Benefit obligations are computed using the projected unit credit method. Benefits are attributed to service based on the plan's benefit formula. Cumulative gains and losses in excess of 10% of the greater of the pension benefit obligation or market-related value of plan assets are amortized over the expected average remaining lifetime of all inactive participants. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Jul. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Disaggregation of Revenue The following table presents the Company's revenues from customers with contracts disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Fiscal Year Ended 2022 2021 (In thousands) Service Lines Supply chain management services $ 201,344 $ 224,280 Other 1,928 1,976 $ 203,272 $ 226,256 Timing of Revenue Recognition Services transferred over time $ 203,272 $ 226,256 $ 203,272 $ 226,256 The table below presents information for the Company's contract balances: July 31, 2022 2021 (In thousands) Accounts receivable, trade, net $ 40,083 $ 36,547 Contract assets 369 627 Deferred revenue - current $ 2,705 $ 2,212 Deferred revenue - long-term 134 108 Total deferred revenue $ 2,839 $ 2,320 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the fiscal year ended July 31, 2022 were as follows: Fiscal Year Ended 2022 2021 (In thousands) Balance at beginning of period $ 2,320 $ 2,464 Deferral of revenue 2,368 2,284 Recognition of deferred amounts upon satisfaction of performance obligation (1,849) (2,428) Balance at end of period $ 2,839 $ 2,320 The Company expects to recognize approximately $2.7 million of the deferred revenue over the next twelve months and the remaining $0.1 million beyond that time period. |
OTHER GAINS, NET
OTHER GAINS, NET | 12 Months Ended |
Jul. 31, 2022 | |
Other Income and Expenses [Abstract] | |
OTHER GAINS, NET | OTHER GAINS, NET The following table presents the components of "Other gains, net": Fiscal Year Ended 2022 2021 (In thousands) Foreign currency exchange gains (losses), net $ 2,389 $ (1,907) Derecognition of accrued pricing liabilities (a) 860 3,204 Other gains (losses), net 782 (121) $ 4,031 $ 1,176 |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 12 Months Ended |
Jul. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED PAYMENTS | SHARE-BASED PAYMENTS Share-Based Compensation Plans The Company has adopted share-based compensation plans in order to provide incentives to directors, officers, employees and other individuals providing services to or on behalf of the Company and its subsidiaries. On June 12, 2020, the Company's Board of Directors adopted, subject to stockholder approval, the Steel Connect, Inc. 2020 Stock Incentive Compensation Plan ("2020 Incentive Plan"), and on July 23, 2020, the 2020 Incentive Plan was approved. The 2020 Incentive Plan provides that the Company may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and other cash based-awards. The 2020 Incentive Plan replaced the 2010 Incentive Award Plan, as amended (the "2010 Incentive Plan"). The Company also has a 2005 Non-Employee Director Plan (the "2005 Director Plan"). As of July 23, 2020, no additional grants may be issued under the 2010 Incentive Plan. Any awards that are outstanding under the 2010 Incentive Plan continue to be subject to the terms and conditions of such plan. Under the 2020 Incentive Plan, the Company may grant up to 4,945,000 shares of common stock of the Company in addition to (i) 3,668,143 shares of common stock previously available for issuance under the 2010 Incentive Plan and (ii) up to 1,060,523 shares of common stock subject to outstanding awards under the 2010 Incentive Plan, which if forfeited or lapse unexercised or are settled in cash and are not issued under the prior plan for any reason, may be issued under the 2020 Incentive Plan. As of July 31, 2022, 8,143,060 shares were available for future issuance under the 2020 Incentive Plan. The Board of Directors administers all stock plans, approves the individuals to whom options will be granted, and determines the number of shares and exercise price of each option and may delegate this authority to a committee of the Board of Directors or to certain officers of the Company in accordance with Securities and Exchange Commission ("SEC") regulations and applicable Delaware law. During the fiscal year ended July 31, 2022 and 2021, the Company awarded stock-based compensation under the 2020 Incentive Plan. On December 15, 2017, under the 2010 Incentive Plan, the Board, upon the recommendation of the Special Committee and the Company's Compensation Committee, approved 4.0 million restricted stock grants and 1.5 million market based restricted stock grants to non-employee directors of the Company. The 4.0 million restricted stock vested immediately on the grant date. The 1.5 million market based restricted stock grants do not expire and vest upon the attainment of target stock price hurdles. As of July 31, 2020, 1.0 million of the market based restricted stock grants had met the target stock price hurdles. The restricted stock grants and market based restricted stock grants were fully expensed as of July 31, 2021. As discussed in Note 10, on August 13, 2021 and February 22, 2022, respectively the Company, together with certain of its current and former directors of the Board, entered into a memorandum of understanding and stipulation of settlement with Donald Reith in connection with the settlement of the Reith v. Lichtenstein, et al., C.A. No. 2018-0277-MTZ (Del. Ch. 2018) class and derivative action. Under the MOU, the stipulation and separate letter agreements between the Company and recipients of the 5.5 million restricted stock and market based restricted stock awards granted In December 2017, the non-employee directors surrendered to the Company an aggregate 2.9 million vested shares and 0.5 million unvested shares. For the fiscal years ended July 31, 2022 and 2021, $0.7 million and $0.6 million, respectively, of share-based compensation expense was recorded in SG&A expenses in the consolidated statements of operations. Stock Options A summary of option activity for the fiscal year ended July 31, 2022 is as follows: Number of Weighted Weighted Average (In thousands, except exercise price and years) Stock options outstanding, July 31, 2021 12 $ 3.41 0.2 Granted — — Exercised — — Forfeited or expired (12) 3.41 Stock options outstanding, July 31, 2022 — — 0 Stock options exercisable, July 31, 2022 — $ — 0 As of July 31, 2022, there was no unrecognized share-based compensation related to stock options. Restricted Stock Restricted stock consists of shares of common stock that are subject to restrictions on transfer and risk of forfeiture until the fulfillment of specified conditions. Restricted stock is expensed ratably over the term of the restriction period, ranging from one A summary of the activity of the Company's restricted stock for the fiscal year ended July 31, 2022, is as follows: Number of Shares Weighted Average (Share amounts in thousands) Nonvested stock outstanding, July 31, 2021 1,116 $ 1.09 Granted 480 0.38 Vested (466) 1.18 Forfeited (650) 1.21 Nonvested stock outstanding, July 31, 2022 480 $ 0.38 The fair value of restricted shares is determined based on the market price of the Company's common stock on the grant date. The total grant date fair value of restricted stock that vested during the fiscal years ended July 31, 2022 and 2021 was approximately $0.6 million and $0.7 million, respectively. As of July 31, 2022, there was approximately $0.2 million of total unrecognized compensation cost related to restricted stock to be recognized over a weighted average period of 0.6 years. Employee Stock Purchase Plan The Company offers to its employees an Employee Stock Purchase Plan (the "ESPP") under which an aggregate of 600,000 shares of the Company's stock may be issued. Employees who elect to participate in the ESPP instruct the Company to withhold a specified amount through payroll deductions during each quarterly period. On the last business day of each applicable quarterly payment period, the amount withheld is used to purchase the Company's common stock at a purchase price equal to 85% of the lower of the market price on the first or last business day of the quarterly period. During the fiscal years ended July 31, 2022 and 2021, the Company issued approximately 499 and 9,145 shares, respectively, under the ESPP. Approximately 77,316 shares are available for future issuance as of July 31, 2022. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jul. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe components of (loss) income before provision for income taxes are as follows: Fiscal Year Ended 2022 2021 (In thousands) Income (loss) from operations before income taxes: U.S. $ (5,189) $ (9,590) Foreign 7,321 6,592 Total income (loss) from operations before income taxes $ 2,132 $ (2,998) The components of income tax expense from operations consist of the following: Fiscal Year Ended 2022 2021 (In thousands) Current provision: Federal $ — $ — State 429 574 Foreign 1,918 1,033 2,347 1,607 Deferred provision: Federal 8,849 6,102 State 76 1,032 Foreign 116 96 9,041 7,230 Total tax provision $ 11,388 $ 8,837 As of July 31, 2022, the Company recorded a non-current deferred tax asset of $0.1 million and a non-current deferred tax liability of $0.1 million in "Other Assets" and "Other Long-term Liabilities," respectively. As of July 31, 2021, the Company recorded a non-current deferred tax asset of $0.2 million and a non-current deferred tax liability of $1.2 million in "Other Assets" and "Other Long-term Liabilities," respectively. The components of deferred tax assets and liabilities are as follows: July 31, 2022 2021 (In thousands) Deferred tax assets: Accruals and reserves $ 4,295 $ 18,104 Tax basis in excess of financial basis for intangible and fixed assets 901 181 Lease liability 2,288 9,544 Interest expense disallowance 2,357 7,764 Credit carry forwards 25 28 Net operating loss and capital loss carry forwards 478,530 459,008 Total gross deferred tax assets 488,396 494,629 Less: valuation allowance (485,212) (456,610) Net deferred tax assets $ 3,184 $ 38,019 Deferred tax liabilities: Financial basis in excess of tax basis for intangible and fixed assets $ (69) $ (28,593) Right of use asset (2,154) (9,015) Convertible debt (917) (1,342) Total gross deferred tax liabilities (3,140) (38,950) Net deferred tax liabilities $ 44 $ (931) The net change in the total valuation allowance for the fiscal year ended July 31, 2022 was an increase of approximately $28.6 million. This increase is primarily due to the U.S. valuation allowance. A valuation allowance has been recorded against the gross deferred tax asset in the U.S and certain foreign subsidiaries since management believes that after considering all the available objective evidence, both positive and negative, historical and prospective, it is more likely than not that certain assets will not be realized. The net change in the total valuation allowance for the fiscal year ended July 31, 2021 was an increase of approximately $3.6 million. 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 or more of a corporation's securities over a rolling three year period. On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States. Among other provisions, the IRA includes a 15% corporate minimum tax rate applied to certain large corporations and a 1% excise tax on corporate stock repurchases made after December 31, 2022. We do not expect the IRA to have a material impact on our consolidated financial statements. On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act into law which is intended to respond to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals and businesses. The CARES Act contains numerous tax provisions including temporary changes to the future limitations on interest deductions related to section 163j. As of July 31, 2022, the Company deferred the employer-paid portion of social security taxes, which is expected to provided the Company with approximately $0.3 million of additional liquidity. The remaining deferral is due by December 31, 2022. The Company does not expect the provisions of the CARES Act to have a significant impact on the income tax provision, income tax payable or deferred income tax positions of the Company. The Company has estimated its fiscal year 2022 global intangible low-taxed income ("GILTI") inclusion based on its current year foreign activity. The foreign entities have minor earnings and profit adjustments that will be factored in as part of the tax return filing. These amounts are not material and will not have a significant impact on the overall tax provision or disclosure. Due to the net operating losses available in the U.S., the Company is not entitled to a Section 250 deduction, which is why the total income amount has been recorded as the GILTI inclusion. The Company has made an accounting policy election, as allowed by the SEC and FASB, to recognize the impact of GILTI within the period incurred. Therefore, no U.S. deferred taxes are provided in GILTI inclusions of future foreign subsidiary earnings. The Company has net operating loss carryforwards for federal and state tax purposes of approximately $2.2 billion and $153.7 million, respectively, at July 31, 2022. $2.02 billion of the company's federal net operating losses will expire from the fiscal year ending July 31, 2023 through the fiscal year ended July 31, 2038 and the remainder federal net operating losses of $137.8 million has an indefinite carryforward period. The state net operating losses will expire from the fiscal year ended July 31, 2023 through the fiscal year ended July 31, 2041. The Company has a foreign net operating loss carryforward of approximately $62.6 million, of which $59.7 million has an indefinite carryforward period. In addition, the Company has $34.2 million of capital loss carryforwards for federal and state tax purposes. The federal and state capital losses will expire in fiscal year 2024. Income tax expense attributable to income from continuing operations differs from the expense computed by applying the U.S. federal income tax rate of 21.0% to (loss) income from continuing operations before income taxes as a result of the following: Fiscal Year Ended 2022 2021 (In thousands) Computed "expected" income tax expense (benefit) $ 448 $ (630) Increase (decrease) in income tax expense resulting from: Change in valuation allowance 25,737 4,085 Foreign tax rate differential 56 (33) Goodwill impairment — 5,388 Nondeductible expenses 159 126 Foreign withholding taxes 134 (1,310) Foreign other adjustments 951 347 GILTI 4,775 — Addition of uncertain tax position reserves 58 (74) Worthless stock deduction (20,455) — State income taxes, net of federal benefit (1,042) 317 Deferred true-up 751 — Other (184) 621 Actual income tax expense $ 11,388 $ 8,837 The calculation of the Company's income tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several tax jurisdictions. The Company is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records estimated reserves when necessary. Based on the evaluation of current tax positions, the Company believes it has appropriately accrued for exposures. The Company operates in multiple taxing jurisdictions, both within and outside of the United States. At July 31, 2022 and 2021, the total amount of the liability for unrecognized tax benefits, including interest, related to federal, state and foreign taxes was approximately $0.8 million and $2.5 million, respectively. To the extent the unrecognized tax benefits are recognized, the entire amount would impact income tax expense. The Company expects that there will be a $0.2 million reduction of the unrecognized tax benefits in the next twelve months related to the U.S. state income tax exposure as a result of a lapse in the applicable statute of limitations. The Company files income tax returns in the U.S., various states and in foreign jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the tax years ended July 31, 2019 through July 31, 2022. 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 2014 through 2021 tax years remain subject to examination in most locations while the Company's 2010 through 2021 tax years remain subject to examination in most Asia locations. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: Fiscal Year Ended 2022 2021 (In thousands) Balance as of beginning of year $ 2,140 $ 2,460 Additions for current year tax positions — 52 Currency translation (4) (3) Reductions for lapses in statute of limitations (67) (369) Reductions for member leaving consolidated group (1,498) — Balance as of end of year $ 571 $ 2,140 |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Jul. 31, 2022 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE Loss Per Share The following table reconciles net loss per share for the fiscal years ended July 31, 2022 and 2021. Fiscal Year Ended 2022 2021 (In thousands, except per share data) Reconciliation of net loss to net loss attributable to common stockholders after assumed conversions: Net loss $ (10,968) $ (44,391) Less: Preferred dividends on redeemable preferred stock (2,129) (2,129) Net loss attributable to common stockholders $ (13,097) $ (46,520) Net loss attributable to common stockholders: Continuing operations, net of tax $ (11,385) $ (13,964) Discontinued operations, net of tax (1,712) (32,556) Net loss attributable to common stockholders $ (13,097) $ (46,520) Weighted average common shares outstanding 59,964 62,142 Basic and diluted net loss per share attributable to common stockholders Continuing operations $ (0.19) $ (0.23) Discontinued operations, net of tax (0.03) (0.52) Net loss attributable to common stockholders $ (0.22) $ (0.75) Approximately 24.2 million common stock equivalent shares relating to the effects of outstanding stock options, restricted stock, the SPHG Note and redeemable preferred stock were excluded from the denominator in the calculation of diluted loss per share for both the fiscal years ended July 31, 2022 and 2021. The common stock equivalent shares excluded during the fiscal years ended July 31, 2022 and 2021 were primarily excluded as their effect would be anti-dilutive. Approximately 6.3 million common shares outstanding associated with the SPHG Note, using the if-converted method, were excluded from the denominator in the calculation of diluted loss per share for both the fiscal years ended July 31, 2022 and 2021. Approximately 17.9 million common shares outstanding associated with the contingently redeemable preferred stock, using the if-converted method, were excluded from the denominator in the calculation of diluted loss per share for both the fiscal years ended July 31, 2022 and 2021. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Jul. 31, 2022 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOMEThe components of accumulated other comprehensive income, net of income taxes, are as follows: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment (3,699) — (3,699) Pension liability adjustments — 677 677 Net current-period other comprehensive income (loss) (3,699) 677 (3,022) Accumulated other comprehensive income (loss) at July 31, 2022 $ 6,063 $ (1,923) $ 4,140 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 4,737 — 4,737 Pension liability adjustments — (1,418) (1,418) Net current-period other comprehensive income (loss) 4,737 (1,418) 3,319 Accumulated other comprehensive income (loss) at July 31, 2021 $ 9,762 $ (2,600) $ 7,162 In both the fiscal years ended July 31, 2022 and 2021, the Company recorded an immaterial amount in taxes related to other comprehensive income (loss). |
STATEMENT OF CASH FLOWS SUPPLEM
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION | 12 Months Ended |
Jul. 31, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION | STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION The amount of cash, cash equivalents and restricted cash as of July 31, 2022 and 2021 in the consolidated statements of cash flows is reconciled to the Company's consolidated balance sheets as follows: July 31, 2022 2021 (In thousands) Cash and cash equivalents $ 53,142 $ 58,117 Funds held for clients 4,903 8,212 Cash, cash equivalents and restricted cash $ 58,045 $ 66,329 Cash used for operating activities reflect cash payments for interest and income taxes as follows: Fiscal Year Ended 2022 2021 (In thousands) Cash paid for interest $ 1,237 $ 1,262 Cash paid for income taxes $ 2,364 $ 3,241 Cash paid for taxes can be lower than income tax expense as shown on the Company's consolidated statements of operations due to the timing of required payments in relation to recorded expense, which can cross fiscal years. Non-Cash Activities |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Jul. 31, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Preferred Stock The Company's Board of Directors has the authority, subject to any limitations prescribed by Delaware law, to issue shares of preferred stock in one or more series and to fix and determine the designation, privileges, preferences and rights and the qualifications, limitations and restrictions of those shares, including dividend rights, conversion rights, voting rights, redemption rights, terms of sinking funds, liquidation preferences and the number of shares constituting any series or the designation of the series, without any further vote or action by stockholders. Any shares of the Company's preferred stock so issued may have priority over its common stock with respect to dividend, liquidation and other rights. The Board of Directors may authorize the issuance of preferred stock with voting rights or conversion features that could adversely affect the voting power or other rights of the holders of its common stock. Although the issuance of preferred stock could provide us with flexibility in connection with possible acquisitions and other corporate purposes, under some circumstances, it could have the effect of delaying, deferring or preventing a change of control. On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement (the "Purchase Agreement") with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company's newly created Series C Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock"), to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million (the "Preferred Stock Transaction"). The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of the Company (the "Series C Certificate of Designations"), which has been filed with the Secretary of State of the State of Delaware. Under the Series C Certificate of Designations, each share of Preferred Stock can be converted into shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at an initial conversion price equal to $1.96 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction. Holders of the Preferred Stock will also receive dividends at 6% per annum payable, at the Company's option, in cash or Common Stock. If at any time the closing bid price of the Company's Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), the Company has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock. Upon the occurrence of certain triggering events such as a liquidation, dissolution or winding up of the Company, either voluntary or involuntary, or the merger or consolidation of the Company or significant subsidiary, or the sale of substantially all of the assets or capital stock of the Company or a significant subsidiary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Company to the holders of other equity or equity equivalent securities of the Company other than the Preferred Stock by reason of their ownership thereof, an amount per share in cash equal to the sum of (i) 100% of the stated value per share of Preferred Stock (initially $1,000 per share) then held by them (as adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transactions with respect to the Preferred Stock), plus (ii) 100% of all declared but unpaid dividends, and all accrued but unpaid dividends on each such share of Preferred Stock, in each case as the date of the triggering event. On or after December 15, 2022, each holder of Preferred Stock can also require the Company to redeem its Preferred Stock in cash at a price equal to the Liquidation Preference (as defined in Series C Certificate of Designations). If holders of the Preferred Stock exercise this right to require the Company to redeem all the Preferred Stock, the Company may have insufficient liquidity to pay the redemption price of $35.2 million, or the Company’s payment of the redemption price may adversely impact the Company’s liquidity and ability to finance its operations. Each holder of Preferred Stock has a vote equal to the number of shares of Common Stock into which its Preferred Stock would be convertible as of the record date, provided that the number of shares voted is based upon a conversion price which is no less than the greater of the book or market value of the Common Stock on the closing date of the purchase of the Preferred Stock. In addition, for so long as the Preferred Stock remains outstanding, the Company will not, directly or indirectly, and including in each case with respect to any significant subsidiary, without the affirmative vote of the holders of a majority of the Preferred Stock (i) liquidate, dissolve or wind up the Company or any significant subsidiary; (ii) consummate any transaction that would constitute or result in a Liquidation Event (as defined in the Series C Certificate of Designations); (iii) effect or consummate any Prohibited Issuance (as defined in the Series C Certificate of Designations); or (iv) create, incur, assume or suffer to exist any Indebtedness (as defined in the Series C Certificate of Designations) of any kind, other than certain existing Indebtedness of the Company and any replacement financing thereto, unless any such replacement financing is on substantially similar terms as such existing Indebtedness. The Purchase Agreement provides that the Company will use its commercially reasonable efforts to effect the piggyback registration of the Common Stock issuable on the conversion of the Preferred Stock and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing, with the SEC in the manner reasonably requested by the holder and the qualification of the securities in all states reasonably requested by the holder, in each case, in accordance with certain enumerated conditions. The Purchase Agreement also contains other representations, warranties and covenants, customary for an issuance of Preferred Stock in a private placement of this nature. The Preferred Stock Transaction was approved and recommended to the Board of Directors by the Special Committee of the Board of Directors consisting of independent directors not affiliated with Steel Holdings GP, which controls the power to vote and dispose of the securities held by SPHG Holdings and its affiliates. Common Stock Each holder of the Company's common stock is entitled to: • one vote per share on all matters submitted to a vote of the stockholders, subject to the rights of any preferred stock that may be outstanding; • dividends as may be declared by the Company's Board of Directors out of funds legally available for that purpose, subject to the rights of any preferred stock that may be outstanding; and • a pro rata share in any distribution of the Company's assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock in the event of liquidation. Holders of the Company's common stock have no cumulative voting rights, redemption rights or preemptive rights to purchase or subscribe for any shares of its common stock or other securities. All of the outstanding shares of common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of its common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any existing series of preferred stock and any series of preferred stock that the Company may designate and issue in the future. There are no redemption or sinking fund provisions applicable to the Company's common stock. On March 12, 2013, stockholders of the Company approved the sale of 7,500,000 shares of newly issued common stock to Steel Holdings, an affiliate of SPHG Holdings, at a price of $4.00 per share, resulting in aggregate proceeds of $30.0 million before transaction costs. The Company incurred $2.3 million of transaction costs, which consisted primarily of investment banking and legal fees, resulting in net proceeds from the sale of $27.7 million. In addition, as part of the transaction, the Company issued Steel Holdings a warrant to acquire an additional 2,000,000 shares at an exercise price of $5.00 per share (the "Warrant"). These warrants were to expire after a term of five years after issuance. On December 15, 2017, contemporaneously with the closing of the Preferred Stock Transaction, the Company entered into a Warrant Repurchase Agreement with Steel Holdings pursuant to which the Company repurchased the Warrant for $100. The Warrant was terminated by the Company upon repurchase. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jul. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following tables present the Company's financial assets measured at fair value on a recurring basis as of July 31, 2022 and 2021, classified by fair value hierarchy: Fair Value Measurements at (In thousands) July 31, 2022 Level 1 Level 2 Level 3 Money market funds $ 31,756 $ 31,756 $ — $ — Fair Value Measurements at (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 37,202 $ 37,202 $ — $ — There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices in active markets are not available, fair values are determined using pricing models, and the inputs to those pricing models are based on observable market inputs. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis The Company reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group or reporting unit is not recoverable and exceeds its fair value. The Company estimates the fair values of assets subject to impairment based on the Company's own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. Fair Value of Financial Instruments The Company's financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, customer deposits, accounts payable, restricted cash and debt, and are reflected in the consolidated financial statements at carrying value. With the exception of the SPHG Note, carrying value approximates fair value for these items due to their short-term maturities or expected settlement dates of these instruments. The Company believes that the carrying value of the liability component of the SPHG Note approximates fair value because the stated interest rates of this debt is consistent with current market rates. Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets are money market funds. These are valued at quoted market prices in active markets. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Jul. 31, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Subsequent to the Company’s disposition of the Direct Marketing reportable segment in the IWCO Direct Disposal, the Company has one reportable segment: Supply Chain. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal, finance and share-based compensation, which are not allocated to the Company's reportable segment. The Corporate-level balance sheet information includes cash and cash equivalents, debt and other assets and liabilities which are not identifiable to the operations of the Company's operating segment. All significant intra-segment amounts have been eliminated. Management evaluates segment performance based on segment net revenue and operating income (loss). 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, amortization of long-lived asset impairment, share-based compensation and restructuring. 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 (loss) 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: Fiscal Year Ended 2022 2021 (In thousands) Net revenue: Supply Chain $ 203,272 $ 226,256 Total segment net revenue $ 203,272 $ 226,256 Operating income: Supply Chain 11,318 6,827 Total segment operating income 11,318 6,827 Corporate-level activity (10,155) (8,397) Total operating income (loss) 1,163 (1,570) Total other income (expense) 969 (1,428) Income (loss) before income taxes $ 2,132 $ (2,998) July 31, 2022 2021 (In thousands) Total assets: Supply Chain $ 101,637 $ 101,160 Corporate 36,112 44,278 Total assets $ 137,749 $ 145,438 Summarized financial information of the Company's capital expenditures and depreciation expense for the Supply Chain reportable segment is as follows: Fiscal Year Ended 2022 2021 (In thousands) Capital expenditures $ 1,485 $ 1,218 Depreciation expense 2,220 3,403 Summarized financial information of the Company's net revenue by geographic location is as follows: Fiscal Year Ended 2022 2021 (In thousands) United States $ 50,426 $ 60,743 Mainland China 72,210 71,307 Netherlands 24,483 25,384 Other 56,153 68,822 Total consolidated net revenue $ 203,272 $ 226,256 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jul. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSAs of July 31, 2022, SPHG Holdings and its affiliates, including Steel Holdings, HNH and SPL, beneficially owned approximately 50.0% of our outstanding capital stock, including the if-converted value of the SPHG Note and shares of Series C Convertible Preferred Stock that vote on an as-converted basis together with our Common Stock. Warren G. Lichtenstein, our Interim Chief Executive Officer and the Executive Chairman of our Board, is also the Executive Chairman of Steel Holdings GP. Glen Kassan, our Vice Chairman of the Board of Directors and former Chief Administrative Officer, is an employee of Steel Services. Jack L. Howard, the President and a director of Steel Holdings GP, is also a director. SPHG Note Transaction On February 28, 2019, the Company entered into that certain SPHG Note Purchase Agreement with SPHG Holdings, whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for a 7.50% Convertible Senior Note due 2024. As of July 31, 2022 and 2021, SPHG Holdings held $14.9 million principal amount of the Company's 7.50% Convertible Senior Note. As of July 31, 2022 and 2021, the net carrying value of the SPHG Note was $11.0 million and $9.3 million, respectively. During the fiscal years ended July 31, 2022 and 2021, the Company recognized interest expense of $2.8 million and $2.4 million, respectively, associated with the SPHG Note. Preferred Stock Transaction Refer to Note 19 – “Stockholders’ Equity” for information on the Preferred Stock Purchase Agreement with SPHG Holdings. During each of the fiscal years ended July 31, 2022 and 2021, the Company paid dividends of $2.1 million associated with the Series C Convertible Preferred Stock. Management Services Agreement On June 14, 2019, the Company entered into an agreement (the "Management Services Agreement") with Steel Services Ltd. ("Steel Services"), an indirect wholly-owned subsidiary of Steel Holdings. The Management Services Agreement was effective as of June 1, 2019. Pursuant to this agreement, SP Corporate provided the Company and its subsidiaries with the services of certain employees, including certain executive officers and other corporate services. In connection with the IWCO Direct Disposal, the monthly fee under the Management Services Agreement was reduced effective on the Disposal Date primarily for the portion of the fee attributable to IWCO Direct. Total expenses incurred related to the management services agreement for the fiscal years ended July 31, 2022 and 2021 totaled $3.1 million and $4.3 million, respectively. As of July 31, 2022 and 2021, amounts due to Steel Services were $1.0 million and $0.9 million, respectively. Proposed Merger with Steel Holdings On June 12, 2022, the Company, Steel Holdings and Merger Sub, entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Steel Holdings. See Note 1 for further discussion regarding the Merger. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jul. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements of the Company include the results of its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company accounts for investments in businesses in which it owns between 20% and 50% of the voting interest using the equity method, if the Company has the ability to exercise significant influence over the investee company. All other investments in privately held businesses over which the Company does not have the ability to exercise significant influence, or for which there is not a readily determinable market value, are accounted for under the cost method of accounting. |
Use of Estimates | Use of Estimates The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to: (1) revenue recognition; (2) valuation allowances for trade and other receivables; (3) the valuation of long-lived assets; (4) contingencies, including litigation reserves; (5) restructuring charges and |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from its contracts with customers primarily from the sale of marketing solutions offerings and supply chain management services. Revenue is recognized when control of the promised goods or services is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For ModusLink's supply chain management services arrangements, the goods and services are considered to be transferred over time as they are performed. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Supply Chain Management Services ModusLink's revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer's behalf as part of its service to them. The majority of these arrangements consist of two distinct performance obligations (i.e., warehousing/inventory management service and a separate kitting/packaging/assembly service), revenue related to each of which is recognized over time as services are performed using an input method based on the level of efforts expended. Other Other revenue consists of cloud-based software subscriptions, software maintenance and support service contracts, fees for professional services and fees for the sale of perpetual software licenses in ModusLink's e-Business operations. Except for perpetual software licenses, revenue related to these arrangements is recognized on a straight-line basis over the term of the agreement or over the term of the agreement in proportion to the costs incurred in satisfying the obligations under the contract. Revenue from the sale of perpetual licenses is recognized at a point in time upon execution of the relevant license agreement and when delivery has taken place. Performance Obligations and Standalone Selling Price The Company's contracts with customers may include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require certain judgment. For arrangements with multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company generally determines standalone selling prices based on the prices charged to customers and uses a range of amounts to estimate standalone selling prices when we sell each of the products and services separately and need to determine whether there is a discount that needs to be allocated based on the relative standalone selling prices of the various products and services. The Company typically has more than one range of standalone selling prices for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the type of customer and geographic region in determining the range of standalone selling prices. Variable Consideration The Company may provide credits or incentives to customers, which are accounted for as variable consideration when estimating the transaction price of the contract and amounts of revenue to recognize. The amount of variable consideration to include in the transaction price is estimated at contract inception using either the estimated value method or the most likely amount method based on the nature of the variable consideration. These estimates are updated at the end of each reporting period as additional information becomes available and revenue is recognized only to the extent that it is probable that a significant reversal of any amounts of variable consideration included in the transaction price will not occur. Principal Versus Agent Revenue Recognition For revenue generated from contracts with customers involving another party, the Company considers whether it maintains control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment and discretion in establishing price. Revenues are recognized on a gross basis if the Company is acting in the capacity of a principal and on a net basis if its acting in the capacity of an agent. Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records contract assets and liabilities related to its contracts with customers as follows: • Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time. • Contract assets when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to marketing solutions offerings and supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the Company's consolidated balance sheets. • Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's consolidated balance sheets. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company's unsecured accounts receivable are stated at original invoice amount less an estimate made for doubtful receivables based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition, credit history, current economic conditions, whether any amounts are currently past due and the length of time accounts may be past due. The Company writes off accounts receivable when management deems them uncollectible and records recoveries of accounts receivable previously written off when received. When accounts receivable are considered past due, the Company generally does not charge interest on past due balances. |
Foreign Currency Translation | Foreign Currency Translation All assets and liabilities of the Company's foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars at the rates in effect at the balance sheet date. All amounts in the consolidated statements of operations are translated using the average exchange rates in effect during the year. Resulting translation adjustments are reflected in the accumulated other comprehensive income (loss) component of stockholders' equity. Settlement of receivables and payables in a foreign currency that is not the functional currency result in foreign currency transaction gains and losses. Foreign currency transaction gains and losses are included in "Other gains (losses), net" in the consolidated statements of operations. |
Cash, Cash Equivalents and Short-term Investments | Cash, Cash Equivalents and Short-term InvestmentsCash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase. Investments with maturities greater than three months to twelve months at the time of purchase are considered short-term investments. |
Fair Value Measurements | Fair Value Measurements The Company measures certain assets and liabilities at fair value (see Note 20 - "Fair Value Measurements"). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values of assets and liabilities are determined based on a three-level measurement input hierarchy. Level 1 inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date. Level 2 inputs are other than quoted market prices that are observable, either directly or indirectly, for an asset or liability. Level 2 inputs can include quoted prices in active markets for similar assets or liabilities, quoted prices in a market that is not active for identical assets or liabilities, or other inputs that can be corroborated by observable market data. Level 3 inputs are unobservable for the asset or liability when there is little, if any, market activity for the asset or liability. Level 3 inputs are based on the best information available and may include data developed by the Company. |
Funds Held for Clients | Funds Held for Clients Funds held for clients represent cash that is restricted for use solely for the purposes of satisfying the obligations to remit clients' customer funds to the Company's clients. These funds are classified as a current asset and a corresponding current liability on the Company's consolidated balance sheets. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined by both moving averages and the first-in, first-out methods. A provision for excess or obsolete inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns and future sales expectations. |
Accounting for Impairment of Long-Lived Assets, Goodwill and Other Intangible Assets | Accounting for Impairment of Long-Lived Assets The Company tests long-lived assets or group of assets for recoverability whenever events or changes in circumstances indicate that the Company may not be able to recover the asset's carrying amount. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company evaluates recoverability generally by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group cover the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to recover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. Management may use third-party valuation experts to assist in its determination of fair value. |
Property and Equipment | Property and EquipmentProperty, plant and equipment are stated at cost, less accumulated depreciation. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation and amortization is computed by applying the straight-line method to the estimated useful lives of the respective assets. Changes in estimated useful lives and salvage values of the Company’s assets and the related depreciation and amortization expense are accounted for prospectively. The Company capitalizes certain computer software development costs when incurred in connection with developing or obtaining computer software for internal use. |
Leases | Leases The Company leases office space, warehouse facilities, equipment and automobiles under operating leases. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance, or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities. The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. When discount rates implicit in leases cannot be readily determined, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. The determination of incremental borrowing rates involves significant judgment by management. The weighted average interest rate used for operating leases for the year ended July 31, 2022 and July 31, 2021 was 3.9% and 3.0%, respectively. The weighted average interest rate used for finance leases for the years ended July 31, 2022 and July 31, 2021 were 3.9% and 3.9%, respectively. For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term and are not recognized on the consolidated balance sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. |
Restructuring Costs | Restructuring Costs Restructuring and other exit costs may include employee separation costs, asset impairment charges, contract exit costs and costs of facility consolidation and closure. The Company records restructuring and other exit costs at their fair value when incurred. In accordance with existing benefit arrangements, employee termination costs are accrued when the restructuring actions are probable and estimable. Employee separation costs may also include one-time termination benefits recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required beyond the minimum retention period, in which case the costs are recognized ratably over the future service period. |
Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology is subjective and requires significant estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Income tax accounting standards prescribe: (1) a minimum recognition threshold that an income tax benefit arising from an uncertain income tax position taken, or expected to be taken, on an income tax return is required to meet before being recognized in the financial statements and (2) the measurement of the income tax benefits recognized from such positions. The |
Pension Plans | Pension Plans The Company sponsors defined benefit pension plans covering certain of its employees in the Netherlands and Japan. In accordance with accounting standards for employee pension benefits, the Company recognizes on a plan-by-plan basis the unfunded status of its pension plans in the consolidated financial statements and measures its pension plan assets and benefit obligations as of July 31. The obligation for the Company's pension plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates and expected mortality for employee benefit liabilities, rates of return on plan assets and expected annual rates for salary increases for employee participants. |
Share-Based Compensation Plans | Share-Based Compensation Plans All share-based payment awards to employees and directors are measured based upon their grant date fair values and expensed over the period during with the employee or director is required to provide service in exchange for the award (the vesting period). The Company accounts for forfeitures in the period in which they occur. |
Deferred Debt Issue Costs | Deferred Debt Issue CostsCosts to issue revolving credit facilities are capitalized and deferred when incurred and subsequently amortized on a straight-line basis over the term of the credit facility. Deferred debt issuance costs are presented in the Company's consolidated balance sheets in Other Assets. |
Major Clients and Concentration of Credit Risk | Major Clients and Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk are cash, cash equivalents and accounts receivable. The Company's cash equivalent portfolio is diversified and consists primarily of short-term investment grade securities placed with high credit quality financial institutions. Cash and cash equivalents are maintained at accredited financial institutions, and the balances associated with funds held for clients are at times without and in excess of federally insured limits. The Company has never experienced any losses related to these balances and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with financial institutions. Reclassification On the statement of cash flows for the years ended July 31, 2022 and 2021, the Company reclassified the non-cash portion of deferred tax expense which totaled $9.0 million and $7.2 million from Other Assets and Liabilities to Deferred Taxes. This reclassification was made to conform with current reporting and had no impact on net loss or stockholder's equity in either period. |
Adoption of New Accounting Standards and Accounting Standards Issued and Not Yet Implemented | Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope , respectively (collectively, "Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by Topic 848 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted this standard after LIBOR was discontinued on December 31, 2021. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements as the Company did not have any hedging relationships or transactions impacted by the discontinuance of LIBOR. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Loses on Financial Instruments , an ASU that requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect how to assess the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) : Disclosures by Business Entities about Government Assistance. The ASU requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This guidance is effective for all entities for annual periods beginning after December 15, 2021 and early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | The allowance for doubtful accounts consisted of the following: July 31, July 31, (In thousands) Balance at beginning of year $ 49 $ 134 Provisions charged to expense — — Accounts written off — (6) Recovered (5) (79) Balance at end of year $ 44 $ 49 |
Cash and Cash Equivalents | Cash and cash equivalents consisted of the following: July 31, July 31, (In thousands) Cash and bank deposits $ 21,386 $ 20,915 Money market funds 31,756 37,202 $ 53,142 $ 58,117 The amount of cash, cash equivalents and restricted cash as of July 31, 2022 and 2021 in the consolidated statements of cash flows is reconciled to the Company's consolidated balance sheets as follows: July 31, 2022 2021 (In thousands) Cash and cash equivalents $ 53,142 $ 58,117 Funds held for clients 4,903 8,212 Cash, cash equivalents and restricted cash $ 58,045 $ 66,329 |
Estimated Useful Lives of Property and Equipment | The estimated useful lives are as follows: Category Useful Lives Machinery and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful life of the asset Software 5 years Computer hardware 3 years Other 5 years |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations | A summary of the results of the discontinued operations is as follows: Fiscal Year Ended July 31, 2022 2021 Net revenue $ 165,542 $ 387,510 Cost of revenue 156,697 305,601 Gross profit 8,845 81,909 Operating expenses: Selling, general and administrative (a) 30,744 47,254 Amortization of intangible assets (b) 9,303 20,258 Impairment of goodwill (c) — 25,658 Total operating expenses 40,047 93,170 Operating loss (31,202) (11,261) Other income (expense): Gain upon deconsolidation of IWCO Direct 35,457 — Interest income — 3 Interest expense (16,111) (28,524) Total other income (expense), net 19,346 (28,521) Loss from discontinued operations before income taxes (11,856) (39,782) Income tax benefit 10,144 7,226 Loss from discontinued operations, net of tax $ (1,712) $ (32,556) (a) During the year ended July 31, 2021, the Company recorded $3.7 million of restructuring expenses for IWCO Direct as a result of its Competitive Improvement Plan. (b)During the fiscal year ended July 31, 2022 and 2021, the Company recorded $9.3 million and $20.3 million of amortization expense for the Direct Marketing reporting unit. (c) During the fiscal year ended July 31, 2021, the Company recorded a pre-tax goodwill impairment charge of $25.7 million for the Direct Marketing reporting unit due to a decline in IWCO Direct's fair value as a result of customer exits and decreasing demand for direct marketing products. The major classes of assets and liabilities included in discontinued operations related to IWCO Direct are presented in the table below. July 31, (in thousands) ASSETS Cash and cash equivalents $ 38,814 Accounts receivable, trade, net 33,258 Inventories, net 7,186 Other current assets 17,264 Current assets of discontinued operations $ 96,522 Property and equipment, net 54,247 Goodwill (a) 231,470 Other intangible assets, net (b) 115,005 Operating lease right-of-use assets 32,583 Other assets 1,116 Long-term assets of discontinued operations $ 434,421 LIABILITIES Accounts payable $ 25,688 Accrued expenses 74,218 Current lease obligations 4,047 Current portion of long-term debt (c) 5,602 Other current liabilities 13,837 Current liabilities of discontinued operations $ 123,392 Long-term debt, net of current portion (c) 358,189 Lease obligations 30,207 Other long-term liabilities 6,675 Long-term liabilities of discontinued operations $ 395,071 (a) The Company performed an interim impairment test of Direct Marketing's goodwill and other long-lived assets as of April 30, 2021. The Company determined that the goodwill was impaired, and recorded a non-cash impairment charge of $25.7 million classified in Loss from discontinued operations, net of tax, for the three months ended April 30, 2021. This amount also represents the Company's accumulated goodwill impairment loss as of July 31, 2021. (b) The Company performed a qualitative assessment of whether it was more likely than not that its other intangibles assets were impaired as of July 31, 2021. The Company reviewed its previous forecasts and assumptions based on the Company's current projections, that are subject to various risks and uncertainties, including forecasted revenues, expenses and cash flows, including the duration and extent of impact to our businesses from the COVID-19 pandemic. Based upon that assessment, the Company concluded it was not more likely than not that the other intangible assets were impaired as of July 31, 2021. (c) The balances relate to the Cerberus Term Loan balance outstanding at July 31, 2021. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories, net consisted of the following: July 31, 2022 2021 (In thousands) Raw materials $ 7,330 $ 8,299 Work-in-process 124 76 Finished goods 697 668 $ 8,151 $ 9,043 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment at Cost | Property and equipment at cost, consists of the following: July 31, 2022 2021 (In thousands) Machinery and equipment 12,632 16,865 Leasehold improvements 9,994 11,921 Software 34,161 50,283 Computer hardware 5,317 9,788 Other 2,475 2,875 64,579 91,732 Less: accumulated depreciation and amortization (61,045) (87,116) Property and equipment, net $ 3,534 $ 4,616 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Payables and Accruals [Abstract] | |
Components of Accrued Expenses | The following tables reflect the components of "Accrued expenses" and "Other current liabilities": July 31, 2022 2021 Accrued Expenses (In thousands) Accrued compensation $ 5,099 $ 7,163 Accrued audit, tax and legal 4,564 3,147 Accrued taxes 3,344 3,686 Accrued occupancy costs 1,671 1,728 Accrued IT costs 1,108 509 Accrued contract labor 792 930 Accrued freight 782 742 Accrued other 11,036 14,748 Total accrued expenses $ 28,396 $ 32,653 |
Components of Other Current Liabilities | July 31, 2022 2021 Other Current Liabilities (In thousands) Accrued pricing liabilities $ 9,435 $ 10,295 Deferred revenue - current 2,705 2,212 Other 1,342 1,770 Total other current liabilities $ 13,482 $ 14,277 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Components of Debt and Reconciliation to Carrying Amount | The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: July 31, 2022 2021 (In thousands) Unsecured 7.50% Convertible Senior Note due March 1, 2024 $ 14,940 $ 14,940 Credit Facilities Umpqua Revolver — — Less: unamortized discounts and issuance costs (a) (3,972) (5,793) Total debt, net $ 10,968 $ 9,147 (a) Amounts include deferred debt issuance costs related to credit facilities of $79 thousand and $196 thousand as of July 31, 2022 and July 31, 2021, respectively, which are presented in Other Assets. |
Summary of Debt | The following tables reflect the components of the SPHG Note: July 31, 2022 2021 (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (3,893) (5,597) Net carrying amount $ 11,047 $ 9,343 |
Summary of Interest Expense Related to Convertible Notes | During the fiscal years ended July 31, 2022 and 2021, the Company recognized interest expense associated with the SPHG Note as follows: Fiscal Year Ended 2022 2021 (In thousands) Interest expense related to contractual interest coupon $ 1,136 $ 1,136 Interest expense related to accretion of the discount 1,704 1,290 $ 2,840 $ 2,426 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Leases [Abstract] | |
Lease Cost | The components of the Company's lease expense are presented below: Fiscal Year Ended 2022 2021 (In thousands) Operating lease cost $ 9,973 $ 10,555 Short-term lease expense 1,488 1,627 Sublease income 748 — Variable lease cost 24 28 Interest on finance lease liabilities 3 6 $ 12,236 $ 12,216 Supplemental cash flow information related to the cash paid for amounts included in measurement of lease liabilities during the fiscal year ended July 31, 2022 and 2021 was as follows: Fiscal Year Ended 2022 2021 (In thousands) Operating cash flows from operating leases $ 9,653 $ 10,705 Operating cash flows from finance leases $ 3 $ 6 Financing cash flows from finance leases $ 73 $ 70 |
Future Minimum Lease Payments Under Operating Leases | The Company's future minimum lease payments required under operating and finance leases that have commenced as of July 31, 2022 were as follows: Operating Leases Finance Leases (In thousands) 2023 $ 7,151 $ 38 2024 4,254 — 2025 3,687 — 2026 2,718 — 2027 2,101 — Thereafter — — Total lease payments 19,911 38 Less: imputed interest 538 — Present value of lease payments 19,373 38 Less: current lease obligations 6,428 38 Long-term lease obligations $ 12,945 $ — |
Future Minimum Lease Payments Under Financing Leases | The Company's future minimum lease payments required under operating and finance leases that have commenced as of July 31, 2022 were as follows: Operating Leases Finance Leases (In thousands) 2023 $ 7,151 $ 38 2024 4,254 — 2025 3,687 — 2026 2,718 — 2027 2,101 — Thereafter — — Total lease payments 19,911 38 Less: imputed interest 538 — Present value of lease payments 19,373 38 Less: current lease obligations 6,428 38 Long-term lease obligations $ 12,945 $ — |
Additional Lease Information | Additional information related to the Company's leases as of July 31, 2022 was as follows: Weighted average remaining lease term: Operating leases 3.7 years Finance leases 0.4 years Weighted average discount rate: Operating leases 3.9% Finance leases 3.9% |
RESTRUCTURING ACTIVITIES (Table
RESTRUCTURING ACTIVITIES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The table below summarizes restructuring charges in the statements of operations for employee termination costs: Fiscal Year Ended (in thousands) 2022 2021 Cost of revenue $ 1,200 $ 888 Selling, general and administrative 313 867 $ 1,513 $ 1,755 Changes to the restructuring liability during the fiscal year ended July 31, 2022 were as follows: (in thousands) Balance as of July 31, 2021 $ 1,059 Costs incurred 1,513 Cash payments (1,580) Change in estimates (100) Balance as of July 31, 2022 $ 892 |
DEFINED BENEFIT PENSION PLANS (
DEFINED BENEFIT PENSION PLANS (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Retirement Benefits [Abstract] | |
Plan Assets Measured at Fair Value on Recurring Basis Classified by Fair Value Hierarchy | The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2022 and 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2022 Asset Level 1 Level 2 Level 3 Insurance contract $ 17,560 98 % $ — $ — $ 17,560 Other investments 416 2 % — — 416 $ 17,976 100 % $ — $ — $ 17,976 Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Asset Level 1 Level 2 Level 3 Insurance contract $ 28,554 98 % $ — $ — $ 28,554 Other investments 669 2 % — — 669 $ 29,223 100 % $ — $ — $ 29,223 |
Aggregate Change in Benefit Obligation and Plan Assets | The following table summarizes the changes in benefit obligation, plan assets and funded status for these plans: July 31, 2022 2021 (In thousands) Change in benefit obligation Benefit obligation at beginning of year $ 33,584 $ 33,927 Service cost 11 16 Interest cost 462 501 Actuarial gain (8,674) (664) Benefits and administrative expenses paid (227) (216) Settlements — (46) Currency translation (4,053) 66 Benefit obligation at end of year $ 21,103 $ 33,584 Change in plan assets Fair value of plan assets at beginning of year $ 29,223 $ 29,050 Actual return on plan assets (7,544) (29) Employer contributions, net 5 393 Settlements — (46) Benefits and administrative expenses paid (227) (216) Currency translation (3,481) 71 Fair value of plan assets at end of year $ 17,976 $ 29,223 Funded status Current liabilities $ (11) $ (13) Noncurrent liabilities (3,116) (4,348) Net amounts recognized on the consolidated balance sheets $ (3,127) $ (4,361) |
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets | Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows: July 31, 2022 2021 (In thousands) Projected benefit obligation $ 21,103 $ 33,584 Accumulated benefit obligation $ 21,103 $ 33,584 Fair value of plan assets $ 17,976 $ 29,223 |
Components of Net Periodic Pension Cost | The following table summarizes the components of net periodic pension cost: Fiscal Year Ended 2022 2021 (In thousands) Service cost $ 11 $ 16 Interest costs 462 501 Expected return on plan assets (407) (437) Amortization of net actuarial loss 4 4 Net periodic pension costs $ 70 $ 84 |
Weighted Average Assumptions Used to Determine Benefit Obligations and Net Periodic Pension Cost | The table below summarizes the weighted average assumptions used to determine benefit obligations: Fiscal Year Ended 2022 2021 Discount rate 2.96 % 1.49 % Rate of compensation increase — % — % The table below summarizes weighted average assumptions used to determine net periodic pension cost: Fiscal Year Ended 2022 2021 Discount rate 2.58 % 1.24 % Expected long-term rate of return on plan assets 2.51 % 1.20 % Rate of compensation increase — % — % |
Summary of Expected Benefit Payments from the Plans through Fiscal 2026 | The following table summarizes expected benefit payments from the plans through fiscal year 2032. Actual benefit payments may differ from expected benefit payments. The minimum employer required contributions to the plans are expected to be approximately $0.2 million in fiscal year 2023. Pension Benefit (In thousands) For the fiscal year ending July 31: 2023 $ 265 2024 414 2025 340 2026 430 2027 413 Thereafter 2,896 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Reconciliation of the Disaggregated Revenue | The following table presents the Company's revenues from customers with contracts disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Fiscal Year Ended 2022 2021 (In thousands) Service Lines Supply chain management services $ 201,344 $ 224,280 Other 1,928 1,976 $ 203,272 $ 226,256 Timing of Revenue Recognition Services transferred over time $ 203,272 $ 226,256 $ 203,272 $ 226,256 |
Summary of Changes in Deferred Revenue | The table below presents information for the Company's contract balances: July 31, 2022 2021 (In thousands) Accounts receivable, trade, net $ 40,083 $ 36,547 Contract assets 369 627 Deferred revenue - current $ 2,705 $ 2,212 Deferred revenue - long-term 134 108 Total deferred revenue $ 2,839 $ 2,320 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the fiscal year ended July 31, 2022 were as follows: Fiscal Year Ended 2022 2021 (In thousands) Balance at beginning of period $ 2,320 $ 2,464 Deferral of revenue 2,368 2,284 Recognition of deferred amounts upon satisfaction of performance obligation (1,849) (2,428) Balance at end of period $ 2,839 $ 2,320 |
OTHER GAINS, NET (Tables)
OTHER GAINS, NET (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Components of Other Gains, Net | The following table presents the components of "Other gains, net": Fiscal Year Ended 2022 2021 (In thousands) Foreign currency exchange gains (losses), net $ 2,389 $ (1,907) Derecognition of accrued pricing liabilities (a) 860 3,204 Other gains (losses), net 782 (121) $ 4,031 $ 1,176 |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Option Activity | A summary of option activity for the fiscal year ended July 31, 2022 is as follows: Number of Weighted Weighted Average (In thousands, except exercise price and years) Stock options outstanding, July 31, 2021 12 $ 3.41 0.2 Granted — — Exercised — — Forfeited or expired (12) 3.41 Stock options outstanding, July 31, 2022 — — 0 Stock options exercisable, July 31, 2022 — $ — 0 |
Summary of Activity of Nonvested Stock | A summary of the activity of the Company's restricted stock for the fiscal year ended July 31, 2022, is as follows: Number of Shares Weighted Average (Share amounts in thousands) Nonvested stock outstanding, July 31, 2021 1,116 $ 1.09 Granted 480 0.38 Vested (466) 1.18 Forfeited (650) 1.21 Nonvested stock outstanding, July 31, 2022 480 $ 0.38 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Components of Loss from Continuing Operations before Provision for Income Taxes | The components of (loss) income before provision for income taxes are as follows: Fiscal Year Ended 2022 2021 (In thousands) Income (loss) from operations before income taxes: U.S. $ (5,189) $ (9,590) Foreign 7,321 6,592 Total income (loss) from operations before income taxes $ 2,132 $ (2,998) |
Components of Income Tax Expense from Operations | The components of income tax expense from operations consist of the following: Fiscal Year Ended 2022 2021 (In thousands) Current provision: Federal $ — $ — State 429 574 Foreign 1,918 1,033 2,347 1,607 Deferred provision: Federal 8,849 6,102 State 76 1,032 Foreign 116 96 9,041 7,230 Total tax provision $ 11,388 $ 8,837 |
Components of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities are as follows: July 31, 2022 2021 (In thousands) Deferred tax assets: Accruals and reserves $ 4,295 $ 18,104 Tax basis in excess of financial basis for intangible and fixed assets 901 181 Lease liability 2,288 9,544 Interest expense disallowance 2,357 7,764 Credit carry forwards 25 28 Net operating loss and capital loss carry forwards 478,530 459,008 Total gross deferred tax assets 488,396 494,629 Less: valuation allowance (485,212) (456,610) Net deferred tax assets $ 3,184 $ 38,019 Deferred tax liabilities: Financial basis in excess of tax basis for intangible and fixed assets $ (69) $ (28,593) Right of use asset (2,154) (9,015) Convertible debt (917) (1,342) Total gross deferred tax liabilities (3,140) (38,950) Net deferred tax liabilities $ 44 $ (931) |
Reconciliation of Income Tax Expense Attributable to Income from Continuing Operations | Income tax expense attributable to income from continuing operations differs from the expense computed by applying the U.S. federal income tax rate of 21.0% to (loss) income from continuing operations before income taxes as a result of the following: Fiscal Year Ended 2022 2021 (In thousands) Computed "expected" income tax expense (benefit) $ 448 $ (630) Increase (decrease) in income tax expense resulting from: Change in valuation allowance 25,737 4,085 Foreign tax rate differential 56 (33) Goodwill impairment — 5,388 Nondeductible expenses 159 126 Foreign withholding taxes 134 (1,310) Foreign other adjustments 951 347 GILTI 4,775 — Addition of uncertain tax position reserves 58 (74) Worthless stock deduction (20,455) — State income taxes, net of federal benefit (1,042) 317 Deferred true-up 751 — Other (184) 621 Actual income tax expense $ 11,388 $ 8,837 |
Reconciliation of Beginning and Ending Balances of Total Amounts of Gross Unrecognized Tax Benefits | A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: Fiscal Year Ended 2022 2021 (In thousands) Balance as of beginning of year $ 2,140 $ 2,460 Additions for current year tax positions — 52 Currency translation (4) (3) Reductions for lapses in statute of limitations (67) (369) Reductions for member leaving consolidated group (1,498) — Balance as of end of year $ 571 $ 2,140 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Loss Per Share | The following table reconciles net loss per share for the fiscal years ended July 31, 2022 and 2021. Fiscal Year Ended 2022 2021 (In thousands, except per share data) Reconciliation of net loss to net loss attributable to common stockholders after assumed conversions: Net loss $ (10,968) $ (44,391) Less: Preferred dividends on redeemable preferred stock (2,129) (2,129) Net loss attributable to common stockholders $ (13,097) $ (46,520) Net loss attributable to common stockholders: Continuing operations, net of tax $ (11,385) $ (13,964) Discontinued operations, net of tax (1,712) (32,556) Net loss attributable to common stockholders $ (13,097) $ (46,520) Weighted average common shares outstanding 59,964 62,142 Basic and diluted net loss per share attributable to common stockholders Continuing operations $ (0.19) $ (0.23) Discontinued operations, net of tax (0.03) (0.52) Net loss attributable to common stockholders $ (0.22) $ (0.75) |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income, Net of Income Taxes | The components of accumulated other comprehensive income, net of income taxes, are as follows: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment (3,699) — (3,699) Pension liability adjustments — 677 677 Net current-period other comprehensive income (loss) (3,699) 677 (3,022) Accumulated other comprehensive income (loss) at July 31, 2022 $ 6,063 $ (1,923) $ 4,140 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 4,737 — 4,737 Pension liability adjustments — (1,418) (1,418) Net current-period other comprehensive income (loss) 4,737 (1,418) 3,319 Accumulated other comprehensive income (loss) at July 31, 2021 $ 9,762 $ (2,600) $ 7,162 |
STATEMENT OF CASH FLOWS SUPPL_2
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash and Cash Equivalents | Cash and cash equivalents consisted of the following: July 31, July 31, (In thousands) Cash and bank deposits $ 21,386 $ 20,915 Money market funds 31,756 37,202 $ 53,142 $ 58,117 The amount of cash, cash equivalents and restricted cash as of July 31, 2022 and 2021 in the consolidated statements of cash flows is reconciled to the Company's consolidated balance sheets as follows: July 31, 2022 2021 (In thousands) Cash and cash equivalents $ 53,142 $ 58,117 Funds held for clients 4,903 8,212 Cash, cash equivalents and restricted cash $ 58,045 $ 66,329 |
Schedule of Restrictions on Cash and Cash Equivalents | The amount of cash, cash equivalents and restricted cash as of July 31, 2022 and 2021 in the consolidated statements of cash flows is reconciled to the Company's consolidated balance sheets as follows: July 31, 2022 2021 (In thousands) Cash and cash equivalents $ 53,142 $ 58,117 Funds held for clients 4,903 8,212 Cash, cash equivalents and restricted cash $ 58,045 $ 66,329 |
Schedule of Cash Flow, Supplemental Disclosure | Cash used for operating activities reflect cash payments for interest and income taxes as follows: Fiscal Year Ended 2022 2021 (In thousands) Cash paid for interest $ 1,237 $ 1,262 Cash paid for income taxes $ 2,364 $ 3,241 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy | The following tables present the Company's financial assets measured at fair value on a recurring basis as of July 31, 2022 and 2021, classified by fair value hierarchy: Fair Value Measurements at (In thousands) July 31, 2022 Level 1 Level 2 Level 3 Money market funds $ 31,756 $ 31,756 $ — $ — Fair Value Measurements at (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 37,202 $ 37,202 $ — $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Jul. 31, 2022 | |
Segment Reporting [Abstract] | |
Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity | Summarized financial information of the Company's continuing operations by operating segment is as follows: Fiscal Year Ended 2022 2021 (In thousands) Net revenue: Supply Chain $ 203,272 $ 226,256 Total segment net revenue $ 203,272 $ 226,256 Operating income: Supply Chain 11,318 6,827 Total segment operating income 11,318 6,827 Corporate-level activity (10,155) (8,397) Total operating income (loss) 1,163 (1,570) Total other income (expense) 969 (1,428) Income (loss) before income taxes $ 2,132 $ (2,998) Summarized financial information of the Company's capital expenditures and depreciation expense for the Supply Chain reportable segment is as follows: Fiscal Year Ended 2022 2021 (In thousands) Capital expenditures $ 1,485 $ 1,218 Depreciation expense 2,220 3,403 |
Total Assets of Continuing Operations | July 31, 2022 2021 (In thousands) Total assets: Supply Chain $ 101,637 $ 101,160 Corporate 36,112 44,278 Total assets $ 137,749 $ 145,438 |
Summarized Financial Information of Net Revenue from External Customers by Group of Services | Summarized financial information of the Company's net revenue by geographic location is as follows: Fiscal Year Ended 2022 2021 (In thousands) United States $ 50,426 $ 60,743 Mainland China 72,210 71,307 Netherlands 24,483 25,384 Other 56,153 68,822 Total consolidated net revenue $ 203,272 $ 226,256 |
NATURE OF OPERATIONS - (Detail)
NATURE OF OPERATIONS - (Detail) - USD ($) $ / shares in Units, $ in Thousands | Jun. 12, 2022 | Jul. 31, 2022 | Mar. 16, 2022 | Jan. 31, 2022 | Jul. 31, 2021 |
Nature Of Operations [Line Items] | |||||
Cash and cash equivalents | $ 53,142 | $ 58,117 | |||
Working capital deficit | 26,000 | ||||
Right to receive share, price per share (in usd per share) | $ 1.35 | ||||
Business acquisition, transaction costs | $ 80,000 | ||||
Moduslink | |||||
Nature Of Operations [Line Items] | |||||
Business acquisition, period results included in combined entity | 2 years | ||||
IWCO Direct Holdings, Inc. | |||||
Nature Of Operations [Line Items] | |||||
Long-term line of credit | $ 361,300 | ||||
Umpqua Revolver | |||||
Nature Of Operations [Line Items] | |||||
Line of credit facility, maximum credit commitment | 12,500 | $ 12,500 | |||
Line of credit facility, sublimit borrowing capacity | 5,000 | $ 5,000 | |||
Revolving credit facility | 600 | ||||
Long-term line of credit | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Significant Of Accounting Policies [Line Items] | ||
Highly liquid investment period to be considered cash equivalent | 3 months | |
Operating leases | 3.90% | 3% |
Finance leases | 3.90% | 3.90% |
Deferred taxes | $ 9,041 | $ 7,230 |
Ten Largest Clients | Sales Revenue, Net | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 78% | 81% |
Minimum | ||
Significant Of Accounting Policies [Line Items] | ||
Highly liquid investment period to be considered short term investments | 3 months | |
Maximum | ||
Significant Of Accounting Policies [Line Items] | ||
Highly liquid investment period to be considered short term investments | 12 months | |
Supply Chain | Net Accounts Receivable | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 10% | 10% |
Supply Chain | One Customer | Sales Revenue, Net | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 31% | 42% |
Supply Chain | Two Customer | Sales Revenue, Net | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 12% | |
Supply Chain | Client One | Net Accounts Receivable | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 31% | 25% |
Supply Chain | Client Two | Net Accounts Receivable | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 18% | 22% |
Supply Chain | Client Three | Net Accounts Receivable | Customer Concentration Risk | ||
Significant Of Accounting Policies [Line Items] | ||
Concentration risk percentage | 17% | 13% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of year | $ 49 | $ 134 |
Provisions charged to expense | 0 | 0 |
Accounts written off | 0 | (6) |
Recovered | (5) | (79) |
Balance at end of year | $ 44 | $ 49 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Accounting Policies [Abstract] | ||
Cash and bank deposits | $ 21,386 | $ 20,915 |
Money market funds | 31,756 | 37,202 |
Cash and cash equivalents | $ 53,142 | $ 58,117 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Lives of Property Plant and Equipment (Detail) | 12 Months Ended |
Jul. 31, 2022 | |
Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Computer hardware | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 3 years |
Other | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
DISCONTINUED OPERATIONS - Narra
DISCONTINUED OPERATIONS - Narrative (Details) | Feb. 25, 2022 USD ($) |
Discontinued Operations and Disposal Groups [Abstract] | |
Proceeds from divestiture of businesses | $ 0 |
Disposal groups, including discontinued operations, notes receivable from divestiture of business | 6,900,000 |
Disposal group, including discontinued operation, accounts, notes and loans receivable, net | $ 0 |
DISCONTINUED OPERATIONS - Sched
DISCONTINUED OPERATIONS - Schedule of Disposal Groups, Including Discontinued Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net loss from discontinued operations | $ (1,712) | $ (32,556) |
Restructuring expenses | 3,700 | |
Amortization expense | 9,300 | 20,300 |
Non-cash lease expense | 25,700 | |
Discontinued Operations, Disposed of by Sale | IWCO Direct Holdings, Inc. | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net revenue | 165,542 | 387,510 |
Cost of revenue | 156,697 | 305,601 |
Gross profit | 8,845 | 81,909 |
Selling, general and administrative(a) | 30,744 | 47,254 |
Amortization of intangible assets | 9,303 | 20,258 |
Impairment of goodwill | 0 | 25,658 |
Total operating expenses | 40,047 | 93,170 |
Operating loss | (31,202) | (11,261) |
Gain upon deconsolidation of IWCO Direct | 35,457 | 0 |
Interest income | 0 | 3 |
Interest expense | (16,111) | (28,524) |
Total other income (expense), net | 19,346 | (28,521) |
Loss from discontinued operations before income taxes | (11,856) | (39,782) |
Income tax benefit | 10,144 | 7,226 |
Net loss from discontinued operations | $ (1,712) | $ (32,556) |
DISCONTINUED OPERATIONS - Dispo
DISCONTINUED OPERATIONS - Disposal Groups, Including Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 30, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
ASSETS | |||
Current assets of discontinued operations | $ 0 | $ 96,522 | |
Liabilities [Abstract] | |||
Current liabilities of discontinued operations | 0 | 123,392 | |
Long-term liabilities of discontinued operations | $ 0 | 395,071 | |
Other asset impairment charges | $ 25,700 | ||
Discontinued Operations, Disposed of by Sale | IWCO Direct Holdings, Inc. | |||
ASSETS | |||
Cash and cash equivalents | 38,814 | ||
Accounts receivable, trade, net | 33,258 | ||
Inventories, net | 7,186 | ||
Other current assets | 17,264 | ||
Current assets of discontinued operations | 96,522 | ||
Property and equipment, net | 54,247 | ||
Goodwill | 231,470 | ||
Other intangible assets, net | 115,005 | ||
Operating lease right-of-use assets | 32,583 | ||
Other assets | 1,116 | ||
Long-term assets of discontinued operations | 434,421 | ||
Liabilities [Abstract] | |||
Accounts payable | 25,688 | ||
Accrued expenses | 74,218 | ||
Current lease obligations | 4,047 | ||
Current portion of long-term debt(c) | 5,602 | ||
Other current liabilities | 13,837 | ||
Current liabilities of discontinued operations | 123,392 | ||
Long-term debt, net of current portion | 358,189 | ||
Lease obligations | 30,207 | ||
Other long-term liabilities | 6,675 | ||
Long-term liabilities of discontinued operations | $ 395,071 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,330 | $ 8,299 |
Work-in-process | 124 | 76 |
Finished goods | 697 | 668 |
Inventory, net | $ 8,151 | $ 9,043 |
PROPERTY AND EQUIPMENT - At Cos
PROPERTY AND EQUIPMENT - At Cost (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 64,579 | $ 91,732 |
Less: accumulated depreciation and amortization | (61,045) | (87,116) |
Property and equipment, net | 3,534 | 4,616 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 12,632 | 16,865 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 9,994 | 11,921 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 34,161 | 50,283 |
Computer hardware | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 5,317 | 9,788 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 2,475 | $ 2,875 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional Information (Detail) | 12 Months Ended |
Jul. 31, 2022 USD ($) | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, disposals | $ 25,900,000 |
Property, plant, and equipment, net book value | $ 5,000 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES - Components of Accrued Expenses (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 5,099 | $ 7,163 |
Accrued audit, tax and legal | 4,564 | 3,147 |
Accrued taxes | 3,344 | 3,686 |
Accrued occupancy costs | 1,671 | 1,728 |
Accrued IT costs | 1,108 | 509 |
Accrued contract labor | 792 | 930 |
Accrued freight | 782 | 742 |
Accrued other | 11,036 | 14,748 |
Total accrued expenses | $ 28,396 | $ 32,653 |
ACCRUED EXPENSES AND OTHER LI_4
ACCRUED EXPENSES AND OTHER LIABILITIES - Components of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued pricing liabilities | $ 9,435 | $ 10,295 |
Deferred revenue - current | 2,705 | 2,212 |
Other | 1,342 | 1,770 |
Total other current liabilities | $ 13,482 | $ 14,277 |
ACCRUED EXPENSES AND OTHER LI_5
ACCRUED EXPENSES AND OTHER LIABILITIES - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Payables and Accruals [Abstract] | ||
Accrued pricing liabilities | $ 9,435 | $ 10,295 |
Derecognition of accrued pricing liabilities | $ 860 | $ 3,204 |
DEBT - Summary of the Component
DEBT - Summary of the Components of Debt (Details) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 | Feb. 28, 2019 |
Debt Instrument [Line Items] | |||
Less: unamortized discounts and issuance costs(a) | $ (3,972) | $ (5,793) | |
Total debt, net | 10,968 | 9,147 | |
Debt issuance costs, net | 79 | 196 | |
Umpqua Revolver | |||
Debt Instrument [Line Items] | |||
Long-term line of credit | 0 | 0 | |
7.50% Convertible Senior Note due March 1, 2024 | |||
Debt Instrument [Line Items] | |||
Principal amount of long term debt | 14,940 | 14,940 | |
7.50% Convertible Senior Note due March 1, 2024 | SPHG Holdings | |||
Debt Instrument [Line Items] | |||
Total debt, net | $ 11,047 | $ 9,343 | |
Debt instrument stated percentage | 7.50% |
DEBT - Additional Information (
DEBT - Additional Information (Details) | 12 Months Ended | |||
Feb. 28, 2019 USD ($) $ / shares | Jul. 31, 2022 USD ($) | Jul. 31, 2021 USD ($) | Mar. 16, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Issuance of nonvested common stock, value | $ 700,000 | $ 600,000 | ||
Total debt, net | $ 10,968,000 | $ 9,147,000 | ||
Debt instrument, interest rate, effective percentage | 27.80% | 27.80% | ||
Umpqua Revolver | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum credit commitment | $ 12,500,000 | $ 12,500,000 | ||
Line of credit facility, sublimit borrowing capacity | 5,000,000 | 5,000,000 | ||
Revolving credit facility | 600,000 | |||
Accretion of debt discount | 300,000 | |||
MidCap Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, termination amount | $ 12,500,000 | |||
Credit facility, readily available borrowing capacity | 11,900,000 | |||
Accretion of debt discount | 200,000 | |||
SPHG Holdings | ||||
Debt Instrument [Line Items] | ||||
Issuance of nonvested common stock, value | $ 1,000 | |||
Conversion ratio (shares) | 0.4212655 | |||
Initial Conversion price (in usd per share) | $ / shares | $ 2.37 | |||
7.50% Convertible Senior Note due March 1, 2024 | SPHG Holdings | ||||
Debt Instrument [Line Items] | ||||
Debt instrument stated percentage | 7.50% | |||
Principal amount of note | $ 14,900,000 | $ 14,940,000 | $ 14,940,000 | |
Period over which the unamotized discount will be amortized | 19 months | |||
Total debt, net | $ 11,047,000 | 9,343,000 | ||
Accretion of debt discount | $ 2,840,000 | $ 2,426,000 |
DEBT - Net Carrying Value of th
DEBT - Net Carrying Value of the Notes (Detail) - USD ($) | Jul. 31, 2022 | Jul. 31, 2021 | Feb. 28, 2019 |
Debt Instrument [Line Items] | |||
Carrying amount of equity component | $ 8,200,000 | $ 8,200,000 | |
Total debt, net | 10,968,000 | 9,147,000 | |
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||
Debt Instrument [Line Items] | |||
Principal amount of note | 14,940,000 | 14,940,000 | $ 14,900,000 |
Unamortized debt discount | (3,893,000) | (5,597,000) | |
Total debt, net | $ 11,047,000 | $ 9,343,000 |
DEBT - Summary of Interest Expe
DEBT - Summary of Interest Expense (Detail) - 7.50% Convertible Senior Note due March 1, 2024 - SPHG Holdings - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 2,840 | $ 2,426 |
Interest expense related to contractual interest coupon | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | 1,136 | 1,136 |
Interest expense related to accretion of the discount | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 1,704 | $ 1,290 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | 12 Months Ended |
Jul. 31, 2022 | |
Leases [Abstract] | |
Remaining lease term | 5 years |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 9,973 | $ 10,555 |
Short-term lease expense | 1,488 | 1,627 |
Sublease income | 748 | 0 |
Variable lease cost | 24 | 28 |
Interest on finance lease liabilities | 3 | 6 |
Total lease cost | $ 12,236 | $ 12,216 |
LEASES - Lease Commitments (Det
LEASES - Lease Commitments (Details) $ in Thousands | Jul. 31, 2022 USD ($) |
Operating Leases | |
2023 | $ 7,151 |
2024 | 4,254 |
2025 | 3,687 |
2026 | 2,718 |
2027 | 2,101 |
Thereafter | 0 |
Total lease payments | 19,911 |
Less: imputed interest | 538 |
Present value of lease payments | $ 19,373 |
Operating lease, liability, current, statement of financial position | Current lease obligations |
Less: current lease obligations | $ 6,428 |
Operating lease, liability, noncurrent, statement of financial position | Long-term lease obligations |
Long-term lease obligations | $ 12,945 |
Finance Leases | |
2023 | 38 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total lease payments | 38 |
Less: imputed interest | 0 |
Present value of lease payments | $ 38 |
Finance lease, liability, current, statement of financial position | Current lease obligations |
Less: current lease obligations | $ 38 |
Finance lease, liability, noncurrent, statement of financial position | Long-term lease obligations |
Long-term lease obligations | $ 0 |
LEASES - Lease Information (Det
LEASES - Lease Information (Details) | Jul. 31, 2022 | Jul. 31, 2021 |
Weighted average remaining lease term: | ||
Operating leases | 3 years 8 months 12 days | |
Finance leases | 4 months 24 days | |
Weighted average discount rate: | ||
Operating leases | 3.90% | 3% |
Finance leases | 3.90% | 3.90% |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Cash Flow, Lessee [Abstract] | ||
Operating cash flows from operating leases | $ 9,653 | $ 10,705 |
Operating cash flows from finance leases | 3 | 6 |
Financing cash flows from finance leases | $ 73 | $ 70 |
RESTRUCTURING ACTIVITIES - Narr
RESTRUCTURING ACTIVITIES - Narrative (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Jan. 31, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 1,513 | $ 1,755 | ||
Supply Chain | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 600 | $ 900 |
RESTRUCTURING ACTIVITIES - Sche
RESTRUCTURING ACTIVITIES - Schedule of Restructuring Charges by Type (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred | $ 1,513 | $ 1,755 |
Cost of revenue | ||
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred | 1,200 | 888 |
Selling, general and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred | $ 313 | $ 867 |
RESTRUCTURING ACTIVITIES - Rest
RESTRUCTURING ACTIVITIES - Restructuring Liability Rollforward (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Restructuring Reserve [Roll Forward] | ||
Costs incurred | $ 1,513 | $ 1,755 |
IWCO Direct Holdings, Inc. | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 1,059 | |
Costs incurred | 1,513 | |
Cash payments | (1,580) | |
Change in estimates | (100) | |
Ending balance | $ 892 | $ 1,059 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) - USD ($) | 12 Months Ended | ||||
Aug. 18, 2022 | Feb. 18, 2022 | Aug. 13, 2021 | Dec. 15, 2017 | Jul. 31, 2022 | |
Restricted Stock | |||||
Commitments and Contingencies [Line Items] | |||||
Number of shares surrendered | 650,000 | ||||
Reith v. Lichtenstein | |||||
Commitments and Contingencies [Line Items] | |||||
Cash paid to plaintiff | $ 2,750,000 | ||||
Legal fees | $ 2,050,000 | ||||
Reith v. Lichtenstein | Subsequent Event | |||||
Commitments and Contingencies [Line Items] | |||||
Legal fees | $ 1,600,000 | ||||
Litigation settlement, amount awarded from other party | 3,000,000 | ||||
Litigation settlement, expense | 125,000 | ||||
Litigation settlement, distribution amount | $ 1 | ||||
Reith v. Lichtenstein | Director | Restricted Stock | |||||
Commitments and Contingencies [Line Items] | |||||
Number of shares surrendered | 3,300,000 | ||||
Reith v. Lichtenstein | Director | Restricted Stock | Warren Lichtenstein | |||||
Commitments and Contingencies [Line Items] | |||||
Number of vested shares surrendered | 1,833,333 | ||||
Number of nonvested shares surrendered | 300,000 | ||||
Reith v. Lichtenstein | Director | Restricted Stock | Jack Howard | |||||
Commitments and Contingencies [Line Items] | |||||
Number of vested shares surrendered | 916,667 | ||||
Number of nonvested shares surrendered | 150,000 | ||||
Reith v. Lichtenstein | Director | Restricted Stock | William Fejes | |||||
Commitments and Contingencies [Line Items] | |||||
Number of vested shares surrendered | 100,000 | ||||
Series C Convertible Preferred Stock | Purchase Agreement | SPHG Holdings | |||||
Commitments and Contingencies [Line Items] | |||||
Proceeds from issuance of preferred stock | $ 35,000,000 |
DEFINED BENEFIT PENSION PLANS -
DEFINED BENEFIT PENSION PLANS - Additional Information (Detail) | 12 Months Ended | ||
Jul. 31, 2023 USD ($) | Jul. 31, 2022 pension_plan | Jul. 31, 2020 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |||
Pre-tax curtailment gain | $ | $ 2,400,000 | ||
Cumulative gains and losses in excess of the greater of the pension benefit obligation | 10% | ||
Scenario, Forecast | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Minimum required contributions to the plans | $ | $ 200,000 | ||
Netherlands | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Number of pension plans | pension_plan | 2 | ||
Unfunded Defined Benefit Pension Plans | Japan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Number of pension plans | pension_plan | 1 |
DEFINED BENEFIT PENSION PLANS_2
DEFINED BENEFIT PENSION PLANS - Schedule of Defined Benefit Plan Assets Fair Value Measurements (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 17,976 | $ 29,223 | $ 29,050 |
Fair Value, Measurements, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 17,976 | $ 29,223 | |
Asset Allocations | 100% | 100% | |
Fair Value, Measurements, Recurring | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 0 | $ 0 | |
Fair Value, Measurements, Recurring | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | 17,976 | 29,223 | |
Fair Value, Measurements, Recurring | Insurance contract | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 17,560 | $ 28,554 | |
Asset Allocations | 98% | 98% | |
Fair Value, Measurements, Recurring | Insurance contract | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 0 | $ 0 | |
Fair Value, Measurements, Recurring | Insurance contract | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | 0 | 0 | |
Fair Value, Measurements, Recurring | Insurance contract | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | 17,560 | 28,554 | |
Fair Value, Measurements, Recurring | Other investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 416 | $ 669 | |
Asset Allocations | 2% | 2% | |
Fair Value, Measurements, Recurring | Other investments | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 0 | $ 0 | |
Fair Value, Measurements, Recurring | Other investments | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | 0 | 0 | |
Fair Value, Measurements, Recurring | Other investments | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, fair value of plan assets | $ 416 | $ 669 |
DEFINED BENEFIT PENSION PLANS_3
DEFINED BENEFIT PENSION PLANS - Aggregate Change in Benefit Obligation and Plan Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Change in benefit obligation | ||
Benefit obligation at beginning of year | $ 33,584 | $ 33,927 |
Service cost | 11 | 16 |
Interest cost | 462 | 501 |
Actuarial gain | (8,674) | (664) |
Benefits and administrative expenses paid | (227) | (216) |
Settlements | 0 | (46) |
Currency translation | (4,053) | 66 |
Benefit obligation at end of year | 21,103 | 33,584 |
Change in plan assets | ||
Fair value of plan assets at beginning of year | 29,223 | 29,050 |
Actual return on plan assets | (7,544) | (29) |
Employer contributions, net | 5 | 393 |
Settlements | 0 | (46) |
Benefits and administrative expenses paid | (227) | (216) |
Currency translation | (3,481) | 71 |
Fair value of plan assets at end of year | 17,976 | 29,223 |
Funded status | ||
Current liabilities | (11) | (13) |
Noncurrent liabilities | (3,116) | (4,348) |
Net amounts recognized on the consolidated balance sheets | $ (3,127) | $ (4,361) |
DEFINED BENEFIT PENSION PLANS_4
DEFINED BENEFIT PENSION PLANS - Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Retirement Benefits [Abstract] | ||
Projected benefit obligation | $ 21,103 | $ 33,584 |
Accumulated benefit obligation | 21,103 | 33,584 |
Fair value of plan assets | $ 17,976 | $ 29,223 |
DEFINED BENEFIT PENSION PLANS_5
DEFINED BENEFIT PENSION PLANS - Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 11 | $ 16 |
Interest costs | 462 | 501 |
Expected return on plan assets | (407) | (437) |
Amortization of net actuarial loss | 4 | 4 |
Net periodic pension costs | $ 70 | $ 84 |
Defined benefit plan, net periodic benefit cost (credit), interest cost, statement of income or comprehensive income | Selling, general and administrative | Selling, general and administrative |
Defined benefit plan, net periodic benefit cost (credit) excluding service cost, statement of income or comprehensive income | Selling, general and administrative | Selling, general and administrative |
Defined benefit plan, net periodic benefit (cost) credit, amortization of gain (loss), statement of income or comprehensive income | Selling, general and administrative | Selling, general and administrative |
DEFINED BENEFIT PENSION PLANS_6
DEFINED BENEFIT PENSION PLANS - Weighted Average Assumptions Used to Determine Benefit Obligations (Detail) | Jul. 31, 2022 | Jul. 31, 2021 |
Retirement Benefits [Abstract] | ||
Discount rate | 2.96% | 1.49% |
Rate of compensation increase | 0% | 0% |
DEFINED BENEFIT PENSION PLANS_7
DEFINED BENEFIT PENSION PLANS - Weighted-Average Assumptions Used to Determine Net Periodic Pension Cost (Detail) | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Discount rate | 2.58% | 1.24% |
Expected long-term rate of return on plan assets | 2.51% | 1.20% |
Rate of compensation increase | 0% | 0% |
DEFINED BENEFIT PENSION PLANS_8
DEFINED BENEFIT PENSION PLANS - Summary of Expected Benefit Payments from Plans (Detail) $ in Thousands | Jul. 31, 2022 USD ($) |
Retirement Benefits [Abstract] | |
2023 | $ 265 |
2024 | 414 |
2025 | 340 |
2026 | 430 |
2027 | 413 |
Thereafter | $ 2,896 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 203,272 | $ 226,256 | $ 203,272 | $ 226,256 |
Supply chain management services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 201,344 | 224,280 | ||
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 1,928 | 1,976 | ||
Services transferred over time | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 203,272 | $ 226,256 |
REVENUE RECOGNITION REVENUE REC
REVENUE RECOGNITION REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2020 |
Disaggregation of Revenue [Line Items] | |||
Contract assets | $ 369 | $ 627 | |
Deferred revenue - current | 2,705 | 2,212 | |
Deferred revenue - long-term | 134 | 108 | |
Total deferred revenue | 2,839 | 2,320 | $ 2,464 |
Trade Accounts Receivable | |||
Disaggregation of Revenue [Line Items] | |||
Accounts receivable, trade, net | $ 40,083 | $ 36,547 |
REVENUE RECOGNITION - Summary o
REVENUE RECOGNITION - Summary of Changes in Deferred Revenue (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Change in Deferred Revenue | ||
Balance at beginning of period | $ 2,320 | $ 2,464 |
Deferral of revenue | 2,368 | 2,284 |
Recognition of deferred amounts upon satisfaction of performance obligation | (1,849) | (2,428) |
Balance at end of period | $ 2,839 | $ 2,320 |
REVENUE RECOGNITION - Performan
REVENUE RECOGNITION - Performance Obligations (Details) $ in Millions | Jul. 31, 2022 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-08-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unearned revenue | $ 2.7 |
Unearned revenue, timing of satisfaction | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-08-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unearned revenue | $ 0.1 |
Unearned revenue, timing of satisfaction |
OTHER GAINS, NET - Components o
OTHER GAINS, NET - Components of Other Gains, Net (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Other Income and Expenses [Abstract] | ||
Foreign currency exchange gains (losses), net | $ 2,389 | $ (1,907) |
Derecognition of accrued pricing liabilities | 860 | 3,204 |
Other gains (losses), net | 782 | (121) |
Other gains (losses), net | $ 4,031 | $ 1,176 |
SHARE-BASED PAYMENTS - Addition
SHARE-BASED PAYMENTS - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 15, 2017 | Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2020 | Jul. 23, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant date fair value of nonvested stock | $ 0.6 | $ 0.7 | |||
Unrecognized compensation cost related to nonvested stock | 0.2 | ||||
Selling, general and administrative | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | $ 0.7 | $ 0.6 | |||
ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common Stock shares available for future issuance (in shares) | 77,316 | ||||
Number of shares pursuant to stock options granted (in shares) | 600,000 | ||||
Common stock purchase price as a percentage of market value (in percentage) | 85% | ||||
Shares issued under plan (in shares) | 499 | 9,145 | |||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Non vested stock compensation expense | $ 0.7 | $ 0.6 | |||
Weighted average period of cost expected to be expensed (in years) | 7 months 6 days | ||||
Restricted Stock | Nonemployee Director | Reith v. Lichtenstein | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of vested shares surrendered | 2,900,000 | ||||
Number of nonvested shares surrendered | 500,000 | ||||
Minimum | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of restriction period (in years) | 1 year | ||||
Maximum | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of restriction period (in years) | 5 years | ||||
2020 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares available for grant | 4,945,000 | ||||
Common Stock shares available for future issuance (in shares) | 8,143,060 | ||||
2010 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common Stock shares available for future issuance (in shares) | 3,668,143 | ||||
2010 Plan additional shares of common stock (in shares) | 1,060,523 | ||||
2010 Plan | Restricted Stock and Market Performance Based Restricted Stock, Total | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Restricted stock award granted (in shares) | 5,500,000 | ||||
2010 Plan | Restricted Stock | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Restricted stock award granted (in shares) | 4,000,000 | ||||
Restricted stock award vested (in shares) | 4,000,000 | ||||
2010 Plan | Market Performance Based Restricted Stock | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Restricted stock award granted (in shares) | 1,500,000 | ||||
Restricted stock award vested (in shares) | 1,000,000 |
SHARE-BASED PAYMENTS - Summary
SHARE-BASED PAYMENTS - Summary of Option Activity (Detail) - $ / shares shares in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Number of Shares | ||
Stock options outstanding, beginning balance (in shares) | 12 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited or expired (in shares) | (12) | |
Stock options outstanding, ending balance (in shares) | 0 | 12 |
Stock options exercisable (in shares) | 0 | |
Weighted Average Exercise Price | ||
Stock options outstanding, beginning balance (in usd per shares) | $ 3.41 | |
Granted (in usd per shares) | 0 | |
Exercised (in usd per shares) | 0 | |
Forfeited or expired (in usd per shares) | 3.41 | |
Stock options outstanding, ending balance (in usd per shares) | 0 | $ 3.41 |
Stock options exercisable (in usd per shares) | $ 0 | |
Weighted Average Remaining Contractual Term (Years) | ||
Stock options outstanding | 0 years | 2 months 12 days |
Stock options exercisable | 0 years |
SHARE-BASED PAYMENTS - Summar_2
SHARE-BASED PAYMENTS - Summary of Activity of Nonvested Stock (Detail) - Restricted Stock shares in Thousands | 12 Months Ended |
Jul. 31, 2022 $ / shares shares | |
Number of Shares | |
Nonvested stock outstanding, beginning balance (in shares) | shares | 1,116 |
Granted (in shares) | shares | 480 |
Vested (in shares) | shares | (466) |
Forfeited (in shares) | shares | (650) |
Nonvested stock outstanding, ending balance (in shares) | shares | 480 |
Weighted-Average Grant Date Fair Value | |
Nonvested stock outstanding, beginning balance (in usd per shares) | $ / shares | $ 1.09 |
Granted (in usd per shares) | $ / shares | 0.38 |
Vested (in usd per shares) | $ / shares | 1.18 |
Forfeited (in usd per shares) | $ / shares | 1.21 |
Nonvested stock outstanding, ending balance (in usd per shares) | $ / shares | $ 0.38 |
INCOME TAXES - Components of Lo
INCOME TAXES - Components of Loss from Continuing Operations before Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||||
U.S. | $ (5,189) | $ (9,590) | ||
Foreign | 7,321 | 6,592 | ||
Income (loss) from continuing operations before income taxes | $ 2,132 | $ (2,998) | $ 2,132 | $ (2,998) |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax Expense from Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Current provision: | ||
Federal | $ 0 | $ 0 |
State | 429 | 574 |
Foreign | 1,918 | 1,033 |
Current provision | 2,347 | 1,607 |
Deferred provision: | ||
Federal | 8,849 | 6,102 |
State | 76 | 1,032 |
Foreign | 116 | 96 |
Deferred provision | 9,041 | 7,230 |
Total tax provision | $ 11,388 | $ 8,837 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Income Taxes [Line Items] | ||
Net deferred tax assets | $ 3,184 | $ 38,019 |
Deferred tax liability | 931 | |
Change in valuation allowance | $ 28,600 | 3,600 |
Ownership percentage | 5% | |
Stockholder owning ownership on corporation's securities rolling period | 3 years | |
Deferred employer-paid portion of social security taxes | $ 300 | |
Unrecognized tax benefits, including interest, related to federal, state and foreign taxes | 800 | 2,500 |
Expected any unrecognized tax benefits to reverse in the next twelve months | 200 | |
Increase (decrease) in liabilities for interest expense related to uncertain tax positions | 100 | |
Federal | ||
Income Taxes [Line Items] | ||
Operating loss carryforwards | 2,200,000 | |
Federal | Expiration Period From July 31,2023 Through July 31, 2038 | ||
Income Taxes [Line Items] | ||
Operating loss carryforwards | 2,020,000 | |
Federal | Indefinite Carryforward Period | ||
Income Taxes [Line Items] | ||
Operating loss carryforwards | 137,800 | |
State | ||
Income Taxes [Line Items] | ||
Operating loss carryforwards | 153,700 | |
Foreign | ||
Income Taxes [Line Items] | ||
Operating loss carryforwards | 62,600 | |
Foreign net operating loss carryforward with indefinite period | 59,700 | |
Federal and State | ||
Income Taxes [Line Items] | ||
Net capital loss carryforwards | 34,200 | |
Other Assets | ||
Income Taxes [Line Items] | ||
Net deferred tax assets | 100 | 200 |
Other Long -term Liabilities | ||
Income Taxes [Line Items] | ||
Deferred tax liability | $ 100 | $ 1,200 |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Deferred tax assets: | ||
Accruals and reserves | $ 4,295 | $ 18,104 |
Tax basis in excess of financial basis for intangible and fixed assets | 901 | 181 |
Lease liability | 2,288 | 9,544 |
Interest expense disallowance | 2,357 | 7,764 |
Credit carry forwards | 25 | 28 |
Net operating loss and capital loss carry forwards | 478,530 | 459,008 |
Total gross deferred tax assets | 488,396 | 494,629 |
Less: valuation allowance | (485,212) | (456,610) |
Net deferred tax assets | 3,184 | 38,019 |
Deferred tax liabilities: | ||
Financial basis in excess of tax basis for intangible and fixed assets | (69) | (28,593) |
Right of use asset | 2,154 | 9,015 |
Convertible debt | (917) | (1,342) |
Total gross deferred tax liabilities | (3,140) | (38,950) |
Net deferred tax assets | $ 44 | |
Net deferred tax liabilities | $ (931) |
INCOME TAXES - Difference of In
INCOME TAXES - Difference of Income Tax Expense Attributable to Income from Continuing Operations and Expense Computed using U.S. Federal Income Tax (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" income tax expense (benefit) | $ 448 | $ (630) |
Increase (decrease) in income tax expense resulting from: | ||
Change in valuation allowance | 25,737 | 4,085 |
Foreign tax rate differential | 56 | (33) |
Goodwill impairment | 0 | 5,388 |
Nondeductible expenses | 159 | 126 |
Foreign withholding taxes | 134 | (1,310) |
Foreign other adjustments | 951 | 347 |
GILTI | 4,775 | 0 |
Addition of uncertain tax position reserves | 58 | (74) |
Worthless stock deduction | (20,455) | 0 |
State income taxes, net of federal benefit | (1,042) | 317 |
Deferred true-up | 751 | 0 |
Other | (184) | 621 |
Total tax provision | $ 11,388 | $ 8,837 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Beginning and Ending Balances of Total Amounts of Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance as of beginning of year | $ 2,140 | $ 2,460 |
Additions for current year tax positions | 0 | 52 |
Currency translation | (4) | (3) |
Reductions for lapses in statute of limitations | (67) | (369) |
Reductions for member leaving consolidated group | (1,498) | 0 |
Balance as of end of year | $ 571 | $ 2,140 |
LOSS PER SHARE - Reconciliation
LOSS PER SHARE - Reconciliation of Loss Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (10,968) | $ (44,391) |
Less: Preferred dividends on redeemable preferred stock | (2,129) | (2,129) |
Net loss attributable to common stockholders | (13,097) | (46,520) |
Continuing operations, net of tax | (11,385) | (13,964) |
Discontinued operations, net of tax | $ (1,712) | $ (32,556) |
Basic loss per share (in shares) | 59,964 | 62,142 |
Diluted loss per share (in shares) | 59,964 | 62,142 |
Continuing operations (in usd per share) | $ (0.19) | $ (0.23) |
Discontinued operations (in usd per share) | (0.03) | (0.52) |
Diluted net loss per share attributable to common stockholders (in usd per share) | (0.22) | (0.75) |
Basic net loss per share attributable to common stockholders (in usd per share) | $ (0.22) | $ (0.75) |
LOSS PER SHARE - Additional Inf
LOSS PER SHARE - Additional Information (Detail) - shares shares in Millions | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Continuing operations, net of tax | ||
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||
Common stock equivalent shares excluded from the denominator in the calculation of diluted loss per share (in shares) | 17.9 | 17.9 |
Net loss attributable to common stockholders: | ||
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||
Common stock equivalent shares excluded from the denominator in the calculation of diluted loss per share (in shares) | 6.3 | 6.3 |
Net loss attributable to common stockholders: | Stock Options, Restricted Stock, and Redeemable Preferred Stock | ||
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||
Common stock equivalent shares excluded from the denominator in the calculation of diluted loss per share (in shares) | 24.2 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME - Accumulated Other Comprehensive Income, Net of Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | $ 6,212 | $ 48,818 |
Foreign currency translation adjustment | (3,699) | 4,737 |
Pension liability adjustments | 677 | (1,418) |
Other comprehensive (loss) income | (3,022) | 3,319 |
Balance | (9,206) | 6,212 |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | 7,162 | 3,843 |
Other comprehensive (loss) income | (3,022) | 3,319 |
Balance | 4,140 | 7,162 |
Foreign currency items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | 9,762 | 5,025 |
Foreign currency translation adjustment | (3,699) | 4,737 |
Pension liability adjustments | 0 | 0 |
Other comprehensive (loss) income | (3,699) | 4,737 |
Balance | 6,063 | 9,762 |
Pension items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | (2,600) | (1,182) |
Foreign currency translation adjustment | 0 | 0 |
Pension liability adjustments | 677 | (1,418) |
Other comprehensive (loss) income | 677 | (1,418) |
Balance | $ (1,923) | $ (2,600) |
STATEMENT OF CASH FLOWS SUPPL_3
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION - Reconciliation of Cash (Details) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2020 |
Supplemental Cash Flow Elements [Abstract] | |||
Cash and cash equivalents | $ 53,142 | $ 58,117 | |
Funds held for clients | 4,903 | 8,212 | |
Cash, cash equivalents and restricted cash | $ 58,045 | $ 66,329 | $ 77,072 |
STATEMENT OF CASH FLOWS SUPPL_4
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION - Cash Used for Operating Activities Reflect Cash Payments for Interest and Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 1,237 | $ 1,262 |
Cash paid for income taxes | $ 2,364 | $ 3,241 |
STATEMENT OF CASH FLOWS SUPPL_5
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | ||
Issuance of nonvested common stock ( in shares) | 0.5 | 0.4 |
Issuance of nonvested common stock, value | $ 0.7 | $ 0.6 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 15, 2022 USD ($) | Dec. 15, 2017 USD ($) d vote $ / shares shares | Mar. 12, 2013 USD ($) $ / shares shares | Jul. 31, 2022 USD ($) $ / shares shares | Jul. 31, 2021 USD ($) $ / shares shares | |
Equity [Line Items] | |||||
Preferred stock, shares issued (in shares) | shares | 0 | 0 | |||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 | |||
Price per share (in usd per share) | $ 4 | ||||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |||
Percentage of declared dividends | 100% | ||||
Number of votes per share | vote | 1 | ||||
Issuance of common stock (in shares) | shares | 7,500,000 | ||||
Proceeds from issuance of common stock, gross | $ | $ 30,000 | ||||
Common stock issuance, transaction cost | $ | 2,300 | ||||
Net proceeds from issuance of common stock | $ | $ 27,700 | $ 0 | $ 4 | ||
Issuance of warrants to acquire additional shares (in shares) | shares | 2,000,000 | ||||
Issuance of warrants to acquire additional shares, exercise price (in usd per share) | $ 5 | ||||
Warrants expiration term | 5 years | ||||
Repurchase Agreements | Steel Holdings | Warrant | |||||
Equity [Line Items] | |||||
Repurchase price of warrant (in usd per share) | $ 100 | ||||
Series C Convertible Preferred Stock | |||||
Equity [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | 0.01 | ||||
Convertible preferred stock conversion price per share (in usd per share) | $ 1.96 | ||||
Preferred stock, dividend rate, percentage | 6% | ||||
Percentage threshold closing sale price of common stock higher than conversion price | 170% | ||||
Trading days | d | 5 | ||||
Series C Convertible Preferred Stock | Subsequent Event | |||||
Equity [Line Items] | |||||
Stock redeemed, value | $ | $ 35,200 | ||||
Series C Convertible Preferred Stock | Purchase Agreement | SPHG Holdings | |||||
Equity [Line Items] | |||||
Preferred stock, shares issued (in shares) | shares | 35,000 | ||||
Preferred stock, par value (in usd per share) | $ 0.01 | ||||
Price per share (in usd per share) | $ 1,000 | ||||
Proceeds from issuance of preferred stock | $ | $ 35,000 | ||||
Percentage of stated value | 100% |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy (Detail) - Fair Value, Measurements, Recurring - Money market funds - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 31,756 | $ 37,202 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 31,756 | 37,202 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) $ in Millions | 12 Months Ended |
Jul. 31, 2021 USD ($) | |
Fair Value Disclosures [Abstract] | |
Non-cash lease expense | $ (25.7) |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Detail) | 12 Months Ended |
Jul. 31, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
SEGMENT INFORMATION - Summarize
SEGMENT INFORMATION - Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 203,272 | $ 226,256 | $ 203,272 | $ 226,256 |
Operating (loss) income | 1,163 | (1,570) | 1,163 | (1,570) |
Total other income (expense) | 969 | (1,428) | 969 | (1,428) |
Income (loss) from continuing operations before income taxes | 2,132 | (2,998) | $ 2,132 | $ (2,998) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating (loss) income | 11,318 | 6,827 | ||
Operating Segments | Supply Chain | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 203,272 | 226,256 | ||
Operating (loss) income | 11,318 | 6,827 | ||
Corporate-level activity | ||||
Segment Reporting Information [Line Items] | ||||
Operating (loss) income | $ (10,155) | $ (8,397) |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets of Continuing Operations (Detail) - USD ($) $ in Thousands | Jul. 31, 2022 | Jul. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 137,749 | $ 676,381 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 137,749 | 145,438 |
Corporate-level activity | ||
Segment Reporting Information [Line Items] | ||
Total assets | 36,112 | 44,278 |
Supply Chain | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 101,637 | $ 101,160 |
SEGMENT INFORMATION - Summari_2
SEGMENT INFORMATION - Summarized Financial Information of Capital Expenditures, Depreciation, and Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2022 | Jul. 31, 2021 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 1,485 | $ 1,217 |
Depreciation | 2,220 | 3,403 |
Operating Segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 1,485 | 1,218 |
Depreciation | $ 2,220 | $ 3,403 |
SEGMENT INFORMATION - Summari_3
SEGMENT INFORMATION - Summarized Financial Information of Net Revenue by Geographical Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2022 | Jul. 31, 2021 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 203,272 | $ 226,256 | $ 203,272 | $ 226,256 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 50,426 | 60,743 | ||
Mainland China | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 72,210 | 71,307 | ||
Netherlands | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 24,483 | 25,384 | ||
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 56,153 | $ 68,822 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2022 | Jul. 31, 2021 | Feb. 28, 2019 | |
Related Party Transaction [Line Items] | |||
Total debt, net | $ 10,968 | $ 9,147 | |
Preferred dividends paid | $ 2,129 | 2,129 | |
Steel Holdings | 5.25% Convertible Senior Notes | SPHG Holdings, Steel Holdings, HNH And SPL | |||
Related Party Transaction [Line Items] | |||
Ownership percentage in capital stock | 50% | ||
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||
Related Party Transaction [Line Items] | |||
Debt instrument stated percentage | 7.50% | ||
Total debt, net | $ 11,047 | 9,343 | |
Debt instrument, interest expense | 2,840 | 2,426 | |
SPHG Holdings | Net loss attributable to common stockholders: | |||
Related Party Transaction [Line Items] | |||
Debt instrument stated percentage | 7.50% | ||
Purchase Agreement | SPHG Holdings | Series C Convertible Preferred Stock | |||
Related Party Transaction [Line Items] | |||
Preferred dividends paid | 2,100 | 2,100 | |
SPHG Holdings | |||
Related Party Transaction [Line Items] | |||
Convertible notes payable | 14,900 | 14,900 | |
SPHG Holdings | Net loss attributable to common stockholders: | |||
Related Party Transaction [Line Items] | |||
Convertible notes payable, current | $ 14,900 | ||
Steel Services Ltd | Management Services Agreement | |||
Related Party Transaction [Line Items] | |||
Total expenses incurred related to Management Services Agreement and Transfer Agreement | 3,100 | 4,300 | |
SP Corporate Services Llc and Steel Services Limited | Management Services Agreement | |||
Related Party Transaction [Line Items] | |||
Amount due to related parties | $ 1,000 | $ 900 |