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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Apr. 30, 2018	May 31, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	STCN
Entity Registrant Name	STEEL CONNECT, INC.
Entity Central Index Key	0000914712
Current Fiscal Year End Date	--07-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		60,739,100

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
ASSETS
Cash and cash equivalents	$ 99,723	$ 110,670
Trading securities	0	11,898
Accounts receivable, trade, net of allowance for doubtful accounts of $274 and $616 at April 30, 2018 and July 31, 2017, respectively	99,682	81,450
Inventories, net	46,184	34,369
Funds held for clients	10,781	13,454
Prepaid expenses and other current assets	13,850	6,005
Total current assets	270,220	257,846
Property and equipment, net	103,775	18,555
Goodwill	255,361
Other intangible assets, net	198,848
Other assets	14,829	4,897
Total assets	843,033	281,298
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Accounts payable	78,947	71,476
Accrued restructuring	140	186
Accrued expenses	85,780	37,898
Funds held for clients	10,781	13,454
Current portion of long-term debt	5,727
Other current liabilities	48,341	26,141
Notes payable	63,274
Total current liabilities	292,990	149,155
Notes payable	63,274	59,758
Long-term debt, excluding current portion	384,543
Other long-term liabilities	11,667	9,414
Total long-term liabilities	396,210	69,172
Total liabilities	689,200	218,327
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at April 30, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017 (Note 12)	35,175
Stockholders' equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at April 30, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at April 30, 2018 and at July 31, 2017
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,739,100 issued and outstanding shares at April 30, 2018; 55,555,973 issued and outstanding shares at July 31, 2017	608	556
Additional paid-in capital	7,466,706	7,457,051
Accumulated deficit	(7,355,500)	(7,398,949)
Accumulated other comprehensive income	6,844	4,313
Total stockholders' equity	118,658	62,971
Total liabilities, contingently redeemable preferred stock and stockholders' equity	$ 843,033	$ 281,298

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Accounts receivable, trade, allowance for doubtful accounts	$ 274	$ 616
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares Authorized	4,965,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares Authorized	1,400,000,000	1,400,000,000
Common stock, shares issued	60,739,100	55,555,973
Common stock, shares outstanding	60,739,100	55,555,973
Contingent Convertible Preferred Stock
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares Authorized	35,000	0
Preferred stock, shares issued	35,000	0
Preferred stock, shares outstanding	35,000	0

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Net revenue	$ 188,922	$ 97,948	$ 443,022	$ 336,843
Cost of revenue	149,917	89,406	379,120	307,770
Gross profit	39,005	8,542	63,902	29,073
Operating expenses
Selling, general and administrative	29,584	14,034	72,558	39,561
Amortization of intangible assets	7,964		12,071
Gain on sale of property			(12,692)
Restructuring, net	77	(249)	118	1,901
Total operating expenses	37,625	13,785	72,055	41,462
Operating income (loss)	1,380	(5,243)	(8,153)	(12,389)
Other income (expense):
Interest income	174	96	430	276
Interest expense	(10,680)	(2,041)	(19,362)	(6,179)
Other gains (losses), net	(692)	2,708	(987)	3,239
Total other income (expense)	(11,198)	763	(19,919)	(2,664)
Loss before income taxes	(9,818)	(4,480)	(28,072)	(15,053)
Income tax expense (benefit)	715	819	(71,719)	2,591
Gains on investments in affiliates, net of tax	(200)	(232)	(601)	(1,128)
Net income (loss)	(10,333)	(5,067)	44,248	(16,516)
Less: Preferred dividends on redeemable preferred stock	(529)		(788)
Net income (loss) attributable to common stockholders	$ (10,862)	$ (5,067)	$ 43,460	$ (16,516)
Basic net earning (loss) per share attributable to common stockholders:	$ (0.18)	$ (0.09)	$ 0.75	$ (0.30)
Diluted net earning (loss) per share attributable to common stockholders:	$ (0.18)	$ (0.09)	$ 0.63	$ (0.30)
Weighted average common shares used in:
Basic earnings per share	60,076	55,257	58,281	55,099
Diluted earnings per share	60,076	55,257	78,934	55,099

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Net income (loss)	$ (10,333)	$ (5,067)	$ 44,248	$ (16,516)
Other comprehensive loss:
Foreign currency translation adjustment	(1,411)	232	2,515	(1,771)
Net unrealized holding gain (loss) on securities, net of tax	(26)	40	(10)	40
Pension liability adjustments, net of tax		80	26	830
Other comprehensive gain (loss)	(1,437)	352	2,531	(901)
Comprehensive income (loss)	$ (11,770)	$ (4,715)	$ 46,779	$ (17,417)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017
Cash flows from operating activities:
Net income (loss)	$ 44,248	$ (16,516)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	11,388	5,967
Amortization of intangible assets	12,071
Amortization of deferred financing costs	748	422
Accretion of debt discount	3,230	2,913
Share-based compensation	9,657	526
Non-cash (gains) losses, net (including gain on sale of building)	(13,137)	(3,239)
Gains on investments in affiliates	(601)	(1,128)
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable, net	30,600	16,813
Inventories, net	16,350	4,889
Prepaid expenses and other current assets	4,156	356
Accounts payable, accrued restructuring and accrued expenses	(32,508)	(30,975)
Refundable and accrued income taxes, net	9,123	238
Deferred tax assets and liabilities	(75,775)
Other assets and liabilities	(13,882)	(1,623)
Net cash provided by (used in) operating activities	5,668	(21,357)
Cash flows from investing activities:
Payments to acquire business	(469,221)
Additions to property and equipment	(13,610)	(3,885)
Proceeds from the disposition of property and equipment	20,747
Proceeds from the sale of Trading Securities	13,775	7,998
Proceeds from investments in affiliates	601	1,128
Net cash provided by (used in) investing activities	(447,708)	5,241
Cash flows from financing activities:
Proceeds from long-term debt	393,000
Proceeds from issuance of preferred stock	35,000
Proceeds from revolving line of credit	6,000
Payment of long-term debt	(1,500)
Payment of deferred financing costs	(1,334)
Payment of preferred dividends	(612)
Purchase of the Company's Convertible Notes		(1,763)
Repayments on capital lease obligations	(178)	(171)
Proceeds from issuance of common stock	3	15
Net cash provided by (used in) financing activities	430,379	(1,919)
Net effect of exchange rate changes on cash and cash equivalents	714	(810)
Net decrease in cash and cash equivalents	(10,947)	(18,845)
Cash and cash equivalents at beginning of period	110,670	130,790
Cash and cash equivalents at end of period	$ 99,723	$ 111,945

NATURE OF OPERATIONS

9 Months Ended

Apr. 30, 2018

NATURE OF OPERATIONS

(1) NATURE OF OPERATIONS

Steel Connect, Inc. (“Steel Connect” or the” Company”) together with its consolidated subsidiaries, operates through its wholly owned subsidiaries, ModusLink Corporation and ModusLink PTS, Inc. (together “ModusLink”), and IWCO Direct Holdings, Inc. (“IWCO Direct” or “IWCO”). The Company was formerly known as ModusLink Global Solutions, Inc. until it changed its name to Steel Connect, Inc. effective February 27, 2018.

ModusLink is a leader in global supply chain business process management serving clients in markets such as consumer electronics, communications, computing, medical devices, software, and retail. The Company designs and executes critical elements in its clients’ global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. These benefits are delivered through a combination of industry expertise, innovative service solutions, and integrated operations, proven business processes, expansive global footprint and world-class technology. The Company also produces and licenses an entitlement management solution powered by its enterprise-class Poetic software, which offers a complete solution for activation, provisioning, entitlement subscription and data collection from physical goods (connected products) and digital products.

ModusLink has an integrated network of strategically located facilities with 20 sites operating in 21 languages in various countries, including numerous sites throughout North America, Europe and Asia. The Company previously operated under the names ModusLink Global Solutions, Inc., CMGI, Inc. and CMG Information Services, Inc. and was incorporated in Delaware in 1986.

IWCO Direct delivers highly-effective data-driven marketing solutions for its customers, which represent some of the largest and most respected brands in the world. Its full range of services includes strategy, creative and production for multichannel marketing campaigns, along with one of the industry’s most sophisticated postal logistics programs for direct mail. Through its Mail-Gard^® product, IWCO Direct also offers business continuity and disaster recovery services to protect against unexpected business interruptions, along with providing print and mail outsourcing services. IWCO Direct is the largest direct mail production provider in North America, with the largest platform of continuous digital print technology and a growing direct marketing agency service. Their solutions enable customers to improve Customer Lifetime Value (CLV), which in turn, has led to and longer customer relationships.

IWCO has administrative offices in Chanhassen, MN. and has three facilities in Chanhassen, MN., one facility in Little Falls, MN., one facility in Warminster, PA. and two facilities in Hamburg PA.

Historically, the Company has financed its operations and met its capital requirements primarily through funds generated from operations, the sale of our securities and borrowings from lending institutions. As of April 30, 2018, the Company had available cash and cash equivalents of $99.7 million. The Company believes it will generate sufficient cash to meet its debt covenants of its Credit Facility, repay or restructure the Convertible Senior Notes, and be able to obtain cash through its current PNC Bank. Additionally, the Company expects to preserve cash through a tax sharing agreement with IWCO. The Company believes that it has adequate cash and available resources to meet its obligations for one year.

CORRECTION OF PRIOR PERIOD FINANCIAL STATEMENTS

9 Months Ended

Apr. 30, 2018

CORRECTION OF PRIOR PERIOD FINANCIAL STATEMENTS

2) CORRECTION OF PRIOR PERIOD FINANCIAL STATEMENTS

In connection with the preparation of our condensed consolidated financial statements for the three months ended April 30, 2018, and our remediation efforts related to the material weakness in our internal control over financial reporting related to our controls over non-routine transactions, we identified errors as of January 31, 2018 in the determination of deferred tax liabilities in connection with the acquisition of IWCO Direct and in our revenue recognition for our Direct Marketing segment. Based in part upon the estimates of self-insurance and fixed assets, we overstated a tax benefit in our condensed consolidated statements of operations. The correction of this error requires an adjustment to the income tax benefit of $4.1 million as of January 31, 2018. Additionally, we identified bill and hold revenue recognition practices for a portion of certain Direct Mail revenues. We evaluated the error and determined that the related impact was not material to our results of operations or financial position for any prior annual or interim period, but that correcting the $4.1 million cumulative impact of the error would be material to our results of operations for the three months ended April 30, 2018. Although deemed immaterial, we also corrected the recognition of the Direct Mail revenue recognized before the performance obligation to the customer had been satisfied for a portion of certain Direct Mail revenues. Accordingly, we have corrected the condensed consolidated balance sheets as of January 31, 2018 and the condensed consolidated statements of operations for the three and six months ended January 31, 2018. Additionally, we have restated the preliminary fair value of acquired assets and liabilities assumed at the date of acquisition. These errors had no impact on the three and six months ended January 31, 2017. The impact to the condensed consolidated balance sheets, and the consolidated statements of income for the three and six months ended January 31, 2018 is as follows (in thousands, except per share amounts):


*Consolidated Balance Sheets*	January 31, 2018
	As Previously Reported			Adjustments			As Revised
Inventories, net	$	45,211		$	4,002		$	49,213
Goodwill		259,085			(3,724	)		255,361
Total assets		870,110			278			870,388
Other current liabilities		43,561			23,549			67,110
Other long-term liabilities		30,693			(18,000	)		12,693
Total liabilities		700,883			5,549			706,432
Accumulated deficit		(7,339,367	)		(5,271	)		(7,344,638	)
Total stockholders’ equity	$	133,968		$	(5,271	)	$	128,697


*Consolidated Statements of Operations*	Three Months Ended January 31, 2018									Six Months Ended January 31, 2018
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Net revenue	$	151,119		$	459		$	151,578		$	253,641		$	459		$	254,100
Cost of revenue		134,169			1,586			135,755			227,617			1,586			229,203
Gross profit		16,950			(1,127	)		15,823			26,024			(1,127	)		24,897
Income tax expense (benefit)		(77,664	)		4,143			(73,521	)		(76,577	)		4,143			(72,434	)
Net income (loss)	$	65,089		$	(5,271	)	$	59,818		$	59,852		$	(5,271	)	$	54,581
Basic net earning (loss) per share attributable to common stockholders:	$	1.11					$	1.02		$	1.05					$	0.96
Diluated net earning (loss) per share attributable to common stockholders:	$	0.85					$	0.78		$	0.87					$	0.80

The impact to the preliminary fair value of acquired assets and liabilities assumed at the date of acquisition is noted in Note 9 to these Condensed Consolidated Financial Statements.

BASIS OF PRESENTATION

9 Months Ended

Apr. 30, 2018

BASIS OF PRESENTATION

(3) BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2017, which are contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on October 16, 2017. The results for the three and nine months ended April 30, 2018 are not necessarily indicative of the results to be expected for the full fiscal year. The July 31, 2017 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

All significant intercompany transactions and balances have been eliminated in consolidation.

The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the period ended April 30, 2018, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed.

RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Apr. 30, 2018

RECENT ACCOUNTING PRONOUNCEMENTS

(4) RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

The standard allows two methods of adoption: (i) retrospectively to each prior period presented (“full retrospective method”), or (ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). The Company will adopt the new standard using the modified retrospective method at the beginning of its first quarter of fiscal 2019.

The Company and its outside consultants have initiated the process of evaluating the potential effects on the consolidated financial statements and establishing new accounting policies and internal controls necessary to support the requirements of the new standard. This preliminary assessment is based on the types and number of revenue arrangements currently in place. The exact impact of the new standard will be dependent on facts and circumstances at adoption.

The Company does not expect the new standard to have a material impact on its revenue recognition practices on an ongoing basis. Revenue from the sale of physical and digital supply chain management services to the Company’s clients will continue to be recognized over time as the services are performed. The new standard will primarily impact the Company’s revenue recognition with respect to certain transactions involving the sale of software products by the ModusLink’s e-Business operations and IWCO’s marketing solutions offerings. Currently, revenue from the sale of perpetual licenses sold in multiple element arrangements is recognized ratably over the initial maintenance term, due to lack of Vendor Specific Objective Evidence (VSOE) for certain undelivered elements. The new standard will accelerate the recognition of revenue from the sale of perpetual licenses as the Company will allocate consideration between each performance obligation based on each item’s relative standalone selling price. Revenue recognized related to IWCO’s marketing solutions offerings, which typically consist of a single combined performance obligation, will be recognized over time as the services are performed, rather than the current practice of recognizing revenue at a point in time when the services are complete. However, given the typical contract terms, the Company does not expect this change to be material.

In addition, the new standard will require incremental contract acquisition costs (such as certain sales commissions) for customer contracts to be capitalized and amortized over the period of contract performance or expected client program life, if renewals are expected and the renewal commission is not commensurate with the initial commission. Currently, these costs are expensed as incurred. The Company has identified certain commissions programs where it expects that incremental costs will be capitalized and recognized over a period of greater than one year.

The Company will be required to record cumulative effect adjustments to retained earnings (net of tax) upon adopting the new standard as of the fiscal year commencing August 1, 2018. The most significant of these adjustments will be to establish an asset and increase retained earnings related to the requirement to capitalize incremental contract acquisition costs for customer contracts. An adjustment will also be recorded to reduce deferred revenue and increase retained earnings at the date of adoption to reflect revenue that would have been already recognized under the new standard related to an existing software arrangements where the pattern and timing of revenue recognition will change, as well as creating a contract asset for unbilled revenue for services that are being performed over time, but where the customer is not billed until completion of the work. The Company expects to complete its assessment during the final quarter of fiscal year 2019.

In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements—Going Concern (Subtopic 205-40), which amends the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. The Company adopted this guidance as of the first quarter of fiscal year 2018. Its adoption did not have an effect on the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330), which provides guidance related to inventory measurement. The new standard requires entities to measure inventory at the lower of cost and net realizable value thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The Company adopted this guidance beginning the first quarter of fiscal year 2018. The adoption of the guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This guidance allowed for adoption on either a prospective or retrospective basis. The Company had elected to early adopt this guidance in fiscal year 2017 on a prospective basis and, as a result, prior consolidated balance sheets were not retrospectively adjusted.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. This ASU will be effective for the Company beginning in the first quarter of fiscal year 2020. The Company is currently evaluating the effect the guidance will have on the Company’s financial statement disclosures, results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments in this update relate to when another party, along with the Company, are involved in providing a good or service to a customer and are intended to improve the operability and understandability of the implementation guidance on principal versus agent. Revenue recognition guidance requires companies to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the Company is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the Company is an agent). This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company and its outside consultants have initiated the process of evaluating the potential effects on the consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company retrospectively adopted this guidance during the first quarter of fiscal year 2018 by utilizing the modified retrospective transition method. The adoption of this ASU did not materially impact the Company’s consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances, which is similar to what is required today for SEC Registrants. This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently in the process of assessing what impact this new standard may have on its consolidated financial statements but does not believe that implementing this standard will have a significant impact on the Company’s current presentation and disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715), which requires that the service cost component of net periodic pension and postretirement benefit cost be presented in the same line item as other employee compensation costs, while the other components be presented separately as non-operating income (expense). This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently in the process of assessing what impact this new standard may have on its consolidated financial statements.

INVENTORIES

9 Months Ended

Apr. 30, 2018

INVENTORIES

(5) INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost is determined by both the moving average and the first-in, first-out methods. Materials that the Company typically procures on behalf of its clients that are included in inventory include materials such as compact discs, printed materials, manuals, labels, hardware accessories, hard disk drives, phone chassis, consumer packaging, shipping boxes and labels, power cords and cables for client-owned electronic devices.

Inventories, net consisted of the following:


	April 30, 2018		July 31, 2017
	(In thousands)
Raw materials	$	21,760	$	24,129
Work-in-process		15,259		713
Finished goods		9,165		9,527

	$	46,184	$	34,369

The Company continuously monitors inventory balances and records inventory provisions for any excess of the cost of the inventory over its estimated net realizable value. The Company also monitors inventory balances for obsolescence and excess quantities as compared to projected demands. The Company’s inventory methodology is based on assumptions about average shelf life of inventory, forecasted volumes, forecasted selling prices, contractual provisions with its clients, write-down history of inventory and market conditions. While such assumptions may change from period to period, in determining the net realizable value of its inventories, the Company uses the best information available as of the balance sheet date. If actual market conditions are less favorable than those projected, or the Company experiences a higher incidence of inventory obsolescence because of rapidly changing technology and client requirements, additional inventory provisions may be required. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts. Accordingly, if inventory previously written down to its net realizable value is subsequently sold, gross profit margins may be favorably impacted.

IWCO’s inventory consists primarily of raw materials (paper) used to produce direct mail packages and work-in-process. Finished goods are generally not a significant element of the inventory as they are generally mailed after the production and sorting process. With the acquisition of IWCO the Company recorded a fair value “step-up” to work-in-process inventory of $7.0 million, which was recognized as a non-cash charge to cost of revenues during the nine months ended April 30, 2018.

INVESTMENTS

9 Months Ended

Apr. 30, 2018

INVESTMENTS

(6) INVESTMENTS

Trading securities

During the nine months ended April 30, 2018, the Company received $13.8 million in proceeds associated with the sale of publicly traded securities (“Trading Securities”), which included a cash gain of $4.6 million. During the nine months ended April 30, 2018, the Company recognized $2.7 million in net non-cash net losses associated with its Trading Securities.

During the three months ended April 30, 2017, the Company received $2.2 million in proceeds associated with the sale of publicly traded securities (“Trading Securities”), which included a $0.4 million cash gain. During the three months ended April 30, 2017, the Company recognized $2.2 million in net non-cash net gains associated with its Trading Securities. During the nine months ended April 30, 2017, the Company received $8.0 million in proceeds associated with the sale of Trading Securities, which included a $0.9 million cash gain. During the nine months ended April 30, 2017, the Company recognized $1.7 million in net non-cash net gains associated with its Trading Securities. These gains and losses were recorded as a component of Other gains (losses), net on the Statements of Operations.

As of April 30, 2018, the Company did not have any investments in Trading Securities. As of July 31, 2017, the Company had $11.9 million in investments in Trading Securities.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

9 Months Ended

Apr. 30, 2018

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following table reflects the components of “Accrued expenses” and “Other current liabilities”:


	April 30, 2018		July 31, 2017
	(In thousands)
Accrued taxes	$	30,268	$	2,272
Accrued compensation		21,254		10,678
Accrued interest		992		1,366
Accrued audit, tax and legal		2,814		2,759
Accrued contract labor		1,612		1,632
Accrued worker’s compensation		6,690		—
Accrued other		22,150		19,191

	$	85,780	$	37,898


	April 30, 2018		July 31, 2017
	(In thousands)
Accrued pricing liabilities	$	18,882	$	18,882
Line of credit liability		6,000		—
Customer postage deposits		12,357		—
Other		11,102		7,259

	$	48,341	$	26,141

As of April 30, 2018 and July 31, 2017, the Company had accrued pricing liabilities of approximately $18.9 million for both periods. As previously reported by the Company, several adjustments were made to its historic financial statements for periods ending on or before April 30, 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 (collectively referred to as “pricing adjustments”), 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 affected. A corresponding liability for the same amount was recorded in that period (referred to as accrued pricing liabilities). The Company believes that it may not ultimately be required to pay all of the accrued pricing liabilities, due in part to the nature of the interactions with its clients. The remaining accrued pricing liabilities at April 30, 2018 will be derecognized when there is sufficient information for the Company to conclude that such liabilities have been extinguished, which may occur through payment, legal release, or other legal or factual determination.

In connection with the acquisition of IWCO the Company performed an analysis of the liability associated with IWCO’s sales tax. Based on the information currently available, a reserve of $18.0 million was recorded on IWCO’s opening balance sheet. This reserve is subject to review during the measurement period and may be adjusted accordingly. As of April 30, 2018, accrued expenses includes sales tax liabilities of approximately $18.0 million.

RESTRUCTURING, NET

9 Months Ended

Apr. 30, 2018

RESTRUCTURING, NET

(8) RESTRUCTURING, NET

Restructuring and other costs for the three and nine months ended April 30, 2018, primarily included continuing charges for personnel reductions and facility consolidations in an effort to streamline operations across our global supply chain operations. It is expected that the payments of employee-related charges will be substantially completed during the fiscal year ended July 31, 2018. The remaining contractual obligations primarily relate to facility lease obligations for vacant space resulting from the previous restructuring activities of the Company. The Company anticipates that these contractual obligations will be substantially fulfilled by the end of December 2018.

The $0.1 million restructuring charge recorded during the nine months ended April 30, 2018 primarily consisted of $0.1 million of employee-related costs in the Americas. The $1.9 million restructuring charge recorded during the nine months ended April 30, 2017 primarily consisted of $0.2 million, $0.7 million, $0.5 million and $0.1 million of employee-related costs in the Americas, Asia, Europe and e-Business, respectively, related to the workforce reduction of 78 employees in our global supply chain. Of this amount, $0.5 million related to contractual obligations.

The following tables summarize the activities related to the restructuring accrual by expense category and by reportable segment for the nine months ended April 30, 2018:


	Employee Related Expenses			Contractual Obligations			Total
	(In thousands)
Accrued restructuring balance at July 31, 2017	$	100		$	86		$	186
Restructuring charges		93			22			115
Cash paid		(48	)		(108	)		(156	)
Non-cash adjustments		(8	)		—			(8	)

Accrued restructuring balance at April 30, 2018	$	140		$	—		$	140


	Americas			Asia			Europe			Direct marketing		e-Business			Consolidated Total
	(In thousands)
Accrued restructuring balance at July 31, 2017	$	51		$	—		$	23		$	—	$	112		$	186
Restructuring charges		—			—			—			—		3			3
Restructuring adjustments		101			1			2			—		11			115
Cash paid		(48	)		—			—			—		(108	)		(156	)
Non-cash adjustments		(11	)		(1	)		(25	)		—		29			(8	)

Accrued restructuring balance at April 30, 2018	$	93		$	—		$	—		$	—	$	47		$	140

The net restructuring charges for the three and nine months ended April 30, 2018 and 2017 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities:


	Three Months Ended April 30,					Nine Months Ended April 30,
	2018		2017			2018		2017
	(In thousands)
Cost of revenue	$	—	$	(170	)	$	8	$	565
Selling, general and administrative		77		(79	)		110		1,336

	$	77	$	(249	)	$	118	$	1,901

ACQUISITION OF IWCO DIRECT

9 Months Ended

Apr. 30, 2018

ACQUISITION OF IWCO DIRECT

(9) ACQUISITION OF IWCO DIRECT

On December 15, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, MLGS Merger Company, Inc., a Delaware corporation and newly formed wholly-owned subsidiary of the Company (“MLGS”), IWCO Direct Holdings, Inc. a Delaware corporation (“IWCO”), CSC Shareholder Services, LLC, a Delaware limited liability company (solely in its capacity as representative), and the stockholders of IWCO. Pursuant to the Merger Agreement, MLGS was merged with and into IWCO, with IWCO surviving as a wholly-owned subsidiary of the Company (the “IWCO Acquisition”). The Company acquired IWCO as a part of the Company’s overall acquisition strategy to acquire profitable companies to utilize the Company’s tax net operating losses.

The Company acquired IWCO for total consideration of approximately $469.2 million, net of purchase price adjustments. The Company financed the IWCO Acquisition through a combination of cash on hand and proceeds from a $393.0 million term loan made under the below described financing agreement with Cerberus Business Finance, LLC, net of $2.5 million received from escrow for working capital claims. The transaction price included one-time transaction incentive awards of $3.5 million paid to executives upon closing that were related to pre-existing management arrangements and were included as an element of the purchase price. In connection with the acquisition, the Company paid transaction costs of $1.5 million at acquisition which was recorded as a component of selling, general and administrative expense. Goodwill related to the acquisition of IWCO is not deductible for tax purposes.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition, and the adjustments required due to the correction of the error discussed in Note 2 to these Condensed Consolidated Financial Statements:


	As Previously Reported			Adjustments			As Revised
	(In thousands)
Accounts receivable	$	47,841		$	—		$	47,841
Inventory		27,165			5,590			32,755
Other current assets		7,427			—			7,427
Property and equipment		87,976			—			87,976
Intangible assets		210,920			—			210,920
Goodwill		259,085			(3,724	)		255,361
Other assets		3,040			—			3,040
Accounts payable		(31,069	)		—			(31,069	)
Accrued liabilities and other current liabilities		(35,790	)		(24,009	)		(59,799	)
Customer deposits		(7,829	)		—			(7,829	)
Deferred income taxes		(79,918	)		4,143			(75,775	)
Other liabilities		(19,627	)		18,000			(1,627	)

Total consideration	$	469,221		$	—		$	469,221

Acquired intangible assets include trademarks and tradenames valued at $20.5 million and customer relationships of $190.4 million. The preliminary fair value estimate of trademarks and tradenames was prepared utilizing a relief from royalties method of valuation, while the preliminary fair value estimate of customer relationships was prepared using a multi-period excess earnings method of valuation. The trademarks and tradenames intangible asset will be amortized on a straight line basis over a 3 year estimated useful life. The customer relationship intangible asset will be amortized on a double-declining basis over an estimated useful life of 15 years. The acquired property and equipment consist mainly of machinery and equipment. The fair value of the acquired property and equipment was estimated using the cost approach to value, and applying industry standard normal useful lives and inflationary indices. In the preliminary allocation of the purchase price, the Company recognized $255.4 million of goodwill which arose primarily from the synergies in its business and the assembled workforce of IWCO.

The following unaudited pro forma financial results are based on the Company’s historical consolidated financial statements and IWCO’s historical consolidated financial statements as adjusted to give effect to the Company’s acquisition of IWCO and related transactions. The unaudited pro forma financial information for the three and nine months ended April 30, 2018 give effect to these transactions as if they had occurred on August 1, 2016. The unaudited pro forma results presented do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of August 1, 2016, nor do they indicate the results of operations in future periods. Additionally, the unaudited pro forma results do not include the impact of possible business model changes, nor do they consider any potential impacts of current market conditions or revenues, reduction of expenses, asset dispositions, or other factors. The impact of these items could alter the following pro forma results.

The pro forma results were adjusted to reflect incremental depreciation and amortization based on preliminary fair value adjustments for the acquired property, plant and equipment, and intangible assets. A reduction to interest expense is also reflected in the pro forma results to reflect the more favorable terms obtained with the new Credit Facility as compared to the interest rate under the former facility carried by IWCO:


	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2018			2017			2018		2017
	(In thousands)						(In thousands)
Net revenue	$	187,369		$	204,716		$	620,377	$	671,695
Net income (loss)	$	(16,449	)	$	(11,660	)	$	43,339	$	(35,929	)

GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Apr. 30, 2018

GOODWILL AND INTANGIBLE ASSETS

(10) GOODWILL AND INTANGIBLE ASSETS

The Company conducts its goodwill impairment test on July 31 of each fiscal year. In addition, if and when events or circumstances change that could reduce the fair value of any of its reporting units below its carrying value, an interim test is performed. In making this assessment, the Company relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and marketplace data. The Company’s goodwill of $255.4 million as of April 30, 2018 relates to the Company’s Direct Marketing reporting unit. There were no indicators of impairment identified related to the Company’s Direct Marketing reporting unit during the three and nine months ended April 30, 2018.

Intangible assets, as of April 30, 2018, include trademarks and tradenames with a carrying balance of $17.9 million and customer relationships of $180.9 million. The trademarks and tradenames intangible asset are being amortized on a straight line basis over a 3 year estimated useful life. The customer relationship intangible asset are being amortized on a double-declining basis over an estimated useful life of 15 years. Intangible assets deemed to have finite lives are amortized over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to its future cash flows. Intangible assets are reviewed for impairment on an interim basis when certain events or circumstances exist. For amortizable intangible assets, impairment exists when the carrying amount of the intangible asset exceeds its fair value. At least annually, the remaining useful life is evaluated.

DEBT

9 Months Ended

Apr. 30, 2018

DEBT

(11) DEBT

5.25% Convertible Senior Notes Payable

On March 18, 2014, the Company entered into an indenture (the “Indenture”) with Wells Fargo Bank, National Association, as trustee, relating to the Company’s issuance of $100 million of 5.25% Convertible Senior Notes (the “Notes”). The Notes bear interest at the rate of 5.25% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2014. The Notes will mature on March 1, 2019, unless earlier repurchased by the Company or converted by the holder in accordance with their terms prior to such maturity date.

Holders of the Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business or the business day immediately preceding the maturity date. Each $1,000 of principal of the Notes will initially be convertible into 166.2593 shares of our common stock, which is equivalent to an initial conversion price of approximately $6.01 per share, subject to adjustment upon the occurrence of certain events, or, if the Company obtains the required consent from its stockholders, into shares of the Company’s common stock, cash or a combination of cash and shares of its common stock, at the Company’s election. If the Company has received stockholder approval, and it elects to settle conversions through the payment of cash or payment or delivery of a combination of cash and shares, the Company’s conversion obligation will be based on the volume weighted average prices (“VWAP”) of its common stock for each VWAP trading day in a 40 VWAP trading day observation period. The Notes and any of the shares of common stock issuable upon conversion have not been registered. As of April 30, 2018, the if-converted value of the Notes did not exceed the principal value of the Notes.

Holders will have the right to require the Company to repurchase their Notes, at a repurchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, upon the occurrence of certain fundamental changes, subject to certain conditions. No fundamental changes occurred during the nine months ended April 30, 2018.

The Company may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes. The Company will have the right to elect to cause the mandatory conversion of the Notes in whole, and not in part, at any time on or after March 6, 2017, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the Notes, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the notes.

The Company has valued the debt using similar nonconvertible debt as of the original issuance date of the Notes and bifurcated the conversion option associated with the Notes from the host debt instrument and recorded the conversion option of $28.1 million in stockholders’ equity prior to the allocation of debt issuance costs. The initial value of the equity component, which reflects the equity conversion feature, is equal to the initial debt discount. The resulting debt discount on the Notes is being accreted to interest expense at the effective interest rate over the estimated life of the Notes. The equity component is included in the additional paid-in-capital portion of stockholders’ equity on the Company’s consolidated balance sheet. In addition, the debt issuance costs of $3.4 million are allocated between the liability and equity components in proportion to the allocation of the proceeds. During the first quarter of fiscal year 2017, the Company adopted ASU No. 2015-03. As such, the issuance costs allocated to the liability component ($2.5 million) are capitalized as a reduction of the principal amount of the Notes payable on the Company’s balance sheet and amortized, using the effective-interest method, as additional interest expense over the term of the Notes. The issuance costs allocated to the equity component is recorded as a reduction to additional paid-in capital.

The fair value of the Company’s Notes payable, calculated as of the closing price of the traded securities, was $66.3 million and $63.9 million as of April 30, 2018 and July 31, 2017, respectively. This value does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates. As of April 30, 2018 and July 31, 2017, the net carrying value of the Notes was $63.3 million and $59.8 million, respectively.


	April 30, 2018			July 31, 2017
	(In thousands)
Carrying amount of equity component (net of allocated debt issuance costs)	$	26,961		$	26,961
Principal amount of Notes	$	67,625		$	67,625
Unamortized debt discount		(3,997	)		(7,227	)
Unamortized debt issuance costs		(354	)		(640	)

Net carrying amount	$	63,274		$	59,758

As of April 30, 2018, the remaining period over which the unamortized discount will be amortized is 10 months.


	Three Months Ended April 30,				Nine Months Ended April 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Interest expense related to contractual interest coupon	$	914	$	914	$	2,741	$	2,737
Interest expense related to accretion of the discount		1,113		973		3,230		2,913
Interest expense related to debt issuance costs		99		86		286		258

	$	2,126	$	1,973	$	6,257	$	5,908

During the three and nine months ended April 30, 2018, the Company recognized interest expense associated with the Notes of $2.1 million and $6.3 million, respectively. During the three and nine months ended April 30, 2017, the Company recognized interest expense associated with the Notes of $2.0 million and $5.9 million, respectively. The effective interest rate on the Notes, including amortization of debt issuance costs and accretion of the discount, is 13.9%. The notes bear interest at 5.25%.

PNC Bank Credit Facility

On June 30, 2014, two direct and wholly owned subsidiaries of the Company (the “ModusLink Borrowers”) entered into a revolving credit and security agreement (as amended, the “Credit Agreement”), as borrowers and guarantors, with PNC Bank and National Association, as lender and as agent, respectively.

The Credit Agreement has a five (5) year term which expires on June 30, 2019. It includes a maximum credit commitment of $50.0 million, is available for letters of credit (with a sublimit of $5.0 million) and has a $20.0 million uncommitted accordion feature. The actual maximum credit available under the Credit Agreement varies from time to time and is determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible accounts receivable and eligible inventory minus reserves determined by the Agent (including other reserves that the Agent may establish from time to time in its permitted discretion), all as specified in the Credit Agreement.

Generally, borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the ModusLink Borrowers’ option, either (a) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, two or three months (as selected by the ModusLink Borrowers) plus a margin of 2.25% per annum or (b) a base rate determined by reference to the highest of (1) the base commercial lending rate publicly announced from time to time by PNC Bank, National Association, (2) the sum of the Federal Funds Open Rate in effect on such day plus one half of one percent (0.5%) per annum, or (3) the LIBOR rate (adjusted to reflect any required bank reserves) in effect on such day plus 1.00% per annum. In addition to paying interest on outstanding principal under the Credit Agreement, the ModusLink Borrowers are required to pay a commitment fee, in respect of the unutilized commitments thereunder, of 0.25% per annum, paid quarterly in arrears. The ModusLink Borrowers are also required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

Obligations under the Credit Agreement are guaranteed by the ModusLink Borrowers’ existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain limited exceptions; and the Credit Agreement is secured by security interests in substantially all the ModusLink Borrowers’ assets and the assets of each subsidiary guarantor, whether owned as of the closing or thereafter acquired, including a pledge of 100.0% of the equity interests of each subsidiary guarantor that is a domestic entity (subject to certain limited exceptions) and 65.0% of the voting equity interests of any direct first tier foreign entity owned by either Borrower or by a subsidiary guarantor. The Company is not a borrower or a guarantor under the Credit Agreement.

The Credit Agreement contains certain customary negative covenants, which include limitations on mergers and acquisitions, the sale of assets, liens, guarantees, investments, loans, capital expenditures, dividends, indebtedness, changes in the nature of business, transactions with affiliates, the creation of subsidiaries, changes in fiscal year and accounting practices, changes to governing documents, compliance with certain statutes, and prepayments of certain indebtedness. The Credit Agreement also contains certain customary affirmative covenants (including periodic reporting obligations) and events of default, including upon a change of control. The Credit Agreement requires compliance with certain financial covenants providing for maintenance of specified liquidity, maintenance of a minimum fixed charge coverage ratio and/or maintenance of a maximum leverage ratio following the occurrence of certain events and/or prior to taking certain actions, all as more fully described in the Credit Agreement. The Company believes that the Credit Agreement provides greater financial flexibility to the Company and the ModusLink Borrowers and may enhance their ability to consummate one or several larger and/or more attractive acquisitions and should provide our clients and/or potential clients with greater confidence in the Company’s and the ModusLink Borrowers’ liquidity. During the three months ended April 30, 2018, the Company did not meet the criteria that would cause its financial covenants to be applicable. As of April 30, 2018 and July 31, 2017, the Company did not have any balance outstanding on the PNC Bank credit facility.

Cerberus Credit Facility

On December 15, 2017, MLGS, a wholly owned subsidiary of the Company, entered into a Financing Agreement (the “Financing Agreement”), by and among the MLGS (as the initial borrower), Instant Web, LLC, a Delaware corporation and wholly owned subsidiary of IWCO (as “Borrower”), IWCO, and certain of IWCO’s subsidiaries (together with IWCO, the “Guarantors”), the lenders from time to time party thereto, and Cerberus Business Finance, LLC, as collateral agent and administrative agent for the lenders. MLGS was the initial borrower under the Financing Agreement, but immediately upon the consummation of the IWCO Acquisition, as described above, Borrower became the borrower under the Financing Agreement.

The Financing Agreement provides for $393.0 million term loan facility (the “Term Loan”) and a $25.0 million revolving credit facility (collectively, the “Cerberus Credit Facility”). Proceeds of the Cerberus Credit Facility were used (i) to finance a portion of the IWCO Acquisition, (ii) to repay certain existing indebtedness of the Borrower and its subsidiaries, (iii) for working capital and general corporate purposes and (iv) to pay fees and expenses related to the Financing Agreement and the IWCO Acquisition.

The Cerberus Credit Facility has a maturity of five years. Borrowings under the Cerberus Credit Facility bear interest, at the Borrower’s option, at a Reference Rate plus 3.75% or a LIBOR Rate plus 6.5%, each as defined the Financing Agreement. The initial interest rate under the Cerberus Credit Facility is at the LIBOR Rate option.

The Term Loan under the Cerberus Credit Facility is repayable in consecutive quarterly installments, each of which will be in an amount equal per quarter of $1.5 million and each such installment to be due and payable, in arrears, on the last day of each calendar quarter commencing on March 31, 2018 and ending on the earlier of (a) December 15, 2022 and (b) upon the payment in full of all obligations under the Financing Agreement and the termination of all commitments under the Financing Agreement. Further, the Term Loan would be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, with a step-down to 25% when the Leverage Ratio (as defined in the Financing Agreement) is below 3.50:1.00; provided that, in any calendar year, any voluntary prepayments of the Term Loan shall be credited against the Borrower’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis for such calendar year.

Borrowings under the Financing Agreement are fully guaranteed by the Guarantors and are collateralized by substantially all the assets of the Borrower and the Guarantors and a pledge of all of the issued and outstanding equity interests of each of IWCO’s subsidiaries.

The Financing Agreement contains certain representations, warranties, events of default, mandatory prepayment requirements, as well as certain affirmative and negative covenants customary for financing agreements of this type. These covenants include restrictions on borrowings, investments and dispositions, as well as limitations on the ability of the Borrower and the Guarantors to make certain capital expenditures and pay dividends. Upon the occurrence and during the continuation of an event of default under the Financing Agreement, the lenders under the Financing Agreement may, among other things, terminate all commitments and declare all or a portion of the loans under the Financing Agreement immediately due and payable and increase the interest rate at which loans and obligations under the Financing Agreement bear interest.

On May 9, 2018, IWCO entered into a Waiver and Amendment No.1 to Financing Agreement (the “Amendment No. 1”) in order to, among other things, amend the definition of “Fiscal Year” to mean the twelve (12) month period ending on July 31st of each calendar year for IWCO and its subsidiaries and to make other related conforming changes to the Financing Agreement. Amendment No.1 also waived an event of default existing under the Financing Agreement that resulted from the failure of the Borrower and the Guarantors to deliver certain financial statements and an opinion for the Fiscal Year, which, prior to the effectiveness of Amendment No.1, was based on a year ending on December 31st of each year. The Company anticipates delivering the required financial statements and opinion for the “Fiscal Year” ended July 31, 2018, as now required under the amended Financing Agreement. There were no events of default under the Financing Agreement during the three months ended April 30, 2018 (after giving effect to the above-described waiver).

During the first quarter of fiscal year 2017, the Company adopted ASU No. 2015-03. As such, the debt issuance costs are capitalized as a reduction of the principal amount of Term Loan on the Company’s balance sheet and amortized, using the effective-interest method, as additional interest expense over the term of the Term Loan. As of April 30, 2018, the Company had $6.0 million outstanding on the revolving credit facility. As of April 30, 2018, the principal amount outstanding on the Term Loan was $391.5 million. As of April 30, 2018, the current and long-term net carrying value of the Term Loan was $390.3 million.


	April 30, 2018
	(In thousands)
Principal amount outstanding on the Term Loan	$	391,500
Unamortized debt issuance costs		(1,230	)

Net carrying value of the Term Loan	$	390,270

STOCKHOLDERS' EQUITY

9 Months Ended

Apr. 30, 2018

STOCKHOLDERS' EQUITY

(12) STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s Board of Directors (“the “Board”) 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 the 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 Company’s 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 SPH Group Holdings LLC (“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 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) one hundred percent (100%) of the stated value per share of Preferred Stock (initially $1,000 per share) then held by them (as adjusted for any stock split, stock dividend, stock combination 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).

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 be 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 Securities and Exchange Commission in all states reasonably requested by the holder 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 by a special committee of the Board (the “Special Committee”) consisting of independent directors not affiliated with Steel Partners Holdings GP Inc. (“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 Partners Holdings L.P. (“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 (the “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. The Warrant Repurchase Agreement is more fully described in Note 19 to these Condensed Consolidated Financial Statements.

OTHER GAINS (LOSSES), NET

9 Months Ended

Apr. 30, 2018

OTHER GAINS (LOSSES), NET

(13) OTHER GAINS (LOSSES), NET

The following table reflects the components of “Other gains (losses), net”:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2018			2017			2018			2017
				(In thousands)
Foreign currency exchange gains (losses)	$	720		$	206		$	(1,351	)	$	632
Gains on Trading Securities		—			2,509			1,876			2,603
Other, net		(1,412	)		(7	)		(1,512	)		4

	$	(692	)	$	2,708		$	(987	)	$	3,239

The Company recorded foreign exchange gains of approximately $0.7 million and $0.2 million during the three months ended April 30, 2018 and 2017, respectively. For the three months ended April 30, 2018, the net gains primarily related to realized and unrealized gains from foreign currency exposures and settled transactions of approximately $1.4 million in Corporate, offset by net losses of $0.6 million in Europe. For the three months ended April 30, 2017, the net gains primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $(0.5) million, $0.5 million and $0.3 million in Corporate, Asia and e-Business, respectively.

During the three months ended April 30, 2017, the Company recognized $2.5 million in net gains associated with its Trading Securities.

The Company recorded foreign exchange gains (losses) of approximately $(1.4) million and $0.6 million during the nine months ended April 30, 2018 and 2017, respectively. For the nine months ended April 30, 2018, the net losses primarily related to realized and unrealized losses from foreign currency exposures and settled transactions of approximately $1.0 million and $0.8 million in the Asia and Corporate, respectively, offset by net gains of $0.4 million in Europe. For the nine months ended April 30, 2017, the net gains primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $0.7 million, $0.2 million and $(0.4) million in Corporate, e-Business and Europe, respectively.

During the nine months ended April 30, 2018 and 2017, the Company recognized $1.9 million and $2.6 million in net gains (losses) associated with its Trading Securities.

INCOME TAXES

9 Months Ended

Apr. 30, 2018

INCOME TAXES

(14) INCOME TAXES

The Company operates in multiple taxing jurisdictions, both within and outside of the United States. For the nine months ended April 30, 2018, the Company was profitable in certain jurisdictions, resulting in an income tax expense using enacted rates in those jurisdictions. As of April 30, 2018, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $1.8 million. As of July 31, 2017, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $0.7 million.

Uncertain Tax Positions

In accordance with the Company’s accounting policy, interest related to unrecognized tax benefits is included in the provision of income taxes line of the Condensed Consolidated Statements of Operations. As of April 30, 2018 and July 31, 2017, the liabilities for interest expense related to uncertain tax positions were immaterial. The Company did not accrue for penalties related to income tax positions as there were no income tax positions that required the Company to accrue penalties. The Company does not expect any unrecognized tax benefits to reverse in the next twelve months. The Company is subject to U.S. federal income tax and various state, local and international income taxes in numerous jurisdictions. The federal and state tax returns are generally subject to tax examinations for the tax years ended July 31, 2013 through July 31, 2017. 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 2009 through 2016 tax years remain subject to examination in most locations, while the Company’s 2005 through 2016 tax years remain subject to examination in most Asia locations.

Net Operating Loss

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 percent or more of a corporation’s securities over a rolling three-year period.

Tax Benefits Preservation Plan

On January 19, 2018, our Board adopted a Tax Benefits Preservation Plan (the “Tax Plan”) and with American Stock Transfer & Trust Company, LLC, as rights agent (the “Rights Agent”). The Tax Plan is designed to preserve the Company’s ability to utilize its Tax Benefits and is similar to plans adopted by other public companies with significant Tax Benefits.

The Board asked the Company’s stockholders to approve, and the stockholders did so approve, the Tax Plan at its 2017 Annual Meeting of Stockholders held on April 12, 2018 (the “2017 Meeting”). If the Tax Plan was not approved by stockholders at the 2017 Meeting, the Tax Plan would have automatically expired immediately following the final adjournment of the 2017 Meeting if stockholder approval was not received.

The Company had net operating loss carryforwards for federal and state tax purposes of approximately $2.1 billion and $209.8 million, respectively, as of April 30, 2018. The Company’s s ability to use its Tax Benefits would be substantially limited if the Company undergoes an “ownership change” (within the meaning of Section 382 of the Internal Revenue Code). The Tax Plan is intended to prevent an “ownership change” of the Company that would impair the Company ability to utilize its Tax Benefits.

As part of the Tax Plan, the Board declared a dividend of one right (a “Right”) for each share of Common Stock then outstanding. The dividend was payable to holders of record as of the close of business on January 29, 2018. Any shares of Common Stock issued after January 29, 2018, will be issued together with the Rights. Each Right initially represents the right to purchase one one-thousandth of a share of newly created Series D Junior Participating Preferred Stock.

Initially, the Rights will be attached to all certificates representing shares of Common Stock then outstanding and no separate rights certificates will be distributed. In the case of book entry shares, the Rights will be evidenced by notations in the book entry accounts. Subject to certain exceptions specified in the Plan, the Rights will separate from the Common Stock and a distribution date (the “Distribution Date”) will occur upon the earlier of (i) ten (10) business days following a public announcement that a stockholder (or group) has become a beneficial owner of 4.99-percent or more of the shares of Common Stock then outstanding and (ii) ten (10) business days (or such later date as the Board determines) following the commencement of a tender offer or exchange offer that would result in a person or group becoming a 4.99-percent stockholder.

Pursuant to the Tax Plan and subject to certain exceptions, if a stockholder (or group) becomes a 4.99-percent stockholder after adoption of the Tax Plan, the Rights would generally become exercisable and entitle stockholders (other than the 4.99-percent stockholder or group) to purchase additional shares of Steel Connect, Inc. at a significant discount, resulting in substantial dilution in the economic interest and voting power of the 4.99-percent stockholder (or group). In addition, under certain circumstances in which Steel Connect, Inc. is acquired in a merger or other business combination after an non-exempt stockholder (or group) becomes a 4.99-percent stockholder, each holder of the Right (other than the 4.99-percent stockholder or group) would then be entitled to purchase shares of the acquiring company’s common stock at a discount.

The Rights are not exercisable until the Distribution Date and will expire at the earliest of (i) 11:59 p.m. on the date that the votes of the stockholders of the Company with respect to the Company’s next annual meeting or special meeting of stockholders are certified (which date will be no later than January 18, 2019), unless the continuation of the Tax Plan is approved by the affirmative vote of the majority of shares of Common Stock present at such meeting of stockholders (in which case clause (ii) will govern); (ii) 11:59 p.m., on January 18, 2021; (iii) the time at which the Rights are redeemed or exchanged as provided in the Tax Plan; and (iv) the time at which the Board determines that the Tax Plan is no longer necessary or desirable for the preservation of Tax Benefits.

Protective Amendment

On March 6, 2018, the Board, subject to approval by the Company’s stockholders, approved an amendment to the Company’s Restated Certificate of Incorporation designed to protect the tax benefits of the Company’s net operating loss carryforwards by preventing certain transfers of our securities that could result in an “ownership change” (as defined under Section 382 of the Code) (the “Protective Amendment”). The Protective Amendment was approved and adopted by the Company’s stockholders at the 2017 Meeting and was filed with the Secretary of State of the State of Delaware on April 12, 2018.

IWCO Acquisition

As more fully described in Note 9 to these unaudited Condensed Consolidated Financial Statements, the Company completed the IWCO Acquisition on December 15, 2017. Going forward, the Company and IWCO will file a consolidated federal tax return. In purchase accounting, a deferred tax liability of $75.8 million was computed for IWCO. After considering the transaction, the projected combined results and available temporary differences from the acquired business, the Company has determined in accordance with ASC 805-740-30-3 that its valuation allowance in the same amount of IWCO’s full deferred tax liability may be released and the benefit be recognized in income.

The Tax Cuts and Jobs Act

In December 2017, the Tax Cuts and Jobs Act, or the Tax Act (“TCJA”), was signed into law. Among other things, the Tax Act permanently lowers the corporate federal income tax rate to 21% from the existing maximum rate of 35%, effective for tax years including or commencing January 1, 2018. As a result of the reduction of the corporate federal income tax rate to 21%, U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in a provision of $266.3 million to income tax expense in continuing operations and a corresponding reduction in the valuation allowance. As a result, there was no impact to the Company’s income statement as a result of reduction in tax rates. The total provision of $266.3 million included a provision of $296.1 million to income tax expense for the Company and a benefit of $29.8 million to income tax expense for IWCO.

Beginning on January 1, 2018, the TCJA also requires a minimum tax on certain future earnings generated by foreign subsidiaries while providing for future tax-free repatriation of such earnings through a 100% dividends-received deduction. In accordance with ASC Topic 740, Income Taxes, and SAB 118, the Company has estimated that no provisional charge will be recorded related to the TCJA based on its initial analysis using available information and estimates. Given the significant complexity of the TCJA, anticipated guidance from the U.S. Treasury Department about implementing the TCJA and the potential for additional guidance from the SEC or the FASB related to the TCJA or additional information becoming available, the Company’s provisional charge may be adjusted during 2018 and is expected to be finalized no later than December 31, 2018. Other provisions of the TCJA that impact future tax years are still being assessed.

Our preliminary estimate of the TCJA and the remeasurement of our deferred tax assets and liabilities is subject to the finalization of management’s analysis related to certain matters, such as developing interpretations of the provisions of the TCJA, changes to certain estimates and the filing of our tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting the TCJA may require further adjustments and changes in our estimates. The final determination of the TCJA and the remeasurement of our deferred assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the TCJA.

EARNINGS PER SHARE

9 Months Ended

Apr. 30, 2018

EARNINGS PER SHARE

(15) EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.” The following table reconciles earnings per share for the three and nine months ended April 30, 2018 and 2017:


	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2018			2017			2018			2017
	(In thousands, except per share data)
Net income (loss)	$	(10,333	)	$	(5,067	)	$	44,248		$	(16,516	)
Less: Preferred dividends on redeemable preferred stock		(529	)		—			(788	)		—

Net income (loss) attributable to common stockholders		(10,862	)		(5,067	)		43,460			(16,516	)

Effect of dilutive securities:
5.25% Convertible Senior Notes		—			—			5,248			—
Redeemable preferred stock		—			—			788			—

Net income (loss) attributable to common stockholders after assumed conversions	$	(10,862	)	$	(5,067	)	$	49,496		$	(16,516	)

Weighted average common shares outstanding		60,076			55,257			58,281			55,099
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock		—			—			20,653			—

Weighted average number of common and potential common shares		60,076			55,257			78,934			55,099

Basic net earning (loss) per share attributable to common stockholders:	$	(0.18	)	$	(0.09	)	$	0.75		$	(0.30	)
Diluted net earning (loss) per share attributable to common stockholders:	$	(0.18	)	$	(0.09	)	$	0.63		$	(0.30	)

Basic earnings per common share is calculated using the weighted-average number of common shares outstanding during the period. Diluted earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), non-vested restricted stock shares purchased under the employee stock purchase plan and shares issuable upon debt or preferred stock conversion (calculated using an as-if converted method).

For the three and nine months ended April 30, 2018, approximately 29.6 million and 0.5 million, respectively, common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive.

For the three and nine months ended April 30, 2017, approximately 13.9 million and 14.3 million, respectively, common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive.

SHARE-BASED PAYMENTS

9 Months Ended

Apr. 30, 2018

SHARE-BASED PAYMENTS

(16) SHARE-BASED PAYMENTS

The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and non-vested shares for the three and nine months ended April 30, 2018 and 2017, which was allocated as follows:


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2018		2017		2018		2017
	(In thousands)
Cost of revenue	$	1	$	10	$	13	$	41
Selling, general and administrative		2,259		135		9,644		485

	$	2,260	$	145	$	9,657	$	526

During December 2017, the Board, upon the recommendation of the Special Committee and the Human Resources and Compensation Committee of the Board (the “Compensation Committee”), approved equity grants to certain members of the Board, in each case effective upon the closing of the IWCO Acquisition and in consideration for current and future services to the Company.

At April 30, 2018, there was an immaterial amount unrecognized compensation cost related to Stock Options issued under the Company’s plans. At April 30, 2018, there was approximately $2.1 million of total unrecognized compensation cost related to non-vested share-based compensation awards under the Company’s plans.

COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Apr. 30, 2018

COMPREHENSIVE INCOME (LOSS)

(17) COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) combines net income (loss) and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of stockholder’s equity in the accompanying condensed consolidated balance sheets.

Accumulated other comprehensive items consist of the following:


						Unrealized
	Foreign currency items		Pension items			gains (losses) on securities			Total
			(In thousands)
Accumulated other comprehensive income (loss) at July 31, 2017	$	7,522	$	(3,376	)	$	167		$	4,313
Foreign currency translation adjustment		2,515		—			—			2,515
Net unrealized holding loss on securities		—		—			(10	)		(10	)
Pension liability adjustments		—		26			—			26

Net current-period other comprehensive income (loss)		2,515		26			(10	)		2,531

Accumulated other comprehensive income (loss) at April 30, 2018	$	10,037	$	(3,350	)	$	157		$	6,844

SEGMENT INFORMATION

9 Months Ended

Apr. 30, 2018

SEGMENT INFORMATION

(18) SEGMENT INFORMATION

The Company has five operating segments: Americas; Asia; Europe; Direct Marketing; and e-Business. Direct Marketing is a new operating segment which represents IWCO. Based on the information provided to the Company’s chief operating decision-maker (“CODM”) for purposes of making decisions about allocating resources and assessing performance and quantitative thresholds, the Company has determined that it has five reportable segments: Americas, Asia, Europe, Direct Marketing and e-Business. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal, finance, share-based compensation and acquisition costs which are not allocated to the Company’s reportable segments. The Corporate-level balance sheet information includes cash and cash equivalents, Notes payables and other assets and liabilities which are not identifiable to the operations of the Company’s operating segments. All significant intra-segment amounts have been eliminated.

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 intangible assets, 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 to assist in evaluating the performance of the Company’s core operations.

Summarized financial information of the Company’s continuing operations by operating segment is as follows:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2018			2017			2018			2017
	(In thousands)
Net revenue:
Americas	$	13,061		$	20,179		$	41,664		$	73,240
Asia		31,820			37,056			111,622			118,790
Europe		22,942			34,272			99,225			124,363
Direct Marketing		115,647			—			173,019			—
e-Business		5,452			6,441			17,492			20,450

	$	188,922		$	97,948		$	443,022		$	336,843

Operating income (loss):
Americas	$	(2,032	)	$	(2,363	)	$	(6,518	)	$	(7,939	)
Asia		1,903			832			21,795			4,921
Europe		(1,770	)		(2,334	)		(8,089	)		(4,885	)
Direct Marketing		9,917			—			5,965			—
e-Business		(1,646	)		(197	)		(4,437	)		(742	)

Total Segment operating income (loss)		6,372			(4,062	)		8,716			(8,645	)
Corporate-level activity		(4,992	)		(1,181	)		(16,869	)		(3,744	)

Total operating income (loss)		1,380			(5,243	)		(8,153	)		(12,389	)

Total other income (expense)		(11,198	)		763			(19,919	)		(2,664	)

Loss before income taxes	$	(9,818	)	$	(4,480	)	$	(28,072	)	$	(15,053	)

Net revenue and operating income associated with Direct Marketing is for the period from December 15, 2017 to April 30, 2018. The Direct Marketing operating income includes certain purchase accounting adjustments associated with the IWCO acquisition.


	April 30, 2018		July 31, 2017
	(In thousands)
Total assets:
Americas	$	23,679	$	21,876
Asia		44,731		63,819
Europe		42,367		64,639
Direct Marketing		641,384		—
e-Business		14,909		20,703

Sub-total - segment assets		767,070		171,037
Corporate		75,963		110,261

	$	843,033	$	281,298

Summarized financial information of the Company’s net revenue from external customers by group of services is as follows:


	Three Months Ended April 30,				Nine Months Ended April 30,
	2018		2017		2018		2017
			(In thousands)
Supply chain services	$	67,823	$	91,507	$	252,511	$	316,393
Direct Marketing		115,647		—		173,019		—
e-Business services		5,452		6,441		17,492		20,450

	$	188,922	$	97,948	$	443,022	$	336,843

As of April 30, 2018, approximately $563.0 million of the Company’s long-lived assets were located in the U.S.A. As of July 31, 2017, approximately $9.3 million of the Company’s long-lived assets were located in the U.S.A.

For the three months ended April 30, 2018, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $129.3 million, $24.3 million, $13.3 million and $6.2 million, respectively. For the three months ended April 30, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $21.0 million, $29.1 million, $16.5 million and $16.4 million, respectively.

For the nine months ended April 30, 2018, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $216.8 million, $87.3 million, $45.1 million and $46.3 million, respectively. For the nine months ended April 30, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $75.3 million, $97.2 million, $53.3 million and $64.4 million, respectively.

RELATED PARTY TRANSACTIONS

9 Months Ended

Apr. 30, 2018

RELATED PARTY TRANSACTIONS

(19) RELATED PARTY TRANSACTIONS

Preferred Stock Transaction and Warrant Repurchase

On December 15, 2017, the Company entered into a Preferred Stock 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 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, 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 our 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 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.

The Preferred Stock Transaction was approved and recommended to the Board by a special committee of the Board (the “Special Committee”). Each member of the Special Committee was independent and not affiliated with Steel Holdings GP, which controls the power to vote and dispose of the securities held by SPHG Holdings and its affiliates.

On December 15, 2017, contemporaneously with the closing of the Preferred Stock Transaction, the Company entered into a Warrant Repurchase Agreement with Steel Holdings, an affiliate of SPHG Holdings, pursuant to which the Company repurchased for $100 the warrant to acquire 2,000,000 shares of the Common Stock that the Company had previously issued to Steel Holdings. The Warrant, which was to expire in 2018, was terminated by the Company upon repurchase.

Management Services Agreement

December 24, 2014, the Company entered into a Management Services Agreement with SP Corporate Services LLC (“SP Corporate”), effective as of January 1, 2015 (as amended, the “Management Services Agreement”). SP Corporate is an indirect wholly owned subsidiary of Steel Holdings and is a related party. Pursuant to the Management Services Agreement, SP Corporate provided the Company and its subsidiaries with the services of certain employees, including certain executive officers, and other corporate services.

The Management Services Agreement had an initial term of six months. On June 30, 2015, the Company entered into an amendment that extended the term of the Management Services Agreement to December 31, 2015 and provided for automatic renewal for successive one year periods, unless and until terminated in accordance with the terms set forth therein, which include, under certain circumstances, the payment by the Company of certain termination fees to SP Corporate. On March 10, 2016, the Company entered into a Second Amendment to the Management Services Agreement with SPH Services, Inc. (“SPH Services”), the parent of SP Corporate and an affiliate of SPHG Holdings, pursuant to which SPH Services assumed rights and responsibilities of SP Corporate and the services provided by SPH Services to the Company were modified pursuant to the terms of the amendment. On March 10, 2016, the Company entered into a Transfer Agreement with SPH Services pursuant to which the parties agreed to transfer to the Company certain individuals who provide corporate services to the Company (the “Transfer Agreement”). SP Corporate and Steel Partners LLC merged with and into SPH Services, with SPH Services surviving. SPH Services has since changed its name to Steel Services Ltd. (“Steel Services”). On September 1, 2017, the Company entered into a Third Amendment to the Management Services Agreement, which reduced the fixed monthly fee paid by the Company to Steel Services under the Management Services Agreement from $175,000 per month to $95,641 per month. The monthly fee is subject to review and adjustment by agreement between the Company and Steel Services for periods commencing in fiscal 2016 and beyond. Additionally, the Company may be required to reimburse Steel Services and its affiliates for all reasonable and necessary business expenses incurred on our behalf in connection with the performance of the services under the Management Services Agreement, including travel expenses. The Management Services Agreement provides that, under certain circumstances, the Company may be required to indemnify and hold harmless Steel Services and its affiliates and employees from any claims or liabilities by a third party in connection with activities or the rendering of services under the Management Services Agreement. Total expenses incurred related to this agreement for the three and nine months ended April 30, 2018 were $0.3 million and $1.5 million, respectively. Total expenses incurred related to this agreement for the three and nine months ended April 30, 2017 were $0.6 million and $1.7 million, respectively. As of April 30, 2018 and July 31, 2017, amounts due to SP Corporate and Steel Services were $0.1 million and $0.3 million, respectively.

The Related Party Transactions Committee of the Board (the “Related Party Transactions Committee”) approved the entry into the Management Services Agreement (and the first two amendments thereto) and the Transfer Agreement. The Audit Committee of the Board of Directors (the “Audit Committee”) approved the third amendment to the Management Services Agreement. The Related Party Transactions Committee held the responsibility to review, approve and ratify related party transactions from November 20, 2014, until October 11, 2016. On October 11, 2016, the Board adopted a Related Person Transaction Policy that is administered by the Audit Committee and applies to all related party transactions. As of October 11, 2016, the Audit Committee reviews all related party transactions on an ongoing basis and all such transactions must be approved or ratified by the Audit Committee.

On December 15, 2017, the Board, upon the recommendation of the Special Committee and the Compensation Committee, approved restricted stock grants and market performance based restricted stock grants to non-employee directors Messrs. Howard, Fejes and Lichtenstein, the Executive Chairman of the Board, in each case effective upon the closing of the IWCO Acquisition (the “Grant Date”) and in consideration for current and future services to the Company. Messrs. Howard and Lichtenstein are affiliated with Steel Holdings GP, which is a wholly-owned subsidiary of Steel Holdings. Mr. Fejes is currently affiliated with Steel Services, an indirect wholly owned subsidiary of Steel Holdings. These awards were measured based on the fair market value on the Grant Date.

Mutual Securities, Inc. (“Mutual Securities”) serves as the broker and record-keeper for all the transactions associated with the Trading Securities. An officer of SP Corporate and of the General Partner of Steel Holdings is a registered principal of Mutual Securities. Commissions charged by Mutual Securities are generally commensurate with commissions charged by other institutional brokers, and the Company believes its use of Mutual Securities is consistent with its desire to obtain best price and execution. During the three and nine months ended April 30, 2018 and 2017, Mutual Securities received an immaterial amount in commissions associated with these transactions.

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

9 Months Ended

Apr. 30, 2018

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

(20) FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

ASC Topic 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1:

Observable inputs such as quoted prices for identical assets or liabilities in active markets

Level 2:

Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs

Level 3:

Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities

The carrying value of cash and cash equivalents, accounts receivable, funds held for clients, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. The carrying value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The fair values of the Company’s Trading Securities are estimated using quoted market prices. The Company values foreign exchange forward contracts using observable inputs which primarily consist of an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. The defined benefit plans have 100% of their assets invested in bank-managed portfolios of debt securities and other assets. Conservation of capital with some conservative growth potential is the strategy for the plans. The Company’s pension plans are outside the United States, where asset allocation decisions are typically made by an independent board of trustees. Investment objectives are aligned to generate returns that will enable the plans to meet their future obligations. The Company acts in a consulting and governance role in reviewing investment strategy and providing a recommended list of investment managers for each plan, with final decisions on asset allocation and investment manager made by local trustees.

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 April 30, 2018 and July 31, 2017, classified by fair value hierarchy:


			Fair Value Measurements at Reporting Date Using
(In thousands)	April 30, 2018		Level 1		Level 2		Level 3
Assets:
Money market funds	$	47,002	$	47,002	$	—	$	—

			Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	11,898	$	11,898	$	—	$	—
Money market funds		85,683		85,683		—		—

There were no transfers between Levels 1, 2 or 3 during any of the periods presented.

When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were 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’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were the Company’s @Ventures investments and certain assets subject to long-lived asset impairment. 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.

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, accounts payable, funds held for clients and debt, and are reflected in the financial statements at cost. With the exception of the Notes payable and long-term debt, cost approximates fair value for these items due to their short-term nature. We believe that the carrying value of our long-term debt approximates fair value because the stated interest rates of this debt is consistent with current market rates.

Included in Trading Securities in the accompanying balance sheet are marketable equity securities. These instruments are valued at quoted market prices in active markets. Included in cash and cash equivalents in the accompanying balance sheet are money market funds. These are valued at quoted market prices in active markets.

The following table presents the Company’s Notes payable not carried at fair value:


	April 30, 2018				July 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
			(In thousands)
Notes payable	$	63,274	$	66,273	$	59,758	$	63,852		Level 1

The fair value of our Notes payable represents the value at which our lenders could trade our debt within the financial markets, and does not represent the settlement value of these long-term debt liabilities to us. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

CORRECTION OF PRIOR PERIOD FINANCIAL STATEMENTS (Tables)

9 Months Ended

Apr. 30, 2018

Schedule of Impact to Condensed Consolidated Balance Sheets and Consolidated Statements of Income

The impact to the condensed consolidated balance sheets, and the consolidated statements of income for the three and six months ended January 31, 2018 is as follows (in thousands, except per share amounts):


*Consolidated Balance Sheets*	January 31, 2018
	As Previously Reported			Adjustments			As Revised
Inventories, net	$	45,211		$	4,002		$	49,213
Goodwill		259,085			(3,724	)		255,361
Total assets		870,110			278			870,388
Other current liabilities		43,561			23,549			67,110
Other long-term liabilities		30,693			(18,000	)		12,693
Total liabilities		700,883			5,549			706,432
Accumulated deficit		(7,339,367	)		(5,271	)		(7,344,638	)
Total stockholders’ equity	$	133,968		$	(5,271	)	$	128,697


*Consolidated Statements of Operations*	Three Months Ended January 31, 2018									Six Months Ended January 31, 2018
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Net revenue	$	151,119		$	459		$	151,578		$	253,641		$	459		$	254,100
Cost of revenue		134,169			1,586			135,755			227,617			1,586			229,203
Gross profit		16,950			(1,127	)		15,823			26,024			(1,127	)		24,897
Income tax expense (benefit)		(77,664	)		4,143			(73,521	)		(76,577	)		4,143			(72,434	)
Net income (loss)	$	65,089		$	(5,271	)	$	59,818		$	59,852		$	(5,271	)	$	54,581
Basic net earning (loss) per share attributable to common stockholders:	$	1.11					$	1.02		$	1.05					$	0.96
Diluated net earning (loss) per share attributable to common stockholders:	$	0.85					$	0.78		$	0.87					$	0.80

INVENTORIES (Tables)

9 Months Ended

Apr. 30, 2018

Components of Inventories

Inventories, net consisted of the following:


	April 30, 2018		July 31, 2017
	(In thousands)
Raw materials	$	21,760	$	24,129
Work-in-process		15,259		713
Finished goods		9,165		9,527

	$	46,184	$	34,369

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Apr. 30, 2018

Components of Accrued Expenses


	April 30, 2018		July 31, 2017
	(In thousands)
Accrued taxes	$	30,268	$	2,272
Accrued compensation		21,254		10,678
Accrued interest		992		1,366
Accrued audit, tax and legal		2,814		2,759
Accrued contract labor		1,612		1,632
Accrued worker’s compensation		6,690		—
Accrued other		22,150		19,191

	$	85,780	$	37,898

Components of Other Current Liabilities


	April 30, 2018		July 31, 2017
	(In thousands)
Accrued pricing liabilities	$	18,882	$	18,882
Line of credit liability		6,000		—
Customer postage deposits		12,357		—
Other		11,102		7,259

	$	48,341	$	26,141

RESTRUCTURING, NET (Tables)

9 Months Ended

Apr. 30, 2018

Summary of Restructuring Accrual by Expense Category and by Reportable Segment

The following tables summarize the activities related to the restructuring accrual by expense category and by reportable segment for the nine months ended April 30, 2018:


	Employee Related Expenses			Contractual Obligations			Total
	(In thousands)
Accrued restructuring balance at July 31, 2017	$	100		$	86		$	186
Restructuring charges		3			—			3
Restructuring adjustments		93			22			115
Cash paid		(48	)		(108	)		(156	)
Non-cash adjustments		(8	)		—			(8	)

Accrued restructuring balance at April 30, 2018	$	140		$	—		$	140


	Americas			Asia			Europe			Direct marketing		e-Business			Consolidated Total
	(In thousands)
Accrued restructuring balance at July 31, 2017	$	51		$	—		$	23		$	—	$	112		$	186
Restructuring charges		—			—			—			—		3			3
Restructuring adjustments		101			1			2			—		11			115
Cash paid		(48	)		—			—			—		(108	)		(156	)
Non-cash adjustments		(11	)		(1	)		(25	)		—		29			(8	)

Accrued restructuring balance at April 30, 2018	$	93		$	—		$	—		$	—	$	47		$	140


	Three Months Ended April 30,					Nine Months Ended April 30,
	2018		2017			2018		2017
	(In thousands)
Cost of revenue	$	—	$	(170	)	$	8	$	565
Selling, general and administrative		77		(79	)		110		1,336

	$	77	$	(249	)	$	118	$	1,901

Summary of Net Restructuring Charges


	Three Months Ended April 30,					Nine Months Ended April 30,
	2018		2017			2018		2017
	(In thousands)
Cost of revenue	$	—	$	(170	)	$	8	$	565
Selling, general and administrative		77		(79	)		110		1,336

	$	77	$	(249	)	$	118	$	1,901

ACQUISITION OF IWCO DIRECT (Tables)

9 Months Ended

Apr. 30, 2018

Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed


	As Previously Reported			Adjustments			As Revised
	(In thousands)
Accounts receivable	$	47,841		$	—		$	47,841
Inventory		27,165			5,590			32,755
Other current assets		7,427			—			7,427
Property and equipment		87,976			—			87,976
Intangible assets		210,920			—			210,920
Goodwill		259,085			(3,724	)		255,361
Other assets		3,040			—			3,040
Accounts payable		(31,069	)		—			(31,069	)
Accrued liabilities and other current liabilities		(35,790	)		(24,009	)		(59,799	)
Customer deposits		(7,829	)		—			(7,829	)
Deferred income taxes		(79,918	)		4,143			(75,775	)
Other liabilities		(19,627	)		18,000			(1,627	)

Total consideration	$	469,221		$	—		$	469,221

Summary of Pro Forma Information

A reduction to interest expense is also reflected in the pro forma results to reflect the more favorable terms obtained with the new Credit Facility as compared to the interest rate under the former facility carried by IWCO:


	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2018			2017			2018		2017
	(In thousands)						(In thousands)
Net revenue	$	187,369		$	204,716		$	620,377	$	671,695
Net income (loss)	$	(16,449	)	$	(11,660	)	$	43,339	$	(35,929	)

DEBT (Tables)

9 Months Ended

Apr. 30, 2018

Net Carrying Value of Term Loan


	April 30, 2018			July 31, 2017
	(In thousands)
Carrying amount of equity component (net of allocated debt issuance costs)	$	26,961		$	26,961
Principal amount of Notes	$	67,625		$	67,625
Unamortized debt discount		(3,997	)		(7,227	)
Unamortized debt issuance costs		(354	)		(640	)

Net carrying amount	$	63,274		$	59,758

Summary of Interest Expense Related to Convertible Notes


	Three Months Ended April 30,				Nine Months Ended April 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Interest expense related to contractual interest coupon	$	914	$	914	$	2,741	$	2,737
Interest expense related to accretion of the discount		1,113		973		3,230		2,913
Interest expense related to debt issuance costs		99		86		286		258

	$	2,126	$	1,973	$	6,257	$	5,908

Term Loan

Net Carrying Value of Term Loan


	April 30, 2018
	(In thousands)
Principal amount outstanding on the Term Loan	$	391,500
Unamortized debt issuance costs		(1,230	)

Net carrying value of the Term Loan	$	390,270

OTHER GAINS (LOSSES), NET (Tables)

9 Months Ended

Apr. 30, 2018

Components of Other Gains (Losses), Net

The following table reflects the components of “Other gains (losses), net”:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2018			2017			2018			2017
				(In thousands)
Foreign currency exchange gains (losses)	$	720		$	206		$	(1,351	)	$	632
Gains on Trading Securities		—			2,509			1,876			2,603
Other, net		(1,412	)		(7	)		(1,512	)		4

	$	(692	)	$	2,708		$	(987	)	$	3,239

EARNINGS PER SHARE (Tables)

9 Months Ended

Apr. 30, 2018

Reconciliation of Earnings Per Share

The following table reconciles earnings per share for the three and nine months ended April 30, 2018 and 2017:


	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2018			2017			2018			2017
	(In thousands, except per share data)
Net income (loss)	$	(10,333	)	$	(5,067	)	$	44,248		$	(16,516	)
Less: Preferred dividends on redeemable preferred stock		(529	)		—			(788	)		—

Net income (loss) attributable to common stockholders		(10,862	)		(5,067	)		43,460			(16,516	)

Effect of dilutive securities:
5.25% Convertible Senior Notes		—			—			5,248			—
Redeemable preferred stock		—			—			788			—

Net income (loss) attributable to common stockholders after assumed conversions	$	(10,862	)	$	(5,067	)	$	49,496		$	(16,516	)

Weighted average common shares outstanding		60,076			55,257			58,281			55,099
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock		—			—			20,653			—

Weighted average number of common and potential common shares		60,076			55,257			78,934			55,099

Basic net earning (loss) per share attributable to common stockholders:	$	(0.18	)	$	(0.09	)	$	0.75		$	(0.30	)
Diluted net earning (loss) per share attributable to common stockholders:	$	(0.18	)	$	(0.09	)	$	0.63		$	(0.30	)

SHARE-BASED PAYMENTS (Tables)

9 Months Ended

Apr. 30, 2018

Summary of Share Based Compensation Expense Related to Employee Stock Options, Employee Stock Purchases and Non-Vested Shares


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2018		2017		2018		2017
	(In thousands)
Cost of revenue	$	1	$	10	$	13	$	41
Selling, general and administrative		2,259		135		9,644		485

	$	2,260	$	145	$	9,657	$	526

COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Apr. 30, 2018

Accumulated Other Comprehensive Items

Accumulated other comprehensive items consist of the following:


						Unrealized
	Foreign currency items		Pension items			gains (losses) on securities			Total
			(In thousands)
Accumulated other comprehensive income (loss) at July 31, 2017	$	7,522	$	(3,376	)	$	167		$	4,313
Foreign currency translation adjustment		2,515		—			—			2,515
Net unrealized holding loss on securities		—		—			(10	)		(10	)
Pension liability adjustments		—		26			—			26

Net current-period other comprehensive income (loss)		2,515		26			(10	)		2,531

Accumulated other comprehensive income (loss) at April 30, 2018	$	10,037	$	(3,350	)	$	157		$	6,844

SEGMENT INFORMATION (Tables)

9 Months Ended

Apr. 30, 2018

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:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2018			2017			2018			2017
	(In thousands)
Net revenue:
Americas	$	13,061		$	20,179		$	41,664		$	73,240
Asia		31,820			37,056			111,622			118,790
Europe		22,942			34,272			99,225			124,363
Direct Marketing		115,647			—			173,019			—
e-Business		5,452			6,441			17,492			20,450

	$	188,922		$	97,948		$	443,022		$	336,843

Operating income (loss):
Americas	$	(2,032	)	$	(2,363	)	$	(6,518	)	$	(7,939	)
Asia		1,903			832			21,795			4,921
Europe		(1,770	)		(2,334	)		(8,089	)		(4,885	)
Direct Marketing		9,917			—			5,965			—
e-Business		(1,646	)		(197	)		(4,437	)		(742	)

Total Segment operating income (loss)		6,372			(4,062	)		8,716			(8,645	)
Corporate-level activity		(4,992	)		(1,181	)		(16,869	)		(3,744	)

Total operating income (loss)		1,380			(5,243	)		(8,153	)		(12,389	)

Total other income (expense)		(11,198	)		763			(19,919	)		(2,664	)

Loss before income taxes	$	(9,818	)	$	(4,480	)	$	(28,072	)	$	(15,053	)

Total Assets of Continuing Operations


	April 30, 2018		July 31, 2017
	(In thousands)
Total assets:
Americas	$	23,679	$	21,876
Asia		44,731		63,819
Europe		42,367		64,639
Direct Marketing		641,384		—
e-Business		14,909		20,703

Sub-total - segment assets		767,070		171,037
Corporate		75,963		110,261

	$	843,033	$	281,298

Summarized Financial Information of Net Revenue from External Customers by Group of Services

Summarized financial information of the Company’s net revenue from external customers by group of services is as follows:


	Three Months Ended April 30,				Nine Months Ended April 30,
	2018		2017		2018		2017
			(In thousands)
Supply chain services	$	67,823	$	91,507	$	252,511	$	316,393
Direct Marketing		115,647		—		173,019		—
e-Business services		5,452		6,441		17,492		20,450

	$	188,922	$	97,948	$	443,022	$	336,843

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Apr. 30, 2018

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 April 30, 2018 and July 31, 2017, classified by fair value hierarchy:


			Fair Value Measurements at Reporting Date Using
(In thousands)	April 30, 2018		Level 1		Level 2		Level 3
Assets:
Money market funds	$	47,002	$	47,002	$	—	$	—

			Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	11,898	$	11,898	$	—	$	—
Money market funds		85,683		85,683		—		—

Notes Payable not Carried at Fair Value

The following table presents the Company’s Notes payable not carried at fair value:


	April 30, 2018				July 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
			(In thousands)
Notes payable	$	63,274	$	66,273	$	59,758	$	63,852		Level 1

Nature of Operations - Additional Information (Detail) $ in Thousands	9 Months Ended
	Apr. 30, 2018 USD ($) Site Language Facility	Jul. 31, 2017 USD ($)	Apr. 30, 2017 USD ($)	Jul. 31, 2016 USD ($)
Nature Of Operations [Line Items]
Cash and cash equivalents \| $	$ 99,723	$ 110,670	$ 111,945	$ 130,790
Moduslink
Nature Of Operations [Line Items]
Number of sites \| Site	20
Number of languages \| Language	21
IWCO \| Chanhassen MN
Nature Of Operations [Line Items]
Number of facilities	3
IWCO \| Little Falls MN
Nature Of Operations [Line Items]
Number of facilities	1
IWCO \| Warminster PA
Nature Of Operations [Line Items]
Number of facilities	1
IWCO \| Hamburg PA
Nature Of Operations [Line Items]
Number of facilities	2

Correction of Prior Period Financial Statements - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended
	Jan. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2018	Apr. 30, 2018	Apr. 30, 2017
Adjustments For Change In Accounting Principle [Line Items]
Income tax expense (benefit)		$ 715	$ (73,521)	$ 819	$ (72,434)	$ (71,719)	$ 2,591
Adjustments
Adjustments For Change In Accounting Principle [Line Items]
Income tax expense (benefit)	$ 4,100		$ 4,143		$ 4,143

Schedule of Impact to Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018	Jul. 31, 2017
Adjustments For Change In Accounting Principle [Line Items]
Inventories, net	$ 46,184	$ 49,213	$ 34,369
Goodwill	255,361	255,361
Total assets	843,033	870,388	281,298
Other current liabilities	48,341	67,110	26,141
Other long-term liabilities	11,667	12,693	9,414
Total liabilities	689,200	706,432	218,327
Accumulated deficit	(7,355,500)	(7,344,638)	(7,398,949)
Total stockholders' equity	$ 118,658	128,697	$ 62,971
Previously Reported
Adjustments For Change In Accounting Principle [Line Items]
Inventories, net		45,211
Goodwill		259,085
Total assets		870,110
Other current liabilities		43,561
Other long-term liabilities		30,693
Total liabilities		700,883
Accumulated deficit		(7,339,367)
Total stockholders' equity		133,968
Adjustments
Adjustments For Change In Accounting Principle [Line Items]
Inventories, net		4,002
Goodwill		(3,724)
Total assets		278
Other current liabilities		23,549
Other long-term liabilities		(18,000)
Total liabilities		5,549
Accumulated deficit		(5,271)
Total stockholders' equity		$ (5,271)

Schedule of Impact to Consolidated Statements of Income (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended
	Jan. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2018	Apr. 30, 2018	Apr. 30, 2017
Adjustments For Change In Accounting Principle [Line Items]
Net revenue		$ 188,922	$ 151,578	$ 97,948	$ 254,100	$ 443,022	$ 336,843
Cost of revenue		149,917	135,755	89,406	229,203	379,120	307,770
Gross profit		39,005	15,823	8,542	24,897	63,902	29,073
Income tax expense (benefit)		715	(73,521)	819	(72,434)	(71,719)	2,591
Net income (loss)		$ (10,333)	$ 59,818	$ (5,067)	$ 54,581	$ 44,248	$ (16,516)
Basic net earning (loss) per share attributable to common stockholders:		$ (0.18)	$ 1.02	$ (0.09)	$ 0.96	$ 0.75	$ (0.30)
Diluated net earning (loss) per share attributable to common stockholders:		$ (0.18)	$ 0.78	$ (0.09)	$ 0.80	$ 0.63	$ (0.30)
Previously Reported
Adjustments For Change In Accounting Principle [Line Items]
Net revenue			$ 151,119		$ 253,641
Cost of revenue			134,169		227,617
Gross profit			16,950		26,024
Income tax expense (benefit)			(77,664)		(76,577)
Net income (loss)			$ 65,089		$ 59,852
Basic net earning (loss) per share attributable to common stockholders:			$ 1.11		$ 1.05
Diluated net earning (loss) per share attributable to common stockholders:			$ 0.85		$ 0.87
Adjustments
Adjustments For Change In Accounting Principle [Line Items]
Net revenue			$ 459		$ 459
Cost of revenue			1,586		1,586
Gross profit			(1,127)		(1,127)
Income tax expense (benefit)	$ 4,100		4,143		4,143
Net income (loss)			$ (5,271)		$ (5,271)

Components of Inventories (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018	Jul. 31, 2017
Inventory [Line Items]
Raw materials	$ 21,760		$ 24,129
Work-in-process	15,259		713
Finished goods	9,165		9,527
Inventories, net	$ 46,184	$ 49,213	$ 34,369

Inventories - Additional Information (Detail) $ in Millions	9 Months Ended
Inventories - Additional Information (Detail) $ in Millions	Apr. 30, 2018 USD ($)
Work In Process Inventory \| IWCO
Inventory [Line Items]
Fair value of assets acquired	$ 7.0

Investments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017	Jul. 31, 2017
Investment [Line Items]
Sale (purchase) of Trading Securities	$ 2,200	$ 13,800	$ 8,000
Gains (losses) on Trading Securities	2,509	1,876	2,603
Trading securities		0		$ 11,898
Cash
Investment [Line Items]
Gains (losses) on Trading Securities	400	4,600	900
Non Cash
Investment [Line Items]
Gains (losses) on Trading Securities	$ 2,200	$ (2,700)	$ 1,700

Components of Accrued Expenses (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Accrued Expenses [Line Items]
Accrued taxes	$ 30,268	$ 2,272
Accrued compensation	21,254	10,678
Accrued interest	992	1,366
Accrued audit, tax and legal	2,814	2,759
Accrued contract labor	1,612	1,632
Accrued worker's compensation	6,690
Accrued other	22,150	19,191
Accrued expenses	$ 85,780	$ 37,898

Components of Other Current Liabilities (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018	Jul. 31, 2017
Other Current Liabilities [Line Items]
Accrued pricing liabilities	$ 18,882		$ 18,882
Line of credit liability	6,000
Customer postage deposits	12,357
Other	11,102		7,259
Other current liabilities	$ 48,341	$ 67,110	$ 26,141

Accrued Expenses and Other Current Liabilities - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Apr. 30, 2018	Jul. 31, 2017
Accrued Expenses and Other Current Liabilities [Line Items]
Accrued pricing liabilities	$ 18,882	$ 18,882
Accrued expenses	85,780	$ 37,898
IWCO \| Sales Tax Liabilities
Accrued Expenses and Other Current Liabilities [Line Items]
Accrued expenses	18,000
IWCO \| Sales Tax Liabilities
Accrued Expenses and Other Current Liabilities [Line Items]
Reserve recorded	$ 18,000

Restructuring, Net - Additional Information (Detail) $ in Thousands	9 Months Ended
	Apr. 30, 2018 USD ($)	Apr. 30, 2017 USD ($) Employee
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 3
Number of workforce reduction \| Employee		78
Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	$ 1,900
Contractual Obligations
Restructuring Cost and Reserve [Line Items]
Restructuring charges		500
Americas \| Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges	100	200
Asia \| Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges		700
Europe \| Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges		500
e-Business
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 3
e-Business \| Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 100

Summary of Restructuring Accrual by Expense Category and by Reportable Segment (Detail) - USD ($) $ in Thousands	9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	$ 186
Restructuring charges	3
Restructuring adjustments	115
Cash paid	(156)
Non-cash adjustments	(8)
Accrued restructuring, ending balance	140
Americas
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	51
Restructuring adjustments	101
Cash paid	(48)
Non-cash adjustments	(11)
Accrued restructuring, ending balance	93
Asia
Restructuring Cost and Reserve [Line Items]
Restructuring adjustments	1
Non-cash adjustments	(1)
Europe
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	23
Restructuring adjustments	2
Non-cash adjustments	(25)
e-Business
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	112
Restructuring charges	3
Restructuring adjustments	11
Cash paid	(108)
Non-cash adjustments	29
Accrued restructuring, ending balance	47
Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	100
Restructuring charges	3	$ 1,900
Restructuring adjustments	93
Cash paid	(48)
Non-cash adjustments	(8)
Accrued restructuring, ending balance	140
Employee Related Expenses \| Americas
Restructuring Cost and Reserve [Line Items]
Restructuring charges	100	200
Employee Related Expenses \| Asia
Restructuring Cost and Reserve [Line Items]
Restructuring charges		700
Employee Related Expenses \| Europe
Restructuring Cost and Reserve [Line Items]
Restructuring charges		500
Employee Related Expenses \| e-Business
Restructuring Cost and Reserve [Line Items]
Restructuring charges		100
Contractual Obligations
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	86
Restructuring charges		$ 500
Restructuring adjustments	22
Cash paid	$ (108)

Summary of Net Restructuring Charges (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring, net	$ 77	$ (249)	$ 118	$ 1,901
Cost of revenue
Restructuring Cost and Reserve [Line Items]
Restructuring, net		(170)	8	565
Selling, general and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring, net	$ 77	$ (79)	$ 110	$ 1,336

Acquisition of IWCO Direct - Additional Information (Detail) - USD ($) $ in Thousands		9 Months Ended
	Dec. 15, 2017	Apr. 30, 2018	Jan. 31, 2018
Business Acquisition [Line Items]
Payments to acquire business, net of cash acquired		$ 469,221
Goodwill		$ 255,361	$ 255,361
IWCO
Business Acquisition [Line Items]
Payments to acquire business, net of cash acquired	$ 469,200
Proceeds from term loan under financing agreement	393,000
Receivable from escrow for working capital claims	2,500
Transaction price included one-time transaction incentive awards	3,500
Transaction costs	1,500
Intangible assets	210,920
Goodwill	255,361
Trademarks and Trade Names \| IWCO
Business Acquisition [Line Items]
Intangible assets	$ 20,500
Acquired finite-lived intangible assets, weighted average useful life	3 years
Customer Relationships \| IWCO
Business Acquisition [Line Items]
Intangible assets	$ 190,400
Acquired finite-lived intangible assets, weighted average useful life	15 years

Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018	Dec. 15, 2017
Business Acquisition [Line Items]
Goodwill	$ 255,361	$ 255,361
IWCO
Business Acquisition [Line Items]
Accounts receivable			$ 47,841
Inventory			32,755
Other current assets			7,427
Property and equipment			87,976
Intangible assets			210,920
Goodwill			255,361
Other assets			3,040
Accounts payable			(31,069)
Accrued liabilities and other current liabilities			(59,799)
Customer deposits			(7,829)
Deferred income taxes			(75,775)
Other liabilities			(1,627)
Total consideration			469,221
Previously Reported
Business Acquisition [Line Items]
Goodwill		259,085
Previously Reported \| IWCO
Business Acquisition [Line Items]
Accounts receivable			47,841
Inventory			27,165
Other current assets			7,427
Property and equipment			87,976
Intangible assets			210,920
Goodwill			259,085
Other assets			3,040
Accounts payable			(31,069)
Accrued liabilities and other current liabilities			(35,790)
Customer deposits			(7,829)
Deferred income taxes			(79,918)
Other liabilities			(19,627)
Total consideration			469,221
Adjustments
Business Acquisition [Line Items]
Goodwill		$ (3,724)
Adjustments \| IWCO
Business Acquisition [Line Items]
Inventory			5,590
Goodwill			(3,724)
Accrued liabilities and other current liabilities			(24,009)
Deferred income taxes			4,143
Other liabilities			$ 18,000

Summary of Pro Forma Information (Detail) - IWCO - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Net revenue	$ 187,369	$ 204,716	$ 620,377	$ 671,695
Net income (loss)	$ (16,449)	$ (11,660)	$ 43,339	$ (35,929)

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018
Goodwill [Line Items]
Goodwill	$ 255,361	$ 255,361
Direct Marketing
Goodwill [Line Items]
Goodwill	255,400
Customer Relationships
Goodwill [Line Items]
Intangible assets	$ 180,900
Estimated useful life	15 years
Trademarks and Trade Names
Goodwill [Line Items]
Intangible assets	$ 17,900
Estimated useful life	3 years

Debt - Additional Information (Detail)				3 Months Ended		9 Months Ended		12 Months Ended
Debt - Additional Information (Detail)	Dec. 15, 2017 USD ($)	Jun. 30, 2014 USD ($)	Mar. 18, 2014 USD ($)	Apr. 30, 2018 USD ($) $ / shares	Apr. 30, 2017 USD ($)	Apr. 30, 2018 USD ($) d $ / shares	Apr. 30, 2017 USD ($)	Jul. 31, 2017 USD ($)
Debt Instrument [Line Items]
Debt instrument issued				$ 67,625,000		$ 67,625,000		$ 67,625,000
Debt instrument issuance costs				354,000		354,000		640,000
Notes payable, Fair Value				66,273,000		66,273,000		63,852,000
Debt instrument, carrying amount				63,274,000		$ 63,274,000		59,758,000
Convertible debt, remaining discount amortization period						10 months
Debt instrument, interest expense						$ 3,230,000	$ 2,913,000
Term loan facility						$ 393,000,000
PNC Bank Credit Facility
Debt Instrument [Line Items]
Line of credit facility, term		5 years
Line of credit facility, maximum credit commitment		$ 50,000,000
Credit facility expiry date						Jun. 30, 2019
Line of credit facility, unutilized commitment fee percentage		0.25%
Outstanding indebtedness under the Credit Facility				0		$ 0		$ 0
Cerberus Credit Facility
Debt Instrument [Line Items]
Line of credit facility, term	5 years
Outstanding indebtedness under the Credit Facility				$ 6,000,000		6,000,000
Term loan facility	$ 393,000,000
Revolving credit facility	$ 25,000,000
Line of credit facility, interest rate description	Borrowings under the Cerberus Credit Facility bear interest, at the Borrower's option, at a Reference Rate plus 3.75% or a LIBOR Rate plus 6.5%, each as defined the Financing Agreement.
Aggregate amount of each consecutive quarterly scheduled principal installment						$ 1,500,000
Excess cash flow payment percentage						25.00%		50.00%
Leverage ratio				3.50%		3.50%
Debt issuance cost				$ 6,000,000		$ 6,000,000
London Interbank Offered Rate (LIBOR) \| Cerberus Credit Facility
Debt Instrument [Line Items]
Debt instrument, percentage points added to the reference rate	6.50%
Base Rate \| Cerberus Credit Facility
Debt Instrument [Line Items]
Debt instrument, percentage points added to the reference rate	3.75%
Domestic Subsidiaries
Debt Instrument [Line Items]
Percentage of equity interests pledged						100.00%
Foreign Subsidiaries
Debt Instrument [Line Items]
Percentage of equity interests pledged						65.00%
Letter of Credit Sublimit \| PNC Bank Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum credit commitment		$ 5,000,000
Uncommitted Accordion Feature \| PNC Bank Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum credit commitment		$ 20,000,000
Scenario 1 \| London Interbank Offered Rate (LIBOR) \| PNC Bank Credit Facility
Debt Instrument [Line Items]
Debt instrument, percentage points added to the reference rate		2.25%
Scenario 2 \| London Interbank Offered Rate (LIBOR) \| PNC Bank Credit Facility
Debt Instrument [Line Items]
Debt instrument, percentage points added to the reference rate		1.00%
Scenario 2 \| Federal Funds Open Rate \| PNC Bank Credit Facility
Debt Instrument [Line Items]
Debt instrument, percentage points added to the reference rate		0.50%
5.25% Convertible Senior Notes Due 2019
Debt Instrument [Line Items]
Debt instrument issued			$ 100,000,000
Debt instrument, stated interest rate			5.25%
Debt instrument, convertible, conversion ratio						166.2593
Initial Conversion price \| $ / shares				$ 6.01		$ 6.01
Debt instrument, redemption price percentage			100.00%
Debt instrument, convertible, earliest date						Mar. 06, 2017
Debt instrument, convertible, threshold percentage of stock price trigger						130.00%
Debt instrument, convertible, threshold trading days \| d						20
Debt instrument, convertible, threshold consecutive trading days \| d						30
Debt instrument conversion option						$ 28,100,000
Debt instrument issuance costs				$ 3,400,000		3,400,000
Deferred debt instrument issuance costs				2,500,000		2,500,000
Debt instrument, interest expense				$ 2,126,000	$ 1,973,000	$ 6,257,000	$ 5,908,000
Debt instrument, interest rate, effective percentage				13.90%		13.90%
Term Loan \| Cerberus Credit Facility
Debt Instrument [Line Items]
Debt instrument issued				$ 391,500,000		$ 391,500,000
Current and long-term net				$ 390,270,000		$ 390,270,000

Net Carrying Value of the Notes (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Debt Instrument [Line Items]
Carrying amount of equity component (net of allocated debt issuance costs)	$ 26,961	$ 26,961
Principal amount of Notes	67,625	67,625
Unamortized debt discount	(3,997)	(7,227)
Unamortized debt issuance costs	(354)	(640)
Net carrying amount	$ 63,274	$ 59,758

Summary of Interest Expense Related to Convertible Notes (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Interest Expense, Debt [Line Items]
Debt instrument, interest expense			$ 3,230	$ 2,913
5.25% Convertible Senior Notes Due 2019
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	$ 2,126	$ 1,973	6,257	5,908
5.25% Convertible Senior Notes Due 2019 \| Coupon Interest
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	914	914	2,741	2,737
5.25% Convertible Senior Notes Due 2019 \| Accretion of Debt Discount
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	1,113	973	3,230	2,913
5.25% Convertible Senior Notes Due 2019 \| Amortization of Debt Issue Cost
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	$ 99	$ 86	$ 286	$ 258

Net Carrying Value of Term Loan (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Debt Instrument [Line Items]
Principal amount outstanding on the Term Loan	$ 67,625	$ 67,625
Term Loan \| Cerberus Credit Facility
Debt Instrument [Line Items]
Principal amount outstanding on the Term Loan	391,500
Unamortized debt issuance costs	(1,230)
Net carrying value of the Term Loan	$ 390,270

Stockholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands			9 Months Ended
	Dec. 15, 2017 USD ($) TradingDay $ / shares shares	Mar. 12, 2013 USD ($) $ / shares shares	Apr. 30, 2018 USD ($) $ / shares shares	Apr. 30, 2017 USD ($)	Jul. 31, 2017 $ / shares shares
Equity [Line Items]
Preferred stock, shares issued \| shares			0		0
Preferred stock, par value			$ 0.01		$ 0.01
Price per share		$ 4.00
Proceeds from issuance of preferred stock \| $			$ 35,000
Common stock par value			$ 0.01		$ 0.01
Issuance of common stock \| 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	$ 3	$ 15
Issuance of warrants to acquire additional shares, shares \| shares	2,000,000	2,000,000
Issuance of warrants to acquire additional shares, exercise price		$ 5.00
Warrants expiration term		5 years
Series C Convertible Preferred Stock
Equity [Line Items]
Common stock par value	$ 0.01
Convertible preferred stock conversion price per share	$ 1.96
Preferred stock, dividend rate, percentage	6.00%
Percentage threshold closing sale price of common stock higher than conversion price	170.00%
Series C Convertible Preferred Stock \| Minimum
Equity [Line Items]
Trading days \| TradingDay	5
Liquidation Basis of Accounting [Member] \| Series C Convertible Preferred Stock
Equity [Line Items]
Preferred stock liquidation preference percentage per share	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) one hundred percent (100%) of the stated value per share of Preferred Stock (initially $1,000 per share) then held by them (as adjusted for any stock split, stock dividend, stock combination 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.
Repurchase Agreements \| Warrant \| Steel Holdings
Equity [Line Items]
Repurchase price of warrant	$ 100
Purchase Agreement \| SPHG Holdings \| Series C Convertible Preferred Stock
Equity [Line Items]
Preferred stock, shares issued \| shares	35,000
Preferred stock, par value	$ 0.01
Price per share	$ 1,000
Proceeds from issuance of preferred stock \| $	$ 35,000

Components of Other Gains (Losses), Net (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Component Of Other Expense Income Nonoperating [Line Items]
Foreign currency exchange gains (losses)	$ 720	$ 206	$ (1,351)	$ 632
Gains on Trading Securities		2,509	1,876	2,603
Other, net	(1,412)	(7)	(1,512)	4
Other gains (losses), net	$ (692)	$ 2,708	$ (987)	$ 3,239

Other Gains (Losses), Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Component Of Other Expense Income Nonoperating [Line Items]
Foreign currency exchange gains (losses)	$ 720	$ 206	$ (1,351)	$ 632
Gains (losses) on Trading Securities		2,509	1,876	2,603
e-Business
Component Of Other Expense Income Nonoperating [Line Items]
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions		300		200
Asia
Component Of Other Expense Income Nonoperating [Line Items]
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions		500	(1,000)
Europe
Component Of Other Expense Income Nonoperating [Line Items]
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions	(600)		400	(400)
Corporate
Component Of Other Expense Income Nonoperating [Line Items]
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions	$ 1,400	$ (500)	$ (800)	$ 700

Income Taxes - Additional Information (Detail)	6 Months Ended	9 Months Ended
Income Taxes - Additional Information (Detail)	Jan. 31, 2018	Apr. 30, 2018 USD ($) d	Jul. 31, 2017 USD ($)
Income Taxes [Line Items]
Unrecognized tax benefits related to federal, state and foreign taxes		$ 1,800,000	$ 700,000
Expected any unrecognized tax benefits to reverse in the next twelve months		$ 0
Stockholder owning ownership on corporation's securities percentage		5.00%
Stockholder owning ownership on corporation's securities rolling period		3 years
Net operating loss carryforwards for federal tax		$ 2,100,000,000
Net operating loss carryforwards for state tax		$ 209,800,000
Business days \| d		10
Statutory federal income tax rate	35.00%	21.00%
Provision for income tax expense (benefit)		$ 266,300,000
Accumulated foreign earnings provisional income tax expense		$ 0
Minimum
Income Taxes [Line Items]
Percentage of ownership require to obtain approval from board of directors to acquiring shares of the company's securities		4.99%
Parent Company
Income Taxes [Line Items]
Provision for income tax expense (benefit)		$ 296,100,000
IWCO
Income Taxes [Line Items]
Deferred tax liability		75,800,000
Provision for income tax expense (benefit)		$ (29,800,000)
Federal \| Internal Revenue Service (IRS) \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2013
Federal \| Internal Revenue Service (IRS) \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2017
State \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2013
State \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2017
Foreign \| Europe Income Tax Authority \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2009
Foreign \| Europe Income Tax Authority \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2016
Foreign \| Asia Income Tax Authority \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2005
Foreign \| Asia Income Tax Authority \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2016

Reconciliation of Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2018	Apr. 30, 2018	Apr. 30, 2017
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Net income (loss)	$ (10,333)	$ 59,818	$ (5,067)	$ 54,581	$ 44,248	$ (16,516)
Less: Preferred dividends on redeemable preferred stock	(529)				(788)
Net income (loss) attributable to common stockholders	(10,862)		(5,067)		43,460	(16,516)
Effect of dilutive securities:
Net income (loss) attributable to common stockholders after assumed conversions	$ (10,862)		$ (5,067)		$ 49,496	$ (16,516)
Weighted average common shares outstanding	60,076		55,257		58,281	55,099
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock					20,653
Weighted average number of common and potential common shares	60,076		55,257		78,934	55,099
Basic net earning (loss) per share attributable to common stockholders:	$ (0.18)	$ 1.02	$ (0.09)	$ 0.96	$ 0.75	$ (0.30)
Diluted net earning (loss) per share attributable to common stockholders:	$ (0.18)	$ 0.78	$ (0.09)	$ 0.80	$ 0.63	$ (0.30)
5.25% Convertible Senior Notes
Effect of dilutive securities:
Dilutive securities					$ 5,248
Contingent Convertible Preferred Stock
Effect of dilutive securities:
Dilutive securities					$ 788

Earnings Per Share - Additional Information (Detail) - shares shares in Millions	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Computation of Earnings Per Share [Line Items]
Common stock equivalent shares excluded from the denominator in the calculation of diluted earnings per share	29.6	13.9	0.5	14.3

Summary of Share Based Compensation Expense Related to Employee Stock Options, Employee Stock Purchases and Non-Vested Shares (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 2,260	$ 145	$ 9,657	$ 526
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	1	10	13	41
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 2,259	$ 135	$ 9,644	$ 485

Share-Based Payments - Additional Information (Detail) $ in Millions	Apr. 30, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested shares	$ 2.1

Accumulated Other Comprehensive Income Items (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ 128,697		$ 62,971
Foreign currency translation adjustment	(1,411)	$ 232	2,515	$ (1,771)
Net unrealized holding loss on securities	(26)	40	(10)	40
Pension liability adjustments		80	26	830
Other comprehensive income (loss)	(1,437)	$ 352	2,531	$ (901)
Balance	118,658		118,658
Foreign currency items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			7,522
Foreign currency translation adjustment			2,515
Other comprehensive income (loss)			2,515
Balance	10,037		10,037
Pension items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			(3,376)
Pension liability adjustments			26
Other comprehensive income (loss)			26
Balance	(3,350)		(3,350)
Unrealized gains (losses) on Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			167
Net unrealized holding loss on securities			(10)
Other comprehensive income (loss)			(10)
Balance	157		157
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			4,313
Balance	$ 6,844		$ 6,844

Segment Information - Additional Information (Detail) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Apr. 30, 2018 USD ($)	Jan. 31, 2018 USD ($)	Apr. 30, 2017 USD ($)	Jan. 31, 2018 USD ($)	Apr. 30, 2018 USD ($) Segment	Apr. 30, 2017 USD ($)	Jul. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments \| Segment					5
Number of reportable segments \| Segment					5
Total assets	$ 843,033	$ 870,388		$ 870,388	$ 843,033		$ 281,298
Net revenue	188,922	$ 151,578	$ 97,948	$ 254,100	443,022	$ 336,843
United States
Segment Reporting Information [Line Items]
Total assets	563,000				563,000		$ 9,300
Net revenue	129,300		21,000		216,800	75,300
China
Segment Reporting Information [Line Items]
Net revenue	24,300		29,100		87,300	97,200
Netherlands
Segment Reporting Information [Line Items]
Net revenue	13,300		16,500		45,100	53,300
Czech Republic
Segment Reporting Information [Line Items]
Net revenue	$ 6,200		$ 16,400		$ 46,300	$ 64,400

Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2018	Apr. 30, 2018	Apr. 30, 2017
Segment Reporting Information [Line Items]
Revenues	$ 188,922	$ 151,578	$ 97,948	$ 254,100	$ 443,022	$ 336,843
Operating income (loss)	1,380		(5,243)		(8,153)	(12,389)
Total other income (expense)	(11,198)		763		(19,919)	(2,664)
Loss before income taxes	(9,818)		(4,480)		(28,072)	(15,053)
Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	6,372		(4,062)		8,716	(8,645)
Operating Segments \| Americas
Segment Reporting Information [Line Items]
Revenues	13,061		20,179		41,664	73,240
Operating income (loss)	(2,032)		(2,363)		(6,518)	(7,939)
Operating Segments \| Asia
Segment Reporting Information [Line Items]
Revenues	31,820		37,056		111,622	118,790
Operating income (loss)	1,903		832		21,795	4,921
Operating Segments \| Europe
Segment Reporting Information [Line Items]
Revenues	22,942		34,272		99,225	124,363
Operating income (loss)	(1,770)		(2,334)		(8,089)	(4,885)
Operating Segments \| Direct Marketing
Segment Reporting Information [Line Items]
Revenues	115,647				173,019
Operating income (loss)	9,917				5,965
Operating Segments \| e-Business
Segment Reporting Information [Line Items]
Revenues	5,452		6,441		17,492	20,450
Operating income (loss)	(1,646)		(197)		(4,437)	(742)
Corporate-level activity
Segment Reporting Information [Line Items]
Operating income (loss)	$ (4,992)		$ (1,181)		$ (16,869)	$ (3,744)

Total Assets of Continuing Operations (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jan. 31, 2018	Jul. 31, 2017
Segment Reporting Information [Line Items]
Total assets	$ 843,033	$ 870,388	$ 281,298
Operating Segments
Segment Reporting Information [Line Items]
Total assets	767,070		171,037
Operating Segments \| Americas
Segment Reporting Information [Line Items]
Total assets	23,679		21,876
Operating Segments \| Asia
Segment Reporting Information [Line Items]
Total assets	44,731		63,819
Operating Segments \| Europe
Segment Reporting Information [Line Items]
Total assets	42,367		64,639
Operating Segments \| Direct Marketing
Segment Reporting Information [Line Items]
Total assets	641,384
Operating Segments \| e-Business
Segment Reporting Information [Line Items]
Total assets	14,909		20,703
Corporate-level activity
Segment Reporting Information [Line Items]
Total assets	$ 75,963		$ 110,261

Summarized Financial Information of Net Revenue from External Customers by Group of Services (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Apr. 30, 2018	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2018	Apr. 30, 2018	Apr. 30, 2017
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 188,922	$ 151,578	$ 97,948	$ 254,100	$ 443,022	$ 336,843
Supply Chain Services
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	67,823		91,507		252,511	316,393
e-Business
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	5,452		$ 6,441		17,492	$ 20,450
Direct Marketing
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 115,647				$ 173,019

Related Party Transactions - Additional Information (Detail)						3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 15, 2017 USD ($) TradingDay $ / shares shares	Sep. 01, 2017 USD ($)	Jun. 30, 2015	Dec. 24, 2014	Mar. 12, 2013 $ / shares shares	Apr. 30, 2018 USD ($) $ / shares shares	Apr. 30, 2017 USD ($)	Apr. 30, 2018 USD ($) $ / shares shares	Apr. 30, 2017 USD ($)	Jul. 31, 2017 USD ($) $ / shares shares
Related Party Transaction [Line Items]
Preferred stock, shares issued \| shares						0		0		0
Preferred stock, par value						$ 0.01		$ 0.01		$ 0.01
Price per share					$ 4.00
Proceeds from issuance of preferred stock \| $								$ 35,000,000
Issuance of warrants to acquire additional shares, shares \| shares	2,000,000				2,000,000
Series C Convertible Preferred Stock
Related Party Transaction [Line Items]
Convertible preferred stock conversion price per share	$ 1.96
Preferred stock, dividend rate, percentage	6.00%
Percentage threshold closing sale price of common stock higher than conversion price	170.00%
Series C Convertible Preferred Stock \| Minimum
Related Party Transaction [Line Items]
Trading days \| TradingDay	5
Steel Holdings \| Repurchase Agreements \| Warrant
Related Party Transaction [Line Items]
Repurchase price of warrant	$ 100
Purchase Agreement \| SPHG Holdings \| Series C Convertible Preferred Stock
Related Party Transaction [Line Items]
Preferred stock, shares issued \| shares	35,000
Preferred stock, par value	$ 0.01
Price per share	$ 1,000
Proceeds from issuance of preferred stock \| $	$ 35,000,000
Steel Services Ltd. \| Management Services Agreement
Related Party Transaction [Line Items]
Fixed monthly fee to be paid in consideration of services \| $		$ 95,641								$ 175,000
Total expenses incurred related to Management Services Agreement and Transfer Agreement \| $						$ 300,000	$ 600,000	1,500,000	$ 1,700,000
SP Corporate Services Llc and Steel Services Limited \| Management Services Agreement
Related Party Transaction [Line Items]
Amount due to related parties \| $						$ 100,000		$ 100,000		$ 300,000
SP Corporate and Steel Services \| Management Services Agreement
Related Party Transaction [Line Items]
Management services agreement, effective date of agreement				Jan. 01, 2015
Management services agreement, amended expiration date of agreement			Dec. 31, 2015
Management services agreement, renew period			1 year
Management services agreement term								6 months

Fair Value Measurement of Assets and Liabilities - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Apr. 30, 2018	Jul. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Defined benefit plans assets percentage invested in bank-managed portfolios	100.00%
Fair value, assets, Level 1 to Level 2 transfers, amount	$ 0	$ 0
Fair value, assets, Level 2 to Level 1 transfers, amount	0	0
Fair value, assets, transfers into Level 3	0	0
Fair value, assets, transfers out of Level 3	$ 0	$ 0

Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	$ 47,002	$ 85,683
Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring		11,898
Fair Value, Inputs, Level 1 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	$ 47,002	85,683
Fair Value, Inputs, Level 1 \| Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring		$ 11,898

Notes Payable not Carried at Fair Value (Detail) - USD ($) $ in Thousands	Apr. 30, 2018	Jul. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable	$ 63,274	$ 59,758
Notes payable, Fair Value	$ 66,273	$ 63,852