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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Jul. 31, 2018	Nov. 01, 2018	Jan. 31, 2018
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	STCN
Entity Registrant Name	STEEL CONNECT, INC.
Entity Central Index Key	0000914712
Current Fiscal Year End Date	--07-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		60,611,082
Entity Public Float			$ 81,962,522

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
ASSETS
Cash and cash equivalents	$ 92,138	$ 110,670
Trading securities	0	11,898
Accounts receivable, trade, net of allowance for doubtful accounts of $480 and $616 at July 31, 2018 and July 31, 2017, respectively	99,254	81,450
Inventories, net	47,786	34,369
Funds held for clients	11,688	13,454
Prepaid expenses and other current assets	13,415	6,005
Total current assets	264,281	257,846
Property and equipment, net	106,632	18,555
Goodwill	254,352
Other intangible assets, net	192,964
Other assets	8,821	4,897
Total assets	827,050	281,298
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Accounts payable	78,212	71,476
Accrued restructuring	96	186
Accrued expenses	88,330	37,898
Funds held for clients	11,688	13,454
Current portion of long-term debt	5,727
Other current liabilities	42,029	26,141
Notes payable	64,530
Total current liabilities	290,612	149,155
Notes payable	64,530	59,758
Long-term debt, excluding current portion	383,111
Other long-term liabilities	10,507	9,414
Total long-term liabilities	393,618	69,172
Total liabilities	684,230	218,327
Commitments and contingencies (Note 11)
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017	35,192
Stockholders' equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at July 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at July 31, 2018 and at July 31, 2017
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,742,859 issued and outstanding shares at July 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017	608	556
Additional paid-in capital	7,467,855	7,457,051
Accumulated deficit	(7,363,569)	(7,398,949)
Accumulated other comprehensive income	2,734	4,313
Total stockholders' equity	107,628	62,971
Total liabilities, contingently redeemable preferred stock and stockholders' equity	$ 827,050	$ 281,298

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016	Jul. 31, 2015
Accounts receivable, trade, allowance for doubtful accounts	$ 480	$ 616	$ 489	$ 57
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	60,742,859	55,555,973
Common stock, shares outstanding	60,742,859	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

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Net revenue:
Total net revenue	$ 645,258	$ 436,620	$ 459,023
Cost of revenue:
Total cost of revenue	543,999	400,255	434,265
Gross profit:
Total gross profit	101,259	36,365	24,758
Operating expenses
Selling, general and administrative	101,701	54,159	57,604
Amortization of intangible assets	20,285
Impairment of long-lived assets			305
Gain on sale of property	(12,692)
Restructuring, net	271	1,967	7,421
Total operating expenses	109,565	56,126	65,330
Operating loss	(8,306)	(19,761)	(40,572)
Other income (expense):
Interest income	679	399	668
Interest expense	(29,884)	(8,247)	(10,924)
Other gains (losses), net	2,223	3,200	(5,757)
Impairment of investments in affiliates			(42)
Total other expense	(26,982)	(4,648)	(16,055)
Loss before income taxes	(35,288)	(24,409)	(56,627)
Income tax expense (benefit)	(71,202)	2,696	5,443
Gains on investments in affiliates, net of tax	(801)	(1,278)	(789)
Net income (loss)	36,715	(25,827)	(61,281)
Less: Preferred dividends on redeemable preferred stock	(1,335)
Net income (loss) attributable to common stockholders	$ 35,380	$ (25,827)	$ (61,281)
Basic net earning (loss) per share attributable to common stockholders:	$ 0.60	$ (0.47)	$ (1.18)
Diluted net earning (loss) per share attributable to common stockholders:	$ 0.53	$ (0.47)	$ (1.18)
Weighted average common shares used in:
Basic earnings per share	59,179	55,134	51,934
Diluted earnings per share	81,899	55,134	51,934
Services
Net revenue:
Total net revenue	$ 345,900	$ 436,620	$ 459,023
Cost of revenue:
Total cost of revenue	313,978	400,255	434,265
Gross profit:
Total gross profit	31,922	$ 36,365	$ 24,758
Products
Net revenue:
Total net revenue	299,358
Cost of revenue:
Total cost of revenue	230,021
Gross profit:
Total gross profit	$ 69,337

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Net income (loss)	$ 36,715	$ (25,827)	$ (61,281)
Other comprehensive income (loss):
Foreign currency translation adjustment	(1,174)	1,391	(1,539)
Net unrealized holding gain on securities, net of tax	14	73	48
Pension liability adjustments, net of tax	(419)	830
Other comprehensive gain (loss)	(1,579)	2,294	(1,491)
Comprehensive income (loss)	$ 35,136	$ (23,533)	$ (62,772)

- Definition

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

+ References + Details

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Balance at Jul. 31, 2015	$ 144,601	$ 522	$ 7,452,410	$ (7,311,841)	$ 3,510
Balance, shares at Jul. 31, 2015		52,233,888
Net income (loss)	(61,281)			(61,281)
Equity portion of convertible notes	(64)		(64)
Issuance of common stock to Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P.	3,134	$ 27	3,107
Issuance of common stock to Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P., Shares		2,656,336
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises	51		51
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises, shares		70,136
Restricted stock grants		$ 4	(4)
Restricted stock grants, shares		340,259
Restricted stock forfeitures	(136)		(136)
Restricted stock forfeitures, shares		(51,543)
Share-based compensation	1,126		1,126
Other comprehensive items	(1,491)				(1,491)
Balance at Jul. 31, 2016	85,940	$ 553	7,456,490	(7,373,122)	2,019
Balance, shares at Jul. 31, 2016		55,249,076
Net income (loss)	(25,827)			(25,827)
Equity portion of convertible notes	(135)		(135)
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises	18		18
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises, shares		10,605
Restricted stock grants		$ 3	(3)
Restricted stock grants, shares		296,292
Share-based compensation	681		681
Other comprehensive items	2,294				2,294
Balance at Jul. 31, 2017	$ 62,971	$ 556	7,457,051	(7,398,949)	4,313
Balance, shares at Jul. 31, 2017	55,555,973	55,555,973
Net income (loss)	$ 36,715			36,715
Preferred dividends	(1,335)			(1,335)
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises	8		8
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises, shares		10,462
Restricted stock grants	47	$ 52	(5)
Restricted stock grants, shares		5,225,806
Restricted stock forfeitures, shares		(49,382)
Share-based compensation	10,801		10,801
Other comprehensive items	(1,579)				(1,579)
Balance at Jul. 31, 2018	$ 107,628	$ 608	$ 7,467,855	$ (7,363,569)	$ 2,734
Balance, shares at Jul. 31, 2018	60,742,859	60,742,859

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ 36,715	$ (25,827)	$ (61,281)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	16,791	8,206	8,119
Amortization of intangible assets	20,285
Amortization of deferred financing costs	1,072	566	733
Accretion of debt discount	4,384	3,919	4,967
Impairment of long-lived assets		261	305
Share-based compensation	10,801	681	1,126
Other (gains) losses, net (including gain on sale of building)	(15,266)	(3,200)	4,519
Gains on investments in affiliates and impairments	(801)	(1,278)	(747)
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable, net	29,735	31,102	19,130
Inventories, net	19,971	6,852	7,752
Prepaid expenses and other current assets	6,563	1,572	10,763
Accounts payable, accrued restructuring and accrued expenses	(39,945)	(45,314)	(4,245)
Refundable and accrued income taxes, net	6,524	(1,014)	2,660
Deferred tax assets and liabilities	(78,794)
Other assets and liabilities	(6,267)	(971)	(13,589)
Net cash provided by (used in) operating activities	11,768	(24,445)	(19,788)
Cash flows from investing activities:
Payments to acquire business	(469,221)
Additions to property and equipment	(18,423)	(4,730)	(7,936)
Proceeds from the disposition of property and equipment	20,748	187	1,318
Proceeds from the termination of defined benefit pension plan		905
Purchase of Trading Securities			(1,220)
Proceeds from the sale of Trading Securities	13,775	7,998	59,327
Investments in affiliates			(42)
Proceeds from investments in affiliates	801	1,278	789
Net cash provided by (used in) investing activities	(452,320)	5,638	52,236
Cash flows from financing activities:
Proceeds from long-term debt	393,000
Proceeds from issuance of preferred stock	35,000
Payment of long-term debt	(3,000)
Payment of deferred financing costs	(1,334)
Payment of preferred dividends	(1,143)
Purchase of the Company's Convertible Notes		(1,763)	(20,257)
Repayments on capital lease obligations	(652)	(171)	(228)
Proceeds from issuance of common stock	8	18	51
Repurchase of common stock			(127)
Net cash provided by (used in) financing activities	421,879	(1,916)	(20,561)
Net effect of exchange rate changes on cash and cash equivalents	141	603	(528)
Net decrease in cash and cash equivalents	(18,532)	(20,120)	11,359
Cash and cash equivalents at beginning of period	110,670	130,790	119,431
Cash and cash equivalents at end of period	$ 92,138	$ 110,670	$ 130,790

NATURE OF OPERATIONS

12 Months Ended

Jul. 31, 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” or “Supply Chain“), 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 supply chain business process management company serving clients in markets such as consumer electronics, communications, computing, medical devices, software, and retail. ModusLink designs and executes elements in its clients’ global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. The Company also produces and licenses an entitlement management solution for activation, provisioning, entitlement subscription and data collection from physical goods (connected products) and digital products.

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 data-driven marketing solutions for its customers. Its full range of services includes strategy, creative and execution for omnichannel marketing campaigns, along with postal logistics programs for direct mail. Through its Mail-Gard® division, 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 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, borrowings from lending institutions, and sale of facilities that were not fully utilized. The Company believes it has access to adequate resources to meet its needs for normal operating costs, capital expenditures, mandatory debt redemptions and working capital for its existing business for at least twelve months from the date of this filing. These resources include cash and cash equivalents, the Credit Agreement, as defined in Note 10 the securitization of trade receivables not currently in the PNC Agreement and the revolving credit facility and cash, if any, provided by operating activities. At July 31, 2018 and July 31, 2017, the Company had cash and cash equivalents and Trading Securities of $92.1 million and $122.6 million, respectively. As of July 31, 2018, the Company had a deficiency in working capital which was primarily driven by the reclassification of the Company’s convertible notes from long-term to current and the additional liabilities assumed as a result of the IWCO acquisition. At July 31, 2018 and July 31, 2017, the Company had a readily available borrowing capacity under its PNC Bank Credit Facility of $9.6 million and $16.0 million, respectively. At July 31, 2018, IWCO had a readily available borrowing capacity under its Revolving Facility of $25.0 million. Per the Cerberus Credit Facility, IWCO is permitted to make distributions to the Parent, Steel Connect, Inc., an aggregate amount not to exceed $5.0 million in any fiscal year and pay reasonable documented expenses incurred by the Parent. The Parent is entitled to receive additional cash remittances under a “U.S. Federal Income Tax Sharing Agreement.” As of July 31, 2018, SPHG Holdings held $14.9 million principal amount of the Company’s 5.25% Convertible Senior Notes (the “Notes”). SPHG Holdings has confirmed to the Company that it will not require a cash payment on Notes when they mature and for a period of twelve months from the date of this filing. The Company believes it will generate sufficient cash to meet its debt covenants under the Credit Agreement with PNC Bank (the “Credit Agreement”) and the Financing Agreement to which certain of its subsidiaries are a party, to repay or restructure its the Notes, and that it will be able to obtain cash through its current credit facilities and through securitization of certain trade receivables. The Company’s historical operating results and working capital deficit indicate substantial doubt exists related to the Company’s ability to continue as a going concern. The Company believes that the actions discussed above are probable of occurring and mitigating the substantial doubt raised by the Company’s historical operating results and satisfying the Company’s estimated liquidity needs 12 months from the issuance of the financial statements. However, the Company cannot predict, with certainty, the outcome of its actions to generate liquidity, including the availability of additional debt refinancing or factoring of receivables, or whether such actions would generate the expected liquidity as currently planned. Our conclusion on going concern is predicated upon the factoring of certain accounts receivable balances, which has not yet occurred.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jul. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(2)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements reflect the application of certain significant accounting policies described below.

Principles of Consolidation

The accompanying consolidated financial statements of the Company include the results of its wholly-owned and majority- owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company accounts for investments in businesses in which it owns between 20% and 50% of the voting interest using the equity method, if the Company has the ability to exercise significant influence over the investee company. All other investments in privately held businesses over which the Company does not have the ability to exercise significant influence, or for which there is not a readily determinable market value, are accounted for under the cost method of accounting.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, allowance for doubtful accounts, inventories, fair value of its trading and available-for-sale securities, intangible assets, income taxes, restructuring, valuation of long-lived assets, impairments, contingencies, restructuring charges, litigation, pension obligations and the fair value of stock options and share bonus awards granted under the Company’s stock based compensation plans. Accounting estimates are based on historical experience and various assumptions that are considered reasonable under the circumstances. However, because these estimates inherently involve judgments and uncertainties, actual results could differ materially from those estimated.

Revenue Recognition

The Supply Chain business’ revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to clients under these arrangements include revenue attributable to the services performed as well as for materials procured on the Company’s clients’ behalf as part of its service to them. Other sources of revenue include the sale of products and other services. Revenue is recognized for services when the services are performed and for product sales when the products are shipped or in certain cases when products are built and title had transferred, if the client has also contracted with us for warehousing and/or logistics services for a separate fee, assuming all other applicable revenue recognition criteria are met.

IWCO recognizes revenue for the majority of its products upon the transfer of title and risk of ownership, which is generally upon the delivery of the product to the United States Postal Service (“USPS”). IWCO does not have contractual purchase commitments from customers. IWCO receives purchase orders for all customer transactions and prices each order based upon the customer’s most recently agreed to pricing grid/rate card.

The Company recognizes revenue in accordance with the provisions of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition” (“ASC Topic 605”). Specifically, the Company recognizes revenue when persuasive evidence of an arrangement exists, title and risk of loss have passed or services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. The Company’s shipping terms vary by client and can include FOB shipping point, which means that risk of loss passes to the client when it is shipped from the Company’s location, as well as other terms such as ex-works, meaning that title and risk of loss transfer upon delivery of product to the customer’s designated carrier or when the products is delivered to the USPS. The Company also evaluates the terms of each major client contract relative to a number of criteria that management considers in making its determination with respect to gross versus net reporting of revenue for transactions with its clients. Management’s criteria for making these judgments place particular emphasis on determining the primary obligor in a transaction and which party bears general inventory risk. The Company records all shipping and handling fees billed to clients as revenue, and related costs as cost of sales, when incurred.

The Company applies the provisions of ASC Topic 985, “Software” (“ASC Topic 985”), with respect to certain transactions involving the sale of software products by the Company’s e-Business operations.

The Company applies the guidance of Accounting Standards Codification (“ASC”) 605-25 “Revenue – Multiple-Element Arrangements” for determining whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. Under this guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. For those contracts which contain multiple deliverables, management must first determine whether each service, or deliverable, meets the separation criteria. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has standalone value to the client. Each deliverable that meets the separation criteria is considered a “separate unit of accounting.” Management allocates the total arrangement consideration to each separate unit of accounting based on the relative selling price of each separate unit of accounting. After the arrangement consideration has been allocated to each separate unit of accounting, management applies the appropriate revenue recognition method for each separate unit of accounting as described previously based on the nature of the arrangement. In general, revenue is recognized upon completion of the last deliverable. All deliverables that do not meet the separation criteria are combined into one unit of accounting and the appropriate revenue recognition method is applied.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s unsecured accounts receivable are stated at original invoice amount less an estimate made for doubtful receivables based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer’s financial condition, credit history and current economic conditions. The Company writes off accounts receivable when management deems them uncollectible and records recoveries of accounts receivable previously written off when received. When accounts receivable are considered past due, the Company generally does not charge interest on past due balances.

Foreign Currency Translation

All assets and liabilities of the Company’s foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars at the rates in effect at the balance sheet date. All amounts in the Consolidated Statements of Operations are translated using the average exchange rates in effect during the year. Resulting translation adjustments are reflected in the accumulated other comprehensive income (loss) component of stockholders’ equity. Settlement of receivables and payables in a foreign currency that is not the functional currency result in foreign currency transaction gains and losses. Foreign currency transaction gains and losses are included in “Other gains (losses), net” in the Consolidated Statements of Operations.

Cash, Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Investments with maturities greater than three months to twelve months at the time of purchase are considered short- term investments. Cash and cash equivalents consisted of the following:


	July 31, 2018		July 31, 2017
	(In thousands)
Cash and bank deposits	$	44,952	$	24,987
Money market funds		47,186		85,683

	$	92,138	$	110,670

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. 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. 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 fair value of the Company’s Notes payable is $66.7 million as of July 31, 2018, which represents the value at which its lenders could trade its debt with in the financial markets, and does not represent the settlement value of these debt liabilities to us. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, the Company’s stock price, as well as changes to the Company’s credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates.

The defined benefit plans have assets invested in insurance contracts and bank managed portfolios. 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.

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

Investments

Marketable securities held by the Company which meet the criteria for classification as trading securities or available-for-sale are carried at fair value. Gains and losses on securities classified as trading are reflected in other income (expense) in the Company’s Consolidated Statements of Operations. Unrealized holding gains and losses on securities classified as available-for-sale are carried net of income taxes, when applicable, as a component of accumulated other comprehensive income (loss) in the Consolidated Statements of Stockholders’ Equity.

The Company maintained interests in a small number of privately held companies primarily through its various venture capital funds. The Company’s venture capital investment portfolio, @Ventures, invested in early-stage technology companies. These investments are generally made in connection with a round of financing with other third-party investors. Investments in which the Company’s interest is less than 20% and which are not classified as available-for-sale securities, are accounted for under the cost method of accounting, and are carried at the lower of cost or net realizable value. Under this method, the investment balance, originally recorded at is cost, is only adjusted for impairments to the investment. Gains and losses realized upon the sale of the investment are reflected in “Gains on investments in affiliates, net of tax” in the Company’s Consolidated Statements of Operations. If it is determined that the Company exercises significant influence over the investee company, then the equity method of accounting is used. For those investments in which the Company’s voting interest is between 20% and 50%, the equity method of accounting is generally used. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee company as they occur, limited to the extent of the Company’s investment in, advances to and commitments for the investee.

The Company assesses the need to record impairment losses on its investments and records such losses when the impairment of an investment is determined to be other than temporary in nature. The process of assessing whether a particular equity investment’s net realizable value is less than its carrying cost requires a significant amount of judgment. This valuation process is based primarily on information that the Company obtains from these privately held companies who are not subject to the same disclosure and audit requirements as the reports required of U.S. public companies. As such, the timeliness and completeness of the data may vary. Based on the Company’s evaluation, it recorded impairment charges related to its investments in privately held companies of approximately $42 thousand for the fiscal year ended July 31, 2016. These impairment losses are reflected in “Impairment of investments in affiliates” in the Company’s Consolidated Statements of Operations.

At the time an equity method investee issues its stock to unrelated parties, the Company accounts for that share issuance as if the Company has sold a proportionate share of its investment. The Company records any gain or loss resulting from an equity method investee’s share issuance in its Consolidated Statements of Operations.

Funds held for clients

Funds held for clients represent assets that are restricted for use solely for the purposes of satisfying the obligations to remit client’s customer funds to the Company’s clients. These funds are classified as a current asset and a corresponding other current liability on the Company’s Consolidated Balance Sheets.

Inventory

We value the inventory at the lower of cost or net realizable value. Cost is determined by both moving averages and the first-in, first-out methods. We continuously monitor inventory balances and record inventory provisions for any excess of the cost of the inventory over its estimated net realizable value. We also monitor inventory balances for obsolescence and excess quantities as compared to projected demands. Our inventory methodology is based on assumptions about average shelf life of inventory, forecasted volumes, forecasted selling prices, contractual provisions with our 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 our inventories, we use the best information available as of the balance sheet date. If actual market conditions are less favorable than those projected, or we experience 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.

IWCO’s inventory consists primarily of raw material (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 $7.2 million which was recognized as a non-cash charge to cost of revenues during the fiscal year 2018.

Inventories consisted of the following:


	July 31, 2018		July 31, 2017
	(In thousands)
Raw materials	$	23,208	$	31,071
Work-in-process		16,147		713
Finished goods		8,431		2,585

	$	47,786	$	34,369

Business Combinations and Valuation of Goodwill and Other Acquired Intangible Assets

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets may include, but are not limited to, future expected cash flows, acquired technology and tradenames, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Accounting for Impairment of Long-Lived Assets, Goodwill and Other Intangible Assets

The Company follows ASC Topic 360, “Property, Plant, and Equipment” (“ASC Topic 360”). Under ASC Topic 360, the Company tests certain long-lived assets or group of assets for recoverability whenever events or changes in circumstances indicate that the Company may not be able to recover the asset’s carrying amount. ASC Topic 360 defines impairment as the condition that exists when the carrying amount of a long-lived asset or group, including property and equipment and other intangible assets, exceeds its fair value. The Company evaluates recoverability by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group cover the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to cover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. Management may use third party valuation experts to assist in its determination of fair value.

The Company is required to test goodwill for impairment annually or if a triggering event occurs in accordance with the provisions of ASC Topic 350, “Goodwill and Other” (“ASC Topic 350”). The Company’s policy is to perform its annual impairment testing for its reporting units on July 31, of each fiscal year.

Acquired finite-lived intangible assets are amortized over their estimated useful lives. We evaluate the recoverability of our intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Restructuring Expenses

The Company follows the provisions of ASC Topic 420, “Exit or Disposal Cost Obligations”, which addresses financial accounting and reporting for costs associated with exit or disposal activities. The statement requires companies to recognize costs associated with exit or disposal activities when a liability has been incurred rather than at the date of a commitment to an exit or disposal plan. The Company records liabilities that primarily include estimated severance and other costs related to employee benefits and certain estimated costs related to equipment and facility lease obligations and other service contracts. These contractual obligations principally represent future obligations under non-cancelable real estate leases. Restructuring estimates relating to real estate leases involve consideration of a number of factors including: potential sublet rental rates, estimated vacancy period for the property, brokerage commissions and certain other costs. Estimates relating to potential sublet rates and expected vacancy periods are most likely to have a material impact on the Company’s results of operations in the event that actual amounts differ significantly from estimates. These estimates involve judgment and uncertainties, and the settlement of these liabilities could differ materially from recorded amounts.

Property and Equipment

Property, plant and equipment are stated at cost. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation and amortization is provided on the straight-line basis over the estimated useful lives of the respective assets. The Company capitalizes certain computer software development costs when incurred in connection with developing or obtaining computer software for internal use. The estimated useful lives are as follows:


Buildings		32 years
Machinery & equipment		3 to 7 years
Furniture & fixtures		5 to 7 years
Automobiles		5 years
Software		3 to 8 years
Leasehold improvements		Shorter of the remaining lease term or the estimated useful life of the asset

Income Taxes

Income taxes are accounted for under the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”), using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 also requires that the deferred tax assets be reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology is subjective and requires significant estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities.

In accordance with ASC Topic 740, the Company applies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. ASC Topic 740 prescribes a recognition threshold of more-likely-than-not,and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. In accordance with the Company’s accounting policy, interest and penalties related to uncertain tax positions is included in the “income tax expense” line of the Consolidated Statements of Operations. See Note 15, “Income Taxes,” for additional information.

Earnings (Loss) Per Share

The following table reconciles earnings (loss) per share for the fiscal years ended July 31, 2018, 2017 and 2016.


	Twelve Months Ended
	July 31,
	2018			2017			2016
	(In thousands, except per share data)
Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)
Less: Preferred dividends on redeemable preferred stock		(1,335	)		—			—

Net income (loss) attributable to common stockholders		35,380			(25,827	)		(61,281	)

Effect of dilutive securities:
5.25% Convertible Senior Notes		7,079			—			—
Redeemable preferred stock		1,335			—			—

Net income (loss) attributable to common stockholders after assumed conversions	$	43,794		$	(25,827	)	$	(61,281	)

Weighted average common shares outstanding		59,179			55,134			51,934
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock		22,720			—			—

Weighted average number of common and potential common shares		81,899			55,134			51,934

Basic net earning (loss) per share attributable to common stockholders:	$	0.60		$	(0.47	)	$	(1.18	)
Diluted net earning (loss) per share attributable to common stockholders:	$	0.53		$	(0.47	)	$	(1.18	)

Approximately 0.5 million, 14.2 million and 21.1 million common stock equivalent shares relating to the effects of outstanding stock options and restricted stock were excluded from the denominator in the calculation of diluted earnings per share for the fiscal years ended July 31, 2018, 2017 and 2016, respectively. The common stock equivalent shares excluded during the year ended July 31, 2018 were primarily excluded as the options were out-of-the-money. The common stock equivalent shares excluded during the years ended July 31, 2017 and 2016 were primarily excluded as their effect would be anti-dilutive due to the fact that the Company recorded a net loss for those periods. Approximately 11.4 million and 16.5 million common shares outstanding associated with the convertible Notes, using the if-converted method, were excluded from the denominator in the calculation of diluted earnings (loss) per share for the fiscal years ended July 31, 2017 and 2016, respectively.

Share-Based Compensation Plans

The Company recognizes share-based compensation in accordance with the provisions of ASC Topic 718, “Compensation— Stock Compensation” (“ASC Topic 718”) which requires the measurement and recognition of compensation expense for all share- based payment awards made to employees and directors including employee stock options and employee stock purchases based on estimated fair values.

The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. The Company estimates forfeitures at the time of grant and revises those estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company uses a binomial-lattice option-pricing model (“binomial-lattice model”) for valuation of share-based awards with time-based vesting. The Company believes that the binomial-lattice model is an accurate model for valuing employee stock options since it reflects the impact of stock price changes on option exercise behavior. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. For share-based awards based on market conditions, specifically, the Company’s stock price, the compensation cost and derived service periods are estimated using the Monte Carlo valuation method. The Company uses third party analyses to assist in developing the assumptions used in its binomial-lattice model and Monte Carlo valuations and the resulting fair value used to record compensation expense. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Any significant changes in these assumptions may materially affect the estimated fair value of the share-based award.

Major Clients and Concentration of Credit Risk

For the fiscal year ended July 31, 2018, 2017 and 2016, the Company’s 10 largest clients accounted for approximately 44%, 70% and 71% of consolidated net revenue, respectively. No clients accounted for more than 10% of the Company’s consolidated net revenue for the fiscal year ended July 31, 2018. No clients accounted for greater than 10% of the Company’s Net Accounts Receivable balance as of July 31, 2018. A computing market client accounted for approximately 13% and 3% of the Company’s Net Accounts Receivable balance as of July 31, 2017 and 2016, respectively. A consumer electronics client accounted for approximately 11% and 16% of the Company’s Net Accounts Receivable balance as of July 31, 2017 and 2016, respectively. To manage risk, the Company performs ongoing credit evaluations of its clients’ financial condition. The Company generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable.

Financial instruments which potentially subject the Company to concentrations of credit risk are cash, cash equivalents and accounts receivable. The Company’s cash equivalent portfolio is diversified and consists primarily of short-term investment grade securities placed with high credit quality financial institutions. Cash and cash equivalents are maintained at accredited financial institutions, and the balances associated with Funds Held for Clients are at times without and in excess of federally insured limits. The Company has never experienced any losses related to these balances and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with financial institutions.

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 has substantially completed 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. Based on the analysis to date, the Company has identified the following potential impacts:

•

ModusLink’s revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer’s behalf as part of its service to them. Under existing guidance, revenue was recognized for services when the services were performed and for product sales when the products were shipped or in certain cases when products were completed and title had transferred, if the client had also contracted with us for warehousing and/or logistics services for a separate fee, assuming all other applicable revenue recognition criteria were met.

Under the new standard, the majority of our arrangements will consist of two distinct performance obligations (i.e., a warehousing/inventory management service and a separate kitting/packaging/assembly service), each of which will be recognized over time as services are performed using an input method based on the level of efforts expended. For the majority of the Company’s contracts under which the Company previously recognized revenue for services when the services were performed, the Company does not expect a material change in the manner and timing of revenue recognition as the input method corresponds with the transfer of value to the customer under the previous standard. However, for the limited population of contracts where the Company previously recognized revenues upon completion of all services and historically recognized revenue at a point in time (generally upon product shipment), the timing of revenue recognition will change in comparison to existing guidance as the Company’s performance enhances assets that the customer controls.

The Company has estimated that the impact of this change in the manner and timing of revenue recognition will result in an estimated increase to retained earnings of approximately $1.0 million to $2.0 million and the recording of an unbilled asset in the same amount. The Company is currently refining this estimate and will record in the Company’s first quarter report on Form 10-Q.

•

We also recognize revenue from the sale of software in the Company’s e-Business operations. 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.

The Company has determined that it does not have any in process perpetual license arrangements at the date of adoption, as the balances at July 31, 2018 relate to maintenance renewal periods only. The Company did not identify any changes to the timing and manner of revenue recognition related to software contracts where the only performance obligation is the provision of software maintenance.

•

IWCO’s revenue is generated through the provision of data-driven marketing solutions, primarily through providing direct mail products to customers. Revenue recognized related to IWCO’s marketing solutions offerings, which typically consist of a single integrated performance obligation, was recognized at a point in time when the products were complete under existing guidance. Under the new standard, the majority of IWCO’s marketing solutions contracts will be recognized over time as the Company performs because the products have no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

The Company has estimated that the impact of this change in the manner and timing of revenue recognition will result in an estimated adjustment to retained earnings of approximately $4.5 million to $6.0 million and the recording of an unbilled asset in the same amount. The Company is currently refining this estimate and will record in the Company’s first quarter report on Form 10-Q.

In addition, the new standard will require incremental contract acquisition costs (such as certain sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the sales commissions or other costs relate. 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. As of the date of adoption, the total commission expense that has been incurred under the commissions programs that have been identified by the Company is not material and the Company does not expect to record an adjustment for commissions at the date of adoption.

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 ModusLink supply chain management services contracts and IWCO marketing solutions contracts as noted above, given the changes to the manner and timing of revenue recognition upon adoption. The Company has not identified any other material adjustments that would need to be recorded at the time of adoption. Currently, the Company expects the cumulative effect adjustment to be within the range of $5.5 million to $8.0 million. The Company expects to finalize its estimates and record the cumulative effect adjustment for inclusion in the Company’s first quarter report on Form 10-Q.

In addition, the Company has determined the adoption of the standard will result in several additional disclosures, including but not limited to additional information around performance obligations, the timing of revenue recognition, remaining performance obligations at period end, contract assets and liabilities and significant judgments made that impact the amount and timing of revenue from our contracts with customers. These additional disclosures will be included in the Company’s first quarter report on Form 10-Q. In addition, under the modified retrospective method of adoption, we will be required to disclose, for any periods presented which occurred prior to adoption, any significant revenue recognition differences under the new standard from what would have been recorded by us had historical revenue recognition guidance continued to be in effect for those periods.

This discussion of the expected effects of the Company’s adoption of ASC 606 represents management’s best estimates of the effects of adopting ASC 606 at the time of the preparation of this Annual Report on Form 10-K. In order to finalize this assessment, we are continuing to update and enhance our internal accounting systems and internal controls over financial reporting.

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 and has provided additional disclosures in accordance with the new standard.

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 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. 2016-09, 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 the guidance did not have a material impact on 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. This new ASU will not materially impact the Company’s consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

12 Months Ended

Jul. 31, 2018

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

(3)

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE


	July 31,
	2018			2017			2016
	(In thousands)
Balance at beginning of year	$	616		$	489		$	57
Provisions charged to expense		211			132			458
Accounts written off		(347	)		(5	)		(26	)

	$	480		$	616		$	489

During the fourth quarter of fiscal 2013, as a part of its working capital management, the Company entered into a factoring agreement with a third party financial institution for the sale of certain accounts receivables without recourse. The activity under this agreement was accounted for as a sale of accounts receivable under ASC 860 “Transfers and Servicing”. This agreement related exclusively to the accounts receivables of one of the Company’s significant clients. The amount sold varied each month based on the amount of underlying receivables and cash flow requirements of the Company. The factoring agreement is permitted under the Company’s Credit Facility agreement. The total amount of accounts receivable factored was $38.0 million and $41.1 million for the years ended July 31, 2018 and 2017, respectively. The cost incurred on the sale of these receivables was immaterial for years ended July 31, 2018 and 2017, respectively. The cost of selling these receivable is dependent upon the number of days between the sale date of the receivable and the date the client’s invoice is due and the interest rate. The interest rate associated with the sale of these receivables was equal to LIBOR plus 0.85%. The expense associated with the sale of these receivables is recorded as a component of selling, general and administrative expense in the accompanying consolidated statements of operations. The factoring agreement was discontinued during the fiscal year 2018.

PROPERTY AND EQUIPMENT

12 Months Ended

Jul. 31, 2018

PROPERTY AND EQUIPMENT

(4)

PROPERTY AND EQUIPMENT

Property and equipment at cost, consists of the following:


	July 31,
	2018			2017
	(In thousands)
Land	$	942		$	—
Buildings		—			24,476
Machinery and equipment		97,149			24,504
Leasehold improvements		21,917			14,815
Software		52,082			48,536
Other		28,147			22,126

		200,237			134,457
Less: Accumulated depreciation and amortization		(93,605	)		(115,902	)

Property and equipment, net	$	106,632		$	18,555

An immaterial amount of assets are under capital leases are included in the amounts above.

The Company recorded depreciation expense of $16.8 million, $8.2 million and $8.1 million for the fiscal years ended July 31, 2018, 2017 and 2016, respectively. Depreciation expense within the Americas, Asia, Europe, Direct Marketing and e-Business was $1.1 million, $1.4 million, $1.3 million, $10.0 million and $0.6 million, respectively, for the year ended July 31, 2018. Depreciation expense within the Americas, Asia, Europe and e-Business was $1.2 million, $1.9 million, $1.8 million, and $0.6 million, respectively, for the year ended July 31, 2017, and $1.5 million, $3.2 million, $2.6 million, and $0.8 million, respectively, for the year ended July 31, 2016. Amortization of assets recorded under capital leases is included in the depreciation expense amounts.

During the twelve months ended July 31, 2018, the Company received $20.7 million in proceeds associated with the sale of property and equipment. During the twelve months ended July 31, 2018, the Company recognized $12.7 million in gains associated with the sale of property. During the year ended, July, 2016, the Company recorded an impairment charge of $0.3 million to adjust the carrying value of its building in Kildare, Ireland to its estimated fair value. These charges are reflected in “impairment of long-lived assets” in the Consolidated Statements of Operations.

INVESTMENTS

12 Months Ended

Jul. 31, 2018

INVESTMENTS

(5)

INVESTMENTS

Trading securities

During the twelve months ended July 31, 2018, the Company sold all of its remaining publicly traded securities (“Trading Securities”). As a result, the Company received $13.8 million in proceeds associated with the sale of the Trading Securities, which included a cash gain of $4.6 million. During the twelve months ended July 31, 2018, the Company recognized $2.7 million in net non-cash net losses associated with its Trading Securities.

During the twelve months ended July 31, 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 twelve months ended July 31, 2017, the Company recognized $2.2 million in net non-cash net gains associated with its Trading Securities. During the twelve months ended July 31, 2016, the Company sold $57.2 million in publicly traded securities, with a realized gain of $6.4 million. These gains and losses were recorded as a component of Other gains (losses), net on the Statements of Operations.

As of July 31, 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.

Investments in affiliates

The Company maintained interests in a small number of privately held companies. As of July 31, 2018 and 2017, the value of these investments was fully impaired. As of July 31, 2018, the Company is not committed to fund any follow-on investments in any of the portfolio companies. Investments in which the Company’s interest is less than 20% and which are not classified as available-for-sale securities, are accounted for under the cost method of accounting, and are carried at the lower of cost or net realizable value. Under this method, the investment balance, originally recorded at is cost, is only adjusted for impairments to the investment. Gains and losses realized upon the sale of the investment are reflected in “Gains on investments in affiliates, net of tax” in the Company’s Consolidated Statements of Operations. For the fiscal years ended July 31, 2018, 2017 and 2016, the Company recorded gains of $0.8 million, $1.3 million and $0.8 million, respectively, associated with its cost method investments. If it is determined that the Company exercises significant influence over the investee company, then the equity method of accounting is used. For those investments in which the Company’s voting interest is between 20% and 50%, the equity method of accounting is generally used. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee company as they occur, limited to the extent of the Company’s investment in, advances to and commitments for the investee.

ACQUISITION OF IWCO DIRECT

12 Months Ended

Jul. 31, 2018

ACQUISITION OF IWCO DIRECT

(6)

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:


	As Previously Reported			Adjustments			As Revised
	(In thousands)
Accounts receivable	$	47,841		$	(433	)	$	47,408
Inventory		27,165			5,829			32,994
Other current assets		7,427			3,574			11,001
Property and equipment		87,976			4,533			92,509
Intangible assets		210,920			2,330			213,250
Goodwill		259,085			(4,733	)		254,352
Other assets		3,040			(300	)		2,740
Accounts payable		(31,069	)		—			(31,069	)
Accrued liabilities and other current liabilities		(35,790	)		(30,826	)		(66,616	)
Customer deposits		(7,829	)		—			(7,829	)
Deferred income taxes		(79,918	)		1,398			(78,520	)
Other liabilities		(19,627	)		18,628			(999	)

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

Acquired intangible assets include trademarks and tradenames valued at $20.5 million and customer relationships of $192.7 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 $254.4 million of goodwill which arose primarily from the synergies in its business and the assembled workforce of IWCO. Our purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at that time was unknown to us, may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred. The consolidated statement of operations, for the fiscal year ended July 31, 2018, includes net revenue of $299.4 million, operating income of $10.7 million, and a loss before income taxes of $11.4 million associated with 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 twelve months ended July 31, 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 a fair value step-up to work-in-process inventory, as well as 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. The pro forma results also reflect the reversal of the income tax valuation allowance that resulted from the acquisition in fiscal year 2017, rather than fiscal year 2018:


	Twelve Months Ended July 31,
	2018			2017
	(In thousands)
Net revenue	$	824,825		$	891,373
Net income (loss)	$	(17,148	)	$	16,040

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jul. 31, 2018

GOODWILL AND INTANGIBLE ASSETS

(7)

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 $254.4 million as of July 31, 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 twelve months ended July 31, 2018.

Intangible assets, as of July 31, 2018, include trademarks and tradenames with a carrying balance of $16.2 million and customer relationships of $176.7 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. The estimated future amortization expense of intangible assets as of July 31, 2018 is as follows (in thousands):


2019	$	30,396
2020		27,255
2021		20,258
2022		15,334
2023		11,427
Thereafter		88,294

	$	192,964

RESTRUCTURING

12 Months Ended

Jul. 31, 2018

RESTRUCTURING

(8)

RESTRUCTURING

The following tables summarize the activity in the restructuring accrual for the fiscal years ended July 31, 2018, 2017 and 2016:


	Employee Related Expenses			Contractual Obligations			Total
	(In thousands)
Accrued restructuring balance at July 31, 2015	$	1,437		$	91		$	1,528

Restructuring charges		6,025			1,536			7,561
Restructuring adjustments		(108	)		(32	)		(140	)
Cash paid		(5,244	)		(641	)		(5,885	)
Non-cash adjustments		(36	)		1			(35	)

Accrued restructuring balance at July 31, 2016		2,074			955			3,029

Restructuring charges		1,853			439			2,292
Restructuring adjustments		(416	)		91			(325	)
Cash paid		(3,357	)		(1,419	)		(4,776	)
Non-cash adjustments		(54	)		20			(34	)

Accrued restructuring balance at July 31, 2017		100			86			186

Restructuring charges		3			—			3
Restructuring adjustments		246			22			268
Cash paid		(88	)		(108	)		(196	)
Non-cash adjustments		(165	)		—			(165	)

Accrued restructuring balance at July 31, 2018	$	96		$	—		$	96

During the fiscal year ended July 31, 2018, the Company recorded a net restructuring charge of $0.3 million which primarily consisted of $0.3 million of employee-related net adjustments of previously recorded accruals in the Americas.

During the fiscal year ended July 31, 2017, the Company recorded a net restructuring charge of $2.0 million. Of this amount, $1.5 million primarily related to the workforce reduction of 78 employees across all operating segments, and $0.5 million related to contractual obligations.

During the fiscal year ended July 31, 2016, the Company recorded a net restructuring charge of $7.4 million. Of this amount, $5.9 million primarily related to the workforce reduction of 228 employees across all operating segments, and $1.5 million related to contractual obligations.

The net restructuring charges for the fiscal years ended July 31, 2018, 2017 and 2016 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities:


	Twelve Months Ended July 31,
	2018		2017		2016
	(In thousands)
Cost of revenue	$	9	$	563	$	4,812
Selling, general and administrative		262		1,404		2,609

	$	271	$	1,967	$	7,421

The following tables summarize the restructuring accrual by operating segment for the fiscal years ended July 31, 2018, 2017 and 2016:


	Americas			Asia			Europe			e-Business			Consolidated Total
	(In thousands)
Accrued restructuring balance at July 31, 2015	$	235		$	253		$	1,026		$	14		$	1,528

Restructuring charges		1,885			2,293			2,353			1,030			7,561
Restructuring adjustments		—			(46	)		(94	)		—			(140	)
Cash paid		(1,258	)		(1,563	)		(2,895	)		(169	)		(5,885	)
Non-cash adjustments		—			(43	)		8			—			(35	)

Accrued restructuring balance at July 31, 2016		862			894			398			875			3,029

Restructuring charges		500			972			698			122			2,292
Restructuring adjustments		(162	)		(154	)		(75	)		66			(325	)
Cash paid		(1,172	)		(1,672	)		(984	)		(948	)		(4,776	)
Non-cash adjustments		23			(40	)		(14	)		(3	)		(34	)

Accrued restructuring balance at July 31, 2017		51			—			23			112			186

Restructuring charges		—			—			—			3			3
Restructuring adjustments		257			1			2			8			268
Cash paid		(88	)		—			—			(108	)		(196	)
Non-cash adjustments		(167	)		(1	)		(25	)		28			(165	)

Accrued restructuring balance at July 31, 2018	$	53		$	—		$	—		$	43		$	96

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Jul. 31, 2018

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(9)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following schedules reflect the components of “Accrued expenses” and “Other Current Liabilities”:


	July 31, 2018		July 31, 2017
	(In thousands)
Accrued taxes	$	29,804	$	2,272
Accrued compensation		25,603		10,678
Accrued interest		1,437		1,366
Accrued audit, tax and legal		3,264		2,759
Accrued contract labor		1,932		1,632
Accrued worker’s compensation		6,126		—
Accrued other		20,164		19,191

	$	88,330	$	37,898


	July 31, 2018		July 31, 2017
	(In thousands)
Accrued pricing liabilities	$	18,882	$	18,882
Customer postage deposits		12,638		—
Other		10,509		7,259

	$	42,029	$	26,141

As of July 31, 2018 and 2017, the Company had accrued pricing liabilities of approximately $18.9 million. As previously reported by the Company, several principal adjustments were made to its historic financial statements for periods ending on or before January 31, 2012, the most significant of which related to the treatment of vendor rebates in its pricing policies. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract (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 been 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 based upon the expiration of statutes of limitations, and due in part to the nature of the interactions with its clients. The remaining accrued pricing liabilities at July 31, 2018 will be derecognized when there is sufficient information for the Company to conclude that such liabilities are not subject to escheatment and have been extinguished, which may occur through payment, legal release, or other legal or factual determination. The Company has not provided for any provision for interest and or penalties related to escheatment as it has concluded that such is not probable to occur and any potential interest and penalties cannot be reasonably estimated.

DEBT

12 Months Ended

Jul. 31, 2018

DEBT

(10)

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 or restructured 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 July 31, 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 year ended July 31, 2018.

The Company may not redeem the Notes prior to the mandatory 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.

Per the Indenture, if the Notes are assigned a restricted CUSIP or the Notes are not otherwise freely tradable by holders at any time during the three months immediately preceding as of the 365th day after the last date of original issuance of the Notes, the Company shall pay additional interest on the Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until the restrictive legend on the Notes has been removed. The restrictive legend was removed on August 26, 2015 and, as such, the Company paid $0.2 million in additional interest associated with this restriction.

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.

During the year ended July 31, 2017, the Company purchased $2.0 million in face value of the Notes in the open market at a purchase price of $1.8 million. The gain of $0.1 million on this transaction is presented as a component of other gains and losses. The fair value of the Company’s Notes payable, calculated as of the closing price of the traded securities, was $66.7 million and $63.9 million as of July 31, 2018 and July 31, 2017, respectively. This value does not represent the settlement value of these 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 July 31, 2018 and July 31, 2017, the net carrying value of the Notes was $64.5 million and $59.8 million, respectively.


	July 31, 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		(2,843	)		(7,227	)
Unamortized debt issuance costs		(252	)		(640	)

Net carrying amount	$	64,530		$	59,758

As of July 31, 2018, the remaining period over which the unamortized discount will be amortized is 7 months.


	Twelve Months Ended July 31,
	2018		2017		2016
	(In thousands)
Interest expense related to contractual interest coupon	$	3,655	$	3,651	$	5,159
Interest expense related to accretion of the discount		4,384		3,919		4,967
Interest expense related to debt issuance costs		388		347		439

	$	8,427	$	7,917	$	10,565

During the year ended July 31, 2018, 2017 and 2016, the Company recognized interest expense of $8.4 million, $7.9 million and $10.6 million associated with the Notes, 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 of 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 (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 ModusLink 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 the Company’s clients and/or potential clients with greater confidence in the Company’s and the ModusLink Borrowers’ liquidity. During the year ended July 31, 2018, the Company did not meet the criteria that would cause its financial covenants to be applicable. As of July 31, 2018 and 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 (the “Revolving Facility”) (together, 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 twelve months ended July 31, 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 July 31, 2018, the Company did not have an outstanding balance on the Revolving Facility. As of July 31, 2018, the principal amount outstanding on the Term Loan was $390.0 million. As of July 31, 2018, the current and long-term net carrying value of the Term Loan was $388.8 million.


	July 31, 2018
	(In thousands)
Principal amount outstanding on the Term Loan	$	390,000
Unamortized debt issuance costs		(1,162	)

Net carrying value of the Term Loan	$	388,838

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jul. 31, 2018

COMMITMENTS AND CONTINGENCIES

(11)

COMMITMENTS AND CONTINGENCIES

The Company leases facilities and certain machinery and equipment under various non-cancelable operating leases and executory contracts expiring through December 2021. Certain non-cancelable leases are classified as capital leases and the leased assets are included in property, plant and equipment, at cost. Future annual minimum payments, including restructuring related obligations as of July 31, 2018, are as follows:


	Operating Leases		Capital Lease Obligations		Purchase Obligations		Debt Principal & Interest		Total
	(In thousands)
For the fiscal years ended July 31:
2019	$	17,367	$	79	$	37,920	$	108,792	$	164,158
2020		12,796		70		—		37,135		50,001
2021		9,980		59		—		36,653		46,692
2022		7,175		28		—		36,170		43,373
2023		3,802		—		—		383,191		386,993
Thereafter		24,689		—		—		—		24,689

	$	75,809	$	236	$	37,920	$	601,941	$	715,906

Total rent and equipment lease expense charged to continuing operations was $19.2 million, $15.6 million and $17.3 million for the fiscal years ended July 31, 2018, 2017 and 2016, respectively.

From time to time, the Company agrees to provide indemnification to its clients in the ordinary course of business. Typically, the Company agrees to indemnify its clients for losses caused by the Company. As of July 31, 2018, the Company had no recorded liabilities with respect to these arrangements.

Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which the Company has not received the goods or services. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to the delivery of goods or performance of services.

Legal Proceedings

On April 13, 2018, a purported shareholder, Donald Reith, filed a verified complaint, Reith v. Lichtenstein, et al., 2018-0277 (Del. Ch.) in the Delaware Court of Chancery. The complaint alleges class and derivative claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duty and unjust enrichment against the Company’s Board of Directors, Warren Lichtenstein, Glen Kassan, William T. Fejes, Jack L. Howard, Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald; and stockholders Steel Holdings, Steel Partners, L.P., SPHG Holdings, Handy & Harman Ltd. and WHX CS Corp. (collectively, “Steel Parties”) in connection with the acquisition of $35 million of the Series C Preferred Stock by SPHG Holdings and equity grants made to Lichtenstein, Howard and Fejes on December 15, 2017 (collectively, “Challenged Transactions”). The Company is named as a nominal defendant. The complaint alleges that although the Challenged Transactions were approved by a Special Committee consisting of the independent members of the Board (Messrs. Fenton, Lengyel and Wald), the Steel Parties dominated and controlled the Special Committee, who approved the Challenged Transactions in breach of their fiduciary duty. Plaintiff alleges that the Challenged Transactions unfairly diluted shareholders and therefore unjustly enriched Steel Holdings, SPHG Holdings and Messrs. Lichtenstein, Howard and Fejes. The complaint also alleges that the Board made misleading disclosures in the Company’s proxy statement for the 2017 Meeting in connection with seeking approval to amend the 2010 Incentive Award Plan to authorize the issuance of additional shares to accommodate certain shares underlying the equity grants. Remedies requested include rescission of the Series C Convertible Preferred Stock and equity grants, disgorgement of any unjustly obtained property or compensation and monetary damages.

On June 8, 2018, defendants moved to dismiss the complaint for failure to plead demand futility and failure to state a claim. The motions are fully briefed, and argument is scheduled for March 5, 2019. Discovery is stayed pending a decision on the motions to dismiss. Because the litigation is at an early stage and motions to dismiss are pending, we are unable at this time to provide a calculation of potential damages or litigation loss that is probable or estimable. Although there can be no assurance as to the ultimate outcome, the Company believes it has meritorious defenses, will deny liability, and intends to defend this litigation vigorously.

DEFINED BENEFIT PENSION PLANS

12 Months Ended

Jul. 31, 2018

DEFINED BENEFIT PENSION PLANS

(12)

DEFINED BENEFIT PENSION PLANS

During the year ended July 31, 2017, the Company terminated the defined benefit pension plan (the “Taiwan Plan”) covering certain of its employees in its Taiwan facility. As of the Taiwan Plan termination date, the fair value of the Taiwan Plan assets were in excess of the project benefit obligation. The Company received $0.9 million in cash proceeds associated with the termination of this defined benefit pension plan. The termination of this defined benefit pension plan did not result in a gain or loss for the year ended July 31, 2017.

As of July 31, 2018, the Company sponsored two defined benefit pension plans covering certain of its employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined.

The plan assets are primarily related to the defined benefit plan associated with the Company’s Netherlands facility. It consists of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2018 and 2017, classified by fair value hierarchy:


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	22,339		98	%	$	—	$	—	$	22,339
Other investments		521		2	%						521

	$	22,860		100	%	$	—	$	—	$	22,860


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	20,726		98	%	$	—	$	—	$	20,726
Other investments		478		2	%		—		—		478

	$	21,204		100	%	$	—	$	—	$	21,204

The aggregate change in benefit obligation and plan assets related to these plans was as follows:


	July 31,
	2018			2017
	(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	27,464		$	31,667
Service cost		398			700
Interest cost		671			573
Actuarial (gain) loss		1,655			(6,814	)
Employee contributions		93			103
Benefits and administrative expenses paid		(372	)		(157	)
Adjustments		(54	)		—
Settlements		(21	)		(279	)
Effect of curtailment		—			—
Currency translation		15			1,671

Benefit obligation at end of year		29,849			27,464

Change in plan assets
Fair value of plan assets at beginning of year		21,204			25,473
Actual return on plan assets		1,541			(5,005	)
Employee contributions		402			104
Employer contributions (withdrawals), net		92			(342	)
Settlements		(21	)		(279	)
Benefits and administrative expenses paid		(372	)		(157	)
Currency translation		14			1,410

Fair value of plan assets at end of year		22,860			21,204

Funded status
Assets		—			—
Current liability		(13	)		(12	)
Noncurrent liability		(6,976	)		(6,248	)

Net amount recognized in statement of financial position as a noncurrent asset (liability)	$	(6,989	)	$	(6,260	)

The accumulated benefit obligation was approximately $27.7 million and $25.5 million at July 31, 2018 and 2017, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:


	July 31,
	2018		2017
	(In thousands)
Projected benefit obligation	$	29,849	$	27,464
Accumulated benefit obligation	$	27,700	$	25,531
Fair value of plan assets	$	22,860	$	21,204

Components of net periodic pension cost were as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Service cost	$	398		$	700		$	632
Interest costs		671			573			637
Expected return on plan assets		(529	)		(457	)		(491	)
Amortization of net actuarial (gain) loss		125			201			222
Curtailment gain		—			—			(844	)

Net periodic pension costs	$	665		$	1,017		$	156

The amount included in accumulated other comprehensive income expected to be recognized as a component of net periodic pension costs in fiscal year 2019 is approximately $4.8 million related to amortization of a net actuarial loss and prior service cost.

Assumptions:

Weighted-average assumptions used to determine benefit obligations was as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
Discount rate		2.22	%		2.47	%		1.72	%
Rate of compensation increase		1.93	%		1.93	%		1.92	%

Weighted-average assumptions used to determine net periodic pension cost was as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
Discount rate		2.21	%		1.69	%		1.95	%
Expected long-term rate of return on plan assets		2.20	%		1.69	%		2.41	%
Rate of compensation increase		1.94	%		1.91	%		1.83	%

The discount rate reflects the Company’s best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as per July 31, 2018 for the appropriate duration of the plan.

To develop the expected long-term rate of return on assets assumptions consideration is given to the current level of expected returns on risk free investments, the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for the future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

Benefit payments:

The following table summarizes expected benefit payments from the plans through fiscal year 2026. Actual benefit payments may differ from expected benefit payments. The minimum required contributions to the plans are expected to be approximately $0.4 million in fiscal year 2019.


	Pension Benefit Payments
	(in thousands)
For the fiscal years ended July 31:
2018		163
2019		213
2020		256
2021		257
2022		307
Next 5 years		2,352

The current target allocations for plan assets are primarily insurance contracts. The market value of plan assets using Level 3 inputs is approximately $22.3 million.

Valuation Technique:

Benefit obligations are computed using the projected unit credit method. Benefits are attributed to service based on the plan’s benefit formula. Cumulative gains and losses in excess of 10% of the greater of the pension benefit obligation or market-related value of plan assets are amortized over the expected average remaining future service of the current active membership.

OTHER GAINS (LOSSES), NET

12 Months Ended

Jul. 31, 2018

OTHER GAINS (LOSSES), NET

(13)

OTHER GAINS (LOSSES), NET

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


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Foreign currency exchange gains (losses)	$	1,055		$	199		$	(593	)
Gain (losses), net on Trading Securities		1,876			3,128			(5,920	)
Other, net		(708	)		(127	)		756

	$	2,223		$	3,200		$	(5,757	)

Other gains (losses), net totaled approximately $2.2 million for the fiscal year ended July 31, 2018. The balance consists primarily of $1.9 million in net gains associated with sale of publicly traded securities (“Trading Securities”), $1.1 million in net realized and unrealized foreign exchange gains, offset by $(0.6) million in losses associated with the disposal of assets at IWCO.

Other gains (losses), net totaled approximately $3.2 million for the fiscal year ended July 31, 2017. The balance consists primarily of $2.2 million and $0.9 million, in net non-cash and cash gains, respectively, associated with its Trading Securities, and $0.2 million in net realized and unrealized foreign exchange gains, offset by other gain and losses.

Other gains (losses), net totaled approximately $(5.8) million for the fiscal year ended July 31, 2016. The balance consists primarily of $(12.3) million and $6.4 million, in net non-cash and cash gains and (losses), respectively, associated with its Trading Securities, $0.8 million in non-cash gains associated with the repurchase of the Company’s Notes and $(0.6) million in net realized and unrealized foreign exchange losses, offset by other gain and losses.

SHARE-BASED PAYMENTS

12 Months Ended

Jul. 31, 2018

SHARE-BASED PAYMENTS

(14)

SHARE-BASED PAYMENTS

Stock Option Plans

During the fiscal year ended July 31, 2018, the Company had outstanding awards for stock options under two plans: the 2010 Incentive Award Plan, as amended (the “2010 Plan”) and the 2005 Non-Employee Director Plan (the “2005 Plan”). Historically, the Company has had the 2004 Stock Incentive Plan (the “2004 Plan”), the 2002 Non-Officer Employee Stock Incentive Plan (the “2002 Plan”), and the 2000 Stock Incentive Plan (the “2000 Plan”). Options granted under the 2010 Plan are generally exercisable as to 25% of the shares underlying the options beginning one year after the date of grant, with the option being exercisable as to the remaining shares in equal monthly installments over the next three years. The Company may also grant awards other than stock options under the 2010 Plan. Options granted under the 2005 plan are exercisable in equal monthly installments over three years, and have a term of ten years. As of December 2010, no additional grants may be issued under this plan. Stock options granted under all other plans have contractual terms of seven years.

On December 15, 2017, under the 2010 Plan, the Board of Directors of the Company, upon the recommendation of the Special Committee and the Compensation Committee, approved 4.0 million restricted stock grants and 1.5 million market performance based restricted stock grants to non-employee directors of the Company (See note 21). The 4.0 million restricted stock vested immediately on the grant date. The 1.5 million market performance based restricted stock grants do not expire and vest upon the attainment of target stock price hurdles. As of July 31, 2018, 1.0 million of the market performance based restricted stock grants had met the target stock price hurdles.

Under the 2010 Plan, pursuant to which the Company may grant stock options, stock appreciation rights, restricted stock awards and other equity-based awards for the issuance of (i) 11,000,000 shares of common stock of the Company plus (ii) the number of shares subject to outstanding awards under the Company’s 2000 Plan, 2002 Plan and 2004 Plan (collectively, the “Prior Plans”) that expire or are forfeited following December 8, 2010, the effective date of the 2010 Plan. As of December 8, 2010, the Company ceased making any further awards under its Prior Plans. As of December 8, 2010, the effective date of the 2010 Plan, there were an additional 2,922,258 shares of common stock underlying equity awards issued under the Company’s Prior Plans. This amount represents the maximum number of additional shares that may be added to the 2010 Plan should these awards expire or be forfeited subsequent to December 8, 2010. Any awards that were outstanding under the Prior Plans as of the effective date continued to be subject to the terms and conditions of such Prior Plan. As of July 31, 2018, 4,803,835 shares were available for future issuance under the 2010 Plan.

The Board of Directors administers all stock plans, approves the individuals to whom options will be granted, and determines the number of shares and exercise price of each option and may delegate this authority to a committee of the Board or to certain officers of the Company in accordance with SEC regulations and applicable Delaware law.

Employee Stock Purchase Plan

The Company offers to its employees an Employee Stock Purchase Plan, (the “ESPP”) under which an aggregate of 600,000 shares of the Company’s stock may be issued. Employees who elect to participate in the ESPP instruct the Company to withhold a specified amount through payroll deductions during each quarterly period. On the last business day of each applicable quarterly payment period, the amount withheld is used to purchase the Company’s common stock at a purchase price equal to 85% of the lower of the market price on the first or last business day of the quarterly period. During the fiscal years ended July 31, 2018, 2017 and 2016, the Company issued approximately 10,000, 11,000 and 30,000 shares, respectively, under the ESPP. Approximately 126,000 shares are available for future issuance as of July 31, 2018.

Stock Option Valuation and Expense Information

The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and nonvested shares for the fiscal years ended July 31, 2018, 2017 and 2016:


	Twelve Months Ended July 31,
	2018		2017		2016
Cost of revenue	$	14	$	53	$	96
Selling, general and administrative		10,787		628		1,030

	$	10,801	$	681	$	1,126

The Company estimates the fair value of stock option awards on the date of grant using a binomial-lattice model. No employee stock options were granted during the fiscal years ended July 31, 2018 and 2017. The weighted-average grant date fair value of employee stock options granted during the fiscal years ended July 31, 2016 was $1.11, using the binomial-lattice model with the following weighted-average assumptions:


	Twelve Months Ended July 31,
	2016
Expected volatility		55.80	%
Risk-free interest rate		1.28	%
Expected term (in years)		4.41
Expected dividend yield		0.00	%

The volatility assumption for fiscal year 2016 is based on the weighted-average of the historical volatility of the Company’s common shares for a period equal to the expected term of the stock option awards.

The weighted-average risk-free interest rate assumption is based upon the interpolation of various U.S. Treasury rates, as of the month of the grants.

The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on historical option activity. The determination of the expected term of employee stock options assumes that employees’ exercise behavior is comparable to historical option activity. The binomial-lattice model estimates the probability of exercise as a function of time based on the entire history of exercises and cancellations on all past option grants made by the Company. The expected term generated by these probabilities reflects actual and anticipated exercise behavior of options granted historically.

As share-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended July 31, 2018, 2017 and 2016 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

Stock Options

A summary of option activity for the fiscal year ended July 31, 2018 is as follows:


	Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	(in thousands, except exercise price and years)
Stock options outstanding, July 31, 2017		573		$	4.36
Granted		—			—
Exercised		—			—
Forfeited or expired		(135	)		5.51

Stock options outstanding, July 31, 2018		438			3.99		1.91	$	—

Stock options exercisable, July 31, 2018		433		$	4.00		1.89	$	—

As of July 31, 2018, unrecognized share-based compensation related to stock options was immaterial. This cost is expected to be expensed over a weighted average period of 0.9 years. The aggregate intrinsic value of options exercised during the fiscal years ended July 31, 2018, 2017 and 2016 was immaterial.

As of July 31, 2018, there were 0.4 million stock options that were vested and expected to vest in the future with a weighted- average remaining contractual term of 1.9 years. The aggregate intrinsic value of these awards is immaterial.

Nonvested Stock

Nonvested stock consists of shares of common stock that are subject to restrictions on transfer and risk of forfeiture until the fulfillment of specified conditions. Nonvested stock is expensed ratably over the term of the restriction period, ranging from one to five years unless there are performance restrictions placed on the nonvested stock, in which case the nonvested stock is expensed using graded vesting. Nonvested stock compensation expense for the fiscal years ended July 31, 2018, 2017 and 2016 was $10.7 million, $0.5 million and $0.7 million, respectively.

A summary of the activity of the Company’s nonvested stock for the fiscal year ended July 31, 2018, is as follows:


	Number of Shares			Weighted-Average Grant Date Fair Value
	(share amounts in thousands)
Nonvested stock outstanding, July 31, 2017		296		$	—
Granted		7,999			1.45
Vested		(7,081	)		1.62
Forfeited		(49	)		1.62

Nonvested stock outstanding, July 31, 2018		1,165		$	0.44

The fair value of nonvested shares is determined based on the market price of the Company’s common stock on the grant date. The total grant date fair value of nonvested stock that vested during the fiscal years ended July 31, 2018, 2017 and 2016 was approximately $11.5 million, $0.6 million and $1.0 million, respectively. As of July 31, 2018, there was approximately $1.0 million of total unrecognized compensation cost related to nonvested stock to be recognized over a weighted-average period of 0.3 years.

INCOME TAXES

12 Months Ended

Jul. 31, 2018

INCOME TAXES

(15)

INCOME TAXES

The components of loss from continuing operations before provision for income taxes are as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Income (loss) from operations before income taxes:
U.S.	$	(60,574	)	$	(34,884	)	$	(69,861	)
Foreign		25,286			10,475			13,234

Total loss from operations before income taxes	$	(35,288	)	$	(24,409	)	$	(56,627	)

The components of income tax expense have been recorded in the Company’s consolidated financial statements as follows:


	Twelve Months Ended July 31,
	2018			2017		2016
	(In thousands)
Income tax expense (benefit) from operations		(71,202	)		2,696		5,443

Total income tax expense (benefit)	$	(71,202	)	$	2,696	$	5,443

The components of income tax expense from operations consist of the following:


	Twelve Months Ended July 31,
	2018			2017		2016
	(In thousands)
Current provision
Federal	$	—		$	—	$	—
State		—			—		—
Foreign		7,592			2,298		3,090

		7,592			2,298		3,090

Deferred provision:
Federal		(76,168	)		—		—
State		(2,352	)		—		—
Foreign		(274	)		398		2,353

		(78,794	)		398		2,353

Total tax provision	$	(71,202	)	$	2,696	$	5,443

During the year ended July 31, 2017, the Company elected to early adopt ASU No. 2015-17, 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 allows for adoption on either a prospective or retrospective basis. As of July 31, 2018, the Company recorded a non-current deferred tax asset of $1.6 million and a non-current deferred tax liability of $0.1 million in Other Assets, and Other Long-term Liabilities, respectively. As of July 31, 2017, the Company recorded a non-current deferred tax asset of $1.9 million and a non-current deferred tax liability of $0.7 million in Other Assets and Other Long-term Liabilities, respectively. The components of deferred tax assets and liabilities are as follows:


	July 31, 2018			July 31, 2017
	(In thousands)
Deferred tax assets:
Accruals and reserves	$	16,070		$	12,193
Tax basis in excess of financial basis of investments in affiliates		6,232			18,332
Tax basis in excess of financial basis for intangible and fixed assets		311			7,689
Net operating loss and capital loss carry forwards		468,129			751,435

Total gross deferred tax assets		490,742			789,649
Less: valuation allowance		(438,467	)		(771,884	)

Net deferred tax assets	$	52,275		$	17,765

Deferred tax liabilities:
Financial basis in excess of tax basis for intangible and fixed assets	$	(50,141	)	$	(784	)
Convertible Debt		(634	)		(2,655	)
Undistributed accumulated earnings of foreign subsidiaries		—			(13,150	)

Total gross deferred tax liabilities		(50,775	)		(16,589	)

Net deferred tax asset	$	1,500		$	1,176

The net change in the total valuation allowance for the fiscal year ended July 31, 2018 was a decrease of approximately $333.4 million. This decrease is primarily due to the remeasurement of the U.S. deferred tax assets and liabilities discussed below. A valuation allowance has been recorded against the gross deferred tax asset in the U.S and certain foreign subsidiaries since management believes that after considering all the available objective evidence, both positive and negative, historical and prospective, it is more likely than not that certain assets will not be realized. The net change in the total valuation allowance for the fiscal year ended July 31, 2017 was an increase of approximately $11.0 million.

The Company has certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes (collectively, the “Tax Benefits”). The Company’s ability to use these Tax Benefits could be substantially limited if it were to experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change would occur if there is a greater than 50-percentage point change in ownership of securities by stockholders owning (or deemed to own under Section 382 of the Code) five percent or more of a corporation’s securities over a rolling three-year period.

On January 19, 2018, our Board adopted a Tax Benefits Preservation Plan (the “Tax Plan”) 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”).

The Company had net operating loss carryforwards for federal and state tax purposes of approximately $2.1 billion and $150.6 million, respectively, as of July 31, 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’s 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.

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.

In accordance with the Protective Amendment, Handy & Harman (“HNH”), a related party, requested, and the Company granted HNH and its affiliates, a waiver under the Protective Amendment to permit their acquisition of up to 45% of the Company’s outstanding shares of common stock in the aggregate (subject to proportionate adjustment, the “45% Cap”), in addition to acquisitions of common stock in connection with the exercise of certain warrants of the Company (the “Warrants”) held by Steel Partners Holdings L.P. (“SPH”), an affiliate of HNH, as well as a limited waiver under Section 203 of the Delaware General Corporation Law for this purpose. Notwithstanding the foregoing, HNH and its affiliates (and any group of which HNH or any of its affiliates is a member) are not permitted to acquire securities that would result in an “ownership change” of the Company for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, that would have the effect of impairing any of the Company’s NOLs. The foregoing waiver was approved by the independent directors of the Company.

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 $280.4 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 $280.4 million included a provision of $305.9 million to income tax expense for the Company and a benefit of $25.5 million to income tax expense for IWCO. As noted above, the net tax expense of $280.4 was offset completely by a corresponding reduction in the valuation allowance

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.

The TCJA also requires a Transition Tax on any net accumulated earnings and profits as of the two required measurement dates, November 2, 2017 and December 31, 2017. As such, as of July 31, 2018, all of the Company’s accumulated earnings and profits are deemed repatriated. Therefore, there is no deferred tax liability for earnings oversees that have not been remitted. The Company will utilize NOLs to offset any Transition Tax assessed. The preliminary calculation of net accumulated earnings and profits resulted in break even, which would not result in a Transition Tax. Company will finalize the Transition Tax calculation with the filing of the fiscal year 2018 tax return.

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.

As more fully described in Note 6, the Company completed the IWCO Acquisition on December 15, 2017. Going forward, the Company and IWCO will file a consolidated federal tax return. As a result of the acquisition, the Company recorded a net deferred tax liability of $78.5 million. 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 Company has net operating loss carryforwards for federal and state tax purposes of approximately $2.1 billion and $150.6 million, respectively, at July 31, 2018. The federal net operating losses will expire from fiscal year 2022 through 2038 and the state net operating losses will expire from fiscal year 2018 through 2038. The Company has a foreign net operating loss carryforward of approximately $74.2 million, of which $57.5 million has an indefinite carryforward period. In addition, the Company has $24.0 million of capital loss carryforwards for federal and state tax purposes. The federal and state capital losses will expire in fiscal year 2020 through fiscal year 2021.

Income tax expense attributable to income from continuing operations differs from the expense computed by applying the U.S. federal income tax rate of 26.83% to income (loss) from continuing operations before income taxes as a result of the following:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Computed “expected” income tax expense (benefit)	$	(9,467	)	$	(8,106	)	$	(19,368	)
Increase (decrease) in income tax expense resulting from:
Change in valuation allowance		(329,415	)		10,978			22,907
Foreign dividends		7,379			2,724			4,730
Foreign tax rate differential		(1,948	)		(2,386	)		(1,082	)
Federal rate change		280,438			—			—
Nondeductible goodwill impairment		191			—			—
Nondeductible expenses		(15,852	)		20			262
Foreign withholding taxes		1,961			239			762
Reversal of uncertain tax position reserves		(48	)		(481	)		(2,768	)
State benefit of U.S. Loss		(4,654	)		—			—
Other		213			(292	)		—

Actual income tax expense	$	(71,202	)	$	2,696		$	5,443

The calculation of the Company’s income tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several tax jurisdictions. The Company is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records estimated reserves when necessary. Based on the evaluation of current tax positions, the Company believes it has appropriately accrued for exposures.

The Company operates in multiple taxing jurisdictions, both within and outside of the United States. At July 31, 2018, 2017 and 2016, the total amount of the liability for unrecognized tax benefits, including interest, related to federal, state and foreign taxes was approximately $1.6 million $0.7 million, and $1.2 million respectively. To the extent the unrecognized tax benefits are recognized, the entire amount would impact income tax expense.

The Company files income tax returns in the U.S., various states and in foreign jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the tax years ended July 31, 2014 through July 31, 2018. 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 2010 through 2017 tax years remain subject to examination in most locations while the Company’s 2006 through 2017 tax years remain subject to examination in most Asia locations.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Balance as of beginning of year	$	681		$	994		$	3,756
Additions for current year tax positions		903			—			19
Currency translation		—			18			—
Reductions for lapses in statute of limitations		(59	)		(331	)		(27	)
Reductions of prior year tax positions		—			—			(2,754	)

Balance as of end of year	$	1,525		$	681		$	994

In accordance with the Company’s accounting policy, interest related to income taxes is included in the provision of income taxes line of the Consolidated Statements of Operations. For the fiscal year ended July 31, 2018, the Company has not recognized any material interest expense related to uncertain tax positions. As of July 31, 2018, 2017 and 2016, the Company had recorded liabilities for increases (decreases) in interest expense related to uncertain tax positions in the amount of $88,000, ($168,000), and $40,000 respectively. 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 that any unrecognized tax benefits will reverse in the next twelve months.

ACCUMULATED OTHER COMPREHENSIVE INCOME

12 Months Ended

Jul. 31, 2018

ACCUMULATED OTHER COMPREHENSIVE INCOME

(16)

ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income, net of income taxes, are as follows:


	Foreign currency items			Pension items			Unrealized 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		(1,174	)		—			—		(1,174	)
Net unrealized holding gain on securities		—			—			14		14
Pension liability adjustments		—			(419	)		—		(419	)

Net current-period other comprehensive income (loss)		(1,174	)		(419	)		14		(1,579	)

Accumulated other comprehensive income (loss) at July 31, 2018	$	6,348		$	(3,795	)	$	181	$	2,734

In the fiscal years ended July 31, 2018, the Company recorded approximately $0.1 million in taxes related to other comprehensive income. In the fiscal years ended July 31, 2017, the Company recorded approximately $0.3 million in taxes related to other comprehensive income. In the fiscal years ended July 31, 2016, the Company recorded an immaterial amount in taxes related to other comprehensive income.

STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION

12 Months Ended

Jul. 31, 2018

STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION

(17)

STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION

Cash used for operating activities reflect cash payments for interest and income taxes as follows:


	Years Ended July 31,
	2018		2017		2016
	(In thousands)
Cash paid for interest	$	24,642	$	3,783	$	6,111
Cash paid for income taxes	$	2,567	$	2,500	$	3,287

Cash paid for taxes can be higher than income tax expense as shown on the Company’s consolidated statements of operations due to prepayments made in certain jurisdictions as well as to the timing of required payments in relation to recorded expense, which can cross fiscal years.

Non-cash Activities

Non-cash financing activities during the fiscal years ended July 31, 2018, 2017 and 2016 included the issuance of approximately 6.7 million, 0.3 million and 0.2 million shares, respectively, of non-vested common stock, valued at approximately $11.5 million, $0.5 million and $0.6 million, respectively, to certain employees and non-employees of the Company. Non-cash financing activities during the fiscal year ended July 31, 2016 also included the issuance of 2.7 million shares of the Company’s common stock, valued at $3.1 million, associated with the repurchase of the Company’s Notes.

STOCKHOLDERS' EQUITY

12 Months Ended

Jul. 31, 2018

STOCKHOLDERS' EQUITY

(18)

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, at the Company’s option, in cash or Common Stock. If at any time the closing bid price of the Company’s Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), the Company has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock.

Upon the occurrence of certain triggering events such as a liquidation, dissolution or winding up of the Company, either voluntary or involuntary, or the merger or consolidation of the Company or significant subsidiary, or the sale of substantially all of the assets or capital stock of the Company or a significant subsidiary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Company to the holders of other equity or equity equivalent securities of the Company other than the Preferred Stock by reason of their ownership thereof, an amount per share in cash equal to the sum of (i) 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.

FAIR VALUE MEASUREMENTS

12 Months Ended

Jul. 31, 2018

FAIR VALUE MEASUREMENTS

(19)

FAIR VALUE MEASUREMENTS

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


			Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Level 1		Level 2		Level 3
Assets:
Money market funds	$	47,186	$	47,186	$	—	$	—

			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		—		—

The following table presents the pension plan assets measured at fair value on a recurring basis as of July 31, 2018 and 2017, classified by fair value hierarchy:


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	22,339		98	%	$	—	$	—	$	22,339
Other investments		521		2	%						521

	$	22,860		100	%	$	—	$	—	$	22,860


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	20,726		98	%	$	—	$	—	$	20,726
Other investments		478		2	%		—		—		478

	$	21,204		100	%	$	—	$	—	$	21,204

The following table sets forth a summary of the changes in the fair value of the pension plan assets for the years ended July 31, 2018 and 2017:


	July 31,
	2018			2017
	(In thousands)
Fair value of plan assets at beginning of year	$	21,204		$	25,473
Actual return on plan assets		1,541			(5,005	)
Employee contributions		402			104
Employer contributions (withdrawals), net		92			(342	)
Settlements		(21	)		(279	)
Benefits and administrative expenses paid		(372	)		(157	)
Currency translation		14			1,410

Fair value of plan assets at end of year	$	22,860		$	21,204

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 reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group or reporting unit is not recoverable and exceeds its fair value. The Company estimated the fair values of assets subject to impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available.

Fair Value of Financial Instruments

The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, customer deposits, accounts payable, 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 debt not carried at fair value:


	July 31, 2018				July 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In thousands)
Notes payable	$	64,530	$	66,658	$	59,758	$	63,852		Level 1

The fair value of the Company’s Notes payable represents the value at which its lenders could trade its debt within the financial markets, and does not represent the settlement value of these 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

SEGMENT INFORMATION

12 Months Ended

Jul. 31, 2018

SEGMENT INFORMATION

(20) 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. In the past the All Other category has completely been comprised of the e-Business operating segment. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal, 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:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Net revenue:
Americas	$	56,320		$	92,324		$	106,143
Asia		146,664			158,048			167,861
Europe		119,403			159,085			151,842
Direct Marketing		299,358			—			—
e-Business		23,513			27,163			33,177

	$	645,258		$	436,620		$	459,023

Operating income (loss):
Americas	$	(9,542	)	$	(10,342	)	$	(14,731	)
Asia		26,405			5,620			(855	)
Europe		(10,074	)		(9,008	)		(13,825	)
Direct Marketing		10,740			—			—
e-Business		(6,176	)		(1,185	)		(4,384	)

Total Segment operating income (loss)		11,353			(14,915	)		(33,795	)
Corporate-level activity		(19,659	)		(4,846	)		(6,777	)

Total operating loss		(8,306	)		(19,761	)		(40,572	)

Total other expense		(26,982	)		(4,648	)		(16,055	)

Loss before income taxes	$	(35,288	)	$	(24,409	)	$	(56,627	)

Net revenue and operating income associated with Direct Marketing is for the period from December 15, 2017 to July 31, 2018. The Direct Marketing operating income includes certain purchase accounting adjustments associated with the IWCO acquisition.


	July 31, 2018		July 31, 2017
	(In thousands)
Total assets:
Americas	$	22,820	$	21,876
Asia		44,322		63,819
Europe		37,223		64,639
Direct Marketing		642,820		—
e-Business		15,758		20,703

Sub-total—segment assets		762,943		171,037
Corporate		64,107		110,261

	$	827,050	$	281,298

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


	Twelve Months Ended
	July 31,
	2018		2017		2016
	(In thousands)
Services:
Supply chain services	$	322,387	$	409,457	$	425,846
e-Business services		23,513		27,163		33,177
Products:
Direct Marketing		299,358		—		—

	$	645,258	$	436,620	$	459,023

As of July 31, 2018 and 2017, approximately $101.8 million and $8.6 million of the Company’s long-lived assets, respectively, were located in the U.S.A.

For the fiscal year ended July 31, 2018, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $358.3 million, $112.3 million, $59.5 million and $48.7 million, respectively. For the fiscal year ended July 31, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $95.1 million, $128.3 million, $70.8 million and $79.8 million, respectively. For the fiscal year ended July 31, 2016, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $110.9 million, $140.2 million, $68.1 million and $75.7 million, respectively.

RELATED PARTY TRANSACTIONS

12 Months Ended

Jul. 31, 2018

RELATED PARTY TRANSACTIONS

(21) RELATED PARTY TRANSACTIONS

As of February 20, 2018, SPHG Holdings and its affiliates beneficially owned approximately 52% of our outstanding capital stock. As of July 31, 2018, SPHG Holdings held $14.9 million principal amount of the Company’s 5.25% Convertible Senior Notes. SPHG Holdings has confirmed to the Company that it will not require a cash payment on the Notes when they mature and for a period of twelve months from the date of this filing.

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 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 a 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 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, at the Company’s option, in cash or Common Stock. If at any time the closing bid price of the Company’s Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), the Company has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock.

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 (the Warrant) 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

On 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 twelve months ended July 31, 2018, 2017 and 2016 were $1.9 million, $2.3 million and $2.2 million, respectively. As of July 31, 2018 and 2017, amounts due to SP Corporate and Steel Services were $0.2 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. Mr. Howard, a director of the Company, 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 year ended July 31, 2018 and 2017, Mutual Securities received an immaterial amount in commissions associated with these transactions.

SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited)

12 Months Ended

Jul. 31, 2018

SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited)

(22) SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited)

The following table sets forth selected quarterly financial information for the fiscal years ended July 31, 2018 and 2017. The operating results for any given quarter are not necessarily indicative of results for any future period.


	Quarter Ended												Quarter Ended
	Oct. 31, ‘17			Jan. 31, ‘18			Apr. 30, ‘18			Jul. 31, ‘18			Oct. 31, ‘16			Jan. 31, ‘17			Apr. 30, ‘17			Jul. 31, ‘17
	(In thousands, except per share data)												(In thousands, except per share data)
Net revenue	$	102,522		$	153,738		$	193,921		$	195,077		$	121,327		$	117,568		$	97,948		$	99,777
Cost of revenue		93,448			137,915			154,916			157,720			111,994			106,370			89,406			92,485

Gross profit		9,074			15,823			39,005			37,357			9,333			11,198			8,542			7,292
Total operating expenses		12,904			21,526			37,625			37,510			14,975			12,702			13,785			14,664

Operating income (loss)		(3,830	)		(5,703	)		1,380			(153	)		(5,642	)		(1,504	)		(5,243	)		(7,372	)
Total other income (expense)		(521	)		(8,200	)		(11,198	)		(7,063	)		(2,352	)		(1,075	)		763			(1,984	)
Income tax benefit (expense)		(1,087	)		73,521			(715	)		(517	)		(1,049	)		(723	)		(819	)		(105	)
Gains on investments in affiliates, net of tax		201			200			200			200			500			396			232			150

Net income (loss)		(5,237	)		59,818			(10,333	)		(7,533	)		(8,543	)		(2,906	)		(5,067	)		(9,311	)

Net income (loss) attributable to common stockholders	$	(5,237	)	$	59,548		$	(10,862	)	$	(8,069	)	$	(8,543	)	$	(2,906	)	$	(5,067	)	$	(9,311	)

Basic net earning (loss) per share attributable to common stockholders:	$	(0.09	)	$	1.02		$	(0.18	)	$	(0.13	)	$	(0.16	)	$	(0.05	)	$	(0.09	)	$	(0.17	)
Diluted net earning (loss) per share attributable to common stockholders:	$	(0.09	)	$	0.75		$	(0.18	)	$	(0.13	)	$	(0.16	)	$	(0.05	)	$	(0.09	)	$	(0.17	)

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-routinetransactions, 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 required 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 Marketing revenues. Accordingly, we have restated the preliminary fair value of acquired assets and liabilities assumed at the date of acquisition. In connection with the preparation of our consolidated financial statements for the twelve months ended July 31, 2018, we determined that the freight costs associated with a customer of the Direct Marketing segment had been recorded on a net basis in error. The correction of this error required an adjustment, to Net Revenue and Cost of Revenue, of $2.2 million and $5.0 million, for the three months ended January 31, 2018 and April 30, 2018, respectively.

We have corrected the condensed consolidated statements of operations for the three months ended January 31, 2018 and April 30, 2018. The impact to the condensed consolidated statements of income for the three months ended January 31, 2018 and April 30, 2018 is as follows (in thousands, except per share amounts):


	Three Months Ended January 31, 2018									Three Months Ended April 30, 2018
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments		As Revised
Net revenue	$	151,119		$	2,619		$	153,738		$	188,922		$	4,999	$	193,921
Cost of revenue		134,169			3,746			137,915			149,917			4,999		154,916
Gross profit		16,950			(1,127	)		15,823			39,005			—		39,005
Income tax expense (benefit)		(77,664	)		4,143			(73,521	)		715			—		715
Net income (loss) attributable to common stockholders	$	64,830			(5,282	)	$	59,548		$	(10,862	)		—	$	(10,862	)
Basic net earning (loss) per share attributable to common stockholders:	$	1.11					$	1.02		$	(0.18	)			$	(0.18	)
Diluted net earning (loss) per share attributable to common stockholders:	$	0.85					$	0.75		$	(0.18	)			$	(0.18	)

PARENT COMPANY CONDENSED FINANCIAL INFORMATION

12 Months Ended

Jul. 31, 2018

PARENT COMPANY CONDENSED FINANCIAL INFORMATION

(23) PARENT COMPANY CONDENSED FINANCIAL INFORMATION

Per the Cerberus Credit Facility, IWCO is permitted to make distributions to the Parent, Steel Connect, Inc., an aggregate amount not to exceed $5.0 million in any fiscal year and pay reasonable documented expenses incurred by the Parent. The Parent is entitled to receive additional cash remittances under a “U.S. Federal Income Tax Sharing Agreement.” As the remainder of the restricted net assets, which totaled approximately $53.1 million at July 31, 2018, represent a significant portion of the Company’s consolidated total assets, the Company is presenting the following parent company condensed financial information:

STEEL CONNECT, INC. (Parent Only)

BALANCE SHEETS

(in thousands, except share and per share data)


	July 31, 2018			July 31, 2017
ASSETS
Cash and cash equivalents	$	7,978		$	708
Prepaid expenses and other current assets		120			85

Total current assets		8,098			793
Investments in affiliates		188,534			113,154
Other assets		87			87
Due from subsidiaries		13,579			10,945

Total assets	$	210,298		$	124,979


LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS’ EQUITY

Accounts payable	$	674		$	498
Accrued expenses		2,274			1,752
Notes payable		64,530			—

Total current liabilities		67,478			2,250

Notes payable		—			59,758

Total long-term liabilities		—			59,758

Total liabilities		67,478			62,008

Contingently redeemable preferred stock		35,192			—

Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017		35,192			—

Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at July 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at July 31, 2018 and at July 31, 2017		—			—
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,742,859 issued and outstanding shares at July 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017		608			556
Additional paid-in capital		7,467,855			7,457,051
Accumulated deficit		(7,363,569	)		(7,398,949	)
Accumulated other comprehensive income		2,734			4,313

Total stockholders’ equity		107,628			62,971

Total liabilities, contingently redeemable preferred stock and stockholders’ equity	$	210,298		$	124,979

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF OPERATIONS

(in thousands)


	Twelve Months Ended July 31,
	2018			2017			2016
Selling, general and administrative	$	16,742		$	4,834		$	6,562

Total operating expenses		16,742			4,834			6,562

Operating loss		(16,742	)		(4,834	)		(6,562	)

Other income (expense):
Interest expense		(8,427	)		(7,917	)		(10,565	)
Other income, net		6,807			—			757

Total other expense		(1,620	)		(7,917	)		(9,808	)

Loss before income taxes		(18,362	)		(12,751	)		(16,370	)
Equity losses of subsidiaries, net of tax		(54,276	)		14,026			44,911
Gains on investments in affiliates, net of tax		(801	)		(950	)		—

Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF CASH FLOWS

(in thousands)


	Twelve Months Ended
	July 31,
	2018			2017			2016
Cash flows from operating activities:
Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs		388			347			439
Accretion of debt discount		4,384			3,919			4,967
Share-based compensation		10,763			533			509
Non-cash (gains) losses, net		(354	)		—			(757	)
Equity losses of subsidiaries, net of tax		(54,276	)		14,026			44,911
Gains on investments in affiliates and impairments		(801	)		(950	)		—
Changes in operating assets and liabilities, net of business acquired:
Prepaid expenses and other current assets		(36	)		76			1,034
Accounts payable and accrued expenses		698			(338	)		(3,418	)
Other assets and liabilities		(1,860	)		(12,926	)		1,223

Net cash used in operating activities		(4,379	)		(21,140	)		(12,373	)

Cash flows from investing activities:
Intercompany advances, net		(22,216	)		19,211			20,000

Net cash provided by (used in) investing activities		(22,216	)		19,211			20,000

Cash flows from financing activities:
Proceeds from issuance of preferred stock		35,000			—			—
Payment of preferred dividends		(1,143	)		—			—
Purchase of the Company’s Convertible Notes		—			(1,763	)		(20,257	)
Proceeds from issuance of common stock		8			18			51
Repurchase of common stock		—			—			(127	)

Net cash provided by (used in) financing activities		33,865			(1,745	)		(20,333	)

Net decrease in cash and cash equivalents		7,270			(3,674	)		(12,706	)
Cash and cash equivalents at beginning of period		708			4,382			17,088

Cash and cash equivalents at end of period	$	7,978		$	708		$	4,382

SUBSEQUENT EVENTS

12 Months Ended

Jul. 31, 2018

SUBSEQUENT EVENTS

(24) SUBSEQUENT EVENTS

Subsequent to July 31, 2018, but prior to the date of these financial statements, the Company purchased $3.7 million in face value of the Company’s Notes in the open market.

Subsequent to July 31, 2018, SPHG Holdings had confirmed to the Company that, on the Notes that it holds, it will not require a cash payment when they mature and for a period of twelve months from the date of this filing.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jul. 31, 2018

Principles of Consolidation

Principles of Consolidation

Use of Estimates

Use of Estimates

Revenue Recognition

Revenue Recognition

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Foreign Currency Translation

Foreign Currency Translation

Cash, Cash Equivalents and Short-term Investments

Cash, Cash Equivalents and Short-term Investments


	July 31, 2018		July 31, 2017
	(In thousands)
Cash and bank deposits	$	44,952	$	24,987
Money market funds		47,186		85,683

	$	92,138	$	110,670

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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

Investments

Investments

Funds held for clients

Funds held for clients

Inventory

Inventory

Inventories consisted of the following:


	July 31, 2018		July 31, 2017
	(In thousands)
Raw materials	$	23,208	$	31,071
Work-in-process		16,147		713
Finished goods		8,431		2,585

	$	47,786	$	34,369

Business Combinations and Valuation of Goodwill and Other Acquired Intangible Assets

Business Combinations and Valuation of Goodwill and Other Acquired Intangible Assets

Accounting for Impairment of Long-Lived Assets, Goodwill and Other Intangible Assets

Accounting for Impairment of Long-Lived Assets, Goodwill and Other Intangible Assets

Restructuring Expenses

Restructuring Expenses

Property and Equipment

Property and Equipment


Buildings		32 years
Machinery & equipment		3 to 7 years
Furniture & fixtures		5 to 7 years
Automobiles		5 years
Software		3 to 8 years
Leasehold improvements		Shorter of the remaining lease term or the estimated useful life of the asset

Income Taxes

Income Taxes

In accordance with ASC Topic 740, the Company applies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. ASC Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. In accordance with the Company’s accounting policy, interest and penalties related to uncertain tax positions is included in the “income tax expense” line of the Consolidated Statements of Operations. See Note 15, “Income Taxes,” for additional information.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

The following table reconciles earnings (loss) per share for the fiscal years ended July 31, 2018, 2017 and 2016.


	Twelve Months Ended
	July 31,
	2018			2017			2016
	(In thousands, except per share data)
Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)
Less: Preferred dividends on redeemable preferred stock		(1,335	)		—			—

Net income (loss) attributable to common stockholders		35,380			(25,827	)		(61,281	)

Effect of dilutive securities:
5.25% Convertible Senior Notes		7,079			—			—
Redeemable preferred stock		1,335			—			—

Net income (loss) attributable to common stockholders after assumed conversions	$	43,794		$	(25,827	)	$	(61,281	)

Weighted average common shares outstanding		59,179			55,134			51,934
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock		22,720			—			—

Weighted average number of common and potential common shares		81,899			55,134			51,934

Basic net earning (loss) per share attributable to common stockholders:	$	0.60		$	(0.47	)	$	(1.18	)
Diluted net earning (loss) per share attributable to common stockholders:	$	0.53		$	(0.47	)	$	(1.18	)

Share-Based Compensation Plans

Share-Based Compensation Plans

Major Clients and Concentration of Credit Risk

Major Clients and Concentration of Credit Risk

Recent Accounting Pronouncements

Recent Accounting Pronouncements

•

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jul. 31, 2018

Cash and Cash Equivalents

Cash and cash equivalents consisted of the following:


	July 31, 2018		July 31, 2017
	(In thousands)
Cash and bank deposits	$	44,952	$	24,987
Money market funds		47,186		85,683

	$	92,138	$	110,670

Components of Inventories

Inventories consisted of the following:


	July 31, 2018		July 31, 2017
	(In thousands)
Raw materials	$	23,208	$	31,071
Work-in-process		16,147		713
Finished goods		8,431		2,585

	$	47,786	$	34,369

Estimated Useful Lives of Property and Equipment

The estimated useful lives are as follows:


Buildings		32 years
Machinery & equipment		3 to 7 years
Furniture & fixtures		5 to 7 years
Automobiles		5 years
Software		3 to 8 years
Leasehold improvements		Shorter of the remaining lease term or the estimated useful life of the asset

Reconciliation of Earnings Per Share

The following table reconciles earnings (loss) per share for the fiscal years ended July 31, 2018, 2017 and 2016.


	Twelve Months Ended
	July 31,
	2018			2017			2016
	(In thousands, except per share data)
Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)
Less: Preferred dividends on redeemable preferred stock		(1,335	)		—			—

Net income (loss) attributable to common stockholders		35,380			(25,827	)		(61,281	)

Effect of dilutive securities:
5.25% Convertible Senior Notes		7,079			—			—
Redeemable preferred stock		1,335			—			—

Net income (loss) attributable to common stockholders after assumed conversions	$	43,794		$	(25,827	)	$	(61,281	)

Weighted average common shares outstanding		59,179			55,134			51,934
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock		22,720			—			—

Weighted average number of common and potential common shares		81,899			55,134			51,934

Basic net earning (loss) per share attributable to common stockholders:	$	0.60		$	(0.47	)	$	(1.18	)
Diluted net earning (loss) per share attributable to common stockholders:	$	0.53		$	(0.47	)	$	(1.18	)

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE (Tables)

12 Months Ended

Jul. 31, 2018

Allowance for Doubtful Accounts

The allowance for doubtful accounts consisted of the following:


	July 31,
	2018			2017			2016
	(In thousands)
Balance at beginning of year	$	616		$	489		$	57
Provisions charged to expense		211			132			458
Accounts written off		(347	)		(5	)		(26	)

	$	480		$	616		$	489

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Jul. 31, 2018

Property and Equipment at Cost

Property and equipment at cost, consists of the following:


	July 31,
	2018			2017
	(In thousands)
Land	$	942		$	—
Buildings		—			24,476
Machinery and equipment		97,149			24,504
Leasehold improvements		21,917			14,815
Software		52,082			48,536
Other		28,147			22,126

		200,237			134,457
Less: Accumulated depreciation and amortization		(93,605	)		(115,902	)

Property and equipment, net	$	106,632		$	18,555

ACQUISITION OF IWCO DIRECT (Tables)

12 Months Ended

Jul. 31, 2018

Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition:


	As Previously Reported			Adjustments			As Revised
	(In thousands)
Accounts receivable	$	47,841		$	(433	)	$	47,408
Inventory		27,165			5,829			32,994
Other current assets		7,427			3,574			11,001
Property and equipment		87,976			4,533			92,509
Intangible assets		210,920			2,330			213,250
Goodwill		259,085			(4,733	)		254,352
Other assets		3,040			(300	)		2,740
Accounts payable		(31,069	)		—			(31,069	)
Accrued liabilities and other current liabilities		(35,790	)		(30,826	)		(66,616	)
Customer deposits		(7,829	)		—			(7,829	)
Deferred income taxes		(79,918	)		1,398			(78,520	)
Other liabilities		(19,627	)		18,628			(999	)

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

Summary of Pro Forma Information

The pro forma results were adjusted to reflect a fair value step-up to work-in-process inventory, as well as 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. The pro forma results also reflect the reversal of the income tax valuation allowance that resulted from the acquisition in fiscal year 2017, rather than fiscal year 2018:


	Twelve Months Ended July 31,
	2018			2017
	(In thousands)
Net revenue	$	824,825		$	891,373
Net income (loss)	$	(17,148	)	$	16,040

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Jul. 31, 2018

Schedule of Estimated Future Amortization Expense of Intangible Assets

The estimated future amortization expense of intangible assets as of July 31, 2018 is as follows (in thousands):


2019	$	30,396
2020		27,255
2021		20,258
2022		15,334
2023		11,427
Thereafter		88,294

	$	192,964

RESTRUCTURING (Tables)

12 Months Ended

Jul. 31, 2018

Summary of Restructuring Accrual by Expense Category

The following tables summarize the activity in the restructuring accrual for the fiscal years ended July 31, 2018, 2017 and 2016:


	Employee Related Expenses			Contractual Obligations			Total
	(In thousands)
Accrued restructuring balance at July 31, 2015	$	1,437		$	91		$	1,528

Restructuring charges		6,025			1,536			7,561
Restructuring adjustments		(108	)		(32	)		(140	)
Cash paid		(5,244	)		(641	)		(5,885	)
Non-cash adjustments		(36	)		1			(35	)

Accrued restructuring balance at July 31, 2016		2,074			955			3,029

Restructuring charges		1,853			439			2,292
Restructuring adjustments		(416	)		91			(325	)
Cash paid		(3,357	)		(1,419	)		(4,776	)
Non-cash adjustments		(54	)		20			(34	)

Accrued restructuring balance at July 31, 2017		100			86			186

Restructuring charges		3			—			3
Restructuring adjustments		246			22			268
Cash paid		(88	)		(108	)		(196	)
Non-cash adjustments		(165	)		—			(165	)

Accrued restructuring balance at July 31, 2018	$	96		$	—		$	96

Summary of Net Restructuring Charges


	Twelve Months Ended July 31,
	2018		2017		2016
	(In thousands)
Cost of revenue	$	9	$	563	$	4,812
Selling, general and administrative		262		1,404		2,609

	$	271	$	1,967	$	7,421

Summary of Restructuring Accrual by Reportable Segment

The following tables summarize the restructuring accrual by operating segment for the fiscal years ended July 31, 2018, 2017 and 2016:


	Americas			Asia			Europe			e-Business			Consolidated Total
	(In thousands)
Accrued restructuring balance at July 31, 2015	$	235		$	253		$	1,026		$	14		$	1,528

Restructuring charges		1,885			2,293			2,353			1,030			7,561
Restructuring adjustments		—			(46	)		(94	)		—			(140	)
Cash paid		(1,258	)		(1,563	)		(2,895	)		(169	)		(5,885	)
Non-cash adjustments		—			(43	)		8			—			(35	)

Accrued restructuring balance at July 31, 2016		862			894			398			875			3,029

Restructuring charges		500			972			698			122			2,292
Restructuring adjustments		(162	)		(154	)		(75	)		66			(325	)
Cash paid		(1,172	)		(1,672	)		(984	)		(948	)		(4,776	)
Non-cash adjustments		23			(40	)		(14	)		(3	)		(34	)

Accrued restructuring balance at July 31, 2017		51			—			23			112			186

Restructuring charges		—			—			—			3			3
Restructuring adjustments		257			1			2			8			268
Cash paid		(88	)		—			—			(108	)		(196	)
Non-cash adjustments		(167	)		(1	)		(25	)		28			(165	)

Accrued restructuring balance at July 31, 2018	$	53		$	—		$	—		$	43		$	96

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Jul. 31, 2018

Components of Accrued Expenses


	July 31, 2018		July 31, 2017
	(In thousands)
Accrued taxes	$	29,804	$	2,272
Accrued compensation		25,603		10,678
Accrued interest		1,437		1,366
Accrued audit, tax and legal		3,264		2,759
Accrued contract labor		1,932		1,632
Accrued worker’s compensation		6,126		—
Accrued other		20,164		19,191

	$	88,330	$	37,898

Components of Other Current Liabilities


	July 31, 2018		July 31, 2017
	(In thousands)
Accrued pricing liabilities	$	18,882	$	18,882
Customer postage deposits		12,638		—
Other		10,509		7,259

	$	42,029	$	26,141

DEBT (Tables)

12 Months Ended

Jul. 31, 2018

Net Carrying Value of Term Loan


	July 31, 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		(2,843	)		(7,227	)
Unamortized debt issuance costs		(252	)		(640	)

Net carrying amount	$	64,530		$	59,758

Summary of Interest Expense Related to Convertible Notes


	Twelve Months Ended July 31,
	2018		2017		2016
	(In thousands)
Interest expense related to contractual interest coupon	$	3,655	$	3,651	$	5,159
Interest expense related to accretion of the discount		4,384		3,919		4,967
Interest expense related to debt issuance costs		388		347		439

	$	8,427	$	7,917	$	10,565

Term Loan

Net Carrying Value of Term Loan


	July 31, 2018
	(In thousands)
Principal amount outstanding on the Term Loan	$	390,000
Unamortized debt issuance costs		(1,162	)

Net carrying value of the Term Loan	$	388,838

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Jul. 31, 2018

Future Annual Minimum Payments

Future annual minimum payments, including restructuring related obligations as of July 31, 2018, are as follows:


	Operating Leases		Capital Lease Obligations		Purchase Obligations		Debt Principal & Interest		Total
	(In thousands)
For the fiscal years ended July 31:
2019	$	17,367	$	79	$	37,920	$	108,792	$	164,158
2020		12,796		70		—		37,135		50,001
2021		9,980		59		—		36,653		46,692
2022		7,175		28		—		36,170		43,373
2023		3,802		—		—		383,191		386,993
Thereafter		24,689		—		—		—		24,689

	$	75,809	$	236	$	37,920	$	601,941	$	715,906

FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Jul. 31, 2018

Plan Assets Measured at Fair Value on Recurring Basis Classified by Fair Value Hierarchy

The following table presents the pension plan assets measured at fair value on a recurring basis as of July 31, 2018 and 2017, classified by fair value hierarchy:


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	22,339		98	%	$	—	$	—	$	22,339
Other investments		521		2	%						521

	$	22,860		100	%	$	—	$	—	$	22,860


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	20,726		98	%	$	—	$	—	$	20,726
Other investments		478		2	%		—		—		478

	$	21,204		100	%	$	—	$	—	$	21,204

Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy

The following tables present the Company’s financial assets measured at fair value on a recurring basis as of July 31, 2018 and 2017, classified by fair value hierarchy:


			Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Level 1		Level 2		Level 3
Assets:
Money market funds	$	47,186	$	47,186	$	—	$	—

			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		—		—

Summary of Changes in Fair Value of Pension Plan Assets

The following table sets forth a summary of the changes in the fair value of the pension plan assets for the years ended July 31, 2018 and 2017:


	July 31,
	2018			2017
	(In thousands)
Fair value of plan assets at beginning of year	$	21,204		$	25,473
Actual return on plan assets		1,541			(5,005	)
Employee contributions		402			104
Employer contributions (withdrawals), net		92			(342	)
Settlements		(21	)		(279	)
Benefits and administrative expenses paid		(372	)		(157	)
Currency translation		14			1,410

Fair value of plan assets at end of year	$	22,860		$	21,204

Notes Payable not Carried at Fair Value

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


	July 31, 2018				July 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In thousands)
Notes payable	$	64,530	$	66,658	$	59,758	$	63,852		Level 1

Pension Plan [Member]

Plan Assets Measured at Fair Value on Recurring Basis Classified by Fair Value Hierarchy

The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2018 and 2017, classified by fair value hierarchy:


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2018		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	22,339		98	%	$	—	$	—	$	22,339
Other investments		521		2	%						521

	$	22,860		100	%	$	—	$	—	$	22,860


						Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2017		Asset Allocations			Level 1		Level 2		Level 3
Insurance contract	$	20,726		98	%	$	—	$	—	$	20,726
Other investments		478		2	%		—		—		478

	$	21,204		100	%	$	—	$	—	$	21,204

DEFINED BENEFIT PENSION PLANS (Tables)

12 Months Ended

Jul. 31, 2018

Aggregate Change in Benefit Obligation and Plan Assets

The aggregate change in benefit obligation and plan assets related to these plans was as follows:


	July 31,
	2018			2017
	(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	27,464		$	31,667
Service cost		398			700
Interest cost		671			573
Actuarial (gain) loss		1,655			(6,814	)
Employee contributions		93			103
Benefits and administrative expenses paid		(372	)		(157	)
Adjustments		(54	)		—
Settlements		(21	)		(279	)
Effect of curtailment		—			—
Currency translation		15			1,671

Benefit obligation at end of year		29,849			27,464

Change in plan assets
Fair value of plan assets at beginning of year		21,204			25,473
Actual return on plan assets		1,541			(5,005	)
Employee contributions		402			104
Employer contributions (withdrawals), net		92			(342	)
Settlements		(21	)		(279	)
Benefits and administrative expenses paid		(372	)		(157	)
Currency translation		14			1,410

Fair value of plan assets at end of year		22,860			21,204

Funded status
Assets		—			—
Current liability		(13	)		(12	)
Noncurrent liability		(6,976	)		(6,248	)

Net amount recognized in statement of financial position as a noncurrent asset (liability)	$	(6,989	)	$	(6,260	)

Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:


	July 31,
	2018		2017
	(In thousands)
Projected benefit obligation	$	29,849	$	27,464
Accumulated benefit obligation	$	27,700	$	25,531
Fair value of plan assets	$	22,860	$	21,204

Components of Net Periodic Pension Cost

Components of net periodic pension cost were as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Service cost	$	398		$	700		$	632
Interest costs		671			573			637
Expected return on plan assets		(529	)		(457	)		(491	)
Amortization of net actuarial (gain) loss		125			201			222
Curtailment gain		—			—			(844	)

Net periodic pension costs	$	665		$	1,017		$	156

Weighted Average Assumptions Used to Determine Benefit Obligations and Net Periodic Pension Cost

Weighted-average assumptions used to determine benefit obligations was as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
Discount rate		2.22	%		2.47	%		1.72	%
Rate of compensation increase		1.93	%		1.93	%		1.92	%

Weighted-average assumptions used to determine net periodic pension cost was as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
Discount rate		2.21	%		1.69	%		1.95	%
Expected long-term rate of return on plan assets		2.20	%		1.69	%		2.41	%
Rate of compensation increase		1.94	%		1.91	%		1.83	%

Summary of Expected Benefit Payments from the Plans through Fiscal 2026

The following table summarizes expected benefit payments from the plans through fiscal year 2026.


	Pension Benefit Payments
	(in thousands)
For the fiscal years ended July 31:
2018		163
2019		213
2020		256
2021		257
2022		307
Next 5 years		2,352

OTHER GAINS (LOSSES), NET (Tables)

12 Months Ended

Jul. 31, 2018

Components of Other Gains (Losses), Net

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


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Foreign currency exchange gains (losses)	$	1,055		$	199		$	(593	)
Gain (losses), net on Trading Securities		1,876			3,128			(5,920	)
Other, net		(708	)		(127	)		756

	$	2,223		$	3,200		$	(5,757	)

SHARE-BASED PAYMENTS (Tables)

12 Months Ended

Jul. 31, 2018

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


	Twelve Months Ended July 31,
	2018		2017		2016
Cost of revenue	$	14	$	53	$	96
Selling, general and administrative		10,787		628		1,030

	$	10,801	$	681	$	1,126

Weighted-Average Grant Date Fair Value of Employee Stock Options Granted

The weighted-average grant date fair value of employee stock options granted during the fiscal years ended July 31, 2016 was $1.11, using the binomial-lattice model with the following weighted-average assumptions:


	Twelve Months Ended July 31,
	2016
Expected volatility		55.80	%
Risk-free interest rate		1.28	%
Expected term (in years)		4.41
Expected dividend yield		0.00	%

Summary of Option Activity

A summary of option activity for the fiscal year ended July 31, 2018 is as follows:


	Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	(in thousands, except exercise price and years)
Stock options outstanding, July 31, 2017		573		$	4.36
Granted		—			—
Exercised		—			—
Forfeited or expired		(135	)		5.51

Stock options outstanding, July 31, 2018		438			3.99		1.91	$	—

Stock options exercisable, July 31, 2018		433		$	4.00		1.89	$	—

Summary of Activity of Nonvested Stock

A summary of the activity of the Company’s nonvested stock for the fiscal year ended July 31, 2018, is as follows:


	Number of Shares			Weighted-Average Grant Date Fair Value
	(share amounts in thousands)
Nonvested stock outstanding, July 31, 2017		296		$	—
Granted		7,999			1.45
Vested		(7,081	)		1.62
Forfeited		(49	)		1.62

Nonvested stock outstanding, July 31, 2018		1,165		$	0.44

INCOME TAXES (Tables)

12 Months Ended

Jul. 31, 2018

Components of Loss from Continuing Operations before Provision for Income Taxes

The components of loss from continuing operations before provision for income taxes are as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Income (loss) from operations before income taxes:
U.S.	$	(60,574	)	$	(34,884	)	$	(69,861	)
Foreign		25,286			10,475			13,234

Total loss from operations before income taxes	$	(35,288	)	$	(24,409	)	$	(56,627	)

Components of Income Tax Expense

The components of income tax expense have been recorded in the Company’s consolidated financial statements as follows:


	Twelve Months Ended July 31,
	2018			2017		2016
	(In thousands)
Income tax expense (benefit) from operations		(71,202	)		2,696		5,443

Total income tax expense (benefit)	$	(71,202	)	$	2,696	$	5,443

Components of Income Tax Expense from Operations

The components of income tax expense from operations consist of the following:


	Twelve Months Ended July 31,
	2018			2017		2016
	(In thousands)
Current provision
Federal	$	—		$	—	$	—
State		—			—		—
Foreign		7,592			2,298		3,090

		7,592			2,298		3,090

Deferred provision:
Federal		(76,168	)		—		—
State		(2,352	)		—		—
Foreign		(274	)		398		2,353

		(78,794	)		398		2,353

Total tax provision	$	(71,202	)	$	2,696	$	5,443

Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities are as follows:


	July 31, 2018			July 31, 2017
	(In thousands)
Deferred tax assets:
Accruals and reserves	$	16,070		$	12,193
Tax basis in excess of financial basis of investments in affiliates		6,232			18,332
Tax basis in excess of financial basis for intangible and fixed assets		311			7,689
Net operating loss and capital loss carry forwards		468,129			751,435

Total gross deferred tax assets		490,742			789,649
Less: valuation allowance		(438,467	)		(771,884	)

Net deferred tax assets	$	52,275		$	17,765

Deferred tax liabilities:
Financial basis in excess of tax basis for intangible and fixed assets	$	(50,141	)	$	(784	)
Convertible Debt		(634	)		(2,655	)
Undistributed accumulated earnings of foreign subsidiaries		—			(13,150	)

Total gross deferred tax liabilities		(50,775	)		(16,589	)

Net deferred tax asset	$	1,500		$	1,176

Reconciliation of Income Tax Expense Attributable to Income from Continuing Operations


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Computed “expected” income tax expense (benefit)	$	(9,467	)	$	(8,106	)	$	(19,368	)
Increase (decrease) in income tax expense resulting from:
Change in valuation allowance		(329,415	)		10,978			22,907
Foreign dividends		7,379			2,724			4,730
Foreign tax rate differential		(1,948	)		(2,386	)		(1,082	)
Federal rate change		280,438			—			—
Nondeductible goodwill impairment		191			—			—
Nondeductible expenses		(15,852	)		20			262
Foreign withholding taxes		1,961			239			762
Reversal of uncertain tax position reserves		(48	)		(481	)		(2,768	)
State benefit of U.S. Loss		(4,654	)		—			—
Other		213			(292	)		—

Actual income tax expense	$	(71,202	)	$	2,696		$	5,443

Reconciliation of Beginning and Ending Balances of Total Amounts of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Balance as of beginning of year	$	681		$	994		$	3,756
Additions for current year tax positions		903			—			19
Currency translation		—			18			—
Reductions for lapses in statute of limitations		(59	)		(331	)		(27	)
Reductions of prior year tax positions		—			—			(2,754	)

Balance as of end of year	$	1,525		$	681		$	994

ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

12 Months Ended

Jul. 31, 2018

Accumulated Other Comprehensive Income, Net of Income Taxes

The components of accumulated other comprehensive income, net of income taxes, are as follows:


	Foreign currency items			Pension items			Unrealized 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		(1,174	)		—			—		(1,174	)
Net unrealized holding gain on securities		—			—			14		14
Pension liability adjustments		—			(419	)		—		(419	)

Net current-period other comprehensive income (loss)		(1,174	)		(419	)		14		(1,579	)

Accumulated other comprehensive income (loss) at July 31, 2018	$	6,348		$	(3,795	)	$	181	$	2,734

STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION (Tables)

12 Months Ended

Jul. 31, 2018

Cash Used for Operating Activities Reflect Cash Payments for Interest and Income Taxes

Cash used for operating activities reflect cash payments for interest and income taxes as follows:


	Years Ended July 31,
	2018		2017		2016
	(In thousands)
Cash paid for interest	$	24,642	$	3,783	$	6,111
Cash paid for income taxes	$	2,567	$	2,500	$	3,287

SEGMENT INFORMATION (Tables)

12 Months Ended

Jul. 31, 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:


	Twelve Months Ended July 31,
	2018			2017			2016
	(In thousands)
Net revenue:
Americas	$	56,320		$	92,324		$	106,143
Asia		146,664			158,048			167,861
Europe		119,403			159,085			151,842
Direct Marketing		299,358			—			—
e-Business		23,513			27,163			33,177

	$	645,258		$	436,620		$	459,023

Operating income (loss):
Americas	$	(9,542	)	$	(10,342	)	$	(14,731	)
Asia		26,405			5,620			(855	)
Europe		(10,074	)		(9,008	)		(13,825	)
Direct Marketing		10,740			—			—
e-Business		(6,176	)		(1,185	)		(4,384	)

Total Segment operating income (loss)		11,353			(14,915	)		(33,795	)
Corporate-level activity		(19,659	)		(4,846	)		(6,777	)

Total operating loss		(8,306	)		(19,761	)		(40,572	)

Total other expense		(26,982	)		(4,648	)		(16,055	)

Loss before income taxes	$	(35,288	)	$	(24,409	)	$	(56,627	)

Total Assets of Continuing Operations


	July 31, 2018		July 31, 2017
	(In thousands)
Total assets:
Americas	$	22,820	$	21,876
Asia		44,322		63,819
Europe		37,223		64,639
Direct Marketing		642,820		—
e-Business		15,758		20,703

Sub-total—segment assets		762,943		171,037
Corporate		64,107		110,261

	$	827,050	$	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:


	Twelve Months Ended
	July 31,
	2018		2017		2016
	(In thousands)
Services:
Supply chain services	$	322,387	$	409,457	$	425,846
e-Business services		23,513		27,163		33,177
Products:
Direct Marketing		299,358		—		—

	$	645,258	$	436,620	$	459,023

SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables)

12 Months Ended

Jul. 31, 2018

Selected Quarterly Financial Information


	Quarter Ended												Quarter Ended
	Oct. 31, ‘17			Jan. 31, ‘18			Apr. 30, ‘18			Jul. 31, ‘18			Oct. 31, ‘16			Jan. 31, ‘17			Apr. 30, ‘17			Jul. 31, ‘17
	(In thousands, except per share data)												(In thousands, except per share data)
Net revenue	$	102,522		$	153,738		$	193,921		$	195,077		$	121,327		$	117,568		$	97,948		$	99,777
Cost of revenue		93,448			137,915			154,916			157,720			111,994			106,370			89,406			92,485

Gross profit		9,074			15,823			39,005			37,357			9,333			11,198			8,542			7,292
Total operating expenses		12,904			21,526			37,625			37,510			14,975			12,702			13,785			14,664

Operating income (loss)		(3,830	)		(5,703	)		1,380			(153	)		(5,642	)		(1,504	)		(5,243	)		(7,372	)
Total other income (expense)		(521	)		(8,200	)		(11,198	)		(7,063	)		(2,352	)		(1,075	)		763			(1,984	)
Income tax benefit (expense)		(1,087	)		73,521			(715	)		(517	)		(1,049	)		(723	)		(819	)		(105	)
Gains on investments in affiliates, net of tax		201			200			200			200			500			396			232			150

Net income (loss)		(5,237	)		59,818			(10,333	)		(7,533	)		(8,543	)		(2,906	)		(5,067	)		(9,311	)

Net income (loss) attributable to common stockholders	$	(5,237	)	$	59,548		$	(10,862	)	$	(8,069	)	$	(8,543	)	$	(2,906	)	$	(5,067	)	$	(9,311	)

Basic net earning (loss) per share attributable to common stockholders:	$	(0.09	)	$	1.02		$	(0.18	)	$	(0.13	)	$	(0.16	)	$	(0.05	)	$	(0.09	)	$	(0.17	)
Diluted net earning (loss) per share attributable to common stockholders:	$	(0.09	)	$	0.75		$	(0.18	)	$	(0.13	)	$	(0.16	)	$	(0.05	)	$	(0.09	)	$	(0.17	)

Schedule of Impact to Consolidated Statements of Income

The impact to the condensed consolidated statements of income for the three months ended January 31, 2018 and April 30, 2018 is as follows (in thousands, except per share amounts):


	Three Months Ended January 31, 2018									Three Months Ended April 30, 2018
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments		As Revised
Net revenue	$	151,119		$	2,619		$	153,738		$	188,922		$	4,999	$	193,921
Cost of revenue		134,169			3,746			137,915			149,917			4,999		154,916
Gross profit		16,950			(1,127	)		15,823			39,005			—		39,005
Income tax expense (benefit)		(77,664	)		4,143			(73,521	)		715			—		715
Net income (loss) attributable to common stockholders	$	64,830			(5,282	)	$	59,548		$	(10,862	)		—	$	(10,862	)
Basic net earning (loss) per share attributable to common stockholders:	$	1.11					$	1.02		$	(0.18	)			$	(0.18	)
Diluted net earning (loss) per share attributable to common stockholders:	$	0.85					$	0.75		$	(0.18	)			$	(0.18	)

PARENT COMPANY CONDENSED FINANCIAL INFORMATION (Tables)

12 Months Ended

Jul. 31, 2018

Schedule of Balance Sheet

STEEL CONNECT, INC. (Parent Only)

BALANCE SHEETS

(in thousands, except share and per share data)


	July 31, 2018			July 31, 2017
ASSETS
Cash and cash equivalents	$	7,978		$	708
Prepaid expenses and other current assets		120			85

Total current assets		8,098			793
Investments in affiliates		188,534			113,154
Other assets		87			87
Due from subsidiaries		13,579			10,945

Total assets	$	210,298		$	124,979


LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS’ EQUITY

Accounts payable	$	674		$	498
Accrued expenses		2,274			1,752
Notes payable		64,530			—

Total current liabilities		67,478			2,250

Notes payable		—			59,758

Total long-term liabilities		—			59,758

Total liabilities		67,478			62,008

Contingently redeemable preferred stock		35,192			—

Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017		35,192			—

Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at July 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at July 31, 2018 and at July 31, 2017		—			—
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,742,859 issued and outstanding shares at July 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017		608			556
Additional paid-in capital		7,467,855			7,457,051
Accumulated deficit		(7,363,569	)		(7,398,949	)
Accumulated other comprehensive income		2,734			4,313

Total stockholders’ equity		107,628			62,971

Total liabilities, contingently redeemable preferred stock and stockholders’ equity	$	210,298		$	124,979

Schedule of Statements of Operations

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF OPERATIONS

(in thousands)


	Twelve Months Ended July 31,
	2018			2017			2016
Selling, general and administrative	$	16,742		$	4,834		$	6,562

Total operating expenses		16,742			4,834			6,562

Operating loss		(16,742	)		(4,834	)		(6,562	)

Other income (expense):
Interest expense		(8,427	)		(7,917	)		(10,565	)
Other income, net		6,807			—			757

Total other expense		(1,620	)		(7,917	)		(9,808	)

Loss before income taxes		(18,362	)		(12,751	)		(16,370	)
Equity losses of subsidiaries, net of tax		(54,276	)		14,026			44,911
Gains on investments in affiliates, net of tax		(801	)		(950	)		—

Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)

Schedule of Statements of Cash Flows

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF CASH FLOWS

(in thousands)


	Twelve Months Ended
	July 31,
	2018			2017			2016
Cash flows from operating activities:
Net income (loss)	$	36,715		$	(25,827	)	$	(61,281	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs		388			347			439
Accretion of debt discount		4,384			3,919			4,967
Share-based compensation		10,763			533			509
Non-cash (gains) losses, net		(354	)		—			(757	)
Equity losses of subsidiaries, net of tax		(54,276	)		14,026			44,911
Gains on investments in affiliates and impairments		(801	)		(950	)		—
Changes in operating assets and liabilities, net of business acquired:
Prepaid expenses and other current assets		(36	)		76			1,034
Accounts payable and accrued expenses		698			(338	)		(3,418	)
Other assets and liabilities		(1,860	)		(12,926	)		1,223

Net cash used in operating activities		(4,379	)		(21,140	)		(12,373	)

Cash flows from investing activities:
Intercompany advances, net		(22,216	)		19,211			20,000

Net cash provided by (used in) investing activities		(22,216	)		19,211			20,000

Cash flows from financing activities:
Proceeds from issuance of preferred stock		35,000			—			—
Payment of preferred dividends		(1,143	)		—			—
Purchase of the Company’s Convertible Notes		—			(1,763	)		(20,257	)
Proceeds from issuance of common stock		8			18			51
Repurchase of common stock		—			—			(127	)

Net cash provided by (used in) financing activities		33,865			(1,745	)		(20,333	)

Net decrease in cash and cash equivalents		7,270			(3,674	)		(12,706	)
Cash and cash equivalents at beginning of period		708			4,382			17,088

Cash and cash equivalents at end of period	$	7,978		$	708		$	4,382

Nature of Operations - Additional Information (Detail)		12 Months Ended
Nature of Operations - Additional Information (Detail)	Dec. 15, 2017 USD ($)	Jul. 31, 2018 USD ($) Site Language Facility	Jul. 31, 2017 USD ($)
Nature Of Operations [Line Items]
Cash and cash equivalents and Trading Securities		$ 92,100,000	$ 122,600,000
Principal amount of notes held		67,625,000	67,625,000
PNC Bank Credit Facility
Nature Of Operations [Line Items]
Credit facility, readily available borrowing capacity		$ 9,600,000	$ 16,000,000
Cerberus Credit Facility
Nature Of Operations [Line Items]
Revolving credit facility	$ 25,000,000
Steel Holdings \| 5.25% Convertible Senior Notes
Nature Of Operations [Line Items]
Debt instrument stated percentage		5.25%
Principal amount of notes held		$ 14,900,000
Moduslink
Nature Of Operations [Line Items]
Number of sites \| Site		20
Number of languages \| Language		21
IWCO \| Cerberus Credit Facility
Nature Of Operations [Line Items]
Revolving credit facility		$ 25,000,000
IWCO \| Cerberus Credit Facility \| Maximum
Nature Of Operations [Line Items]
Cash distributions		$ 5,000,000
IWCO \| Chanhassen MN
Nature Of Operations [Line Items]
Number of facilities \| Facility		3
IWCO \| Little Falls MN
Nature Of Operations [Line Items]
Number of facilities \| Facility		1
IWCO \| Warminster PA
Nature Of Operations [Line Items]
Number of facilities \| Facility		1
IWCO \| Hamburg PA
Nature Of Operations [Line Items]
Number of facilities \| Facility		2

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands, shares in Millions	12 Months Ended
	Jul. 31, 2018 USD ($) Customer shares	Jul. 31, 2017 USD ($) shares	Jul. 31, 2016 USD ($) shares
Significant Of Accounting Policies [Line Items]
Highly liquid investment period to be considered cash equivalent	3 months
Fair value of notes payable	$ 66,658	$ 63,852
Impairment charges related to investments			$ 42
Number of largest clients \| Customer	10
Work In Process Inventory \| IWCO
Significant Of Accounting Policies [Line Items]
Fair value of assets acquired	$ 7,200
5.25% Convertible Senior Notes
Significant Of Accounting Policies [Line Items]
Common stock equivalent shares excluded from the denominator in calculation of diluted earnings (loss)per share \| shares		11.4	16.5
Sales Revenue, Net \| Customer Concentration Risk
Significant Of Accounting Policies [Line Items]
Concentration risk percentage	44.00%	70.00%	71.00%
Computing Market Client \| Net Accounts Receivable \| Customer Concentration Risk
Significant Of Accounting Policies [Line Items]
Concentration risk percentage		13.00%	3.00%
Consumer Electronics Client \| Net Accounts Receivable \| Customer Concentration Risk
Significant Of Accounting Policies [Line Items]
Concentration risk percentage		11.00%	16.00%
Stock Options And Restricted Stock
Significant Of Accounting Policies [Line Items]
Common stock equivalent shares excluded from the denominator in calculation of diluted earnings (loss)per share \| shares	0.5	14.2	21.1
Minimum
Significant Of Accounting Policies [Line Items]
Equity method investment ownership percentage	20.00%
Highly liquid investment period to be considered short term investments	3 months
Minimum \| IWCO
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	$ 4,500
Minimum \| ModusLink Corporation
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	1,000
Minimum \| Iwco Direct Holdings Inc and Moduslink Corporation
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	$ 5,500
Maximum
Significant Of Accounting Policies [Line Items]
Equity method investment ownership percentage	50.00%
Highly liquid investment period to be considered short term investments	12 months
Maximum \| IWCO
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	$ 6,000
Maximum \| ModusLink Corporation
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	2,000
Maximum \| Iwco Direct Holdings Inc and Moduslink Corporation
Significant Of Accounting Policies [Line Items]
Increase (decrease) in retained earnings	$ 8,000
Maximum \| Sales Revenue, Net \| Customer Concentration Risk
Significant Of Accounting Policies [Line Items]
Concentration risk percentage	10.00%
Maximum \| Net Accounts Receivable \| Customer Concentration Risk
Significant Of Accounting Policies [Line Items]
Concentration risk percentage	10.00%

Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Cash and Cash Equivalents [Line Items]
Cash and bank deposits	$ 44,952	$ 24,987
Money market funds	47,186	85,683
Cash and cash equivalents	$ 92,138	$ 110,670

Components of Inventories (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Inventory [Line Items]
Raw materials	$ 23,208	$ 31,071
Work-in-process	16,147	713
Finished goods	8,431	2,585
Inventories, net	$ 47,786	$ 34,369

Estimated Useful Lives of Property Plant and Equipment (Detail)	12 Months Ended
	Jul. 31, 2018
Buildings
Property, Plant and Equipment [Line Items]
Estimated useful life	32 years
Automobiles
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Estimated useful life, description	Shorter of the remaining lease term or the estimated useful life of the asset
Minimum \| Machinery and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Minimum \| Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Minimum \| Software
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Maximum \| Machinery and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Maximum \| Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Maximum \| Software
Property, Plant and Equipment [Line Items]
Estimated useful life	8 years

Reconciliation of Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Net income (loss)	$ (7,533)	$ (10,333)	$ 59,818	$ (5,237)	$ (9,311)	$ (5,067)	$ (2,906)	$ (8,543)	$ 36,715	$ (25,827)	$ (61,281)
Less: Preferred dividends on redeemable preferred stock									(1,335)
Net income (loss) attributable to common stockholders	$ (8,069)	$ (10,862)	$ 59,548	$ (5,237)	$ (9,311)	$ (5,067)	$ (2,906)	$ (8,543)	35,380	(25,827)	(61,281)
Effect of dilutive securities:
Net income (loss) attributable to common stockholders after assumed conversions									$ 43,794	$ (25,827)	$ (61,281)
Weighted average common shares outstanding									59,179	55,134	51,934
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock									22,720
Weighted average number of common and potential common shares									81,899	55,134	51,934
Basic net earning (loss) per share attributable to common stockholders:	$ (0.13)	$ (0.18)	$ 1.02	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.60	$ (0.47)	$ (1.18)
Diluted net earning (loss) per share attributable to common stockholders:	$ (0.13)	$ (0.18)	$ 0.75	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.53	$ (0.47)	$ (1.18)
5.25% Convertible Senior Notes
Effect of dilutive securities:
Dilutive securities									$ 7,079
Contingent Convertible Preferred Stock
Effect of dilutive securities:
Dilutive securities									$ 1,335

Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of year	$ 616	$ 489	$ 57
Provisions charged to expense	211	132	458
Accounts written off	(347)	(5)	(26)
Balance at end of year	$ 480	$ 616	$ 489

Allowance for Doubtful Accounts Receivable - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amount of accounts receivable factored	$ 38.0	$ 41.1
London Interbank Offered Rate (LIBOR)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate on the sale of receivables	0.85%

Property and Equipment at Cost (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Property, Plant and Equipment [Line Items]
Land	$ 942
Buildings		$ 24,476
Machinery and equipment	97,149	24,504
Leasehold improvements	21,917	14,815
Software	52,082	48,536
Other	28,147	22,126
Property plant and equipment, gross	200,237	134,457
Less: Accumulated depreciation and amortization	(93,605)	(115,902)
Property and equipment, net	$ 106,632	$ 18,555

Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 16,791	$ 8,206	$ 8,119
Impairment of goodwill and long-lived assets		261	305
Proceeds associated with the sale of property and equipment	20,748	187	1,318
Gain associated with the sale of property	12,692
Kildare
Property, Plant and Equipment [Line Items]
Impairment of goodwill and long-lived assets			300
Americas
Property, Plant and Equipment [Line Items]
Depreciation expense	1,100	1,200	1,500
Asia
Property, Plant and Equipment [Line Items]
Depreciation expense	1,400	1,900	3,200
Europe
Property, Plant and Equipment [Line Items]
Depreciation expense	1,300	1,800	2,600
e-Business
Property, Plant and Equipment [Line Items]
Depreciation expense	600	$ 600	$ 800
Direct Marketing
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 10,000

Investments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Investment [Line Items]
Sale (purchase) of Trading Securities									$ 13,800	$ 8,000
Gains (losses) on Trading Securities									1,876	3,128	$ (5,920)
Sale of trading securities											57,200
Trading securities	$ 0				$ 11,898				0	11,898
(Gains) losses on investment on affiliates, net of tax	$ 200	$ 200	$ 200	$ 201	$ 150	$ 232	$ 396	$ 500	$ 800	1,300	800
Affiliates \| Maximum
Investment [Line Items]
Company's voting interest	50.00%								50.00%
Affiliates \| Minimum
Investment [Line Items]
Company's voting interest	20.00%								20.00%
Cash
Investment [Line Items]
Gains (losses) on Trading Securities									$ 4,600	900	6,400
Non Cash
Investment [Line Items]
Gains (losses) on Trading Securities									$ (2,700)	$ 2,200	$ (12,300)
Available For Sale Securities \| Affiliates \| Maximum
Investment [Line Items]
Ownership interest on investment, percent									20.00%

Acquisition of IWCO Direct - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
	Dec. 15, 2017	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Business Acquisition [Line Items]
Payments to acquire business, net of cash acquired										$ 469,221
Goodwill		$ 254,352								254,352
Net revenue			$ 193,921	$ 153,738						645,258	$ 436,620	$ 459,023
Operating income		$ (153)	$ 1,380	$ (5,703)	$ (3,830)	$ (7,372)	$ (5,243)	$ (1,504)	$ (5,642)	(8,306)	(19,761)	(40,572)
Loss before income taxes										(35,288)	$ (24,409)	$ (56,627)
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	213,250
Goodwill	254,352
Net revenue										299,400
Operating income										10,700
Loss before income taxes										$ 11,400
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	$ 192,700
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	Jul. 31, 2018	Dec. 15, 2017
Business Acquisition [Line Items]
Goodwill	$ 254,352
IWCO
Business Acquisition [Line Items]
Accounts receivable		$ 47,408
Inventory		32,994
Other current assets		11,001
Property and equipment		92,509
Intangible assets		213,250
Goodwill		254,352
Other assets		2,740
Accounts payable		(31,069)
Accrued liabilities and other current liabilities		(66,616)
Customer deposits		(7,829)
Deferred income taxes		(78,520)
Other liabilities		(999)
Total consideration		469,221
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 \| IWCO
Business Acquisition [Line Items]
Accounts receivable		(433)
Inventory		5,829
Other current assets		3,574
Property and equipment		4,533
Intangible assets		2,330
Goodwill		(4,733)
Other assets		(300)
Accrued liabilities and other current liabilities		(30,826)
Deferred income taxes		1,398
Other liabilities		$ 18,628

Summary of Pro Forma Information (Detail) - IWCO - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Net revenue	$ 824,825	$ 891,373
Net income (loss)	$ (17,148)	$ 16,040

Goodwill and Intangible Assets - Additional Information (Detail) $ in Thousands	Jul. 31, 2018 USD ($)
Goodwill [Line Items]
Goodwill	$ 254,352
Intangible assets	192,964
Direct Marketing
Goodwill [Line Items]
Goodwill	254,400
Customer Relationships
Goodwill [Line Items]
Intangible assets	$ 176,700
Estimated useful life	15 years
Trademarks and Trade Names
Goodwill [Line Items]
Intangible assets	$ 16,200
Estimated useful life	3 years

Schedule of Estimated Future Amortization Expense of Intangible Assets (Detail) $ in Thousands	Jul. 31, 2018 USD ($)
Intangible Assets And Goodwill [Line Items]
2019	$ 30,396
2020	27,255
2021	20,258
2022	15,334
2023	11,427
Thereafter	88,294
Total	$ 192,964

Summary of Restructuring Accrual by Expense Category (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	$ 186	$ 3,029	$ 1,528
Restructuring charges	3	2,292	7,561
Restructuring adjustments	268	(325)	(140)
Cash paid	(196)	(4,776)	(5,885)
Non-cash adjustments	(165)	(34)	(35)
Accrued restructuring, ending balance	96	186	3,029
Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	100	2,074	1,437
Restructuring charges	3	1,853	6,025
Restructuring adjustments	246	(416)	(108)
Cash paid	(88)	(3,357)	(5,244)
Non-cash adjustments	(165)	(54)	(36)
Accrued restructuring, ending balance	96	100	2,074
Contractual Obligations
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	86	955	91
Restructuring charges		439	1,536
Restructuring adjustments	22	91	(32)
Cash paid	$ (108)	(1,419)	(641)
Non-cash adjustments		20	1
Accrued restructuring, ending balance		$ 86	$ 955

Restructuring - Additional Information (Detail) $ in Thousands	12 Months Ended
	Jul. 31, 2018 USD ($)	Jul. 31, 2017 USD ($) Employee	Jul. 31, 2016 USD ($) Employee
Restructuring Cost and Reserve [Line Items]
Restructuring, net	$ 271	$ 1,967	$ 7,421
Restructuring charges	3	2,292	7,561
Restructuring charge related to workforce reduction		1,500	5,900
Restructuring charge related to facility closed		$ 500	$ 1,500
Number of workforce reduction \| Employee		78	228
Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	$ 1,853	$ 6,025
Americas
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 500	$ 1,885
Americas \| Employee Related Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 300

Summary of Net Restructuring Charges (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring, net	$ 271	$ 1,967	$ 7,421
Cost of revenue
Restructuring Cost and Reserve [Line Items]
Restructuring, net	9	563	4,812
Selling, general and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring, net	$ 262	$ 1,404	$ 2,609

Summary of Restructuring Accrual by Reportable Segment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	$ 186	$ 3,029	$ 1,528
Restructuring charges	3	2,292	7,561
Restructuring adjustments	268	(325)	(140)
Cash paid	(196)	(4,776)	(5,885)
Non-cash adjustments	(165)	(34)	(35)
Accrued restructuring, ending balance	96	186	3,029
Americas
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	51	862	235
Restructuring charges		500	1,885
Restructuring adjustments	257	(162)
Cash paid	(88)	(1,172)	(1,258)
Non-cash adjustments	(167)	23
Accrued restructuring, ending balance	53	51	862
Asia
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance		894	253
Restructuring charges		972	2,293
Restructuring adjustments	1	(154)	(46)
Cash paid		(1,672)	(1,563)
Non-cash adjustments	(1)	(40)	(43)
Accrued restructuring, ending balance			894
Europe
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	23	398	1,026
Restructuring charges		698	2,353
Restructuring adjustments	2	(75)	(94)
Cash paid		(984)	(2,895)
Non-cash adjustments	(25)	(14)	8
Accrued restructuring, ending balance		23	398
e-Business
Restructuring Cost and Reserve [Line Items]
Accrued restructuring, beginning balance	112	875	14
Restructuring charges	3	122	1,030
Restructuring adjustments	8	66
Cash paid	(108)	(948)	(169)
Non-cash adjustments	28	(3)
Accrued restructuring, ending balance	$ 43	$ 112	$ 875

Components of Accrued Expenses (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Accrued Expenses [Line Items]
Accrued taxes	$ 29,804	$ 2,272
Accrued compensation	25,603	10,678
Accrued interest	1,437	1,366
Accrued audit, tax and legal	3,264	2,759
Accrued contract labor	1,932	1,632
Accrued worker's compensation	6,126
Accrued other	20,164	19,191
Accrued expenses	$ 88,330	$ 37,898

Components of Other Current Liabilities (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Other Current Liabilities [Line Items]
Accrued pricing liabilities	$ 18,882	$ 18,882
Customer postage deposits	12,638
Other	10,509	7,259
Other current liabilities	$ 42,029	$ 26,141

Accrued Expenses and Other Current Liabilities - Additional Information (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Accrued Expenses and Other Current Liabilities [Line Items]
Accrued pricing liabilities	$ 18,882	$ 18,882

Debt - Additional Information (Detail)				12 Months Ended
Debt - Additional Information (Detail)	Dec. 15, 2017 USD ($)	Jun. 30, 2014 USD ($)	Mar. 18, 2014 USD ($)	Jul. 31, 2018 USD ($) d $ / shares	Jul. 31, 2017 USD ($)	Jul. 31, 2016 USD ($)
Debt Instrument [Line Items]
Debt instrument issued				$ 67,625,000	$ 67,625,000
Debt instrument issuance costs				252,000	640,000
Purchase of the Company's Convertible Notes					1,763,000	$ 20,257,000
Notes payable, Fair Value				66,658,000	63,852,000
Debt instrument, carrying amount				$ 64,530,000	59,758,000
Convertible debt, remaining discount amortization period				7 months
Debt instrument, interest expense				$ 4,384,000	3,919,000	4,967,000
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
Cerberus Credit Facility
Debt Instrument [Line Items]
Line of credit facility, term	5 years
Outstanding indebtedness under the Credit Facility				0
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%
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%	0.50%
Debt instrument, convertible, conversion ratio				166.2593
Initial Conversion price \| $ / shares				$ 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
Additional interest paid				$ 200,000
Debt instrument conversion option				28,100,000
Debt instrument issuance costs				3,400,000
Deferred debt instrument issuance costs				2,500,000
Debt instrument, interest expense				8,427,000	$ 7,917,000	$ 10,565,000
Debt instrument, interest rate, effective percentage					13.90%
Notes Payable One
Debt Instrument [Line Items]
Face amount of purchased Notes					$ 2,000,000
Purchase of the Company's Convertible Notes					1,800,000
Gain on purchase of Notes					$ 100,000
Term Loan \| Cerberus Credit Facility
Debt Instrument [Line Items]
Debt instrument issued				390,000,000
Current and long-term net				$ 388,838,000

Net Carrying Value of the Notes (Detail) - USD ($) $ in Thousands	Jul. 31, 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	(2,843)	(7,227)
Unamortized debt issuance costs	(252)	(640)
Net carrying amount	$ 64,530	$ 59,758

Summary of Interest Expense Related to Convertible Notes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	$ 4,384	$ 3,919	$ 4,967
5.25% Convertible Senior Notes Due 2019
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	8,427	7,917	10,565
5.25% Convertible Senior Notes Due 2019 \| Coupon Interest
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	3,655	3,651	5,159
5.25% Convertible Senior Notes Due 2019 \| Accretion of Debt Discount
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	4,384	3,919	4,967
5.25% Convertible Senior Notes Due 2019 \| Amortization of Debt Issue Cost
Interest Expense, Debt [Line Items]
Debt instrument, interest expense	$ 388	$ 347	$ 439

Net Carrying Value of Term Loan (Detail) - USD ($) $ in Thousands	Jul. 31, 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	390,000
Unamortized debt issuance costs	(1,162)
Net carrying value of the Term Loan	$ 388,838

Future Annual Minimum Payments (Detail) $ in Thousands	Jul. 31, 2018 USD ($)
Other Commitments [Line Items]
2019	$ 164,158
2020	50,001
2021	46,692
2022	43,373
2023	386,993
Thereafter	24,689
Future Minimum Payments Due, Total	715,906
Operating Leases
Other Commitments [Line Items]
2019	17,367
2020	12,796
2021	9,980
2022	7,175
2023	3,802
Thereafter	24,689
Future Minimum Payments Due, Total	75,809
Capital Lease Obligations
Other Commitments [Line Items]
2019	79
2020	70
2021	59
2022	28
Future Minimum Payments Due, Total	236
Purchase Obligation
Other Commitments [Line Items]
2019	37,920
Future Minimum Payments Due, Total	37,920
Debt Principal & Interest
Other Commitments [Line Items]
2019	108,792
2020	37,135
2021	36,653
2022	36,170
2023	383,191
Future Minimum Payments Due, Total	$ 601,941

Commitments and Contingencies - Additional Information (Detail) - USD ($)		12 Months Ended
	Dec. 15, 2017	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Commitments and Contingencies [Line Items]
Total rent and equipment lease expense charged to continuing operations		$ 19,200,000	$ 15,600,000	$ 17,300,000
Proceeds from issuance of preferred stock		35,000,000
Purchase Agreement \| SPHG Holdings \| Series C Convertible Preferred Stock
Commitments and Contingencies [Line Items]
Proceeds from issuance of preferred stock	$ 35,000,000
Vendor Agreements
Commitments and Contingencies [Line Items]
Outstanding obligations		$ 0

Defined Benefit Pension Plans - Additional Information (Detail) $ in Thousands	12 Months Ended
	Jul. 31, 2019 USD ($)	Jul. 31, 2018 USD ($) Program	Jul. 31, 2017 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Proceeds from the termination of defined benefit pension plan			$ 905
Accumulated benefit obligation		$ 27,700	25,500
Amount included in accumulated other comprehensive income expected to be recognized as a component of net periodic pension costs in fiscal year 2019		4,800
Market value of plan assets using Level 3 inputs		$ 22,300
Cumulative gains and losses in excess of the greater of the pension benefit obligation		10.00%
Netherlands
Defined Benefit Plan Disclosure [Line Items]
Number of pension plans \| Program		2
Taiwan Plan \| Taiwan
Defined Benefit Plan Disclosure [Line Items]
Proceeds from the termination of defined benefit pension plan			$ 900
Unfunded Defined Benefit Pension Plans \| Japan
Defined Benefit Plan Disclosure [Line Items]
Number of pension plans \| Program		1
Scenario, Forecast
Defined Benefit Plan Disclosure [Line Items]
Minimum required contributions to the plans	$ 400

Schedule of Defined Benefit Plan Assets Fair Value Measurements (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	100.00%	100.00%
Defined benefit plan, fair value of plan assets	$ 22,860	$ 21,204	$ 25,473
Insurance Contracts
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	98.00%	98.00%
Other Investments
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	2.00%	2.00%
Fair Value, Measurements, Recurring
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	$ 22,860	$ 21,204
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,860	21,204
Fair Value, Measurements, Recurring \| Insurance Contracts
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,339	20,726
Fair Value, Measurements, Recurring \| Insurance Contracts \| Fair Value, Inputs, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,339	20,726
Fair Value, Measurements, Recurring \| Other Investments
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	521	478
Fair Value, Measurements, Recurring \| Other Investments \| Fair Value, Inputs, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	$ 521	$ 478

Aggregate Change in Benefit Obligation and Plan Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Change in benefit obligation
Benefit obligation at beginning of year	$ 27,464	$ 31,667
Service cost	398	700	$ 632
Interest cost	671	573	637
Actuarial (gain) loss	1,655	(6,814)
Employee contributions	93	103
Benefits and administrative expenses paid	(372)	(157)
Adjustments	(54)
Settlements	(21)	(279)
Effect of curtailment	0	0
Currency translation	15	1,671
Benefit obligation at end of year	29,849	27,464	31,667
Change in plan assets
Fair value of plan assets at beginning of year	21,204	25,473
Actual return on plan assets	1,541	(5,005)
Employee contributions	402	104
Employer contributions (withdrawals), net	92	(342)
Settlements	(21)	(279)
Benefits and administrative expenses paid	(372)	(157)
Currency translation	14	1,410
Fair value of plan assets at end of year	22,860	21,204	$ 25,473
Assets	0	0
Current liability	(13)	(12)
Noncurrent liability	(6,976)	(6,248)
Net amount recognized in statement of financial position as a noncurrent asset (liability)	$ (6,989)	$ (6,260)

Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	$ 29,849	$ 27,464
Accumulated benefit obligation	27,700	25,531
Fair value of plan assets	$ 22,860	$ 21,204

Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 398	$ 700	$ 632
Interest costs	671	573	637
Expected return on plan assets	(529)	(457)	(491)
Amortization of net actuarial (gain) loss	125	201	222
Curtailment gain			(844)
Net periodic pension costs	$ 665	$ 1,017	$ 156

Weighted Average Assumptions Used to Determine Benefit Obligations (Detail)	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Discount rate	2.22%	2.47%	1.72%
Rate of compensation increase	1.93%	1.93%	1.92%

Weighted-Average Assumptions Used to Determine Net Periodic Pension Cost (Detail)	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Discount rate	2.21%	1.69%	1.95%
Expected long-term rate of return on plan assets	2.20%	1.69%	2.41%
Rate of compensation increase	1.94%	1.91%	1.83%

Summary of Expected Benefit Payments from Plans through Fiscal 2026 (Detail) $ in Thousands	Jul. 31, 2018 USD ($)
Defined Benefit Plan Disclosure [Line Items]
2018	$ 163
2019	213
2020	256
2021	257
2022	307
Next 5 years	$ 2,352

Components of Other Gains (Losses), Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Component Of Other Expense Income Nonoperating [Line Items]
Foreign currency exchange gains (losses)	$ 1,055	$ 199	$ (593)
Gain (losses), net on Trading Securities	1,876	3,128	(5,920)
Other, net	(708)	(127)	756
Other gains (losses), net	$ 2,223	$ 3,200	$ (5,757)

Other Gains (Losses), Net - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Component Of Other Expense Income Nonoperating [Line Items]
Other gains (losses), net	$ 2,223	$ 3,200	$ (5,757)
Sale of marketable securities	1,900
Net realized and unrealized foreign currency exchange gain (losses)	1,100	200	(600)
Offset gain loss	(600)
Gains (losses) in trading securities	1,876	3,128	(5,920)
Non Cash
Component Of Other Expense Income Nonoperating [Line Items]
Gains (losses) in trading securities	(2,700)	2,200	(12,300)
Gain on purchase of Notes			800
Cash
Component Of Other Expense Income Nonoperating [Line Items]
Gains (losses) in trading securities	$ 4,600	$ 900	$ 6,400

Share-Based Payments - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Dec. 15, 2017	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016	Dec. 08, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable rate of options granted		25.00%
2010 Plan number of shares pursuant to stock options granted		0	0
Weighted-average grant date fair value of employee stock options granted				$ 1.11
Stock options vested and expected to vest		400,000
Weighted-average remaining contractual term		1 year 10 months 24 days
Non vested stock compensation expense		$ 10.7	$ 0.5	$ 0.7
Grant date fair value of nonvested stock		$ 11.5	$ 0.6	$ 1.0
Unrecognized compensation cost related to nonvested stock		$ 1.0
2005 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable terms		3 years
2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
2010 Plan number of shares pursuant to stock options granted		11,000,000
2010 Plan additional shares of common stock					2,922,258
Common Stock shares available for future issuance		4,803,835
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock shares available for future issuance		126,000
Number of shares pursuant to stock options granted		600,000
Common stock purchase price as a percentage of market value		85.00%
Shares issued under plan		10,000	11,000	30,000
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual terms, share options granted		7 years
Weighted average period of cost expected to be expensed			10 months 24 days
Stock Option \| 2005 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual terms, share options granted		10 years
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of cost expected to be expensed		3 months 18 days
Restricted stock \| Director \| 2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock award granted	4,000,000
Restricted stock award vested	4,000,000
Market Performance Based Restricted Stock \| Director \| 2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock award granted	1,500,000
Restricted stock award vested		1,000,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable terms		1 year
Term of restriction period		1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable terms		3 years
Term of restriction period		5 years

Summary of Share-Based Compensation (Benefit) Expense Related to Employee Stock Options, Employee Stock Purchases and Non-Vested Shares (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 10,801	$ 681	$ 1,126
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	14	53	96
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 10,787	$ 628	$ 1,030

Weighted-Average Grant Date Fair Value of Employee Stock Options Granted (Detail)	12 Months Ended
	Jul. 31, 2016
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Expected volatility	55.80%
Risk-free interest rate	1.28%
Expected term (in years)	4 years 4 months 28 days
Expected dividend yield	0.00%

Summary of Option Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Number of Shares
Stock options outstanding, July 31, 2017	573
Granted	0	0
Exercised	0
Forfeited or expired	(135)
Stock options outstanding, July 31, 2018	438	573
Stock options exercisable, July 31, 2018	433
Weighted-Average Exercise Price
Stock options outstanding, July 31, 2017	$ 4.36
Granted	0
Exercised	0
Forfeited or expired	5.51
Stock options outstanding, July 31, 2018	3.99	$ 4.36
Stock options exercisable, July 31, 2018	$ 4.00
Weighted-Average Remaining Contractual Term (Years)
Stock options outstanding, July 31, 2018	1 year 10 months 28 days
Stock options exercisable, July 31, 2018	1 year 10 months 20 days
Aggregate Intrinsic Value
Stock options outstanding, July 31, 2018	$ 0
Stock options exercisable, July 31, 2018	$ 0

Summary of Activity of Nonvested Stock (Detail) shares in Thousands	12 Months Ended
	Jul. 31, 2018 $ / shares shares
Number of Shares
Nonvested stock outstanding, July 31, 2017	296
Granted	7,999
Vested	(7,081)
Forfeited	(49)
Nonvested stock outstanding, July 31, 2018	1,165
Weighted-Average Grant Date Fair Value
Granted \| $ / shares	$ 1.45
Vested \| $ / shares	1.62
Forfeited \| $ / shares	1.62
Nonvested stock outstanding, July 31, 2018 \| $ / shares	$ 0.44

Components of Loss from Continuing Operations before Provision for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Income (loss) from operations before income taxes:
U.S.	$ (60,574)	$ (34,884)	$ (69,861)
Foreign	25,286	10,475	13,234
Loss before income taxes	$ (35,288)	$ (24,409)	$ (56,627)

Components of Income Tax Expense (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Income Tax Expense Benefit [Line Items]
Income tax expense (benefit) from operations	$ 517	$ 715	$ (73,521)	$ 1,087	$ 105	$ 819	$ 723	$ 1,049	$ (71,202)	$ 2,696	$ 5,443
Total income tax expense (benefit)									$ (71,202)	$ 2,696	$ 5,443

Components of Income Tax Expense from Operations (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Current provision
Federal									$ 0	$ 0	$ 0
State									0	0	0
Foreign									7,592	2,298	3,090
Current Income Tax Expense (Benefit), Total									7,592	2,298	3,090
Deferred provision:
Federal									(76,168)
State									(2,352)
Foreign									(274)	398	2,353
Deferred Income Tax Expense (Benefit), Total									(78,794)	398	2,353
Total tax provision	$ 517	$ 715	$ (73,521)	$ 1,087	$ 105	$ 819	$ 723	$ 1,049	$ (71,202)	$ 2,696	$ 5,443

Income Taxes - Additional Information (Detail)	6 Months Ended	12 Months Ended
Income Taxes - Additional Information (Detail)	Jan. 31, 2017	Jul. 31, 2018 USD ($) Right	Jul. 31, 2017 USD ($)	Jul. 31, 2016 USD ($)
Income Taxes [Line Items]
Deferred tax assets, non-current		$ 1,600,000	$ 1,900,000
Deferred tax liability, non-current		100,000	700,000
Change in valuation allowance		$ 333,400,000	11,000,000
Stockholder owning ownership on corporation's securities percentage		5.00%
Stockholder owning ownership on corporation's securities rolling period		3 years
Statutory federal income tax rate	35.00%	21.00%
Provision for income tax expense (benefit)		$ 280,400,000
Accumulated foreign earnings provisional income tax expense		0
Reduction in the valuation allowance		280,400,000
Net operating loss carryforwards for federal tax		2,100,000,000
Net operating loss carryforwards for state tax		150,600,000
Foreign net operating loss carryforward		$ 74,200,000
U.S. federal income tax rate		26.83%
Unrecognized tax benefits, including interest, related to federal, state and foreign taxes		$ 1,600,000	700,000	$ 1,200,000
Interest expense related to uncertain tax positions		0
Increase(decrease) in liabilities for interest expense related to uncertain tax positions		88,000	$ (168,000)	$ 40,000
Expected any unrecognized tax benefits to reverse in the next twelve months		$ 0
Tax Benefit Preservation Plan
Income Taxes [Line Items]
Tax Benefit Preservation Plan, adoption date		Jan. 19, 2018
Dividend declared, number of right for each share of Common Stock outstanding \| Right		1
Dividend record date		Jan. 29, 2018
Dividend declared, right to purchase of shares		The right to purchase one one-thousandth of a share of newly created Series D Junior Participating Preferred Stock
Protective Amendment \| Maximum \| Handy & Harman
Income Taxes [Line Items]
Percentage of common shares outstanding permitted for acquired by HNH and its affiliates		45.00%
Parent Company
Income Taxes [Line Items]
Provision for income tax expense (benefit)		$ 305,900,000
IWCO
Income Taxes [Line Items]
Provision for income tax expense (benefit)		(25,500,000)
Deferred tax liability		78,500,000
Indefinite Carryforward
Income Taxes [Line Items]
Foreign net operating loss carryforward with indefinite period		$ 57,500,000
Federal \| Internal Revenue Service (IRS) \| Earliest Tax Year
Income Taxes [Line Items]
Net operating loss carryforwards, expiration date		Jul. 31, 2022
Capital losses expiration year		2020
Tax examinations tax period		2014
Federal \| Internal Revenue Service (IRS) \| Latest Tax Year
Income Taxes [Line Items]
Net operating loss carryforwards, expiration date		Jul. 31, 2038
Capital losses expiration year		2021
Tax examinations tax period		2018
State \| Earliest Tax Year
Income Taxes [Line Items]
Net operating loss carryforwards, expiration date		Jul. 31, 2018
Capital losses expiration year		2020
Tax examinations tax period		2014
State \| Latest Tax Year
Income Taxes [Line Items]
Net operating loss carryforwards, expiration date		Jul. 31, 2038
Capital losses expiration year		2021
Tax examinations tax period		2018
Foreign \| Europe Income Tax Authority \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2010
Foreign \| Europe Income Tax Authority \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2017
Foreign \| Asia Income Tax Authority \| Earliest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2006
Foreign \| Asia Income Tax Authority \| Latest Tax Year
Income Taxes [Line Items]
Tax examinations tax period		2017
Federal and State
Income Taxes [Line Items]
Net capital loss carryforwards		$ 24,000,000

Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Deferred tax assets:
Accruals and reserves	$ 16,070	$ 12,193
Tax basis in excess of financial basis of investments in affiliates	6,232	18,332
Tax basis in excess of financial basis for intangible and fixed assets	311	7,689
Net operating loss and capital loss carry forwards	468,129	751,435
Total gross deferred tax assets	490,742	789,649
Less: valuation allowance	(438,467)	(771,884)
Net deferred tax assets	52,275	17,765
Deferred tax liabilities:
Financial basis in excess of tax basis for intangible and fixed assets	(50,141)	(784)
Convertible Debt	(634)	(2,655)
Undistributed accumulated earnings of foreign subsidiaries		(13,150)
Total gross deferred tax liabilities	(50,775)	(16,589)
Net deferred tax asset	$ 1,500	$ 1,176

Difference of Income Tax Expense Attributable to Income from Continuing Operations and Expense Computed using U.S. Federal Income Tax (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Income Taxes [Line Items]
Computed "expected" income tax expense (benefit)									$ (9,467)	$ (8,106)	$ (19,368)
Increase (decrease) in income tax expense resulting from:
Change in valuation allowance									(329,415)	10,978	22,907
Foreign dividends									7,379	2,724	4,730
Foreign tax rate differential									(1,948)	(2,386)	(1,082)
Federal rate change									280,438
Nondeductible goodwill impairment									191
Nondeductible expenses									(15,852)	20	262
Foreign withholding taxes									1,961	239	762
Reversal of uncertain tax position reserves									(48)	(481)	(2,768)
State benefit of U.S. Loss									(4,654)
Other									213	(292)
Actual income tax expense	$ 517	$ 715	$ (73,521)	$ 1,087	$ 105	$ 819	$ 723	$ 1,049	$ (71,202)	$ 2,696	$ 5,443

Reconciliation of Beginning and Ending Balances of Total Amounts of Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Income Tax Contingency [Line Items]
Balance as of beginning of year	$ 681	$ 994	$ 3,756
Additions for current year tax positions	903		19
Currency translation		18
Reductions for lapses in statute of limitations	(59)	(331)	(27)
Reductions of prior year tax positions			(2,754)
Balance as of end of year	$ 1,525	$ 681	$ 994

Accumulated Other Comprehensive Income, Net of Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ 62,971	$ 85,940	$ 144,601
Foreign currency translation adjustment	(1,174)	1,391	(1,539)
Net unrealized holding gain on securities	14	73	48
Pension liability adjustments	(419)	830
Other comprehensive income (loss)	(1,579)	2,294	(1,491)
Balance	107,628	62,971	85,940
Foreign currency items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	7,522
Foreign currency translation adjustment	(1,174)
Other comprehensive income (loss)	(1,174)
Balance	6,348	7,522
Pension items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(3,376)
Pension liability adjustments	(419)
Other comprehensive income (loss)	(419)
Balance	(3,795)	(3,376)
Unrealized gains (losses) on Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	167
Net unrealized holding gain on securities	14
Other comprehensive income (loss)	14
Balance	181	167
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	4,313	2,019	3,510
Other comprehensive income (loss)	(1,579)	2,294	(1,491)
Balance	$ 2,734	$ 4,313	$ 2,019

Accumulated Other Comprehensive Income - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss), tax	$ 0.1	$ 0.3

Cash Used for Operating Activities Reflect Cash Payments for Interest and Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Schedule Of Supplemental Cash Flow [Line Items]
Cash paid for interest	$ 24,642	$ 3,783	$ 6,111
Cash paid for income taxes	$ 2,567	$ 2,500	$ 3,287

Statement of Cash Flows Supplemental Information - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Cash Flow Supplemental Disclosures [Line Items]
Issuance of nonvested common stock	6.7	0.3	0.2
Issuance of nonvested common stock, value	$ 11,500	$ 500	$ 600
Stock issued during period upon conversion of convertible debt, value			$ 3,134
5.25% Convertible Senior Notes Due 2019 \| Highbridge
Cash Flow Supplemental Disclosures [Line Items]
Stock issued upon repurchase of convertible debt			2.7
Stock issued during period upon conversion of convertible debt, value			$ 3,100

Stockholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands			12 Months Ended
	Dec. 15, 2017 USD ($) TradingDay $ / shares shares	Mar. 12, 2013 USD ($) $ / shares shares	Jul. 31, 2018 USD ($) $ / shares shares	Jul. 31, 2017 USD ($) $ / shares shares	Jul. 31, 2016 USD ($)
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	$ 8	$ 18	$ 51
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

Fair Value Measurement of Assets and Liabilities - Additional Information (Detail) - USD ($)	12 Months Ended
	Jul. 31, 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	Jul. 31, 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	$ 47,186	$ 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	$ 47,186	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

Plan Assets Measured at Fair Value on Recurring Basis Classified by Fair Value Hierarchy (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	100.00%	100.00%
Defined benefit plan, fair value of plan assets	$ 22,860	$ 21,204	$ 25,473
Insurance Contracts
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	98.00%	98.00%
Other Investments
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, asset allocation percentage	2.00%	2.00%
Fair Value, Measurements, Recurring
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	$ 22,860	$ 21,204
Fair Value, Measurements, Recurring \| Insurance Contracts
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,339	20,726
Fair Value, Measurements, Recurring \| Other Investments
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	521	478
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,860	21,204
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3 \| Insurance Contracts
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	22,339	20,726
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3 \| Other Investments
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, fair value of plan assets	$ 521	$ 478

Summary of Changes in Fair Value of Pension Plan Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Fair value of plan assets at beginning of year	$ 21,204	$ 25,473
Actual return on plan assets	1,541	(5,005)
Employee contributions	402	104
Employer contributions (withdrawals), net	92	(342)
Settlements	(21)	(279)
Benefits and administrative expenses paid	(372)	(157)
Currency translation	14	1,410
Fair value of plan assets at end of year	$ 22,860	$ 21,204

Notes Payable not Carried at Fair Value (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable	$ 64,530	$ 59,758
Notes payable, Fair Value	$ 66,658	$ 63,852

Segment Information - Additional Information (Detail) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 30, 2018 USD ($)	Jan. 31, 2018 USD ($)	Jul. 31, 2018 USD ($) Segment	Jul. 31, 2017 USD ($)	Jul. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments \| Segment			5
Number of reportable segments \| Segment			5
Total assets			$ 827,050	$ 281,298
Net revenue	$ 193,921	$ 153,738	645,258	436,620	$ 459,023
United States
Segment Reporting Information [Line Items]
Total assets			101,800	8,600
Net revenue			358,300	95,100	110,900
China
Segment Reporting Information [Line Items]
Net revenue			112,300	128,300	140,200
Netherlands
Segment Reporting Information [Line Items]
Net revenue			59,500	70,800	68,100
Czech Republic
Segment Reporting Information [Line Items]
Net revenue			$ 48,700	$ 79,800	$ 75,700

Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Segment Reporting Information [Line Items]
Revenues		$ 193,921	$ 153,738						$ 645,258	$ 436,620	$ 459,023
Operating income (loss)	$ (153)	1,380	(5,703)	$ (3,830)	$ (7,372)	$ (5,243)	$ (1,504)	$ (5,642)	(8,306)	(19,761)	(40,572)
Total other income (expense)	$ (7,063)	$ (11,198)	$ (8,200)	$ (521)	$ (1,984)	$ 763	$ (1,075)	$ (2,352)	(26,982)	(4,648)	(16,055)
Loss before income taxes									(35,288)	(24,409)	(56,627)
Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)									11,353	(14,915)	(33,795)
Operating Segments \| Americas
Segment Reporting Information [Line Items]
Revenues									56,320	92,324	106,143
Operating income (loss)									(9,542)	(10,342)	(14,731)
Operating Segments \| Asia
Segment Reporting Information [Line Items]
Revenues									146,664	158,048	167,861
Operating income (loss)									26,405	5,620	(855)
Operating Segments \| Europe
Segment Reporting Information [Line Items]
Revenues									119,403	159,085	151,842
Operating income (loss)									(10,074)	(9,008)	(13,825)
Operating Segments \| Direct Marketing
Segment Reporting Information [Line Items]
Revenues									299,358
Operating income (loss)									10,740
Operating Segments \| e-Business
Segment Reporting Information [Line Items]
Revenues									23,513	27,163	33,177
Operating income (loss)									(6,176)	(1,185)	(4,384)
Corporate-level activity
Segment Reporting Information [Line Items]
Operating income (loss)									$ (19,659)	$ (4,846)	$ (6,777)

Total Assets of Continuing Operations (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017
Segment Reporting Information [Line Items]
Total assets	$ 827,050	$ 281,298
Operating Segments
Segment Reporting Information [Line Items]
Total assets	762,943	171,037
Operating Segments \| Americas
Segment Reporting Information [Line Items]
Total assets	22,820	21,876
Operating Segments \| Asia
Segment Reporting Information [Line Items]
Total assets	44,322	63,819
Operating Segments \| Europe
Segment Reporting Information [Line Items]
Total assets	37,223	64,639
Operating Segments \| Direct Marketing
Segment Reporting Information [Line Items]
Total assets	642,820
Operating Segments \| e-Business
Segment Reporting Information [Line Items]
Total assets	15,758	20,703
Corporate-level activity
Segment Reporting Information [Line Items]
Total assets	$ 64,107	$ 110,261

Summarized Financial Information of Net Revenue from External Customers by Group of Services (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 30, 2018	Jan. 31, 2018	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 193,921	$ 153,738	$ 645,258	$ 436,620	$ 459,023
Supply Chain Services
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues			322,387	409,457	425,846
e-Business
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues			23,513	$ 27,163	$ 33,177
Direct Marketing
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues			$ 299,358

Related Party Transactions - Additional Information (Detail)						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	Jul. 31, 2018 USD ($) $ / shares shares	Jul. 31, 2017 USD ($) $ / shares shares	Jul. 31, 2016 USD ($)	Feb. 20, 2018
Related Party Transaction [Line Items]
Principal amount convertible senior notes held of						$ 67,625,000	$ 67,625,000
Preferred stock, shares issued \| shares						0	0
Preferred stock, par value \| $ / shares						$ 0.01	$ 0.01
Price per share \| $ / shares					$ 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
Minimum
Related Party Transaction [Line Items]
Ownership percentage in capital stock						20.00%
Series C Convertible Preferred Stock
Related Party Transaction [Line Items]
Convertible preferred stock conversion price per share \| $ / shares	$ 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 \| 5.25% Convertible Senior Notes
Related Party Transaction [Line Items]
Ownership percentage in capital stock									52.00%
Debt instrument stated percentage						5.25%
Principal amount convertible senior notes held of						$ 14,900,000
Steel Holdings \| Repurchase Agreements \| Warrant
Related Party Transaction [Line Items]
Repurchase price of warrant \| $ / shares	$ 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 \| $ / shares	$ 0.01
Price per share \| $ / shares	$ 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						1,900,000	2,300,000	$ 2,200,000
SP Corporate Services Llc and Steel Services Limited \| Management Services Agreement
Related Party Transaction [Line Items]
Amount due to related parties						$ 200,000	$ 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

Selected Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Quarterly Financial Information [Line Items]
Net revenue	$ 195,077	$ 193,921	$ 153,738	$ 102,522	$ 99,777	$ 97,948	$ 117,568	$ 121,327
Cost of revenue	157,720	154,916	137,915	93,448	92,485	89,406	106,370	111,994	$ 543,999	$ 400,255	$ 434,265
Gross profit	37,357	39,005	15,823	9,074	7,292	8,542	11,198	9,333	101,259	36,365	24,758
Total operating expenses	37,510	37,625	21,526	12,904	14,664	13,785	12,702	14,975	109,565	56,126	65,330
Operating income (loss)	(153)	1,380	(5,703)	(3,830)	(7,372)	(5,243)	(1,504)	(5,642)	(8,306)	(19,761)	(40,572)
Total other income (expense)	(7,063)	(11,198)	(8,200)	(521)	(1,984)	763	(1,075)	(2,352)	(26,982)	(4,648)	(16,055)
Income tax benefit (expense)	(517)	(715)	73,521	(1,087)	(105)	(819)	(723)	(1,049)	71,202	(2,696)	(5,443)
Gains on investments in affiliates, net of tax	200	200	200	201	150	232	396	500	800	1,300	800
Net income (loss)	(7,533)	(10,333)	59,818	(5,237)	(9,311)	(5,067)	(2,906)	(8,543)	36,715	(25,827)	(61,281)
Net income (loss) attributable to common stockholders	$ (8,069)	$ (10,862)	$ 59,548	$ (5,237)	$ (9,311)	$ (5,067)	$ (2,906)	$ (8,543)	$ 35,380	$ (25,827)	$ (61,281)
Basic net earning (loss) per share attributable to common stockholders:	$ (0.13)	$ (0.18)	$ 1.02	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.60	$ (0.47)	$ (1.18)
Diluted net earning (loss) per share attributable to common stockholders:	$ (0.13)	$ (0.18)	$ 0.75	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.53	$ (0.47)	$ (1.18)

Selected Quarterly Financial Information - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Jan. 31, 2018	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Quarterly Financial Information [Line Items]
Income tax expense (benefit)		$ 517	$ 715	$ (73,521)	$ 1,087	$ 105	$ 819	$ 723	$ 1,049	$ (71,202)	$ 2,696	$ 5,443
Net revenue			193,921	153,738						645,258	436,620	459,023
Cost of revenue		$ 157,720	154,916	137,915	$ 93,448	$ 92,485	$ 89,406	$ 106,370	$ 111,994	$ 543,999	$ 400,255	$ 434,265
Adjustments
Quarterly Financial Information [Line Items]
Income tax expense (benefit)	$ 4,100			4,143
Net revenue			4,999	2,619
Cost of revenue			4,999	3,746
Adjustments \| Operating Segments
Quarterly Financial Information [Line Items]
Net revenue				$ 2,200
Cost of revenue			$ 5,000

Schedule of Impact to Consolidated Statements of Income (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Jan. 31, 2018	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Quarterly Financial Information [Line Items]
Net revenue			$ 193,921	$ 153,738						$ 645,258	$ 436,620	$ 459,023
Cost of revenue		$ 157,720	154,916	137,915	$ 93,448	$ 92,485	$ 89,406	$ 106,370	$ 111,994	543,999	400,255	434,265
Gross profit		37,357	39,005	15,823	9,074	7,292	8,542	11,198	9,333	101,259	36,365	24,758
Income tax expense (benefit)		517	715	(73,521)	1,087	105	819	723	1,049	(71,202)	2,696	5,443
Net income (loss) attributable to common stockholders		$ (8,069)	$ (10,862)	$ 59,548	$ (5,237)	$ (9,311)	$ (5,067)	$ (2,906)	$ (8,543)	$ 35,380	$ (25,827)	$ (61,281)
Basic net earning (loss) per share attributable to common stockholders:		$ (0.13)	$ (0.18)	$ 1.02	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.60	$ (0.47)	$ (1.18)
Diluted net earning (loss) per share attributable to common stockholders:		$ (0.13)	$ (0.18)	$ 0.75	$ (0.09)	$ (0.17)	$ (0.09)	$ (0.05)	$ (0.16)	$ 0.53	$ (0.47)	$ (1.18)
Previously Reported
Quarterly Financial Information [Line Items]
Net revenue			$ 188,922	$ 151,119
Cost of revenue			149,917	134,169
Gross profit			39,005	16,950
Income tax expense (benefit)			715	(77,664)
Net income (loss) attributable to common stockholders			$ (10,862)	$ 64,830
Basic net earning (loss) per share attributable to common stockholders:			$ (0.18)	$ 1.11
Diluted net earning (loss) per share attributable to common stockholders:			$ (0.18)	$ 0.85
Adjustments
Quarterly Financial Information [Line Items]
Net revenue			$ 4,999	$ 2,619
Cost of revenue			$ 4,999	3,746
Gross profit				(1,127)
Income tax expense (benefit)	$ 4,100			4,143
Net income (loss) attributable to common stockholders				$ (5,282)

Parent Company Condensed Financial Information - Additional Information (Detail) - IWCO - Cerberus Credit Facility	Jul. 31, 2018 USD ($)
Supplemental Financial Information [Line Items]
Restricted cash	$ 53,100,000
Maximum
Supplemental Financial Information [Line Items]
Cash distributions	$ 5,000,000

Schedule of Balance Sheet (Detail) - USD ($) $ in Thousands	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016	Jul. 31, 2015
ASSETS
Cash and cash equivalents	$ 92,138	$ 110,670
Prepaid expenses and other current assets	13,415	6,005
Total current assets	264,281	257,846
Other assets	8,821	4,897
Total assets	827,050	281,298
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Accounts payable	78,212	71,476
Accrued expenses	88,330	37,898
Notes payable	64,530
Total current liabilities	290,612	149,155
Notes payable	64,530	59,758
Total long-term liabilities	393,618	69,172
Total liabilities	684,230	218,327
Contingently redeemable preferred stock	35,192
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017	35,192
Stockholders' equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at July 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at July 31, 2018 and at July 31, 2017
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,742,859 issued and outstanding shares at July 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017	608	556
Additional paid-in capital	7,467,855	7,457,051
Accumulated deficit	(7,363,569)	(7,398,949)
Accumulated other comprehensive income	2,734	4,313
Total stockholders' equity	107,628	62,971	$ 85,940	$ 144,601
Total liabilities, contingently redeemable preferred stock and stockholders' equity	827,050	281,298
Parent Company
ASSETS
Cash and cash equivalents	7,978	708
Prepaid expenses and other current assets	120	85
Total current assets	8,098	793
Investments in affiliates	188,534	113,154
Other assets	87	87
Due from subsidiaries	13,579	10,945
Total assets	210,298	124,979
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Accounts payable	674	498
Accrued expenses	2,274	1,752
Notes payable	64,530
Total current liabilities	67,478	2,250
Notes payable		59,758
Total long-term liabilities		59,758
Total liabilities	67,478	62,008
Contingently redeemable preferred stock	35,192
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017	35,192
Stockholders' equity:
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at July 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at July 31, 2018 and at July 31, 2017
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,742,859 issued and outstanding shares at July 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017	608	556
Additional paid-in capital	7,467,855	7,457,051
Accumulated deficit	(7,363,569)	(7,398,949)
Accumulated other comprehensive income	2,734	4,313
Total stockholders' equity	107,628	62,971
Total liabilities, contingently redeemable preferred stock and stockholders' equity	$ 210,298	$ 124,979

Schedule of Balance Sheet (Parenthetical) (Detail) - $ / shares	Jul. 31, 2018	Jul. 31, 2017
Condensed Balance Sheet Statements, Captions [Line Items]
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	60,742,859	55,555,973
Common stock, shares outstanding	60,742,859	55,555,973
Contingent Convertible Preferred Stock
Condensed Balance Sheet Statements, Captions [Line Items]
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
Parent Company
Condensed Balance Sheet Statements, Captions [Line Items]
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	60,742,859	55,555,973
Common stock, shares outstanding	60,742,859	55,555,973
Parent Company \| Contingent Convertible Preferred Stock
Condensed Balance Sheet Statements, Captions [Line Items]
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

Schedule of Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Condensed Income Statements, Captions [Line Items]
Selling, general and administrative									$ 101,701	$ 54,159	$ 57,604
Total operating expenses	$ 37,510	$ 37,625	$ 21,526	$ 12,904	$ 14,664	$ 13,785	$ 12,702	$ 14,975	109,565	56,126	65,330
Operating loss	(153)	1,380	(5,703)	(3,830)	(7,372)	(5,243)	(1,504)	(5,642)	(8,306)	(19,761)	(40,572)
Other income (expense):
Interest expense									(29,884)	(8,247)	(10,924)
Other income , net									2,223	3,200	(5,757)
Total other expense	(7,063)	(11,198)	(8,200)	(521)	(1,984)	763	(1,075)	(2,352)	(26,982)	(4,648)	(16,055)
Loss before income taxes									(35,288)	(24,409)	(56,627)
Income tax benefit	517	715	(73,521)	1,087	105	819	723	1,049	(71,202)	2,696	5,443
Gains on investments in affiliates, net of tax									(801)	(1,278)	(789)
Net income (loss)	$ (7,533)	$ (10,333)	$ 59,818	$ (5,237)	$ (9,311)	$ (5,067)	$ (2,906)	$ (8,543)	36,715	(25,827)	(61,281)
Parent Company
Condensed Income Statements, Captions [Line Items]
Selling, general and administrative									16,742	4,834	6,562
Total operating expenses									16,742	4,834	6,562
Operating loss									(16,742)	(4,834)	(6,562)
Other income (expense):
Interest expense									(8,427)	(7,917)	(10,565)
Other income , net									6,807		757
Total other expense									(1,620)	(7,917)	(9,808)
Loss before income taxes									(18,362)	(12,751)	(16,370)
Income tax benefit									0	0	0
Equity losses of subsidiaries, net of tax									(54,276)	14,026	44,911
Gains on investments in affiliates, net of tax									(801)	(950)
Net income (loss)									$ 36,715	$ (25,827)	$ (61,281)

Schedule of Statements of Cash Flows (Detail) - USD ($) $ in Thousands		12 Months Ended
	Mar. 12, 2013	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2016
Cash flows from operating activities:
Net income (loss)		$ (36,715)	$ 25,827	$ 61,281
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs		1,072	566	733
Accretion of debt discount		4,384	3,919	4,967
Share-based compensation		10,801	681	1,126
Gains on investments in affiliates and impairments		(801)	(1,278)	(747)
Changes in operating assets and liabilities, net of business acquired:
Prepaid expenses and other current assets		6,563	1,572	10,763
Accounts payable and accrued expenses		(39,945)	(45,314)	(4,245)
Other assets and liabilities		(6,267)	(971)	(13,589)
Net cash provided by (used in) operating activities		11,768	(24,445)	(19,788)
Cash flows from investing activities:
Net cash provided by (used in) investing activities		(452,320)	5,638	52,236
Cash flows from financing activities:
Proceeds from issuance of preferred stock		35,000
Payment of preferred dividends		(1,143)
Purchase of the Company's Convertible Notes			(1,763)	(20,257)
Proceeds from issuance of common stock	$ 27,700	8	18	51
Repurchase of common stock				(127)
Net cash provided by (used in) financing activities		421,879	(1,916)	(20,561)
Net decrease in cash and cash equivalents		(18,532)	(20,120)	11,359
Cash and cash equivalents at beginning of period		110,670	130,790	119,431
Cash and cash equivalents at end of period		92,138	110,670	130,790
Parent Company
Cash flows from operating activities:
Net income (loss)		36,715	(25,827)	(61,281)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs		388	347	439
Accretion of debt discount		4,384	3,919	4,967
Share-based compensation		10,763	533	509
Non-cash (gains) losses, net		(354)		(757)
Equity losses of subsidiaries, net of tax		(54,276)	14,026	44,911
Gains on investments in affiliates and impairments		(801)	(950)
Changes in operating assets and liabilities, net of business acquired:
Prepaid expenses and other current assets		(36)	76	1,034
Accounts payable and accrued expenses		698	(338)	(3,418)
Other assets and liabilities		(1,860)	(12,926)	1,223
Net cash provided by (used in) operating activities		(4,379)	(21,140)	(12,373)
Cash flows from investing activities:
Intercompany advances, net		(22,216)	19,211	20,000
Net cash provided by (used in) investing activities		(22,216)	19,211	20,000
Cash flows from financing activities:
Proceeds from issuance of preferred stock		35,000
Payment of preferred dividends		(1,143)
Purchase of the Company's Convertible Notes			(1,763)	(20,257)
Proceeds from issuance of common stock		8	18	51
Repurchase of common stock				(127)
Net cash provided by (used in) financing activities		33,865	(1,745)	(20,333)
Net decrease in cash and cash equivalents		7,270	(3,674)	(12,706)
Cash and cash equivalents at beginning of period		708	4,382	17,088
Cash and cash equivalents at end of period		$ 7,978	$ 708	$ 4,382

Subsequent Events - Additional Information (Detail) $ in Millions	12 Months Ended
	Jul. 31, 2018 USD ($)
Subsequent Event [Line Items]
Purchase of securities	$ 3.7