Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jan. 31, 2018 | Feb. 28, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | STCN | |
Entity Registrant Name | STEEL CONNECT, INC. | |
Entity Central Index Key | 914,712 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,205,946 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 106,433 | $ 110,670 |
Trading securities | 0 | 11,898 |
Accounts receivable, trade, net of allowance for doubtful accounts of $75 and $616 at January 31, 2018 and July 31, 2017, respectively | 110,834 | 81,450 |
Inventories, net | 45,211 | 34,369 |
Funds held for clients | 13,074 | 13,454 |
Prepaid expenses and other current assets | 17,204 | 6,005 |
Total current assets | 292,756 | 257,846 |
Property and equipment, net | 105,411 | 18,555 |
Goodwill | 259,085 | |
Other intangible assets, net | 206,819 | |
Other assets | 6,039 | 4,897 |
Total assets | 870,110 | 281,298 |
Current liabilities: | ||
Accounts payable | 85,010 | 71,476 |
Accrued restructuring | 112 | 186 |
Accrued expenses | 74,671 | 37,898 |
Funds held for clients | 13,074 | 13,454 |
Current portion of long-term debt | 5,725 | |
Other current liabilities | 43,561 | 26,141 |
Total current liabilities | 222,153 | 149,155 |
Notes payable | 62,062 | 59,758 |
Long-term debt, excluding current portion | 385,975 | |
Other long-term liabilities | 30,693 | 9,414 |
Long-term liabilities | 478,730 | 69,172 |
Total liabilities | 700,883 | 218,327 |
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding shares at January 31, 2018; zero shares authorized, issued and outstanding shares at July 31, 2017 (Note 11) | 35,259 | |
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. Authorized 4,965,000 and 5,000,000 shares at January 31, 2018 and July 31, 2017, respectively; zero issued and outstanding shares at January 31, 2018 and at July 31, 2017 | ||
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,205,946 issued and outstanding shares at January 31, 2018; 55,555,973 issued and outstanding shares at July 31, 2017 | 603 | 556 |
Additional paid-in capital | 7,464,451 | 7,457,051 |
Accumulated deficit | (7,339,367) | (7,398,949) |
Accumulated other comprehensive income | 8,281 | 4,313 |
Total stockholders' equity | 133,968 | 62,971 |
Total liabilities, contingently redeemable preferred stock and stockholders' equity | $ 870,110 | $ 281,298 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Accounts receivable, trade, allowance for doubtful accounts | $ 75 | $ 616 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares Authorized | 4,965,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares Authorized | 1,400,000,000 | 1,400,000,000 |
Common stock, shares issued | 60,205,946 | 55,555,973 |
Common stock, shares outstanding | 60,205,946 | 55,555,973 |
Contingent Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares Authorized | 35,000 | 0 |
Preferred stock, shares issued | 35,000 | 0 |
Preferred stock, shares outstanding | 35,000 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Net revenue | $ 151,119 | $ 117,568 | $ 253,641 | $ 238,895 |
Cost of revenue | 134,169 | 106,370 | 227,617 | 218,364 |
Gross profit | 16,950 | 11,198 | 26,024 | 20,531 |
Operating expenses | ||||
Selling, general and administrative | 30,107 | 11,926 | 42,974 | 25,527 |
Amortization of intangible assets | 4,107 | 4,107 | ||
Gain on sale of property | (12,692) | (12,692) | ||
Restructuring, net | 4 | 776 | 41 | 2,150 |
Total operating expenses | 21,526 | 12,702 | 34,430 | 27,677 |
Operating loss | (4,576) | (1,504) | (8,406) | (7,146) |
Other income (expense): | ||||
Interest income | 92 | 15 | 256 | 180 |
Interest expense | (6,575) | (2,109) | (8,682) | (4,138) |
Other gains (losses), net | (1,716) | 1,019 | (294) | 531 |
Total other income (expense) | (8,199) | (1,075) | (8,720) | (3,427) |
Loss before income taxes | (12,775) | (2,579) | (17,126) | (10,573) |
Income tax expense (benefit) | (77,664) | 723 | (76,577) | 1,772 |
Gains on investments in affiliates, net of tax | (200) | (396) | (401) | (896) |
Net income (loss) | 65,089 | (2,906) | 59,852 | (11,449) |
Less: Preferred dividends on redeemable preferred stock | (259) | (259) | ||
Net income (loss) attributable to common stockholders | $ 64,830 | $ (2,906) | $ 59,593 | $ (11,449) |
Basic net earning (loss) per share attributable to common stockholders: | $ 1.11 | $ (0.05) | $ 1.05 | $ (0.21) |
Diluted net earning (loss) per share attributable to common stockholders: | $ 0.85 | $ (0.05) | $ 0.87 | $ (0.21) |
Weighted average common shares used in: | ||||
Basic earnings per share | 58,341 | 55,083 | 56,776 | 55,031 |
Diluted earnings per share | 79,083 | 55,083 | 72,883 | 55,031 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Net income (loss) | $ 65,089 | $ (2,906) | $ 59,852 | $ (11,449) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 3,654 | (734) | 3,926 | (2,003) |
Net unrealized holding gain (loss) on securities, net of tax | 29 | (10) | 16 | |
Pension liability adjustments, net of tax | 353 | 26 | 750 | |
Other comprehensive income (loss) | 3,683 | (391) | 3,968 | (1,253) |
Comprehensive income (loss) | $ 68,772 | $ (3,297) | $ 63,820 | $ (12,702) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 59,852 | $ (11,449) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation | 5,656 | 4,090 |
Amortization of intangible assets | 4,107 | |
Amortization of deferred financing costs | 392 | 281 |
Accretion of debt discount | 2,117 | 1,940 |
Share-based compensation | 7,397 | 381 |
Non-cash (gains) losses, net | (12,398) | (531) |
Gains on investments in affiliates | (401) | (896) |
Changes in operating assets and liabilities, net of business acquired: | ||
Accounts receivable, net | 20,388 | 5,169 |
Inventories, net | 17,659 | 2,349 |
Prepaid expenses and other current assets | (1,535) | 1,330 |
Accounts payable, accrued restructuring and accrued expenses | (15,422) | (19,358) |
Refundable and accrued income taxes, net | 3,767 | (372) |
Deferred tax assets and liabilities | (79,918) | |
Other assets and liabilities | (6,279) | (35) |
Net cash provided by (used in) operating activities | 5,382 | (17,101) |
Cash flows from investing activities: | ||
Payments to acquire business | (469,221) | |
Additions to property and equipment | (9,303) | (3,301) |
Proceeds from the disposition of property and equipment | 20,589 | |
Proceeds from the sale of Trading Securities | 13,775 | 5,832 |
Proceeds from investments in affiliates | 401 | 896 |
Net cash provided by (used in) investing activities | (443,759) | 3,427 |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 393,000 | |
Proceeds from issuance of preferred stock | 35,000 | |
Proceeds from revolving line of credit | 6,000 | |
Payment of deferred financing costs | (1,334) | |
Purchase of the Company's Convertible Notes | (1,763) | |
Repayments on capital lease obligations | (77) | (126) |
Proceeds from issuance of common stock | 3 | 12 |
Net cash provided by (used in) financing activities | 432,592 | (1,877) |
Net effect of exchange rate changes on cash and cash equivalents | 1,548 | (905) |
Net decrease in cash and cash equivalents | (4,237) | (16,456) |
Cash and cash equivalents at beginning of period | 110,670 | 130,790 |
Cash and cash equivalents at end of period | $ 106,433 | $ 114,334 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 6 Months Ended |
Jan. 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”), and IWCO Direct Holdings, Inc. (“IWCO” or “IWCO Direct”). The Company was formerly known as ModusLink Global Solutions, Inc. until it changed its name to Steel Connect, Inc. effective February 27, 2018. ModusLink is a leader in global supply chain business process management serving clients in markets such as consumer electronics, communications, computing, medical devices, software, and retail. The Company designs and executes critical elements in its clients’ global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. These benefits are delivered through a combination of industry expertise, innovative service solutions, and integrated operations, proven business processes, expansive global footprint and world-class technology. The Company also produces and licenses an entitlement management solution powered by its enterprise-class Poetic software, which offers a complete solution for activation, provisioning, entitlement subscription and data collection from physical goods (connected products) and digital products. ModusLink has an integrated network of strategically located facilities with 20 sites operating in 21 languages in various countries, including numerous sites throughout North America, Europe and Asia. The Company previously operated under the names ModusLink Global Solutions, Inc., CMGI, Inc. and CMG Information Services, Inc. and was incorporated in Delaware in 1986. IWCO Direct delivers highly-effective data-driven marketing solutions for its customers, which represent some of the largest and most respected brands in the world. Its full range of services includes strategy, creative and production for multichannel marketing campaigns, along with one of the industry’s most sophisticated postal logistics programs for direct mail. Through its Mail-Gard ® 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. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jan. 31, 2018 | |
BASIS OF PRESENTATION | (2) BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q S-X. 10-K year-end All significant intercompany transactions and balances have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the period ended January 31, 2018, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jan. 31, 2018 | |
RECENT ACCOUNTING PRONOUNCEMENTS | (3) RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU No. 2014-09, In August 2014, the FASB issued ASU No. 2014-15 205-40), In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging—Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, which addresses the significant diversity in practice in the assessment of preferred stock and other hybrid equity instruments. ASU 2014-16 mandates the use of the whole-instrument approach and provides guidance to aid in the qualitative analysis when using the whole-instrument approach. The Company adopted this guidance as of the second quarter of fiscal year 2018. Its adoption did not have an effect on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, In February 2016, the FASB issued ASU No. 2016-02, In March 2016, the FASB issued ASU No. 2016-08, In March 2016, the FASB issued ASU No. 2016-09, In November 2016, the FASB issued ASU No. 2016-18, In March 2017, the FASB issued ASU No. 2017-07, non-operating |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jan. 31, 2018 | |
INVENTORIES | (4) INVENTORIES Inventories are stated at the lower of cost or net realizable value. Cost is determined by both the moving average and the first-in, first-out Inventories consisted of the following: January 31, July 31, (In thousands) Raw materials $ 25,055 $ 24,129 Work-in-process 15,448 713 Finished goods 4,708 9,527 $ 45,211 $ 34,369 The Company continuously monitors inventory balances and records inventory provisions for any excess of the cost of the inventory over its estimated net realizable value. The Company also monitors inventory balances for obsolescence and excess quantities as compared to projected demands. The Company’s inventory methodology is based on assumptions about average shelf life of inventory, forecasted volumes, forecasted selling prices, contractual provisions with its clients, write-down history of inventory and market conditions. While such assumptions may change from period to period, in determining the net realizable value of its inventories, the Company uses the best information available as of the balance sheet date. If actual market conditions are less favorable than those projected, or the Company experiences a higher incidence of inventory obsolescence because of rapidly changing technology and client requirements, additional inventory provisions may be required. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts. Accordingly, if inventory previously written down to its net realizable value is subsequently sold, gross profit margins may be favorably impacted. IWCO’s inventory consists primarily of raw materials (paper) used to produce direct mail packages and work-in-process. “step-up” work-in-process non-cash |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jan. 31, 2018 | |
INVESTMENTS | (5) INVESTMENTS Trading securities During the six months ended January 31, 2018, the Company received $13.8 million in proceeds associated with the sale of publicly traded securities (“Trading Securities”), which included a cash gain of $4.6 million. During the six months ended January 31, 2018, the Company recognized $2.7 million in net non-cash During the three months ended January 31, 2017, the Company received $4.9 million in proceeds associated with the sale of publicly traded securities (“Trading Securities”), which included a $0.6 million cash gain. During the three months ended January 31, 2017, the Company recognized $0.4 million in net non-cash non-cash As of January 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. |
OTHER CURRENT AND LONG-TERM LIA
OTHER CURRENT AND LONG-TERM LIABILITIES | 6 Months Ended |
Jan. 31, 2018 | |
OTHER CURRENT AND LONG-TERM LIABILITIES | (6) OTHER CURRENT AND LONG-TERM LIABILITIES The following table reflects the components of “Accrued expenses” and “Other current liabilities”: January 31, 2018 July 31, 2017 (In thousands) Accrued taxes $ 5,215 $ 2,272 Accrued compensation 30,638 10,678 Accrued interest 4,190 1,366 Accrued audit, tax and legal 2,693 2,759 Accrued contract labor 1,538 1,632 Accrued worker’s compensation 6,347 — Accrued other 24,050 19,191 $ 74,671 $ 37,898 January 31, 2018 July 31, 2017 (In thousands) Accrued pricing liabilities $ 18,882 $ 18,882 Line of credit liability 6,000 — Customer postage deposits 10,457 — Other 8,222 7,259 $ 43,561 $ 26,141 As of January 31, 2018 and July 31, 2017, the Company had accrued pricing liabilities of approximately $18.9 million for both periods. As previously reported by the Company, several adjustments were made to its historic financial statements for periods ending on or before 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 In connection with the acquisition of IWCO the Company performed an analysis of the liability associated with IWCO’s sales tax. Based on the information currently available, a reserve of $18.0 million was recorded on IWCO’s opening balance sheet. This reserve is subject to review during the measurement period and may be adjusted accordingly. As of January 31, 2018, other long-term liabilities includes sales tax liabilities of approximately $18.0 million as based on the process and evaluation the associated payments are not expected to occur within the next twelve months. |
RESTRUCTURING, NET
RESTRUCTURING, NET | 6 Months Ended |
Jan. 31, 2018 | |
RESTRUCTURING, NET | (7) RESTRUCTURING, NET Restructuring and other costs for the three and six months ended January 31, 2018 primarily included continuing charges for personnel reductions and facility consolidations in an effort to streamline operations across our global supply chain operations. It is expected that the payments of employee-related charges will be substantially completed during the fiscal year ended July 31, 2018. The remaining contractual obligations primarily relate to facility lease obligations for vacant space resulting from the previous restructuring activities of the Company. The Company anticipates that these contractual obligations will be substantially fulfilled by the end of December 2018. The Company recorded an immaterial restructuring charge during the six months ended January 31, 2018. The $0.8 million restructuring charge recorded during the three months ended January 31, 2017 primarily consisted of $0.2 million, $0.3 million $0.1 million and $0.1 million of employee-related costs in the Americas, Asia, Europe and e-Business, The following tables summarize the activities related to the restructuring accrual by expense category and by reportable segment for the six months ended January 31, 2018: Employee Contractual Total (In thousands) Accrued restructuring balance at July 31, 2017 $ 100 $ 86 $ 186 Restructuring adjustments 19 22 41 Cash paid (12 ) (108 ) (120 ) Non-cash 5 — 5 Accrued restructuring balance at January 31, 2018 $ 112 $ — $ 112 Americas Asia Europe Direct marketing All other Consolidated (In thousands) Accrued restructuring balance at July 31, 2017 $ 51 $ — $ 23 $ — $ 112 $ 186 Restructuring charges — — — — — — Restructuring adjustments 27 1 2 — 11 41 Cash paid (12 ) — — — (108 ) (120 ) Non-cash 2 (1 ) (25 ) — 29 5 Accrued restructuring balance at January 31, 2018 $ 68 $ — $ — $ — $ 44 $ 112 The net restructuring charges for the three and six months ended January 31, 2018 and 2017 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Cost of revenue $ — $ 154 $ 8 $ 735 Selling, general and administrative 4 622 33 1,415 $ 4 $ 776 $ 41 $ 2,150 |
ACQUISTION OF IWCO DIRECT
ACQUISTION OF IWCO DIRECT | 6 Months Ended |
Jan. 31, 2018 | |
ACQUISTION OF IWCO DIRECT | (8) ACQUISTION 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 Acquistion 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 a $2.5 million receivable from escrow for working capital claims. The transaction price included one-time The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands): 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 Acquired intangible assets include trademarks and tradenames valued at $20.5 million and customer relationships of $190.4 million. The preliminary fair value estimate of trademarks and tradenames was prepared utilizing a relief from royalties method of valuation, while the preliminary fair value estimate of customer relationships was prepared using a multi-period excess earnings method of valuation. The trademarks and tradenames intangible asset will be amortized on a straight line basis over a 3 year estimated useful life. The customer relationship intangible asset will be amortized on a double-declining basis over an estimated useful life of 15 years. The acquired property and equipment consist mainly of machinery and equipment. The fair value of the acquired property and equipment was estimated using the cost approach to value, and applying industry standard normal useful lives and inflationary indices. In the preliminary allocation of the purchase price, the Company recognized $259.1 million of goodwill which arose primarily from the synergies in its business and the assembled workforce of IWCO. The following unaudited pro forma financial results are based on the Company’s historical consolidated financial statements and IWCO’s historical consolidated financial statements as adjusted to give effect to the Company’s acquisition of IWCO and related transactions. The unaudited pro forma financial information for the three and six months ended January 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, 2017, nor do they indicate the results of operations in future periods. Additionally, the unaudited pro forma results do not include the impact of possible business model changes, nor do they consider any potential impacts of current market conditions or revenues, reduction of expenses, asset dispositions, or other factors. The impact of these items could alter the following pro forma results. The pro forma results were adjusted to reflect incremental depreciation and amortization based on preliminary fair value adjustments for the acquired property, plant and equipment, and intangible assets. A reduction to interest expense is also reflected in the pro forma results to reflect the more favorable terms obtained with the new Credit Facility as compared to the interest rate under the former facility carried by IWCO (in thousands): Three Months Six Months Three Months Six Months January 31, 2017 January 31, 2018 (unaudited) (unaudited) Net revenue $ 239,375 $ 466,979 $ 208,393 $ 433,006 Net income $ (7,034 ) $ (24,268 ) $ 68,827 $ 59,787 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jan. 31, 2018 | |
GOODWILL AND INTANGIBLE ASSETS | (9) 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 $259.1 million as of January 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 three and six months ended January 31, 2018. Intangible assets, as of January 31, 2018, include trademarks and tradenames with a carrying balance of $20.2 million and customer relationships of $186.6 million. The trademarks and tradenames intangible asset are being amortized on a straight line basis over a 3 year estimated useful life. The customer relationship intangible asset are being amortized on a double-declining basis over an estimated useful life of 15 years. Intangible assets deemed to have finite lives are amortized over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to its future cash flows. Intangible assets are reviewed for impairment on an interim basis when certain events or circumstances exist. For amortizable intangible assets, impairment exists when the carrying amount of the intangible asset exceeds its fair value. At least annually, the remaining useful life is evaluated. |
DEBT
DEBT | 6 Months Ended |
Jan. 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 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 January 31, 2018, the if-converted 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 six months ended January 31, 2018. The Company may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes. The Company will have the right to elect to cause the mandatory conversion of the Notes in whole, and not in part, at any time on or after March 6, 2017, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the Notes, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the notes. The Company has valued the debt using similar nonconvertible debt as of the original issuance date of the Notes and bifurcated the conversion option associated with the Notes from the host debt instrument and recorded the conversion option of $28.1 million in stockholders’ equity prior to the allocation of debt issuance costs. The initial value of the equity component, which reflects the equity conversion feature, is equal to the initial debt discount. The resulting debt discount on the Notes is being accreted to interest expense at the effective interest rate over the estimated life of the Notes. The equity component is included in the additional paid-in-capital No. 2015-03. paid-in The fair value of the Company’s Notes payable, calculated as of the closing price of the traded securities, was $66.2 million and $63.9 million as of January 31, 2018 and July 31, 2017, respectively. This value does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates. As of January 31, 2018 and July 31, 2017, the net carrying value of the Notes was $62.1 million and $59.8 million, respectively. January 31, July 31, 2018 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 (5,110 ) (7,227 ) Unamortized debt issuance costs (453 ) (640 ) Net carrying amount $ 62,062 $ 59,758 As of January 31, 2018, the remaining period over which the unamortized discount will be amortized is 13 months. Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 (In thousands) (In thousands) Interest expense related to contractual interest coupon $ 913 $ 888 $ 1,827 $ 1,823 Interest expense related to accretion of the discount 1,076 999 2,117 1,940 Interest expense related to debt issuance costs 95 89 187 172 $ 2,084 $ 1,976 $ 4,131 $ 3,935 During the three and six months ended January 31, 2018, the Company recognized interest expense associated with the Notes of $2.1 million and $4.1 million, respectively. During the three and six months ended January 31, 2017, the Company recognized interest expense of $2.0 million and $3.9 million, respectively. The effective interest rate on the Notes, including amortization of debt issuance costs and accretion of the discount, is 13.9%. The notes bear interest 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 (as amended, the “Credit Agreement”), as borrowers and guarantors, with PNC Bank and National Association, as lender and as agent, respectively. The Credit Agreement has a five (5) year term which expires on June 30, 2019. It includes a maximum credit commitment of $50.0 million, is available for letters of credit (with a sublimit of $5.0 million) and has a $20.0 million uncommitted accordion feature. The actual maximum credit available under the Credit Agreement varies from time to time and is determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible accounts receivable and eligible inventory minus reserves determined by the Agent (including other reserves that the Agent may establish from time to time in its permitted discretion), all as specified in the Credit Agreement. Generally, borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the ModusLink Borrowers’ option, either (a) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, two or three months (as selected by the ModusLink Borrowers) plus a margin of 2.25% per annum or (b) a base rate determined by reference to the highest of (1) the base commercial lending rate publicly announced from time to time by PNC Bank, National Association, (2) the sum of the Federal Funds Open Rate in effect on such day plus one half of one percent (0.5%) per annum, or (3) the LIBOR rate (adjusted to reflect any required bank reserves) in effect on such day plus 1.00% per annum. In addition to paying interest on outstanding principal under the Credit Agreement, the ModusLink Borrowers are required to pay a commitment fee, in respect of the unutilized commitments thereunder, of 0.25% per annum, paid quarterly in arrears. The ModusLink Borrowers are also required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees. Obligations under the Credit Agreement are guaranteed by the ModusLink Borrowers’ existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain limited exceptions; and the Credit Agreement is secured by security interests in substantially all the ModusLink Borrowers’ assets and the assets of each subsidiary guarantor, whether owned as of the closing or thereafter acquired, including a pledge of 100.0% of the equity interests of each subsidiary guarantor that is a domestic entity (subject to certain limited exceptions) and 65.0% of the voting equity interests of any direct first tier foreign entity owned by either Borrower or by a subsidiary guarantor. The Company is not a borrower or a guarantor under the Credit Agreement. The Credit Agreement contains certain customary negative covenants, which include limitations on mergers and acquisitions, the sale of assets, liens, guarantees, investments, loans, capital expenditures, dividends, indebtedness, changes in the nature of business, transactions with affiliates, the creation of subsidiaries, changes in fiscal year and accounting practices, changes to governing documents, compliance with certain statutes, and prepayments of certain indebtedness. The Credit Agreement also contains certain customary affirmative covenants (including periodic reporting obligations) and events of default, including upon a change of control. The Credit Agreement requires compliance with certain financial covenants providing for maintenance of specified liquidity, maintenance of a minimum fixed charge coverage ratio and/or maintenance of a maximum leverage ratio following the occurrence of certain events and/or prior to taking certain actions, all as more fully described in the Credit Agreement. The Company believes that the Credit Agreement provides greater financial flexibility to the Company and the ModusLink Borrowers and may enhance their ability to consummate one or several larger and/or more attractive acquisitions and should provide our clients and/or potential clients with greater confidence in the Company’s and the ModusLink Borrowers’ liquidity. During the three months ended January 31, 2018, the Company did not meet the criteria that would cause its financial covenants to be applicable. As of January 31, 2018 and July 31, 2017, the Company did not have any balance outstanding on the PNC Bank credit facility. Cerberus Credit Facility On December 15, 2017, MLGS, a wholly owned subsidiary of the Company, entered into a Financing Agreement (the “Financing Agreement”), by and among the MLGS (as the initial borrower), Instant Web, LLC, a Delaware corporation and wholly owned subsidiary of IWCO (as “Borrower”), IWCO, and certain of IWCO’s subsidiaries (together with IWCO, the “Guarantors”), the lenders from time to time party thereto, and Cerberus Business Finance, LLC, as collateral agent and administrative agent for the lenders. MLGS was the initial borrower under the Financing Agreement, but immediately upon the consummation of the IWCO Acquisition, as described above, Borrower became the borrower under the Financing Agreement. The Financing Agreement provides for $393.0 million term loan facility (the “Term Loan”) and a $25.0 million revolving credit facility (collectively, the “Cerberus Credit Facility”). Proceeds of the Cerberus Credit Facility were used (i) to finance a portion of the IWCO Acquisition, (ii) to repay certain existing indebtedness of the Borrower and its subsidiaries, (iii) for working capital and general corporate purposes and (iv) to pay fees and expenses related to the Financing Agreement and the IWCO Acquisition. The Cerberus Credit Facility has a maturity of five years. Borrowings under the Cerberus Credit Facility bear interest, at the Borrower’s option, at a Reference Rate plus 3.75% or a LIBOR Rate plus 6.5%, each as defined the Financing Agreement. The initial interest rate under the Cerberus Credit Facility is at the LIBOR Rate option. The Term Loan under the Cerberus Credit Facility is repayable in consecutive quarterly installments, each of which will be in an amount equal per quarter of $1,500,000 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 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. During the three months ended January 31, 2018, the Company did not trigger any of these covenants. During the first quarter of fiscal year 2017, the Company adopted ASU No. 2015-03. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jan. 31, 2018 | |
STOCKHOLDERS' EQUITY | (11) 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 cumulative dividends at 6% per annum payable in quarterly 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) and accordingly the Preferred Stock has been classified in the Mezzanine section of the accompanying balance sheet. 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 (see Note 18). 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 18 to these Condensed Consolidated Financial Statements. |
OTHER GAINS (LOSSES), NET
OTHER GAINS (LOSSES), NET | 6 Months Ended |
Jan. 31, 2018 | |
OTHER GAINS (LOSSES), NET | (12) OTHER GAINS (LOSSES), NET The following table reflects the components of “Other gains (losses), net”: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Foreign currency exchange gains (losses) $ (1,436 ) $ 29 $ (2,071 ) $ 426 Gains on Trading Securities — 1,011 1,876 94 Other, net (280 ) (21 ) (99 ) 11 $ (1,716 ) $ 1,019 $ (294 ) $ 531 The Company recorded foreign exchange gains (losses) of approximately $(1.4) million and $29 thousand during the three months ended January 31, 2018 and 2017, respectively. For the three months ended January 31, 2018, the net losses primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $(2.3) million, $1.3 million and $(0.7) million in Corporate, Europe and Asia, respectively. For the three months ended January 31, 2017, the net gains primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $0.6 million, $(0.5) million and $(0.1) million in Corporate, Asia and Europe, respectively. During the three months ended January 31, 2017, the Company recognized $1.0 million in net gains associated with its Trading Securities. The Company recorded foreign exchange gains (losses) of approximately $(2.1) million and $0.4 million during the six months ended January 31, 2018 and 2017, respectively. For the six months ended January 31, 2018, the net gains primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $(2.2) million, $1.0 million and $(1.1) million in Corporate, Europe and Asia, respectively. For the six months ended January 31, 2017, the net gains primarily related to realized and unrealized gains (losses) from foreign currency exposures and settled transactions of approximately $1.3 million, $(0.4) million and $(0.4) million in Corporate, Asia and Europe, respectively. During the six months ended January 31, 2018, the Company recognized $2.7 million in net non-cash |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jan. 31, 2018 | |
INCOME TAXES | (13) INCOME TAXES The Company operates in multiple taxing jurisdictions, both within and outside of the United States. For the six months ended January 31, 2018, the Company was profitable in certain jurisdictions, resulting in an income tax expense using enacted rates in those jurisdictions. As of January 31, 2018, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $1.8 million. As of July 31, 2017, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $0.7 million. Uncertain Tax Positions In accordance with the Company’s accounting policy, interest related to unrecognized tax benefits is included in the provision of income taxes line of the Condensed Consolidated Statements of Operations. As of January 31, 2018 and July 31, 2017, the liabilities for interest expense related to uncertain tax positions were immaterial. The Company did not accrue for penalties related to income tax positions as there were no income tax positions that required the Company to accrue penalties. The Company does not expect any unrecognized tax benefits to reverse in the next twelve months. The Company is subject to U.S. federal income tax and various state, local and international income taxes in numerous jurisdictions. The federal and state tax returns are generally subject to tax examinations for the tax years ended July 31, 2013 through July 31, 2017. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe and Asia regions. In Europe, the Company’s 2009 through 2016 tax years remain subject to examination in most locations, while the Company’s 2005 through 2016 tax years remain subject to examination in most Asia locations. Net Operating Loss The Company has certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes (collectively, the “Tax Benefits”). The Company’s ability to use these Tax Benefits could be substantially limited if it were to experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change would occur if there is a greater than 50-percentage Tax Benefits Preservation Plan On January 19, 2018, our Board adopted a Tax Benefits Preservation Plan (the “Tax Plan”) and with American Stock Transfer & Trust Company, LLC, as rights agent (the “Rights Agent”). The Tax Plan is designed to preserve the Company’s ability to utilize its Tax Benefits and is similar to plans adopted by other public companies with significant Tax Benefits. at its 2017 Annual Meeting of Stockholders. The Board will be asking the Company’s stockholders to approve the Tax Plan at its 2017 Annual Meeting of Stockholders (the 2017 Meeting”). If the Tax Plan is not approved by stockholders at the 2017 Meeting, the Tax Plan will automatically expire immediately following the final adjournment of the 2017 Meeting if stockholder approval is not received. The Company had net operating loss carryforwards for federal and state tax purposes of approximately $2.1 billion and $209.8 million, respectively, as of January 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 ability to utilize its Tax Benefits. As part of the plan 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 Initially, the Rights will be attached to all certificates representing shares of Common Stock then outstanding and no separate rights certificates will be distributed. In the case of book entry shares, the Rights will be evidenced by notations in the book entry accounts. Subject to certain exceptions specified in the Plan, the Rights will separate from the Common Stock and a distribution date (the “Distribution Date”) will occur upon the earlier of (i) ten (10) business days following a public announcement that a stockholder (or group) has become a beneficial owner of 4.99-percent or more of the shares of Common Stock then outstanding and (ii) ten (10) business days (or such later date as the Board determines) following the commencement of a tender offer or exchange offer that would result in a person or group becoming a 4.99-percent stockholder. Pursuant to the Tax Plan and subject to certain exceptions, if a stockholder (or group) becomes a 4.99-percent stockholder after adoption of the Tax Plan, the Rights would generally become exercisable and entitle stockholders (other than the 4.99-percent 4.99-percent non-exempt 4.99-percent The Rights are not exercisable until the Distribution Date and will expire at the earliest of (i) 11:59 p.m. on the date that the votes of the stockholders of the Company with respect to the Company’s next annual meeting or special meeting of stockholders are certified (which date will be no later than January 18, 2019), unless the continuation of the Tax Plan is approved by the affirmative vote of the majority of shares of Common Stock present at such meeting of stockholders (in which case clause (ii) will govern); (ii) 11:59 p.m., on January 18, 2021; (iii) the time at which the Rights are redeemed or exchanged as provided in the Tax Plan; and (iv) the time at which the Board determines that the Tax Plan is no longer necessary or desirable for the preservation of Tax Benefits. Protective Amendment On December 9, 2014, the Company’s stockholders voted in favor of an amendment to the Restated Certificate of Incorporation of the Company that was designed to protect the long-term tax benefits presented by our NOLs and the Certificate of Amendment of the Restated Certificate of Incorporation of the Company effecting such amendment was filed with the State of Delaware on December 29, 2014 (the “Original Protective Amendment”). The Original Protective Amendment expired in December 29, 2017. The Board has determined to replace the Original Protective Amendment with a new similar amendment to our Restated Certificate of Incorporation (the “Protective Amendment”). On March 6, 2018, the Board, subject to approval by stockholders, approved a Protective Amendment. The Protective Amendment, which is designed to prevent certain transfers of our securities that could result in an ownership change. The Protective Amendment will not be put into effect unless and until it is approved by stockholders at the 2017 Meeting. Our new Tax Benefits Preservation Plan, dated as of January 19, 2018, with American Stock Transfer & Trust Company, LLC was entered into on January 19, 2018 following Board approval. The Tax Plan requires stockholder approval to remain in effect after the 2017 Meeting, and will expire immediately following the final adjournment of the 2017 Meeting if stockholder approval is not received. IWCO Acquisition As more fully described in Note 8 to these unaudited Condensed Consolidated Financial Statements, the Company completed the IWCO Acquisition on December 15, 2017. Going forward, the Company and IWCO will file a consolidated federal tax return. In purchase accounting, a deferred tax liability of $79.9 million was computed for IWCO, Inc. 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 The Tax Cuts and Jobs Act In December 2017, the Tax Cuts and Jobs Act, or the Tax Act (“TCJA”), was signed into law. Among other things, the Tax Act permanently lowers the corporate federal income tax rate to 21% from the existing maximum rate of 35%, effective for tax years including or commencing January 1, 2018. As a result of the reduction of the corporate federal income tax rate to 21%, U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in a provision of $266.3 million to income tax expense in continuing operations and a corresponding reduction in the valuation allowance. As a result, there was no impact to the Company’s Statement of Operations as a result of reduction in tax rates. The total provision of $266.3 million included a provision of $296.1 million to income tax expense for the Company and a benefit of $29.8 million to income tax expense for IWCO. Beginning on January 1, 2018, the TCJA also requires a minimum tax on certain future earnings generated by foreign subsidiaries while providing for future tax-free repatriation of such earnings through a 100% dividends-received deduction. In accordance with ASC Topic 740, Income Taxes, and SAB 118, the Company has estimated that no provisional charge will be recorded related to the TCJA based on its initial analysis using available information and estimates. Given the significant complexity of the TCJA, anticipated guidance from the U.S. Treasury Department about implementing the TCJA and the potential for additional guidance from the SEC or the FASB related to the TCJA or additional information becoming available, the Company’s provisional charge may be adjusted during 2018 and is expected to be finalized no later than December 31, 2018. Other provisions of the TCJA that impact future tax years are still being assessed. Our preliminary estimate of the TCJA and the remeasurement of our deferred tax assets and liabilities is subject to the finalization of management’s analysis related to certain matters, such as developing interpretations of the provisions of the TCJA, changes to certain estimates and the filing of our tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting the TCJA may require further adjustments and changes in our estimates. The final determination of the TCJA and the remeasurement of our deferred assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the TCJA. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jan. 31, 2018 | |
EARNINGS PER SHARE | (14) EARNINGS PER SHARE The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.” The following table reconciles earnings per share for the three and six months ended January 31, 2018 and 2017: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands, except per share data) Net income (loss) $ 65,089 $ (2,906 ) $ 59,852 $ (11,449 ) Less: Preferred dividends on redeemable preferred stock (259 ) — (259 ) — Net income (loss) attributable to common stockholders $ 64,830 $ (2,906 ) $ 59,593 $ (11,449 ) Effect of dilutive securities: 5.25% Convertible Senior Notes 1,748 — 3,459 — Redeemable preferred stock 259 — 259 — Net income (loss) attributable to common stockholders after assumed conversions $ 66,837 $ (2,906 ) $ 63,311 $ (11,449 ) Weighted average common shares outstanding 58,341 55,083 56,776 55,031 Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock 20,742 — 16,107 — Weighted average number of common and potential common shares 79,083 55,083 72,883 55,031 Basic net earning (loss) per share attributable to common stockholders: $ 1.11 $ (0.05 ) $ 1.05 $ (0.21 ) Diluted net earning (loss) per share attributable to common stockholders: $ 0.85 $ (0.05 ) $ 0.87 $ (0.21 ) Basic earnings per common share is calculated using the weighted-average number of common shares outstanding during the period. Diluted earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), non-vested as-if For both the three and six months ended January 31, 2018, approximately 0.5 million common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive. For the three and six months ended January 31, 2017, approximately 14.2 million and 14.5 million, respectively, common stock equivalent shares were excluded from the denominator in the calculation of diluted earnings per share as their inclusion would have been antidilutive. |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 6 Months Ended |
Jan. 31, 2018 | |
SHARE-BASED PAYMENTS | (15) SHARE-BASED PAYMENTS The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and employee and non-employee non-vested Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Cost of revenue $ 1 $ 15 $ 12 $ 31 Selling, general and administrative 7,104 174 7,385 350 $ 7,105 $ 189 $ 7,397 $ 381 During December 2017, the Board, upon the recommendation of the Special Committee and the Human Resources and Compensation Committee, of the Board (the “Compensation Committee”), approved equity grants to certain members of the Board, in each case effective upon the closing of the IWCO Acquisition and in consideration for current and future services to the Company and which are being accounted for in accordance with ASC 505-50, Equity—Equity Based Payments to Non-Employees. Certain of these non-employee awards are subject to market conditions in order to vest. Additionally, some of the awards are subject to shareholder approval. The expense for the three months ended January 31, 2018 related to these non-employee awards was $6.6 million. At January 31, 2018, there was an immaterial balance of total unrecognized compensation cost related to Stock Options issued under the Company’s plans. At January 31, 2018, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jan. 31, 2018 | |
COMPREHENSIVE INCOME (LOSS) | (16) COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) combines net income (loss) and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of stockholder’s equity in the accompanying condensed consolidated balance sheets. Accumulated other comprehensive items consist of the following: Foreign Pension Unrealized Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2017 $ 7,522 $ (3,376 ) $ 167 $ 4,313 Foreign currency translation adjustment 3,926 — — 3,926 Net unrealized holding gain on securities — — 16 16 Pension liability adjustments — 26 — 26 Net current-period other comprehensive income 3,926 26 16 3,968 Accumulated other comprehensive income (loss) at January 31, 2018 $ 11,448 $ (3,350 ) $ 183 $ 8,281 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jan. 31, 2018 | |
SEGMENT INFORMATION | (17) SEGMENT INFORMATION The Company has five operating segments: Americas; Asia; Europe; Direct Marketing; and e-Business. e-Business 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, acquisition related costs and restructuring. These items are excluded because they may be considered to be of a non-operational non-cash Summarized financial information of the Company’s continuing operations by operating segment is as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Net revenue: Americas $ 13,764 $ 27,183 $ 28,603 $ 53,061 Asia 36,290 38,861 79,802 81,734 Europe 37,893 44,910 76,283 90,091 Direct Marketing 56,913 — 56,913 — All Other 6,259 6,614 12,040 14,009 $ 151,119 $ 117,568 $ 253,641 $ 238,895 Operating income (loss): Americas $ (2,285 ) $ (1,720 ) $ (4,484 ) $ (5,576 ) Asia 15,730 2,312 19,899 4,089 Europe (3,464 ) 40 (6,324 ) (2,551 ) Direct Marketing (2,825 ) — (2,825 ) — All Other (1,350 ) (889 ) (2,795 ) (545 ) Total Segment operating income (loss) 5,806 (257 ) 3,471 (4,583 ) Corporate-level activity (10,382 ) (1,247 ) (11,877 ) (2,563 ) Total operating loss (4,576 ) (1,504 ) (8,406 ) (7,146 ) Total other expense 8,199 1,075 8,720 3,427 Loss before income taxes $ (12,775 ) $ (2,579 ) $ (17,126 ) $ (10,573 ) Net revenue and operating loss associated with Direct Marketing is for the period from December 15, 2017 to January 31, 2018. The Direct Marketing operating loss includes certain purchase accounting adjustments associated with the IWCO acquisition. January 31, July 31, (In thousands) Total assets: Americas $ 21,944 $ 21,876 Asia 51,805 63,819 Europe 57,039 64,639 Direct Marketing 646,840 — All Other 20,020 20,703 Sub-total 797,648 171,037 Corporate 72,462 110,261 $ 870,110 $ 281,298 Summarized financial information of the Company’s net revenue from external customers by group of services is as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Supply chain services $ 87,947 $ 110,954 $ 184,688 $ 224,886 Direct Marketing 56,913 — 56,913 — e-Business 6,259 6,614 12,040 14,009 $ 151,119 $ 117,568 $ 253,641 $ 238,895 As of January 31, 2018, approximately $567.6 million of the Company’s long-lived assets were located in the U.S.A. As of July 31, 2017, approximately $9.3 million of the Company’s long-lived assets were located in the U.S.A. For the three months ended January 31, 2018, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $72.0 million, $28.2 million, $16.5 million and $18.3 million, respectively. For the three months ended January 31, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $27.5 million, $31.9 million, $20.0 million and $21.7 million, respectively. For the six months ended January 31, 2018, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $87.1 million, $63.0 million, $31.8 million and $40.8 million, respectively. For the six months ended January 31, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $54.3 million, $68.1 million, $36.8 million and $48.0 million, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jan. 31, 2018 | |
RELATED PARTY TRANSACTIONS | (18) RELATED PARTY TRANSACTIONS Preferred Stock Transaction and Warrant Repurchase On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company’s newly created Series C Convertible Preferred Stock, par value $0.01 per share (the Preferred Stock), to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million. The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of the Company, which has been filed with the Secretary of State of the State of Delaware. Under the Series C Certificate of Designations, each share of Preferred Stock can be converted into shares of the our Common Stock, at an initial conversion price equal to $1.96 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction. Holders of the Preferred Stock will also receive cumulative dividends at 6% per annum payable in cash or Common Stock. If at any time the closing bid price of the Company’s Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), the Company has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock. The Preferred Stock Transaction was approved and recommended to the Board by the Special Committee of the Board. Each member of the Special Committee was independent and not affiliated with Steel Holdings GP, which controls the power to vote and dispose of the securities held by SPHG Holdings and its affiliates. On December 15, 2017, contemporaneously with the closing of the Preferred Stock Transaction, the Company entered into a Warrant Repurchase Agreement with Steel Holdings, an affiliate of SPHG Holdings, pursuant to which the Company repurchased for $100 the warrant to acquire 2,000,000 shares of the Common Stock that the Company had previously issued to Steel Holdings. The Warrant, which was to expire in 2018, was terminated by the Company upon repurchase. Management Services Agreement December 24, 2014, the Company entered into a Management Services Agreement with SP Corporate Services LLC (“SP Corporate”), effective as of January 1, 2015 (as amended, the “Management Services Agreement”). SP Corporate is an indirect wholly owned subsidiary of Steel Holdings and is a related party. Pursuant to the Management Services Agreement, SP Corporate provided the Company and its subsidiaries with the services of certain employees, including certain executive officers, and other corporate services. The Management Services Agreement had an initial term of six months. On June 30, 2015, the Company entered into an amendment that extended the term of the Management Services Agreement to December 31, 2015 and provided for automatic renewal for successive one year periods, unless and until terminated in accordance with the terms set forth therein, which include, under certain circumstances, the payment by the Company of certain termination fees to SP Corporate. On March 10, 2016, the Company entered into a Second Amendment to the Management Services Agreement with SPH Services, Inc. (“SPH Services”) 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. SPH Services is the parent of SP Corporate and an affiliate of SPHG Holdings. On March 10, 2016, the Company entered into a Transfer Agreement with SPH Services pursuant to which the parties agreed to transfer to the Company certain individuals who provide corporate services to the Company (the “Transfer Agreement”). SP Corporate and Steel Partners LLC merged with and into SPH Services, with SPH Services surviving. SPH Services has since changed its name to Steel Services Ltd. (“Steel Services”). On September 1, 2017, the Company entered into a Third Amendment to the Management Services Agreement, which reduced the fixed monthly fee paid by the Company to Steel Services under the Management Services Agreement from $175,000 per month to $95,641 per month. The monthly fee is subject to review and adjustment by agreement between the Company and Steel Services for periods commencing in fiscal 2016 and beyond. Additionally, the Company may be required to reimburse Steel Services and its affiliates for all reasonable and necessary business expenses incurred on our behalf in connection with the performance of the services under the Management Services Agreement, including travel expenses. The Management Services Agreement provides that, under certain circumstances, the Company may be required to indemnify and hold harmless Steel Services and its affiliates and employees from any claims or liabilities by a third party in connection with activities or the rendering of services under the Management Services Agreement. Total expenses incurred related to this agreement for the three and six months ended January 31, 2018 were $0.4 million and $0.9 million, respectively. Total expenses incurred related to this agreement for the three and six months ended January 31, 2017 were $0.5 million and $1.1 million, respectively. As of January 31, 2018 and July 31, 2017, amounts due to SP Corporate and Steel Services were $0.5 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 a total of 5.5 million 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, Fejes and Lichtenstein are all affiliated with Steel Holdings GP, which is a wholly-owned subsidiary of Steel Holdings. These awards were measured based on the fair market value on the Grant Date. Total expense incurred relating to these grants for the three and six months ended January 31, 2018 was $6.6 million. Mutual Securities, Inc. (“Mutual Securities”) serves as the broker and record-keeper for all the transactions associated with the Trading Securities. An officer of SP Corporate and of the General Partner of Steel Holdings is a registered principal of Mutual Securities. Commissions charged by Mutual Securities are generally commensurate with commissions charged by other institutional brokers, and the Company believes its use of Mutual Securities is consistent with its desire to obtain best price and execution. During the three and six months ended January 31, 2018 and 2017, Mutual Securities received an immaterial amount in commissions associated with these transactions. |
FAIR VALUE MEASUREMENT OF ASSET
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES | 6 Months Ended |
Jan. 31, 2018 | |
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES | (19) FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES ASC Topic 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities The carrying value of cash and cash equivalents, accounts receivable, funds held for clients, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. The carrying value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The fair values of the Company’s Trading Securities are estimated using quoted market prices. The 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. 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 January 31, 2018 and July 31, 2017, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) January 31, 2018 Level 1 Level 2 Level 3 Assets: Money market funds $ 41,034 $ 41,034 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2017 Level 1 Level 2 Level 3 Assets: Marketable equity securities $ 11,898 $ 11,898 $ — $ — Money market funds 85,683 85,683 — — There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis The Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were certain assets subject to long-lived asset impairment. The Company reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. Fair Value of Financial Instruments The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and debt, and are reflected in the financial statements at cost. With the exception of the Notes payable and long-term debt, cost approximates fair value for these items due to their short-term nature. We believe that the carrying value of our long-term debt approximates fair value because the stated interest rates of this debt is consistent with current market rates. Included in Trading Securities in the accompanying balance sheet are marketable equity securities. These instruments are valued at quoted market prices in active markets. Included in cash and cash equivalents in the accompanying balance sheet are money market funds. These are valued at quoted market prices in active markets. The following table presents the Company’s Notes payable not carried at fair value: January 31, 2018 July 31, 2017 Carrying Fair Value Carrying Fair Value Fair Value (In thousands) Notes payable $ 62,062 $ 66,188 $ 59,758 $ 63,852 Level 1 The fair value of our Notes payable represents the value at which our lenders could trade our debt within the financial markets, and does not represent the settlement value of these long-term debt liabilities to us. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Components of Inventories | Inventories consisted of the following: January 31, July 31, (In thousands) Raw materials $ 25,055 $ 24,129 Work-in-process 15,448 713 Finished goods 4,708 9,527 $ 45,211 $ 34,369 |
OTHER CURRENT AND LONG-TERM L27
OTHER CURRENT AND LONG-TERM LIABILITIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Components of Accrued Expenses | January 31, 2018 July 31, 2017 (In thousands) Accrued taxes $ 5,215 $ 2,272 Accrued compensation 30,638 10,678 Accrued interest 4,190 1,366 Accrued audit, tax and legal 2,693 2,759 Accrued contract labor 1,538 1,632 Accrued worker’s compensation 6,347 — Accrued other 24,050 19,191 $ 74,671 $ 37,898 |
Components of Other Current Liabilities | January 31, 2018 July 31, 2017 (In thousands) Accrued pricing liabilities $ 18,882 $ 18,882 Line of credit liability 6,000 — Customer postage deposits 10,457 — Other 8,222 7,259 $ 43,561 $ 26,141 |
RESTRUCTURING, NET (Tables)
RESTRUCTURING, NET (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Summary of Restructuring Accrual by Expense Category and by Reportable Segment | The following tables summarize the activities related to the restructuring accrual by expense category and by reportable segment for the six months ended January 31, 2018: Employee Contractual Total (In thousands) Accrued restructuring balance at July 31, 2017 $ 100 $ 86 $ 186 Restructuring adjustments 19 22 41 Cash paid (12 ) (108 ) (120 ) Non-cash 5 — 5 Accrued restructuring balance at January 31, 2018 $ 112 $ — $ 112 Americas Asia Europe Direct marketing All other Consolidated (In thousands) Accrued restructuring balance at July 31, 2017 $ 51 $ — $ 23 $ — $ 112 $ 186 Restructuring charges — — — — — — Restructuring adjustments 27 1 2 — 11 41 Cash paid (12 ) — — — (108 ) (120 ) Non-cash 2 (1 ) (25 ) — 29 5 Accrued restructuring balance at January 31, 2018 $ 68 $ — $ — $ — $ 44 $ 112 |
Summary of Net Restructuring Charges | The net restructuring charges for the three and six months ended January 31, 2018 and 2017 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Cost of revenue $ — $ 154 $ 8 $ 735 Selling, general and administrative 4 622 33 1,415 $ 4 $ 776 $ 41 $ 2,150 |
ACQUISTION OF IWCO DIRECT (Tabl
ACQUISTION OF IWCO DIRECT (Tables) | 6 Months Ended |
Jan. 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 (in thousands): 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 |
Summary of Pro Forma Information | Three Months Six Months Three Months Six Months January 31, 2017 January 31, 2018 (unaudited) (unaudited) Net revenue $ 239,375 $ 466,979 $ 208,393 $ 433,006 Net income $ (7,034 ) $ (24,268 ) $ 68,827 $ 59,787 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Net Carrying Value of the Notes | January 31, July 31, 2018 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 (5,110 ) (7,227 ) Unamortized debt issuance costs (453 ) (640 ) Net carrying amount $ 62,062 $ 59,758 |
Summary of Interest Expense Related to Convertible Notes | Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 (In thousands) (In thousands) Interest expense related to contractual interest coupon $ 913 $ 888 $ 1,827 $ 1,823 Interest expense related to accretion of the discount 1,076 999 2,117 1,940 Interest expense related to debt issuance costs 95 89 187 172 $ 2,084 $ 1,976 $ 4,131 $ 3,935 |
OTHER GAINS (LOSSES), NET (Tabl
OTHER GAINS (LOSSES), NET (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Components of Other Gains (Losses), Net | The following table reflects the components of “Other gains (losses), net”: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Foreign currency exchange gains (losses) $ (1,436 ) $ 29 $ (2,071 ) $ 426 Gains on Trading Securities — 1,011 1,876 94 Other, net (280 ) (21 ) (99 ) 11 $ (1,716 ) $ 1,019 $ (294 ) $ 531 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Reconciliation of Earnings Per Share | The following table reconciles earnings per share for the three and six months ended January 31, 2018 and 2017: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands, except per share data) Net income (loss) $ 65,089 $ (2,906 ) $ 59,852 $ (11,449 ) Less: Preferred dividends on redeemable preferred stock (259 ) — (259 ) — Net income (loss) attributable to common stockholders $ 64,830 $ (2,906 ) $ 59,593 $ (11,449 ) Effect of dilutive securities: 5.25% Convertible Senior Notes 1,748 — 3,459 — Redeemable preferred stock 259 — 259 — Net income (loss) attributable to common stockholders after assumed conversions $ 66,837 $ (2,906 ) $ 63,311 $ (11,449 ) Weighted average common shares outstanding 58,341 55,083 56,776 55,031 Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock 20,742 — 16,107 — Weighted average number of common and potential common shares 79,083 55,083 72,883 55,031 Basic net earning (loss) per share attributable to common stockholders: $ 1.11 $ (0.05 ) $ 1.05 $ (0.21 ) Diluted net earning (loss) per share attributable to common stockholders: $ 0.85 $ (0.05 ) $ 0.87 $ (0.21 ) |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Summary of Share Based Compensation Expense Related to Employee Stock Options, Employee Stock Purchases and Employee and Non-Employee Non-Vested and Vested Shares | The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and employee and non-employee non-vested Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Cost of revenue $ 1 $ 15 $ 12 $ 31 Selling, general and administrative 7,104 174 7,385 350 $ 7,105 $ 189 $ 7,397 $ 381 |
COMPREHENSIVE INCOME (LOSS) (Ta
COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Accumulated Other Comprehensive Items | Accumulated other comprehensive items consist of the following: Foreign Pension Unrealized Total (In thousands) Accumulated other comprehensive income (loss) at July 31, 2017 $ 7,522 $ (3,376 ) $ 167 $ 4,313 Foreign currency translation adjustment 3,926 — — 3,926 Net unrealized holding gain on securities — — 16 16 Pension liability adjustments — 26 — 26 Net current-period other comprehensive income 3,926 26 16 3,968 Accumulated other comprehensive income (loss) at January 31, 2018 $ 11,448 $ (3,350 ) $ 183 $ 8,281 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jan. 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: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Net revenue: Americas $ 13,764 $ 27,183 $ 28,603 $ 53,061 Asia 36,290 38,861 79,802 81,734 Europe 37,893 44,910 76,283 90,091 Direct Marketing 56,913 — 56,913 — All Other 6,259 6,614 12,040 14,009 $ 151,119 $ 117,568 $ 253,641 $ 238,895 Operating income (loss): Americas $ (2,285 ) $ (1,720 ) $ (4,484 ) $ (5,576 ) Asia 15,730 2,312 19,899 4,089 Europe (3,464 ) 40 (6,324 ) (2,551 ) Direct Marketing (2,825 ) — (2,825 ) — All Other (1,350 ) (889 ) (2,795 ) (545 ) Total Segment operating income (loss) 5,806 (257 ) 3,471 (4,583 ) Corporate-level activity (10,382 ) (1,247 ) (11,877 ) (2,563 ) Total operating loss (4,576 ) (1,504 ) (8,406 ) (7,146 ) Total other expense 8,199 1,075 8,720 3,427 Loss before income taxes $ (12,775 ) $ (2,579 ) $ (17,126 ) $ (10,573 ) |
Total Assets of Continuing Operations | January 31, July 31, (In thousands) Total assets: Americas $ 21,944 $ 21,876 Asia 51,805 63,819 Europe 57,039 64,639 Direct Marketing 646,840 — All Other 20,020 20,703 Sub-total 797,648 171,037 Corporate 72,462 110,261 $ 870,110 $ 281,298 |
Summarized Financial Information of Net Revenue from External Customers by Group of Services | Summarized financial information of the Company’s net revenue from external customers by group of services is as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Supply chain services $ 87,947 $ 110,954 $ 184,688 $ 224,886 Direct Marketing 56,913 — 56,913 — e-Business 6,259 6,614 12,040 14,009 $ 151,119 $ 117,568 $ 253,641 $ 238,895 |
FAIR VALUE MEASUREMENT OF ASS36
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy | The following tables present the Company’s financial assets measured at fair value on a recurring basis as of January 31, 2018 and July 31, 2017, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) January 31, 2018 Level 1 Level 2 Level 3 Assets: Money market funds $ 41,034 $ 41,034 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2017 Level 1 Level 2 Level 3 Assets: Marketable equity securities $ 11,898 $ 11,898 $ — $ — Money market funds 85,683 85,683 — — |
Notes Payable not Carried at Fair Value | The following table presents the Company’s Notes payable not carried at fair value: January 31, 2018 July 31, 2017 Carrying Fair Value Carrying Fair Value Fair Value (In thousands) Notes payable $ 62,062 $ 66,188 $ 59,758 $ 63,852 Level 1 |
Nature of Operations - Addition
Nature of Operations - Additional Information (Detail) | 6 Months Ended |
Jan. 31, 2018SiteLanguageFacility | |
IWCO | Hamburg PA | |
Nature Of Operations [Line Items] | |
Number of facilities | 2 |
IWCO | Warminster PA | |
Nature Of Operations [Line Items] | |
Number of facilities | 1 |
IWCO | Little Falls MN | |
Nature Of Operations [Line Items] | |
Number of facilities | 1 |
IWCO | Chanhassen MN | |
Nature Of Operations [Line Items] | |
Number of facilities | 3 |
Moduslink | |
Nature Of Operations [Line Items] | |
Number of sites | Site | 20 |
Number of languages | Language | 21 |
Components of Inventories (Deta
Components of Inventories (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Inventory [Line Items] | ||
Raw materials | $ 25,055 | $ 24,129 |
Work-in-process | 15,448 | 713 |
Finished goods | 4,708 | 9,527 |
Inventories, net | $ 45,211 | $ 34,369 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) $ in Millions | 3 Months Ended |
Jan. 31, 2018USD ($) | |
Work In Process Inventory | IWCO | |
Inventory [Line Items] | |
Fair value of assets acquired | $ 7 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Investment [Line Items] | ||||
Sale (purchase) of Trading Securities | $ 4,900 | $ 13,800 | $ 5,800 | |
Gains (losses) on Trading Securities | 1,011 | 1,876 | 94 | |
Trading securities | 0 | $ 11,898 | ||
Cash | ||||
Investment [Line Items] | ||||
Gains (losses) on Trading Securities | 600 | 4,600 | 600 | |
Non Cash | ||||
Investment [Line Items] | ||||
Gains (losses) on Trading Securities | $ 400 | $ (2,700) | $ (500) |
Components of Accrued Expenses
Components of Accrued Expenses (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Accrued Expenses [Line Items] | ||
Accrued taxes | $ 5,215 | $ 2,272 |
Accrued compensation | 30,638 | 10,678 |
Accrued interest | 4,190 | 1,366 |
Accrued audit, tax and legal | 2,693 | 2,759 |
Accrued contract labor | 1,538 | 1,632 |
Accrued worker's compensation | 6,347 | |
Accrued other | 24,050 | 19,191 |
Accrued expenses | $ 74,671 | $ 37,898 |
Components of Other Current Lia
Components of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Other Current Liabilities [Line Items] | ||
Accrued pricing liabilities | $ 18,882 | $ 18,882 |
Line of credit liability | 6,000 | |
Customer postage deposits | 10,457 | |
Other | 8,222 | 7,259 |
Other current liabilities | $ 43,561 | $ 26,141 |
Other Current and Long-Term L43
Other Current and Long-Term Liabilities - Additional Information (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jul. 31, 2017 | |
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Accrued pricing liabilities | $ 18,882 | $ 18,882 |
Other long-term liabilities | 30,693 | $ 9,414 |
IWCO | Sales Tax Liabilities | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Other long-term liabilities | 18,000 | |
IWCO | Sales Tax Liabilities | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Reserve recorded | $ 18,000 |
Restructuring, Net - Additional
Restructuring, Net - Additional Information (Detail) $ in Millions | 3 Months Ended | |
Jan. 31, 2017USD ($)Employee | Oct. 31, 2016USD ($)Employee | |
Restructuring Cost and Reserve [Line Items] | ||
Number of workforce reduction | Employee | 18 | 50 |
Employee Related Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0.8 | $ 1.4 |
Contractual Obligations | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0.1 | 0.3 |
Americas | Employee Related Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0.2 | 0.2 |
Asia | Employee Related Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0.3 | 0.4 |
Europe | Employee Related Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0.1 | $ 0.5 |
e-Business Services | Employee Related Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0.1 |
Summary of Restructuring Accrua
Summary of Restructuring Accrual by Expense Category and by Reportable Segment (Detail) $ in Thousands | 6 Months Ended |
Jan. 31, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | $ 186 |
Restructuring adjustments | 41 |
Cash paid | (120) |
Non-cash adjustments | 5 |
Accrued restructuring, ending balance | 112 |
Americas | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | 51 |
Restructuring adjustments | 27 |
Cash paid | (12) |
Non-cash adjustments | 2 |
Accrued restructuring, ending balance | 68 |
Asia | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring adjustments | 1 |
Non-cash adjustments | (1) |
Europe | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | 23 |
Restructuring adjustments | 2 |
Non-cash adjustments | (25) |
All Other | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | 112 |
Restructuring adjustments | 11 |
Cash paid | (108) |
Non-cash adjustments | 29 |
Accrued restructuring, ending balance | 44 |
Employee Related Expenses | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | 100 |
Restructuring adjustments | 19 |
Cash paid | (12) |
Non-cash adjustments | 5 |
Accrued restructuring, ending balance | 112 |
Contractual Obligations | |
Restructuring Cost and Reserve [Line Items] | |
Accrued restructuring, beginning balance | 86 |
Restructuring adjustments | 22 |
Cash paid | $ (108) |
Summary of Net Restructuring Ch
Summary of Net Restructuring Charges (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring, net | $ 4 | $ 776 | $ 41 | $ 2,150 |
Cost of revenue | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring, net | 154 | 8 | 735 | |
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring, net | $ 4 | $ 622 | $ 33 | $ 1,415 |
Acquistion of IWCO Dircet - Add
Acquistion of IWCO Dircet - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 15, 2017 | Jan. 31, 2018 |
Business Acquisition [Line Items] | ||
Goodwill | $ 259,085 | |
IWCO | ||
Business Acquisition [Line Items] | ||
Payments to acquire business, net of cash acquired | $ 469,200 | |
Proceeds from term loan under financing agreement | 393,000 | |
Receivable from escrow for working capital claims | 2,500 | |
Transaction price included one-time transaction incentive awards | 3,500 | |
Transaction costs | 1,500 | |
Intangible assets | 210,920 | |
Goodwill | 259,085 | |
Trademarks and Trade Names | IWCO | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 20,500 | |
Acquired finite-lived intangible assets, weighted average useful life | 3 years | |
Customer Relationships | IWCO | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 190,400 | |
Acquired finite-lived intangible assets, weighted average useful life | 15 years |
Summary of Preliminary Fair Val
Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Dec. 15, 2017 |
Business Acquisition [Line Items] | ||
Goodwill | $ 259,085 | |
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 |
Summary of Pro Forma Informatio
Summary of Pro Forma Information (Detail) - IWCO - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Net revenue | $ 208,393 | $ 239,375 | $ 433,006 | $ 466,979 |
Net income | $ 68,827 | $ (7,034) | $ 59,787 | $ (24,268) |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Additional Information (Detail) $ in Thousands | Jan. 31, 2018USD ($) |
Goodwill [Line Items] | |
Goodwill | $ 259,085 |
Direct Marketing | |
Goodwill [Line Items] | |
Goodwill | 259,100 |
Customer Relationships | |
Goodwill [Line Items] | |
Intangible assets | $ 186,600 |
Estimated useful life | 15 years |
Trademarks and Trade Names | |
Goodwill [Line Items] | |
Intangible assets | $ 20,200 |
Estimated useful life | 3 years |
Debt - Additional Information (
Debt - Additional Information (Detail) | Dec. 15, 2017USD ($) | Jun. 30, 2014USD ($) | Mar. 18, 2014USD ($) | Jan. 31, 2018USD ($)$ / shares | Jan. 31, 2017USD ($) | Jan. 31, 2018USD ($)d$ / shares | Jan. 31, 2017USD ($) | Jul. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||
Debt instrument issued | $ 67,625,000 | $ 67,625,000 | $ 67,625,000 | |||||
Debt instrument issuance costs | 453,000 | 453,000 | 640,000 | |||||
Notes payable, Fair Value | 66,188,000 | 66,188,000 | 63,852,000 | |||||
Debt instrument, carrying amount | 62,062,000 | $ 62,062,000 | 59,758,000 | |||||
Convertible debt, remaining discount amortization period | 13 months | |||||||
Debt instrument, interest expense | $ 2,117,000 | $ 1,940,000 | ||||||
Term loan facility | $ 393,000,000 | |||||||
PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, term | 5 years | |||||||
Line of credit facility, maximum credit commitment | $ 50,000,000 | |||||||
Credit facility expiry date | Jun. 30, 2019 | |||||||
Line of credit facility, unutilized commitment fee percentage | 0.25% | |||||||
Outstanding indebtedness under the Credit Facility | 0 | $ 0 | $ 0 | |||||
Cerberus Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, term | 5 years | |||||||
Outstanding indebtedness under the Credit Facility | $ 6,000,000 | 6,000,000 | ||||||
Term loan facility | $ 393,000,000 | |||||||
Revolving credit facility | $ 25,000,000 | |||||||
Line of credit facility, interest rate description | Borrowings under the Cerberus Credit Facility bear interest, at the Borrower's option, at a Reference Rate plus 3.75% or a LIBOR Rate plus 6.5%, each as defined the Financing Agreement. | |||||||
Aggregate amount of each consecutive quarterly scheduled principal installment | $ 1,500,000 | |||||||
Excess cash flow payment percentage | 25.00% | 50.00% | ||||||
Leverage ratio | 3.50% | 3.50% | ||||||
Debt issuance cost | $ 1,300,000 | $ 1,300,000 | ||||||
London Interbank Offered Rate (LIBOR) | Cerberus Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, percentage points added to the reference rate | 6.50% | |||||||
Base Rate | Cerberus Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, percentage points added to the reference rate | 3.75% | |||||||
Domestic Subsidiaries | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of equity interests pledged | 100.00% | |||||||
Foreign Subsidiaries | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of equity interests pledged | 65.00% | |||||||
Letter of Credit Sublimit | PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, maximum credit commitment | $ 5,000,000 | |||||||
Uncommitted Accordion Feature | PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, maximum credit commitment | $ 20,000,000 | |||||||
Scenario 1 | London Interbank Offered Rate (LIBOR) | PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, percentage points added to the reference rate | 2.25% | |||||||
Scenario 2 | London Interbank Offered Rate (LIBOR) | PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, percentage points added to the reference rate | 1.00% | |||||||
Scenario 2 | Federal Funds Open Rate | PNC Bank Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, percentage points added to the reference rate | 0.50% | |||||||
5.25% Convertible Senior Notes Due 2019 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument issued | $ 100,000,000 | |||||||
Debt instrument, stated interest rate | 5.25% | |||||||
Debt instrument, convertible, conversion ratio | 166.2593 | |||||||
Initial Conversion price | $ / shares | $ 6.01 | $ 6.01 | ||||||
Debt instrument, redemption price percentage | 100.00% | |||||||
Debt instrument, convertible, earliest date | Mar. 6, 2017 | |||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130.00% | |||||||
Debt instrument, convertible, threshold trading days | d | 20 | |||||||
Debt instrument, convertible, threshold consecutive trading days | d | 30 | |||||||
Debt instrument conversion option | $ 28,100,000 | |||||||
Debt instrument issuance costs | $ 3,400,000 | 3,400,000 | ||||||
Deferred debt instrument issuance costs | 2,500,000 | 2,500,000 | ||||||
Debt instrument, interest expense | $ 2,084,000 | $ 1,976,000 | $ 4,131,000 | $ 3,935,000 | ||||
Debt instrument, interest rate, effective percentage | 13.90% | 13.90% | ||||||
Term Loan | Cerberus Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument issued | $ 393,000,000 | $ 393,000,000 | ||||||
Current and long-term net | $ 391,700,000 | $ 391,700,000 |
Net Carrying Value of the Notes
Net Carrying Value of the Notes (Detail) - USD ($) $ in Thousands | Jan. 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 | (5,110) | (7,227) |
Unamortized debt issuance costs | (453) | (640) |
Net carrying amount | $ 62,062 | $ 59,758 |
Summary of Interest Expense Rel
Summary of Interest Expense Related to Convertible Notes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | $ 2,117 | $ 1,940 | ||
5.25% Convertible Senior Notes Due 2019 | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | $ 2,084 | $ 1,976 | 4,131 | 3,935 |
5.25% Convertible Senior Notes Due 2019 | Coupon Interest | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | 913 | 888 | 1,827 | 1,823 |
5.25% Convertible Senior Notes Due 2019 | Accretion of Debt Discount | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | 1,076 | 999 | 2,117 | 1,940 |
5.25% Convertible Senior Notes Due 2019 | Amortization of Debt Issue Cost | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | $ 95 | $ 89 | $ 187 | $ 172 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands | Dec. 15, 2017USD ($)TradingDay$ / sharesshares | Mar. 12, 2013USD ($)$ / sharesshares | Jan. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2017USD ($) | Jul. 31, 2017$ / sharesshares |
Equity [Line Items] | |||||
Preferred stock, shares issued | shares | 0 | 0 | |||
Preferred stock, par value | $ 0.01 | $ 0.01 | |||
Price per share | $ 4 | ||||
Proceeds from issuance of preferred stock | $ | $ 35,000 | ||||
Common stock par value | $ 0.01 | $ 0.01 | |||
Issuance of common stock | shares | 7,500,000 | ||||
Proceeds from issuance of common stock, gross | $ | $ 30,000 | ||||
Common stock issuance, transaction cost | $ | 2,300 | ||||
Net proceeds from issuance of common stock | $ | $ 27,700 | $ 3 | $ 12 | ||
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 | ||||
Warrants expiration term | 5 years | ||||
Series C Convertible Preferred Stock | |||||
Equity [Line Items] | |||||
Common stock par value | $ 0.01 | ||||
Convertible preferred stock conversion price per share | $ 1.96 | ||||
Preferred stock, dividend rate, percentage | 6.00% | ||||
Percentage threshold closing sale price of common stock higher than conversion price | 170.00% | ||||
Series C Convertible Preferred Stock | Minimum | |||||
Equity [Line Items] | |||||
Trading days | TradingDay | 5 | ||||
Liquidation Basis of Accounting [Member] | Series C Convertible Preferred Stock | |||||
Equity [Line Items] | |||||
Preferred stock liquidation preference percentage per share | The holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of any of the assets or funds of the company to the holders of other equity or equity equivalent securities of the Company other than the Preferred Stock by reason of their ownership thereof, an amount per share in cash equal to the sum of (i) one hundred percent (100%) of the stated value per share of Preferred Stock (initially $1,000 per share) then held by them (as adjusted for any stock split, stock dividend, stock combination or other similar transactions with respect to the Preferred Stock), plus (ii) 100% of all declared but unpaid dividends, and all accrued but unpaid dividends on each such share of Preferred Stock, in each case as the date of the triggering event. | ||||
Repurchase Agreements | Warrant | Steel Holdings | |||||
Equity [Line Items] | |||||
Repurchase price of warrant | $ 100 | ||||
Purchase Agreement | SPHG Holdings | Series C Convertible Preferred Stock | |||||
Equity [Line Items] | |||||
Preferred stock, shares issued | shares | 35,000 | ||||
Preferred stock, par value | $ 0.01 | ||||
Price per share | $ 1,000 | ||||
Proceeds from issuance of preferred stock | $ | $ 35,000 |
Components of Other Gains (Loss
Components of Other Gains (Losses), Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Foreign currency exchange gains (losses) | $ (1,436) | $ 29 | $ (2,071) | $ 426 |
Gains on Trading Securities | 1,011 | 1,876 | 94 | |
Other, net | (280) | (21) | (99) | 11 |
Other gains (losses), net | $ (1,716) | $ 1,019 | $ (294) | $ 531 |
Other Gains (Losses), Net - Add
Other Gains (Losses), Net - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Foreign currency exchange gains (losses) | $ (1,436) | $ 29 | $ (2,071) | $ 426 |
Gains (losses) on Trading Securities | 1,011 | 1,876 | 94 | |
Non Cash | ||||
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Gains (losses) on Trading Securities | 400 | (2,700) | (500) | |
Cash | ||||
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Gains (losses) on Trading Securities | 600 | 4,600 | 600 | |
Asia | ||||
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions | (700) | (500) | (1,100) | (400) |
Europe | ||||
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions | 1,300 | (100) | 1,000 | (400) |
Corporate | ||||
Component Of Other Expense Income Nonoperating [Line Items] | ||||
Realized and unrealized gains (losses) from foreign currency exposures and settled transactions | $ (2,300) | $ 600 | $ (2,200) | $ 1,300 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 6 Months Ended | 12 Months Ended | |
Jan. 31, 2018USD ($)d | Jul. 31, 2018 | Jul. 31, 2017USD ($) | |
Income Taxes [Line Items] | |||
Unrecognized tax benefits related to federal, state and foreign taxes | $ 1,800,000 | $ 700,000 | |
Expected any unrecognized tax benefits to reverse in the next twelve months | $ 0 | ||
Stockholder owning ownership on corporation's securities percentage | 5.00% | ||
Stockholder owning ownership on corporation's securities rolling period | 3 years | ||
Net operating loss carryforwards for federal tax | $ 2,100,000,000 | ||
Net operating loss carryforwards for state tax | $ 209,800,000 | ||
Business days | d | 10 | ||
Statutory federal income tax rate | 35.00% | ||
Provision for income tax expense (benefit) | $ 266,300,000 | ||
Accumulated foreign earnings provisional income tax expense | $ 0 | ||
Minimum | |||
Income Taxes [Line Items] | |||
Percentage of ownership require to obtain approval from board of directors to acquiring shares of the company's securities | 4.99% | ||
Parent Company | |||
Income Taxes [Line Items] | |||
Provision for income tax expense (benefit) | $ 296,100,000 | ||
IWCO | |||
Income Taxes [Line Items] | |||
Deferred tax liability | 79,900,000 | ||
Provision for income tax expense (benefit) | $ (29,800,000) | ||
Scenario, Forecast | |||
Income Taxes [Line Items] | |||
Statutory federal income tax rate | 21.00% | ||
Federal | Internal Revenue Service (IRS) | Earliest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,013 | ||
Federal | Internal Revenue Service (IRS) | Latest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,017 | ||
State | Earliest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,013 | ||
State | Latest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,017 | ||
Foreign | Europe Income Tax Authority | Earliest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,009 | ||
Foreign | Europe Income Tax Authority | Latest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,016 | ||
Foreign | Asia Income Tax Authority | Earliest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,005 | ||
Foreign | Asia Income Tax Authority | Latest Tax Year | |||
Income Taxes [Line Items] | |||
Tax examinations tax period | 2,016 |
Reconciliation of Earnings (Los
Reconciliation of Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||||
Net income (loss) | $ 65,089 | $ (2,906) | $ 59,852 | $ (11,449) |
Less: Preferred dividends on redeemable preferred stock | (259) | (259) | ||
Net income (loss) attributable to common stockholders | 64,830 | (2,906) | 59,593 | (11,449) |
Effect of dilutive securities: | ||||
Net income (loss) attributable to common stockholders after assumed conversions | $ 66,837 | $ (2,906) | $ 63,311 | $ (11,449) |
Weighted average common shares outstanding | 58,341 | 55,083 | 56,776 | 55,031 |
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock | 20,742 | 16,107 | ||
Weighted average number of common and potential common shares | 79,083 | 55,083 | 72,883 | 55,031 |
Basic net earning (loss) per share attributable to common stockholders: | $ 1.11 | $ (0.05) | $ 1.05 | $ (0.21) |
Diluted net earning (loss) per share attributable to common stockholders: | $ 0.85 | $ (0.05) | $ 0.87 | $ (0.21) |
5.25% Convertible Senior Notes | ||||
Effect of dilutive securities: | ||||
Dilutive securities | $ 1,748 | $ 3,459 | ||
Contingent Convertible Preferred Stock | ||||
Effect of dilutive securities: | ||||
Dilutive securities | $ 259 | $ 259 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Computation of Earnings Per Share [Line Items] | ||||
Common stock equivalent shares excluded from the denominator in the calculation of diluted earnings per share | 0.5 | 14.2 | 0.5 | 14.5 |
Summary of Share Based Compensa
Summary of Share Based Compensation Expense Related to Employee Stock Options, Employee Stock Purchases and Employee and Non-Employee Non-Vested and Vested Shares (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 7,105 | $ 189 | $ 7,397 | $ 381 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 1 | 15 | 12 | 31 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 7,104 | $ 174 | $ 7,385 | $ 350 |
Share-Based Payments - Addition
Share-Based Payments - Additional Information (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation expense | $ 7,397 | $ 381 |
Unrecognized compensation cost related to non-vested shares | 1,100 | |
Restricted stock grants and market performance based restricted stock grants [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation expense | $ 6,600 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income Items (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | $ 62,971 | |||
Foreign currency translation adjustment | $ 3,654 | $ (734) | 3,926 | $ (2,003) |
Net unrealized holding gain on securities | 29 | (10) | 16 | |
Pension liability adjustments | 353 | 26 | 750 | |
Other comprehensive income | 3,683 | $ (391) | 3,968 | $ (1,253) |
Balance | 133,968 | 133,968 | ||
Foreign currency items | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 7,522 | |||
Foreign currency translation adjustment | 3,926 | |||
Other comprehensive income | 3,926 | |||
Balance | 11,448 | 11,448 | ||
Pension items | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (3,376) | |||
Pension liability adjustments | 26 | |||
Other comprehensive income | 26 | |||
Balance | (3,350) | (3,350) | ||
Unrealized gains (losses) on Securities | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 167 | |||
Net unrealized holding gain on securities | 16 | |||
Other comprehensive income | 16 | |||
Balance | 183 | 183 | ||
Accumulated Other Comprehensive Income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 4,313 | |||
Balance | $ 8,281 | $ 8,281 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018USD ($) | Jan. 31, 2017USD ($) | Jan. 31, 2018USD ($)Segment | Jan. 31, 2017USD ($) | Jul. 31, 2017USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of operating segments | Segment | 5 | ||||
Number of reportable segments | Segment | 4 | ||||
Total assets | $ 870,110 | $ 870,110 | $ 281,298 | ||
Net revenue | 151,119 | $ 117,568 | 253,641 | $ 238,895 | |
United States | |||||
Segment Reporting Information [Line Items] | |||||
Total assets | 567,600 | 567,600 | $ 9,300 | ||
Net revenue | 72,000 | 27,500 | 87,100 | 54,300 | |
China | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | 28,200 | 31,900 | 63,000 | 68,100 | |
Netherlands | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | 16,500 | 20,000 | 31,800 | 36,800 | |
Czech Republic | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | $ 18,300 | $ 21,700 | $ 40,800 | $ 48,000 |
Summarized Financial Informatio
Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 151,119 | $ 117,568 | $ 253,641 | $ 238,895 |
Operating income (loss) | (4,576) | (1,504) | (8,406) | (7,146) |
Total other expense | 8,199 | 1,075 | 8,720 | 3,427 |
Loss before income taxes | (12,775) | (2,579) | (17,126) | (10,573) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 5,806 | (257) | 3,471 | (4,583) |
Operating Segments | Americas | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 13,764 | 27,183 | 28,603 | 53,061 |
Operating income (loss) | (2,285) | (1,720) | (4,484) | (5,576) |
Operating Segments | Asia | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 36,290 | 38,861 | 79,802 | 81,734 |
Operating income (loss) | 15,730 | 2,312 | 19,899 | 4,089 |
Operating Segments | Europe | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 37,893 | 44,910 | 76,283 | 90,091 |
Operating income (loss) | (3,464) | 40 | (6,324) | (2,551) |
Operating Segments | Direct Marketing | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 56,913 | 56,913 | ||
Operating income (loss) | (2,825) | (2,825) | ||
Operating Segments | All Other | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 6,259 | 6,614 | 12,040 | 14,009 |
Operating income (loss) | (1,350) | (889) | (2,795) | (545) |
Corporate-level activity | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ (10,382) | $ (1,247) | $ (11,877) | $ (2,563) |
Total Assets of Continuing Oper
Total Assets of Continuing Operations (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 870,110 | $ 281,298 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 797,648 | 171,037 |
Operating Segments | Americas | ||
Segment Reporting Information [Line Items] | ||
Total assets | 21,944 | 21,876 |
Operating Segments | Asia | ||
Segment Reporting Information [Line Items] | ||
Total assets | 51,805 | 63,819 |
Operating Segments | Europe | ||
Segment Reporting Information [Line Items] | ||
Total assets | 57,039 | 64,639 |
Operating Segments | Direct Marketing | ||
Segment Reporting Information [Line Items] | ||
Total assets | 646,840 | |
Operating Segments | All Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | 20,020 | 20,703 |
Corporate-level activity | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 72,462 | $ 110,261 |
Summarized Financial Informat66
Summarized Financial Information of Net Revenue from External Customers by Group of Services (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Net revenue | $ 151,119 | $ 117,568 | $ 253,641 | $ 238,895 |
Supply Chain Services | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Net revenue | 87,947 | 110,954 | 184,688 | 224,886 |
e-Business Services | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Net revenue | 6,259 | $ 6,614 | 12,040 | $ 14,009 |
Direct Marketing | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Net revenue | $ 56,913 | $ 56,913 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Dec. 15, 2017USD ($)TradingDay$ / sharesshares | Sep. 01, 2017USD ($) | Jun. 30, 2015 | Dec. 24, 2014 | Mar. 12, 2013$ / sharesshares | Jan. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2017USD ($) | Jan. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2017USD ($) | Jul. 31, 2017USD ($)$ / sharesshares |
Related Party Transaction [Line Items] | ||||||||||
Preferred stock, shares issued | shares | 0 | 0 | 0 | |||||||
Preferred stock, par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Price per share | $ / shares | $ 4 | |||||||||
Proceeds from issuance of preferred stock | $ 35,000,000 | |||||||||
Issuance of warrants to acquire additional shares, shares | shares | 2,000,000 | 2,000,000 | ||||||||
Share based compensation expense | 7,397,000 | $ 381,000 | ||||||||
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 | |||||||||
Restricted stock grants and market performance based restricted stock grants [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Share based compensation expense | 6,600,000 | |||||||||
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 | $ 400,000 | $ 500,000 | 900,000 | $ 1,100,000 | ||||||
SP Corporate Services Llc and Steel Services Limited | Management Services Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Amount due to related parties | 500,000 | $ 500,000 | $ 300,000 | |||||||
SP Corporate and Steel Services | Management Services Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Management services agreement, effective date of agreement | Jan. 1, 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 | |||||||||
Non Employee Directors [Member] | Management Services Agreement | Restricted stock grants and market performance based restricted stock grants [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Non option equity instruments, granted | shares | 5,500,000 | |||||||||
Share based compensation expense | $ 6,600,000 | $ 6,600,000 |
Financial Assets Measured at Fa
Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Jan. 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 | $ 41,034 | $ 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 | $ 41,034 | 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 |
Fair Value Measurement of Ass69
Fair Value Measurement of Assets and Liabilities - Additional Information (Detail) - USD ($) | 6 Months Ended | 12 Months Ended |
Jan. 31, 2018 | Jul. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
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 |
Notes Payable not Carried at Fa
Notes Payable not Carried at Fair Value (Detail) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable | $ 62,062 | $ 59,758 |
Notes payable, Fair Value | $ 66,188 | $ 63,852 |