|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
04-2921333
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1601 Trapelo Road, Suite 170
Waltham, Massachusetts
|
|
02451
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of Each Class:
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Common Stock, $0.01 par value
|
STCN
|
NASDAQ Global Select
|
Large accelerated filer ☐
|
|
Accelerated filer ☒
|
|
Non-accelerated filer ☐
|
|
Smaller reporting company ☒
|
|
|
|
|
|
|
Emerging growth company ☐
|
|
Item
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Page
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|
|
|
•
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the challenge of navigating a complex set of licensing and tax requirements and restrictions affecting the conduct of business in China by foreign companies;
|
•
|
difficulties and limitations on the repatriation of cash;
|
•
|
currency fluctuation and exchange rate risks;
|
•
|
protection of intellectual property, both for us and our clients;
|
•
|
evolving regulatory systems and standards, including recent tax law and labor law changes;
|
•
|
difficulty retaining management personnel and skilled employees; and
|
•
|
expiration of tax holidays.
|
•
|
how well we execute on our strategy and operating plans;
|
•
|
implementation of our strategic initiatives and achievement of expected results of these initiatives;
|
•
|
demand for our services;
|
•
|
consumer confidence and demand;
|
•
|
specific economic conditions in the industries in which we compete;
|
•
|
general economic and financial market conditions;
|
•
|
timing of new product introductions or software releases by our clients or their competitors;
|
•
|
payment of costs associated with our acquisitions, sales of assets and investments;
|
•
|
market acceptance of new products and services;
|
•
|
seasonality;
|
•
|
temporary shortages in supply from vendors;
|
•
|
charges for impairment of long-lived assets, including restructuring in future periods;
|
•
|
political instability including changes in tariff laws or natural disasters in the countries in which we operate;
|
•
|
actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates reflected in our accompanying consolidated financial statements;
|
•
|
changes in accounting rules;
|
•
|
changes in tax rules and regulations;
|
•
|
changes in labor laws;
|
•
|
availability of labor resources and the variability of available rates for labor resources;
|
•
|
unionization of our labor and contract labor; and
|
•
|
implementation of automation.
|
•
|
the jurisdictions in which profits are determined to be earned and taxed;
|
•
|
the resolution of issues arising from tax audits with various tax authorities;
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
adjustments to estimated taxes upon finalization of various tax returns;
|
•
|
increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development, impact of costs associated with business combinations and impairments of goodwill in connection with acquisitions;
|
•
|
changes in available tax credits;
|
•
|
changes in share-based compensation;
|
•
|
changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles;
|
•
|
the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes;
|
•
|
increases in tax rates in various jurisdictions; and
|
•
|
the expiration of tax holidays.
|
•
|
claims under client agreements or applicable law, or other liability for damages;
|
•
|
delayed or lost revenue due to adverse client reaction;
|
•
|
negative publicity; and
|
•
|
litigation that could be costly and time consuming.
|
•
|
claims under client agreements or applicable law, or other liability for damages;
|
•
|
delayed or lost revenue due to adverse client reaction;
|
•
|
negative publicity; and
|
•
|
litigation that could be costly and time consuming.
|
|
Twelve
Months Ended
July 31,
2019
|
|
As a %
of
Total
Net
Revenue
|
|
Twelve
Months Ended
July 31,
2018
|
|
As a %
of
Total
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Supply Chain
|
$
|
332,928
|
|
|
40.6
|
%
|
|
$
|
345,900
|
|
|
53.6
|
%
|
|
$
|
(12,972
|
)
|
|
(3.8
|
)%
|
Direct Marketing
|
486,902
|
|
|
59.4
|
%
|
|
299,358
|
|
|
46.4
|
%
|
|
187,544
|
|
|
62.6
|
%
|
|||
Total
|
$
|
819,830
|
|
|
100.0
|
%
|
|
$
|
645,258
|
|
|
100.0
|
%
|
|
$
|
174,572
|
|
|
27.1
|
%
|
|
Twelve
Months Ended
July 31,
2019
|
|
As a %
of
Segment
Net
Revenue
|
|
Twelve
Months Ended
July 31,
2018
|
|
As a %
of
Segment
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Supply Chain
|
$
|
297,417
|
|
|
89.3
|
%
|
|
$
|
313,978
|
|
|
90.8
|
%
|
|
$
|
(16,561
|
)
|
|
(5.3
|
)%
|
Direct Marketing
|
372,683
|
|
|
76.5
|
%
|
|
230,021
|
|
|
76.8
|
%
|
|
142,662
|
|
|
62.0
|
%
|
|||
Total
|
$
|
670,100
|
|
|
81.7
|
%
|
|
$
|
543,999
|
|
|
84.3
|
%
|
|
$
|
126,101
|
|
|
23.2
|
%
|
|
Twelve
Months Ended
July 31,
2019
|
|
As a %
of
Segment
Net
Revenue
|
|
Twelve
Months Ended
July 31,
2018
|
|
As a %
of
Segment
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Supply Chain
|
$
|
38,848
|
|
|
11.7
|
%
|
|
$
|
44,001
|
|
|
12.7
|
%
|
|
$
|
(5,153
|
)
|
|
(11.7
|
)%
|
Direct Marketing
|
92,927
|
|
|
19.1
|
%
|
|
38,312
|
|
|
12.8
|
%
|
|
54,615
|
|
|
142.6
|
%
|
|||
Sub-total
|
131,775
|
|
|
16.1
|
%
|
|
82,313
|
|
|
12.8
|
%
|
|
49,462
|
|
|
60.1
|
%
|
|||
Corporate-level activity
|
12,303
|
|
|
|
|
19,659
|
|
|
|
|
(7,356
|
)
|
|
(37.4
|
)%
|
|||||
Total
|
$
|
144,078
|
|
|
17.6
|
%
|
|
$
|
101,972
|
|
|
15.8
|
%
|
|
$
|
42,106
|
|
|
41.3
|
%
|
•
|
Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
|
•
|
non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
|
•
|
Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and
|
•
|
other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
|
Twelve Months Ended July 31,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
|
|
|
|
||||
Interest income
|
(528
|
)
|
|
(679
|
)
|
||
Interest expense
|
41,951
|
|
|
29,884
|
|
||
Income tax expense (benefit)
|
4,670
|
|
|
(71,202
|
)
|
||
Depreciation
|
22,058
|
|
|
16,791
|
|
||
Amortization of intangible assets
|
30,446
|
|
|
20,285
|
|
||
EBITDA
|
31,870
|
|
|
31,794
|
|
||
|
|
|
|
||||
Strategic consulting and other related professional fees
|
722
|
|
|
2,937
|
|
||
Executive severance and employee retention
|
387
|
|
|
202
|
|
||
Restructuring
|
57
|
|
|
271
|
|
||
Non-cash charge related to a fair value step-up to work-in-process inventory
|
—
|
|
|
7,211
|
|
||
Adjustments related to certain tax liabilities
|
32,070
|
|
|
—
|
|
||
Share-based compensation
|
1,267
|
|
|
10,801
|
|
||
(Gain) loss on sale of long-lived assets
|
485
|
|
|
(12,070
|
)
|
||
Impairment of long-lived assets
|
3,015
|
|
|
(91
|
)
|
||
Unrealized foreign exchange (gains) losses
|
(115
|
)
|
|
(2,408
|
)
|
||
Other non-cash (gains) losses, net
|
(4,265
|
)
|
|
(1,839
|
)
|
||
Gains on investments in affiliates
|
(42
|
)
|
|
(801
|
)
|
||
Adjusted EBITDA
|
$
|
65,451
|
|
|
$
|
36,007
|
|
•
|
Revenue recognition
|
•
|
Inventory valuation
|
•
|
Share-based compensation expense
|
•
|
Business combinations and valuation of goodwill and other acquired intangible assets
|
•
|
Accounting for impairment of long-lived assets, goodwill and other intangible assets
|
•
|
Income taxes
|
|
Page
|
|
July 31, 2019
|
|
July 31, 2018
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
32,548
|
|
|
$
|
92,138
|
|
Accounts receivable, trade, net of allowance for doubtful accounts of $1,804 and $480 at July 31, 2019 and July 31, 2018, respectively
|
112,141
|
|
|
99,254
|
|
||
Inventories, net
|
23,674
|
|
|
47,786
|
|
||
Funds held for clients
|
13,516
|
|
|
11,688
|
|
||
Prepaid expenses and other current assets
|
31,445
|
|
|
13,415
|
|
||
Total current assets
|
213,324
|
|
|
264,281
|
|
||
Property and equipment, net
|
91,268
|
|
|
106,632
|
|
||
Goodwill
|
257,128
|
|
|
254,352
|
|
||
Other intangible assets, net
|
162,518
|
|
|
192,964
|
|
||
Other assets
|
7,325
|
|
|
8,821
|
|
||
Total assets
|
$
|
731,563
|
|
|
$
|
827,050
|
|
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Accounts payable
|
$
|
85,898
|
|
|
$
|
78,212
|
|
Accrued expenses
|
112,658
|
|
|
88,426
|
|
||
Funds held for clients
|
13,516
|
|
|
11,688
|
|
||
Current portion of long-term debt
|
5,732
|
|
|
5,727
|
|
||
Other current liabilities
|
39,046
|
|
|
42,029
|
|
||
Convertible Notes payable
|
—
|
|
|
50,274
|
|
||
Total current liabilities
|
256,850
|
|
|
276,356
|
|
||
Convertible Notes payable
|
7,432
|
|
|
14,256
|
|
||
Long-term debt, excluding current portion
|
368,505
|
|
|
383,111
|
|
||
Other long-term liabilities
|
10,898
|
|
|
10,507
|
|
||
Total long-term liabilities
|
386,835
|
|
|
407,874
|
|
||
Total liabilities
|
643,685
|
|
|
684,230
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
||||
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2019 and 2018
|
35,186
|
|
|
35,192
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at July 31, 2019 and July 31, 2018; zero shares issued and outstanding at July 31, 2019 and July 31, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 61,805,856 issued and outstanding shares at July 31, 2019; 60,742,859 issued and outstanding shares at July 31, 2018
|
618
|
|
|
608
|
|
||
Additional paid-in capital
|
7,477,327
|
|
|
7,467,855
|
|
||
Accumulated deficit
|
(7,426,287
|
)
|
|
(7,363,569
|
)
|
||
Accumulated other comprehensive income
|
1,034
|
|
|
2,734
|
|
||
Total stockholders' equity
|
52,692
|
|
|
107,628
|
|
||
Total liabilities, contingently redeemable preferred stock and stockholders' equity
|
$
|
731,563
|
|
|
$
|
827,050
|
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
Net revenue:
|
|
|
|
||||
Services
|
$
|
332,928
|
|
|
$
|
345,900
|
|
Products
|
486,902
|
|
|
299,358
|
|
||
Total net revenue
|
819,830
|
|
|
645,258
|
|
||
Cost of revenue
|
670,100
|
|
|
543,999
|
|
||
Gross profit
|
149,730
|
|
|
101,259
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative
|
144,078
|
|
|
101,972
|
|
||
Amortization of intangible assets
|
30,446
|
|
|
20,285
|
|
||
(Gain) loss on sale of property
|
485
|
|
|
(12,692
|
)
|
||
Total operating expenses
|
175,009
|
|
|
109,565
|
|
||
Operating loss
|
(25,279
|
)
|
|
(8,306
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest income
|
528
|
|
|
679
|
|
||
Interest expense
|
(41,951
|
)
|
|
(29,884
|
)
|
||
Other gains, net
|
4,603
|
|
|
2,223
|
|
||
Total other expense
|
(36,820
|
)
|
|
(26,982
|
)
|
||
Loss before income taxes
|
(62,099
|
)
|
|
(35,288
|
)
|
||
Income tax expense (benefit)
|
4,670
|
|
|
(71,202
|
)
|
||
Gains on investments in affiliates, net of tax
|
(42
|
)
|
|
(801
|
)
|
||
Net income (loss)
|
(66,727
|
)
|
|
36,715
|
|
||
Less: Preferred dividends on redeemable preferred stock
|
(2,129
|
)
|
|
(1,335
|
)
|
||
Net income (loss) attributable to common stockholders
|
$
|
(68,856
|
)
|
|
$
|
35,380
|
|
|
|
|
|
||||
Basic net earnings (loss) per share attributable to common stockholders:
|
$
|
(1.13
|
)
|
|
$
|
0.60
|
|
Diluted net earnings (loss) per share attributable to common stockholders:
|
$
|
(1.13
|
)
|
|
$
|
0.53
|
|
Weighted average common shares used in:
|
|
|
|
||||
Basic earnings (loss) per share
|
61,180
|
|
|
59,179
|
|
||
Diluted earnings (loss) per share
|
61,180
|
|
|
81,899
|
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustment
|
(1,331
|
)
|
|
(1,174
|
)
|
||
Net unrealized holding gain (loss) securities, net of tax
|
(85
|
)
|
|
14
|
|
||
Pension liability adjustments, net of tax
|
(284
|
)
|
|
(419
|
)
|
||
Other comprehensive loss
|
(1,700
|
)
|
|
(1,579
|
)
|
||
Comprehensive income (loss)
|
$
|
(68,427
|
)
|
|
$
|
35,136
|
|
|
Number of
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Stockholders' Equity |
|||||||||||
Balance at July 31, 2017
|
55,555,973
|
|
|
$
|
556
|
|
|
$
|
7,457,051
|
|
|
$
|
(7,398,949
|
)
|
|
$
|
4,313
|
|
|
$
|
62,971
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
36,715
|
|
|
—
|
|
|
36,715
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,335
|
)
|
|
—
|
|
|
(1,335
|
)
|
|||||
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises
|
10,462
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Restricted stock grants
|
5,225,806
|
|
|
52
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
47
|
|
|||||
Restricted stock forfeitures
|
(49,382
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
10,801
|
|
|
—
|
|
|
—
|
|
|
10,801
|
|
|||||
Other comprehensive items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,579
|
)
|
|
(1,579
|
)
|
|||||
Balance at July 31, 2018
|
60,742,859
|
|
|
$
|
608
|
|
|
$
|
7,467,855
|
|
|
$
|
(7,363,569
|
)
|
|
$
|
2,734
|
|
|
$
|
107,628
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,727
|
)
|
|
—
|
|
|
(66,727
|
)
|
|||||
Effect of adoption of accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
6,138
|
|
|
—
|
|
|
6,138
|
|
|||||
Equity portion of convertible note
|
—
|
|
|
—
|
|
|
8,200
|
|
|
—
|
|
|
—
|
|
|
8,200
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,129
|
)
|
|
—
|
|
|
(2,129
|
)
|
|||||
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises
|
17,454
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Restricted stock grants
|
1,045,543
|
|
|
10
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
1,267
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
|||||
Other comprehensive items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,700
|
)
|
|
(1,700
|
)
|
|||||
Balance at July 31, 2019
|
61,805,856
|
|
|
$
|
618
|
|
|
$
|
7,477,327
|
|
|
$
|
(7,426,287
|
)
|
|
$
|
1,034
|
|
|
$
|
52,692
|
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
22,058
|
|
|
16,791
|
|
||
Amortization of intangible assets
|
30,446
|
|
|
20,285
|
|
||
Amortization of deferred financing costs
|
771
|
|
|
1,072
|
|
||
Accretion of debt discount
|
3,433
|
|
|
4,384
|
|
||
Impairment of long-lived assets
|
3,015
|
|
|
(91
|
)
|
||
Share-based compensation
|
1,267
|
|
|
10,801
|
|
||
Other gains, net
|
(4,603
|
)
|
|
(15,266
|
)
|
||
Gains on investments in affiliates
|
(42
|
)
|
|
(801
|
)
|
||
Changes in operating assets and liabilities, net of business acquired:
|
|
|
|
||||
Accounts receivable, net
|
(14,090
|
)
|
|
29,735
|
|
||
Inventories, net
|
2,482
|
|
|
19,971
|
|
||
Prepaid expenses and other current assets
|
5,519
|
|
|
4,797
|
|
||
Accounts payable and accrued expenses
|
36,486
|
|
|
(39,945
|
)
|
||
Refundable and accrued income taxes, net
|
(3,045
|
)
|
|
6,524
|
|
||
Deferred tax assets and liabilities
|
1,563
|
|
|
(78,794
|
)
|
||
Other assets and liabilities
|
2,316
|
|
|
(6,176
|
)
|
||
Net cash provided by operating activities
|
20,849
|
|
|
10,002
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Payments to acquire business
|
—
|
|
|
(469,221
|
)
|
||
Additions to property and equipment
|
(14,539
|
)
|
|
(18,423
|
)
|
||
Proceeds from the disposition of property and equipment
|
19
|
|
|
20,748
|
|
||
Proceeds from the sale of Trading Securities
|
—
|
|
|
13,775
|
|
||
Proceeds from investments in affiliates
|
42
|
|
|
801
|
|
||
Net cash used in investing activities
|
(14,478
|
)
|
|
(452,320
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt
|
—
|
|
|
393,000
|
|
||
Proceeds from issuance of preferred stock
|
—
|
|
|
35,000
|
|
||
Proceeds from issuance of Convertible Note
|
14,940
|
|
|
—
|
|
||
Proceeds from revolving line of credit, net
|
6,000
|
|
|
—
|
|
||
Payments on maturity of Convertible Notes
|
(63,925
|
)
|
|
—
|
|
||
Payment of long-term debt
|
(14,879
|
)
|
|
(3,000
|
)
|
||
Payment of deferred financing costs
|
—
|
|
|
(1,334
|
)
|
||
Payment of preferred dividends
|
(2,129
|
)
|
|
(1,143
|
)
|
||
Purchase of the Company's Convertible Notes
|
(3,700
|
)
|
|
—
|
|
||
Repayments on capital lease obligations
|
(134
|
)
|
|
(652
|
)
|
||
Proceeds from issuance of common stock
|
15
|
|
|
8
|
|
||
Net cash provided by (used in) financing activities
|
(63,812
|
)
|
|
421,879
|
|
||
Net effect of exchange rate changes on cash and cash equivalents
|
(321
|
)
|
|
141
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(57,762
|
)
|
|
(20,298
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
103,826
|
|
|
124,124
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
46,064
|
|
|
$
|
103,826
|
|
(1)
|
NATURE OF OPERATIONS
|
(2)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Balance at beginning of year
|
$
|
480
|
|
|
$
|
616
|
|
Provisions charged to expense
|
1,418
|
|
|
211
|
|
||
Accounts written off
|
(94
|
)
|
|
(347
|
)
|
||
|
$
|
1,804
|
|
|
$
|
480
|
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Cash and bank deposits
|
$
|
32,183
|
|
|
$
|
44,952
|
|
Money market funds
|
365
|
|
|
47,186
|
|
||
|
$
|
32,548
|
|
|
$
|
92,138
|
|
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
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
21,322
|
|
|
$
|
23,208
|
|
Work-in-process
|
587
|
|
|
16,147
|
|
||
Finished goods
|
1,765
|
|
|
8,431
|
|
||
|
$
|
23,674
|
|
|
$
|
47,786
|
|
Buildings
|
32 years
|
Machinery & equipment
|
3 to 7 years
|
Furniture & fixtures
|
5 to 7 years
|
Automobiles
|
5 years
|
Software
|
3 to 8 years
|
Leasehold improvements
|
Shorter of the remaining lease term or the estimated useful life of the asset
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands, except per share data)
|
||||||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
Less: Preferred dividends on redeemable preferred stock
|
(2,129
|
)
|
|
(1,335
|
)
|
||
Net income (loss) attributable to common stockholders
|
(68,856
|
)
|
|
35,380
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
5.25% Convertible Senior Notes
|
—
|
|
|
7,079
|
|
||
Redeemable preferred stock
|
—
|
|
|
1,335
|
|
||
Net income (loss) attributable to common stockholders after assumed conversions
|
$
|
(68,856
|
)
|
|
$
|
43,794
|
|
Weighted average common shares outstanding
|
61,180
|
|
|
59,179
|
|
||
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock
|
—
|
|
|
22,720
|
|
||
Weighted average number of common and potential common shares
|
61,180
|
|
|
81,899
|
|
||
Basic net earnings (loss) per share attributable to common stockholders:
|
$
|
(1.13
|
)
|
|
$
|
0.60
|
|
Diluted net earnings (loss) per share attributable to common stockholders:
|
$
|
(1.13
|
)
|
|
$
|
0.53
|
|
(3)
|
PROPERTY AND EQUIPMENT
|
|
July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
942
|
|
|
$
|
942
|
|
Machinery and equipment
|
99,961
|
|
|
97,149
|
|
||
Leasehold improvements
|
23,711
|
|
|
21,917
|
|
||
Software
|
52,961
|
|
|
52,082
|
|
||
Other
|
24,230
|
|
|
28,147
|
|
||
|
201,805
|
|
|
200,237
|
|
||
Less: Accumulated depreciation and amortization
|
(110,537
|
)
|
|
(93,605
|
)
|
||
Property and equipment, net
|
$
|
91,268
|
|
|
$
|
106,632
|
|
(4)
|
ACQUISITION OF IWCO DIRECT
|
|
As
Originally
Reported
|
|
Adjustments
|
|
As
Revised
|
||||||
|
(In thousands)
|
||||||||||
Accounts receivable
|
$
|
47,841
|
|
|
$
|
(433
|
)
|
|
$
|
47,408
|
|
Inventories
|
27,165
|
|
|
5,829
|
|
|
32,994
|
|
|||
Other current assets
|
7,427
|
|
|
3,197
|
|
|
10,624
|
|
|||
Property and equipment
|
87,976
|
|
|
477
|
|
|
88,453
|
|
|||
Intangible assets
|
210,920
|
|
|
2,330
|
|
|
213,250
|
|
|||
Goodwill
|
259,085
|
|
|
(1,957
|
)
|
|
257,128
|
|
|||
Other assets
|
3,040
|
|
|
—
|
|
|
3,040
|
|
|||
Accounts payable
|
(31,069
|
)
|
|
—
|
|
|
(31,069
|
)
|
|||
Accrued liabilities and other current liabilities
|
(35,790
|
)
|
|
(30,368
|
)
|
|
(66,158
|
)
|
|||
Customer deposits
|
(7,829
|
)
|
|
—
|
|
|
(7,829
|
)
|
|||
Deferred income taxes
|
(79,918
|
)
|
|
2,755
|
|
|
(77,163
|
)
|
|||
Other long-term liabilities
|
(19,627
|
)
|
|
18,170
|
|
|
(1,457
|
)
|
|||
Total consideration
|
$
|
469,221
|
|
|
$
|
—
|
|
|
$
|
469,221
|
|
|
Twelve Months Ended
|
||
|
July 31, 2018
|
||
Net revenue
|
$
|
824,825
|
|
Net loss
|
$
|
(17,148
|
)
|
(5)
|
GOODWILL AND INTANGIBLE ASSETS
|
2020
|
$
|
27,255
|
|
2021
|
20,258
|
|
|
2022
|
15,334
|
|
|
2023
|
11,427
|
|
|
2024
|
9,371
|
|
|
Thereafter
|
78,873
|
|
|
|
$
|
162,518
|
|
(6)
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Accrued taxes
|
$
|
59,057
|
|
|
$
|
29,804
|
|
Accrued compensation
|
22,584
|
|
|
25,603
|
|
||
Accrued interest
|
467
|
|
|
1,437
|
|
||
Accrued audit, tax and legal
|
3,148
|
|
|
3,264
|
|
||
Accrued contract labor
|
1,650
|
|
|
1,932
|
|
||
Accrued worker's compensation
|
4,549
|
|
|
6,126
|
|
||
Accrued other
|
21,203
|
|
|
20,260
|
|
||
|
$
|
112,658
|
|
|
$
|
88,426
|
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Accrued pricing liabilities
|
$
|
14,309
|
|
|
$
|
18,882
|
|
Customer postage deposits
|
11,816
|
|
|
12,638
|
|
||
Revolving credit facility
|
6,000
|
|
|
—
|
|
||
Other
|
6,921
|
|
|
10,509
|
|
||
|
$
|
39,046
|
|
|
$
|
42,029
|
|
(7)
|
DEBT
|
|
July 31, 2019
|
|
July 31, 2018
|
||||
|
(In thousands)
|
||||||
Short-term debt
|
|
|
|
||||
Cerberus revolving credit facility
|
$
|
6,000
|
|
|
$
|
—
|
|
Current portion of long-term debt
|
5,732
|
|
|
5,727
|
|
||
5.25% Convertible Senior Notes Payable
|
—
|
|
|
50,274
|
|
||
|
11,732
|
|
|
56,001
|
|
||
Long-term debt
|
|
|
|
||||
5.25% Convertible Senior Notes Payable
|
—
|
|
|
14,256
|
|
||
7.50% Convertible Senior Note
|
7,432
|
|
|
—
|
|
||
Long-term debt, net of current portion
|
368,505
|
|
|
383,111
|
|
||
|
375,937
|
|
|
397,367
|
|
||
Total debt
|
$
|
387,669
|
|
|
$
|
453,368
|
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Interest expense related to contractual interest coupon
|
$
|
1,932
|
|
|
$
|
3,655
|
|
Interest expense related to accretion of the discount
|
2,741
|
|
|
4,384
|
|
||
Interest expense related to debt issuance costs
|
243
|
|
|
388
|
|
||
|
$
|
4,916
|
|
|
$
|
8,427
|
|
|
July 31, 2019
|
|
July 31, 2018
|
||||
|
(In thousands)
|
||||||
Principal amount outstanding on the Term Loan
|
$
|
375,125
|
|
|
$
|
390,000
|
|
Unamortized debt issuance costs
|
(888
|
)
|
|
(1,162
|
)
|
||
Net carrying value of the Term Loan
|
$
|
374,237
|
|
|
$
|
388,838
|
|
|
July 31, 2019
|
||
|
(In thousands)
|
||
Carrying amount of equity component
|
$
|
8,200
|
|
|
|
||
Principal amount of Note
|
$
|
14,940
|
|
Unamortized debt discount
|
(7,508
|
)
|
|
Net carrying amount
|
$
|
7,432
|
|
|
Twelve Months Ended
|
||
|
July 31, 2019
|
||
|
(In thousands)
|
||
Interest expense related to contractual interest coupon
|
$
|
473
|
|
Interest expense related to accretion of the discount
|
692
|
|
|
|
$
|
1,165
|
|
(8)
|
COMMITMENTS AND CONTINGENCIES
|
|
Operating
Leases
|
|
Capital
Lease
Obligations
|
|
Purchase
Obligations
|
|
Debt
Principal
& Interest
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
For the fiscal years ended July 31:
|
|
|
|
|
|
|
|
|
|
||||||||||
2020
|
$
|
16,534
|
|
|
$
|
147
|
|
|
$
|
26,800
|
|
|
$
|
7,121
|
|
|
$
|
50,602
|
|
2021
|
11,755
|
|
|
136
|
|
|
—
|
|
|
7,121
|
|
|
19,012
|
|
|||||
2022
|
8,082
|
|
|
104
|
|
|
—
|
|
|
7,121
|
|
|
15,307
|
|
|||||
2023
|
4,899
|
|
|
37
|
|
|
—
|
|
|
364,245
|
|
|
369,181
|
|
|||||
2024
|
3,544
|
|
|
—
|
|
|
—
|
|
|
15,593
|
|
|
19,137
|
|
|||||
Thereafter
|
19,895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,895
|
|
|||||
|
$
|
64,709
|
|
|
$
|
424
|
|
|
$
|
26,800
|
|
|
$
|
401,201
|
|
|
$
|
493,134
|
|
(9)
|
DEFINED BENEFIT PENSION PLANS
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||
(In thousands)
|
July 31, 2019
|
|
Asset
Allocations
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Insurance contract
|
$
|
26,651
|
|
|
98
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,651
|
|
Other investments
|
616
|
|
|
2
|
%
|
|
—
|
|
|
—
|
|
|
616
|
|
||||
|
$
|
27,267
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,267
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||
(In thousands)
|
July 31, 2018
|
|
Asset
Allocations
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Insurance contract
|
$
|
22,339
|
|
|
98
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,339
|
|
Other investments
|
521
|
|
|
2
|
%
|
|
—
|
|
|
—
|
|
|
521
|
|
||||
|
$
|
22,860
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,860
|
|
|
July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Change in benefit obligation
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
29,849
|
|
|
$
|
27,464
|
|
Service cost
|
365
|
|
|
398
|
|
||
Interest cost
|
633
|
|
|
671
|
|
||
Actuarial loss
|
5,125
|
|
|
1,655
|
|
||
Employee contributions
|
72
|
|
|
93
|
|
||
Benefits and administrative expenses paid
|
(197
|
)
|
|
(372
|
)
|
||
Adjustments
|
(20
|
)
|
|
(54
|
)
|
||
Settlements
|
—
|
|
|
(21
|
)
|
||
Currency translation
|
(1,289
|
)
|
|
15
|
|
||
Benefit obligation at end of year
|
34,538
|
|
|
29,849
|
|
||
Change in plan assets
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
22,860
|
|
|
21,204
|
|
||
Actual return on plan assets
|
5,136
|
|
|
1,541
|
|
||
Employer contributions, net
|
422
|
|
|
402
|
|
||
Employee contributions
|
73
|
|
|
92
|
|
||
Settlements
|
(19
|
)
|
|
(21
|
)
|
||
Benefits and administrative expenses paid
|
(197
|
)
|
|
(372
|
)
|
||
Currency translation
|
(1,008
|
)
|
|
14
|
|
||
Fair value of plan assets at end of year
|
27,267
|
|
|
22,860
|
|
||
Funded status
|
|
|
|
||||
Current liability
|
(13
|
)
|
|
(13
|
)
|
||
Noncurrent liability
|
(7,259
|
)
|
|
(6,976
|
)
|
||
Net amount recognized in statement of financial position as a noncurrent liability
|
$
|
(7,272
|
)
|
|
$
|
(6,989
|
)
|
|
July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Projected benefit obligation
|
$
|
34,538
|
|
|
$
|
29,849
|
|
Accumulated benefit obligation
|
$
|
32,361
|
|
|
$
|
27,700
|
|
Fair value of plan assets
|
$
|
27,267
|
|
|
$
|
22,860
|
|
|
Twelve months ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Service cost
|
$
|
365
|
|
|
$
|
398
|
|
Interest costs
|
633
|
|
|
671
|
|
||
Expected return on plan assets
|
(492
|
)
|
|
(529
|
)
|
||
Amortization of net actuarial loss
|
127
|
|
|
125
|
|
||
Net periodic pension costs
|
$
|
633
|
|
|
$
|
665
|
|
|
Twelve months ended
July 31, |
||||
|
2019
|
|
2018
|
||
Discount rate
|
1.48
|
%
|
|
2.22
|
%
|
Rate of compensation increase
|
1.97
|
%
|
|
1.93
|
%
|
|
Twelve months ended
July 31, |
||||
|
2019
|
|
2018
|
||
Discount rate
|
1.46
|
%
|
|
2.21
|
%
|
Expected long-term rate of return on plan assets
|
1.45
|
%
|
|
2.20
|
%
|
Rate of compensation increase
|
1.92
|
%
|
|
1.94
|
%
|
(10)
|
REVENUE RECOGNITION
|
|
Twelve Months Ended July 31, 2019
|
||||||||||
|
Supply Chain
|
|
Direct
Marketing
|
|
Consolidated
Total
|
||||||
|
(In thousands)
|
||||||||||
Major Goods/Service Lines
|
|
|
|
|
|
||||||
Supply chain management services
|
$
|
331,022
|
|
|
$
|
—
|
|
|
$
|
331,022
|
|
Marketing solutions offerings
|
—
|
|
|
486,902
|
|
|
486,902
|
|
|||
Other
|
1,906
|
|
|
—
|
|
|
1,906
|
|
|||
|
$
|
332,928
|
|
|
$
|
486,902
|
|
|
$
|
819,830
|
|
Timing of Revenue Recognition
|
|
|
|
|
|
||||||
Goods transferred over time
|
$
|
—
|
|
|
$
|
486,902
|
|
|
$
|
486,902
|
|
Services transferred over time
|
332,928
|
|
|
—
|
|
|
332,928
|
|
|||
|
$
|
332,928
|
|
|
$
|
486,902
|
|
|
$
|
819,830
|
|
Total Revenue
|
|
|
|
|
|
||||||
Revenue from contracts with customers
|
$
|
332,928
|
|
|
$
|
486,902
|
|
|
$
|
819,830
|
|
|
$
|
332,928
|
|
|
$
|
486,902
|
|
|
$
|
819,830
|
|
•
|
Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time.
|
•
|
Contract asset when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees
|
•
|
Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's consolidated balance sheets.
|
Twelve Months Ended July 31, 2019
|
|
||
Balance at beginning of period
|
$
|
3,858
|
|
Deferral of revenue
|
4,624
|
|
|
Recognition of deferred amounts upon satisfaction of performance obligation
|
(5,453
|
)
|
|
Balance at end of period
|
$
|
3,029
|
|
Balance Sheet
|
|
|
|
|
|
||||||
|
July 31, 2018
|
|
Adjustments Due
to ASU 2014-09
|
|
August 1,
2018
|
||||||
Assets
|
|
|
|
|
|
||||||
Inventories, net
|
$
|
47,786
|
|
|
$
|
(21,233
|
)
|
|
$
|
26,553
|
|
Prepaid expenses and other current assets
|
13,415
|
|
|
24,041
|
|
|
37,456
|
|
|||
Total current assets
|
264,281
|
|
|
2,808
|
|
|
267,089
|
|
|||
Total assets
|
$
|
827,050
|
|
|
$
|
2,808
|
|
|
$
|
829,858
|
|
Liabilities
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
42,029
|
|
|
$
|
(3,330
|
)
|
|
$
|
38,699
|
|
Total current liabilities
|
276,356
|
|
|
(3,330
|
)
|
|
273,026
|
|
|||
Total liabilities
|
684,230
|
|
|
(3,330
|
)
|
|
680,900
|
|
|||
Stockholders' equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
(7,363,569
|
)
|
|
6,138
|
|
|
(7,357,431
|
)
|
|||
Total stockholders' equity
|
107,628
|
|
|
6,138
|
|
|
113,766
|
|
|||
Total liabilities, contingently redeemable preferred stock and stockholders' equity
|
$
|
827,050
|
|
|
$
|
2,808
|
|
|
$
|
829,858
|
|
Balance Sheet:
|
July 31, 2019
|
||||||||||
|
As
Reported
|
|
Balances without
Adoption of
ASC 606
|
|
Effect of
Change
Higher/(Lower)
|
||||||
Assets
|
|
|
|
|
|
||||||
Inventories, net
|
$
|
23,674
|
|
|
$
|
45,853
|
|
|
$
|
(22,179
|
)
|
Prepaid expenses and other current assets
|
31,445
|
|
|
9,973
|
|
|
21,472
|
|
|||
Total current assets
|
213,324
|
|
|
214,031
|
|
|
(707
|
)
|
|||
Total assets
|
$
|
731,563
|
|
|
$
|
732,270
|
|
|
$
|
(707
|
)
|
Liabilities
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
39,046
|
|
|
$
|
46,641
|
|
|
$
|
(7,595
|
)
|
Total current liabilities
|
256,850
|
|
|
264,445
|
|
|
(7,595
|
)
|
|||
Total liabilities
|
643,685
|
|
|
651,280
|
|
|
(7,595
|
)
|
|||
Stockholders' equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
(7,426,287
|
)
|
|
(7,433,175
|
)
|
|
6,888
|
|
|||
Total stockholders' equity
|
52,692
|
|
|
45,804
|
|
|
6,888
|
|
|||
Total liabilities, contingently redeemable preferred stock and stockholders' equity
|
$
|
731,563
|
|
|
$
|
732,270
|
|
|
$
|
(707
|
)
|
Statement of Operations:
|
Twelve months ended July 31, 2019
|
||||||||||
|
As
Reported
|
|
Balances without
Adoption of
ASC 606
|
|
Effect of
Change
Higher/(Lower)
|
||||||
Net revenue
|
$
|
819,830
|
|
|
$
|
818,134
|
|
|
$
|
1,696
|
|
Cost of revenue
|
670,100
|
|
|
669,154
|
|
|
946
|
|
|||
Gross profit
|
149,730
|
|
|
148,980
|
|
|
750
|
|
|||
Loss before income taxes
|
(62,099
|
)
|
|
(62,849
|
)
|
|
750
|
|
|||
Net loss
|
(66,727
|
)
|
|
(67,477
|
)
|
|
750
|
|
|||
Net loss attributable to common stockholders
|
$
|
(68,856
|
)
|
|
$
|
(69,606
|
)
|
|
$
|
750
|
|
Basic and diluted net loss per share attributable to common stockholders:
|
$
|
(1.13
|
)
|
|
$
|
(1.14
|
)
|
|
$
|
0.01
|
|
(11)
|
OTHER GAINS (LOSSES), NET
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Foreign currency exchange gains, net
|
$
|
337
|
|
|
$
|
1,055
|
|
Derecognition of accrued pricing liabilities
|
4,573
|
|
|
—
|
|
||
Gain, net on Trading Securities
|
—
|
|
|
1,876
|
|
||
Other, net
|
(307
|
)
|
|
(708
|
)
|
||
|
$
|
4,603
|
|
|
$
|
2,223
|
|
(12)
|
SHARE-BASED PAYMENTS
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of revenue
|
$
|
—
|
|
|
$
|
14
|
|
Selling, general and administrative
|
1,267
|
|
|
10,787
|
|
||
|
$
|
1,267
|
|
|
$
|
10,801
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-Average
Remaining
Contractual Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
(in thousands, except exercise price and years)
|
|||||||||||
Stock options outstanding, July 31, 2018
|
438
|
|
|
$
|
3.99
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited or expired
|
(113
|
)
|
|
3.74
|
|
|
|
|
|
|||
Stock options outstanding, July 31, 2019
|
325
|
|
|
4.07
|
|
|
1.12
|
|
$
|
—
|
|
|
Stock options exercisable, July 31, 2019
|
325
|
|
|
$
|
4.07
|
|
|
1.12
|
|
$
|
—
|
|
|
Number
of Shares
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
|
(share amounts in thousands)
|
|||||
Nonvested stock outstanding, July 31, 2018
|
1,165
|
|
|
$
|
0.44
|
|
Granted
|
405
|
|
|
1.73
|
|
|
Vested
|
(1,165
|
)
|
|
0.44
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Nonvested stock outstanding, July 31, 2019
|
405
|
|
|
$
|
1.73
|
|
(13)
|
INCOME TAXES
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Income (loss) from operations before income taxes:
|
|
|
|
||||
U.S.
|
$
|
(68,959
|
)
|
|
$
|
(60,574
|
)
|
Foreign
|
6,860
|
|
|
25,286
|
|
||
Total loss from operations before income taxes
|
$
|
(62,099
|
)
|
|
$
|
(35,288
|
)
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Income tax expense (benefit) from operations
|
$
|
4,670
|
|
|
$
|
(71,202
|
)
|
Total income tax expense (benefit)
|
$
|
4,670
|
|
|
$
|
(71,202
|
)
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Accruals and reserves
|
$
|
21,297
|
|
|
$
|
16,070
|
|
Tax basis in excess of financial basis of investments in affiliates
|
6,534
|
|
|
6,232
|
|
||
Tax basis in excess of financial basis for intangible and fixed assets
|
187
|
|
|
311
|
|
||
Net operating loss and capital loss carry forwards
|
469,735
|
|
|
468,129
|
|
||
Total gross deferred tax assets
|
497,753
|
|
|
490,742
|
|
||
Less: valuation allowance
|
(451,189
|
)
|
|
(438,467
|
)
|
||
Net deferred tax assets
|
$
|
46,564
|
|
|
$
|
52,275
|
|
Deferred tax liabilities:
|
|
|
|
||||
Financial basis in excess of tax basis for intangible and fixed assets
|
$
|
(43,885
|
)
|
|
$
|
(50,141
|
)
|
Convertible Debt
|
(1,761
|
)
|
|
(634
|
)
|
||
Total gross deferred tax liabilities
|
(45,646
|
)
|
|
(50,775
|
)
|
||
Net deferred tax asset
|
$
|
918
|
|
|
$
|
1,500
|
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Computed "expected" income tax expense (benefit)
|
$
|
(13,041
|
)
|
|
$
|
(9,467
|
)
|
Increase (decrease) in income tax expense resulting from:
|
|
|
|
||||
Change in valuation allowance
|
16,158
|
|
|
(329,415
|
)
|
||
Foreign dividends
|
—
|
|
|
7,379
|
|
||
Foreign tax rate differential
|
(593
|
)
|
|
(1,948
|
)
|
||
Federal rate change
|
—
|
|
|
280,438
|
|
||
Nondeductible goodwill impairment
|
—
|
|
|
191
|
|
||
Nondeductible expenses
|
2,484
|
|
|
(15,852
|
)
|
||
Foreign withholding taxes
|
336
|
|
|
1,961
|
|
||
Addition (reversal) of uncertain tax position reserves
|
645
|
|
|
(48
|
)
|
||
State benefit of U.S. Loss
|
—
|
|
|
(4,654
|
)
|
||
State income taxes, net of federal benefit
|
113
|
|
|
—
|
|
||
Other
|
(1,432
|
)
|
|
213
|
|
||
Actual income tax expense
|
$
|
4,670
|
|
|
$
|
(71,202
|
)
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Balance as of beginning of year
|
$
|
1,525
|
|
|
$
|
681
|
|
Additions for current year tax positions
|
704
|
|
|
903
|
|
||
Currency translation
|
(22
|
)
|
|
—
|
|
||
Reductions for lapses in statute of limitations
|
—
|
|
|
(59
|
)
|
||
Balance as of end of year
|
$
|
2,207
|
|
|
$
|
1,525
|
|
(14)
|
ACCUMULATED OTHER COMPREHENSIVE INCOME
|
|
Foreign
currency
items
|
|
Pension
items
|
|
Unrealized
gains
(losses) on
securities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Accumulated other comprehensive income (loss) at July 31, 2018
|
$
|
6,348
|
|
|
$
|
(3,795
|
)
|
|
$
|
181
|
|
|
$
|
2,734
|
|
Foreign currency translation adjustment
|
(1,331
|
)
|
|
—
|
|
|
—
|
|
|
(1,331
|
)
|
||||
Net unrealized holding loss on securities
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
(85
|
)
|
||||
Pension liability adjustments
|
—
|
|
|
(284
|
)
|
|
—
|
|
|
(284
|
)
|
||||
Net current-period other comprehensive loss
|
(1,331
|
)
|
|
(284
|
)
|
|
(85
|
)
|
|
(1,700
|
)
|
||||
Accumulated other comprehensive income (loss) at July 31, 2019
|
$
|
5,017
|
|
|
$
|
(4,079
|
)
|
|
$
|
96
|
|
|
$
|
1,034
|
|
(15)
|
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION
|
|
July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
32,548
|
|
|
$
|
92,138
|
|
Funds held for clients
|
13,516
|
|
|
11,688
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
46,064
|
|
|
$
|
103,826
|
|
|
Years Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Cash paid for interest
|
$
|
38,525
|
|
|
$
|
24,642
|
|
Cash paid for income taxes
|
$
|
5,451
|
|
|
$
|
2,567
|
|
(16)
|
STOCKHOLDERS' EQUITY
|
•
|
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 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.
|
(17)
|
FAIR VALUE MEASUREMENTS
|
Level 1:
|
Observable inputs such as quoted prices for identical assets or liabilities in active markets
|
Level 2:
|
Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs
|
Level 3:
|
Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
(In thousands)
|
July 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
365
|
|
|
$
|
365
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
(In thousands)
|
July 31, 2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
47,186
|
|
|
$
|
47,186
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
|||||||||||||
(In thousands)
|
July 31, 2019
|
|
Asset
Allocations
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Insurance contract
|
$
|
26,651
|
|
|
98
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,651
|
|
Other investments
|
616
|
|
|
2
|
%
|
|
—
|
|
|
—
|
|
|
616
|
|
||||
|
$
|
27,267
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,267
|
|
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
|||||||||||||
(In thousands)
|
July 31, 2018
|
|
Asset
Allocations
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Insurance contract
|
$
|
22,339
|
|
|
98
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,339
|
|
Other investments
|
521
|
|
|
2
|
%
|
|
—
|
|
|
—
|
|
|
521
|
|
||||
|
$
|
22,860
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,860
|
|
|
July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Fair value of plan assets at beginning of year
|
$
|
22,860
|
|
|
$
|
21,204
|
|
Actual return on plan assets
|
5,136
|
|
|
1,541
|
|
||
Employer contributions, net
|
422
|
|
|
402
|
|
||
Employee contributions
|
73
|
|
|
92
|
|
||
Settlements
|
(19
|
)
|
|
(21
|
)
|
||
Benefits and administrative expenses paid
|
(197
|
)
|
|
(372
|
)
|
||
Currency translation
|
(1,008
|
)
|
|
14
|
|
||
Fair value of plan assets at end of year
|
$
|
27,267
|
|
|
$
|
22,860
|
|
(18)
|
SEGMENT INFORMATION
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net revenue:
|
|
|
|
||||
Supply Chain
|
$
|
332,928
|
|
|
$
|
345,900
|
|
Direct Marketing
|
486,902
|
|
|
299,358
|
|
||
|
$
|
819,830
|
|
|
$
|
645,258
|
|
Operating income (loss):
|
|
|
|
||||
Supply Chain
|
$
|
(3,822
|
)
|
|
$
|
613
|
|
Direct Marketing
|
(9,154
|
)
|
|
10,740
|
|
||
Total segment operating income (loss)
|
(12,976
|
)
|
|
11,353
|
|
||
Corporate-level activity
|
(12,303
|
)
|
|
(19,659
|
)
|
||
Total operating loss
|
(25,279
|
)
|
|
(8,306
|
)
|
||
Total other expense
|
(36,820
|
)
|
|
(26,982
|
)
|
||
Loss before income taxes
|
$
|
(62,099
|
)
|
|
$
|
(35,288
|
)
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
|
(In thousands)
|
||||||
Total assets:
|
|
|
|
||||
Supply Chain
|
$
|
112,712
|
|
|
$
|
120,123
|
|
Direct Marketing
|
600,390
|
|
|
642,820
|
|
||
Sub-total—segment assets
|
713,102
|
|
|
762,943
|
|
||
Corporate
|
18,461
|
|
|
64,107
|
|
||
|
$
|
731,563
|
|
|
$
|
827,050
|
|
(19)
|
RELATED PARTY TRANSACTIONS
|
(20)
|
PARENT COMPANY CONDENSED FINANCIAL INFORMATION
|
|
July 31,
2019 |
|
July 31,
2018 |
||||
ASSETS
|
|||||||
Cash and cash equivalents
|
$
|
4,083
|
|
|
$
|
7,978
|
|
Prepaid expenses and other current assets
|
227
|
|
|
120
|
|
||
Total current assets
|
4,310
|
|
|
8,098
|
|
||
Investments in affiliates
|
96,940
|
|
|
188,534
|
|
||
Other assets
|
337
|
|
|
87
|
|
||
Due from subsidiaries
|
—
|
|
|
13,579
|
|
||
Total assets
|
$
|
101,587
|
|
|
$
|
210,298
|
|
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
|
|||||||
Accounts payable
|
$
|
1,253
|
|
|
$
|
674
|
|
Accrued expenses
|
2,364
|
|
|
2,274
|
|
||
Convertible Notes payable
|
—
|
|
|
50,274
|
|
||
Total current liabilities
|
3,617
|
|
|
53,222
|
|
||
Convertible Notes payable
|
7,432
|
|
|
14,256
|
|
||
Due to subsidiaries
|
2,660
|
|
|
—
|
|
||
Total long-term liabilities
|
10,092
|
|
|
14,256
|
|
||
Total liabilities
|
13,709
|
|
|
67,478
|
|
||
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2019 and 2018
|
35,186
|
|
|
35,192
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at July 31, 2019 and July 31, 2018; zero shares issued and outstanding at July 31, 2019 and 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 61,805,856 issued and outstanding shares at July 31, 2019; 60,742,859 issued and outstanding shares at July 31, 2018
|
618
|
|
|
608
|
|
||
Additional paid-in capital
|
7,477,327
|
|
|
7,467,855
|
|
||
Accumulated deficit
|
(7,426,287
|
)
|
|
(7,363,569
|
)
|
||
Accumulated other comprehensive income
|
1,034
|
|
|
2,734
|
|
||
Total stockholders' equity
|
52,692
|
|
|
107,628
|
|
||
Total liabilities, contingently redeemable preferred stock and stockholders' equity
|
$
|
101,587
|
|
|
$
|
210,298
|
|
|
Twelve Months Ended July 31,
|
||||||
|
2019
|
|
2018
|
||||
Selling, general and administrative
|
$
|
12,303
|
|
|
$
|
16,742
|
|
Total operating expenses
|
12,303
|
|
|
16,742
|
|
||
Operating loss
|
(12,303
|
)
|
|
(16,742
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(6,081
|
)
|
|
(8,427
|
)
|
||
Other income (expense), net
|
(306
|
)
|
|
6,807
|
|
||
Total other expense
|
(6,387
|
)
|
|
(1,620
|
)
|
||
Loss before income taxes
|
(18,690
|
)
|
|
(18,362
|
)
|
||
Equity (gains) losses of subsidiaries, net of tax
|
48,079
|
|
|
(54,276
|
)
|
||
Gains on investments in affiliates, net of tax
|
(42
|
)
|
|
(801
|
)
|
||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
|
Twelve Months Ended
July 31, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(66,727
|
)
|
|
$
|
36,715
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Amortization of deferred financing costs
|
243
|
|
|
388
|
|
||
Accretion of debt discount
|
3,433
|
|
|
4,384
|
|
||
Share-based compensation
|
1,267
|
|
|
10,763
|
|
||
Non-cash (gains) losses, net
|
7
|
|
|
(354
|
)
|
||
Equity (gains) losses of subsidiaries, net of tax
|
48,079
|
|
|
(54,276
|
)
|
||
Gains on investments in affiliates and impairments
|
(42
|
)
|
|
(801
|
)
|
||
Changes in operating assets and liabilities, net of business acquired:
|
|
|
|
||||
Prepaid expenses and other current assets
|
(107
|
)
|
|
(36
|
)
|
||
Accounts payable and accrued expenses
|
669
|
|
|
698
|
|
||
Other assets and liabilities
|
(250
|
)
|
|
(1,860
|
)
|
||
Net cash used in operating activities
|
(13,428
|
)
|
|
(4,379
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Intercompany advances, net
|
64,332
|
|
|
(22,216
|
)
|
||
Net cash provided by (used in) investing activities
|
64,332
|
|
|
(22,216
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of preferred stock
|
—
|
|
|
35,000
|
|
||
Proceeds from issuance of Convertible Note
|
14,940
|
|
|
—
|
|
||
Payments on maturity of Convertible Notes
|
(63,925
|
)
|
|
—
|
|
||
Payment of preferred dividends
|
(2,129
|
)
|
|
(1,143
|
)
|
||
Purchase of the Company's Convertible Notes
|
(3,700
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
15
|
|
|
8
|
|
||
Net cash provided by (used in) financing activities
|
(54,799
|
)
|
|
33,865
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(3,895
|
)
|
|
7,270
|
|
||
Cash and cash equivalents at beginning of period
|
7,978
|
|
|
708
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,083
|
|
|
$
|
7,978
|
|
•
|
management has developed a process to identify complex non-routine transactions which includes early identification and evaluation by the senior management team;
|
•
|
the process includes but is not limited to establishing a team and team leader. Establish time lines for completion with regular progress reviews held by senior management;
|
•
|
subject matter experts and legal counsel will be consulted with early in the process and as necessary provide assistance; and
|
•
|
management with the assistance of outside counsel has developed a well-documented process to analyze the accrued pricing liabilities on a quarterly basis or more frequently if circumstances warrant a more timely review.
|
(1)
|
Includes:
|
▪
|
108,500 shares available for issuance under the Company's Amended and Restated 1995 Employee Stock Purchase Plan, as amended.
|
▪
|
4,498,546 shares available for issuance under the Company's 2010 Incentive Award Plan, as amended April 12, 2018.
|
(2)
|
In March 2002, the Board of Directors adopted the 2002 Non-officer Employee Stock Incentive Plan (the "2002 Plan"), which was adopted without the approval of our security holders. Pursuant to the 2002 Plan, 415,000 shares of common stock were reserved for issuance (subject to adjustment in the event of stock splits and other similar events). In May 2002, the Board of Directors approved an amendment to the 2002 Plan in which the total shares available under the plan were increased to 1,915,000. Under the 2002 Plan, non-statutory stock options or restricted stock awards were granted to the Company's or its subsidiaries' employees, other than those who were also officers or directors, as defined. In connection with the adoption of the 2010 Incentive Award Plan on December 8, 2010, equity awards are no longer granted under the 2002 Plan.
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
3.7
|
|
|
|
|
|
3.8
|
|
|
|
|
|
3.9
|
|
|
|
|
|
3.10
|
|
|
|
|
|
3.11
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2**
|
|
|
|
|
|
4.3
|
|
|
|
|
4.4
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12*
|
|
|
|
|
|
10.13*
|
|
|
|
|
|
10.14*
|
|
|
|
|
|
10.15*
|
|
|
|
|
|
10.16*
|
|
|
|
|
|
10.17*
|
|
|
|
|
10.18*
|
|
|
|
|
|
10.19*
|
|
|
|
|
|
10.20*
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
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|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
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|
10.26*
|
|
|
|
|
|
10.27*
|
|
|
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|
|
10.28
|
|
|
|
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|
10.29
|
|
|
|
|
|
10.30*
|
|
|
|
|
|
10.31*
|
|
|
|
|
|
10.32*
|
|
|
|
|
10.33*
|
|
|
|
|
|
10.34*
|
|
|
|
|
|
10.35*
|
|
|
|
|
|
10.36*
|
|
|
|
|
|
10.37*
|
|
|
|
|
|
10.38
|
|
|
|
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|
10.39*
|
|
|
|
|
|
10.40*
|
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|
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|
|
10.41
|
|
|
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|
|
10.42
|
|
|
|
|
|
10.43
|
|
|
|
|
|
10.44
|
|
|
|
|
|
10.45*
|
|
|
|
|
|
10.46*
|
|
|
|
|
|
10.47*
|
|
|
|
|
|
10.48
|
|
|
|
|
|
10.49*
|
|
|
|
|
|
10.50
|
|
|
|
|
|
10.51++
|
|
|
|
|
|
21**
|
|
|
|
|
|
23.1**
|
|
|
|
|
|
24.1**
|
|
|
|
|
|
31.1**
|
|
|
|
|
|
31.2**
|
|
|
|
|
|
32.1‡
|
|
|
|
|
|
32.2‡
|
|
|
|
|
|
101**
|
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Audited Consolidated Balance Sheet as of July 31, 2019, (ii) Audited Consolidated Statement of Operations for the Twelve Months ended July 31, 2019, (iii) Audited Consolidated Statement of Cash Flows for the Twelve Months ended July 31, 2019 and (iv) Notes to Audited Consolidated Financial Statements.
|
*
|
Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the instructions to Form 10-K.
|
|
STEEL CONNECT, INC.
|
||
|
|
|
|
Date: October 15, 2019
|
By:
|
|
/S/ WARREN G. LICHTENSTEIN
|
|
|
|
Warren G. Lichtenstein
|
|
|
|
Interim Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ WARREN G. LICHTENSTEIN
|
|
Interim Chief Executive Officer.
Executive Chairman of the Board and Director
|
|
October 15, 2019
|
Warren G. Lichtenstein
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/S/ LOUIS J. BELARDI
|
|
Chief Financial Officer
|
|
October 15, 2019
|
Louis J. Belardi
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/S/ JEFFREY J. FENTON
|
|
Director
|
|
October 15, 2019
|
Jeffrey J. Fenton
|
|
|
|
|
|
|
|
|
|
/S/ GLEN M. KASSAN
|
|
Director
|
|
October 15, 2019
|
Glen M. Kassan
|
|
|
|
|
|
|
|
|
|
/S/ PHILIP E. LENGYEL
|
|
Director
|
|
October 15, 2019
|
Philip E. Lengyel
|
|
|
|
|
|
|
|
|
|
/S/ JEFFREY S. WALD
|
|
Director
|
|
October 15, 2019
|
Jeffrey S. Wald
|
|
|
|
|
|
|
|
|
|
/S/ JACK L. HOWARD
|
|
Director
|
|
October 15, 2019
|
Jack L. Howard
|
|
|
|
|
|
|
|
|
|
/S/ WILLIAM T. FEJES, JR.
|
|
Director
|
|
October 15, 2019
|
William T. Fejes, Jr.
|
|
|
|
|
•
|
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 our board of directors (the “Board”) 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 our assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock in the event of liquidation.
|
•
|
will entitle the holder thereof to quarterly dividend payments of $0.001 or an amount equal to the dividend paid on one share of Common Stock, whichever is greater;
|
•
|
will, upon any liquidation of the Company, entitle the holder thereof to receive either $1.00 plus accrued and unpaid dividends and distributions to the date of payment or an amount equal to the payment made on one share of Common Stock;
|
•
|
will have the same voting power as one share of Common Stock; and
|
•
|
will, if shares of Common Stock are exchanged via merger, consolidation or a similar transaction, entitle holders to a per share payment equal to the payment made on one share of Common Stock.
|
LEGAL AND ENVIRONMENTAL HEALTH & SAFETY
|
• Board meetings
• SEC and Nasdaq reporting
• Financial transactions
• Mergers and acquisitions
• Contract review
• Litigation management
• Labor and employment
• All other legal (intellectual property, etc.)
• Compliance and risk management
• Environmental, health and safety compliance
|
FINANCE AND TREASURY
|
• CFO services to direct external reporting
• Financing evaluation and transactional support
• Bank account rationalization and fee negotiations
• Treasury workstation and credit card/procurement card evaluation
• Insurance renewals
|
HUMAN RESOURCES
|
• Retention, recruitment, compensation benchmarking and standardization
• Wellness programs
|
LEAN
|
• Lean leadership training
• Kaizen event facilitation
• Strategy deployment
• Solution selling
• Joint purchasing participation
|
INTERNAL AUDIT
|
• Support SOA implementation
• Ongoing SOA testing and control deficiency remediation
• Third party resource coordination
• Audit software implementation and deployment
|
MERGERS AND ACQUISITIONS
|
• Target sourcing and identification
• Strategy and execution for sell-side process
• Valuation analysis and deal structuring
• End-to-end due diligence support and deal execution
|
INFORMATION TECHNOLOGY
|
• Security and audit
• Systems administration
• Licensing, procurement and hardware standards
|
Name
|
|
Jurisdiction of Organization
|
CMG Securities Corporation
|
|
Massachusetts
|
CMG@Ventures, Inc.
|
|
Delaware
|
CMG@Ventures Capital Corp.
|
|
Delaware
|
CMG@Ventures Securities Corp.
|
|
Delaware
|
CMGI@Ventures IV, LLC
|
|
Delaware
|
@Ventures V, LLC
|
|
Delaware
|
IWCO Direct Holdings, Inc.
|
|
Delaware
|
Instant Web, LLC
|
|
Delaware
|
United Mailing, Inc.
|
|
Minnesota
|
Victory Envelope, Inc.
|
|
Minnesota
|
IWCO Direct New York, Inc.
|
|
Delaware
|
IWCO Direct North Carolina, Inc.
|
|
Minnesota
|
IWCO Direct TWIN LLC
|
|
Delaware
|
ModusLink PTS, Inc.
|
|
Delaware
|
ModusLink Recovery LLC
|
|
Delaware
|
SalesLink LLC
|
|
Delaware
|
ModusLink Securities Corporation
|
|
Delaware
|
ModusLink Corporation
|
|
Delaware
|
ModusLink Mexico S.A. de C.V.
|
|
Mexico
|
Sol Holdings, Inc.
|
|
Delaware
|
Sol Services Corporation, S.A. de C.V.
|
|
Mexico
|
SalesLink Mexico Holding Corp.
|
|
Delaware
|
SalesLink Servicios, S. de R.L. de C.V.
|
|
Mexico
|
ModusLink Canada Inc.
|
|
Canada
|
ModusLink France S.A.S.
|
|
France
|
ModusLink B.V.
|
|
Netherlands
|
ModusLink Czech Republic s.r.o.
|
|
Czech Republic
|
Modus Media International Documentation Services (Ireland) Limited
|
|
Delaware
|
Modus Media International Leinster Unlimited
|
|
British Virgin Islands
|
Modus Media International (Ireland) Limited
|
|
Delaware
|
Modus Media International Ireland (Holdings)
|
|
Ireland
|
Modus Media International Dublin
|
|
Ireland
|
ModusLink Kildare
|
|
Ireland
|
ModusLink Services Europe
|
|
Ireland
|
Lieboch Limited
|
|
Ireland
|
Logistix Holdings Europe Limited
|
|
Ireland
|
SalesLink Solutions International Ireland Limited
|
|
Ireland
|
ModusLink Company Limited
|
|
New Zealand
|
ModusLink Australia Pty Limited
|
|
Australia
|
ModusLink Japan KK
|
|
Japan
|
ModusLink Solution Services Pte. Ltd.
|
|
Singapore
|
ModusLink Pte. Ltd.
|
|
Singapore
|
ModusLink Software (Shenzhen) Co. Ltd.
|
|
China
|
ModusLink (Shanghai) Co. Ltd.
|
|
China
|
ModusLink Electronic Technology (Shenzhen) Co. Ltd.
|
|
China
|
ModusLink (Pudong) Co. Ltd.
|
|
China
|
ModusLink (Kunshan) Co. Ltd.
|
|
China
|
ModusLink (China) Co. Ltd.
|
|
China
|
Moduslink (Waigaoqiao) Co. Ltd.
|
|
China
|
ModusLink (Hong Kong) Pte. Ltd.
|
|
China
|
ModusLink Software Technology (Chongqing) Co., Ltd.
|
|
China
|
ModusLink (M) Sdn. Bhd
|
|
Malaysia
|
Open Channel Solutions Pty Limited
|
|
Australia
|
|
By:
|
/S/ WARREN G. LICHTENSTEIN
|
|
|
Warren G. Lichtenstein
|
|
|
Interim Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
By:
|
/S/ LOUIS J. BELARDI
|
|
|
Louis J. Belardi
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
By:
|
/S/ WARREN G. LICHTENSTEIN
|
|
|
Warren G. Lichtenstein
|
|
|
Interim Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
By:
|
/S/ LOUIS J. BELARDI
|
|
|
Louis J. Belardi
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|