|
☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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|
04-2921333
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(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1601 Trapelo Road, Suite 170
Waltham, Massachusetts
|
|
02451
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class:
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Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Common Stock, $0.01 par value
|
STCN
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Nasdaq Global Select Market
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☐
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Item
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Page
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16.
|
•
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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;
|
•
|
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.
|
•
|
impair the Company's ability to manage day-to-day service and product delivery;
|
•
|
continue to impact customer demand of our businesses' products and services;
|
•
|
cause disruptions in or closures of the Company's operations or those of its customers and suppliers;
|
•
|
cause the Company to experience an increase in costs as a result of the Company's emergency measures, delayed payments from customers and uncollectible accounts;
|
•
|
cause delays and disruptions in the supply chain resulting in disruptions in the commercial operation of our businesses;
|
•
|
cause limitations on the Company's employees' ability to work and travel;
|
•
|
impact availability of qualified personnel;
|
•
|
increase cybersecurity risks as remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic; and
|
•
|
cause other unpredictable events.
|
•
|
increase our vulnerability to adverse economic and competitive pressures in our industry;
|
•
|
place us at a competitive disadvantage compared to our competitors that have less debt;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
|
•
|
limit our ability to borrow additional funds on terms that are acceptable to us or at all.
|
|
Fiscal Year Ended
July 31,
2020
|
|
As a %
of
Total
Net
Revenue
|
|
Fiscal Year Ended
July 31,
2019
|
|
As a %
of
Total
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Direct Marketing
|
$
|
444,360
|
|
|
56.8
|
%
|
|
$
|
486,902
|
|
|
59.4
|
%
|
|
$
|
(42,542
|
)
|
|
(8.7
|
)%
|
Supply Chain
|
338,453
|
|
|
43.2
|
%
|
|
332,928
|
|
|
40.6
|
%
|
|
5,525
|
|
|
1.7
|
%
|
|||
Total
|
$
|
782,813
|
|
|
100.0
|
%
|
|
$
|
819,830
|
|
|
100.0
|
%
|
|
$
|
(37,017
|
)
|
|
(4.5
|
)%
|
|
Fiscal Year Ended
July 31,
2020
|
|
As a %
of
Segment
Net
Revenue
|
|
Fiscal Year Ended
July 31,
2019
|
|
As a %
of
Segment
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Direct Marketing
|
$
|
345,173
|
|
|
77.7
|
%
|
|
$
|
372,683
|
|
|
76.5
|
%
|
|
$
|
(27,510
|
)
|
|
(7.4
|
)%
|
Supply Chain
|
274,681
|
|
|
81.2
|
%
|
|
297,417
|
|
|
89.3
|
%
|
|
(22,736
|
)
|
|
(7.6
|
)%
|
|||
Total
|
$
|
619,854
|
|
|
79.2
|
%
|
|
$
|
670,100
|
|
|
81.7
|
%
|
|
$
|
(50,246
|
)
|
|
(7.5
|
)%
|
|
Fiscal Year Ended
July 31,
2020
|
|
As a %
of
Segment
Net
Revenue
|
|
Fiscal Year Ended
July 31,
2019
|
|
As a %
of
Segment
Net
Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Direct Marketing
|
$
|
58,992
|
|
|
13.3
|
%
|
|
$
|
92,927
|
|
|
19.1
|
%
|
|
$
|
(33,935
|
)
|
|
(36.5
|
)%
|
Supply Chain
|
35,820
|
|
|
10.6
|
%
|
|
38,848
|
|
|
11.7
|
%
|
|
(3,028
|
)
|
|
(7.8
|
)%
|
|||
Sub-total
|
94,812
|
|
|
12.1
|
%
|
|
131,775
|
|
|
16.1
|
%
|
|
(36,963
|
)
|
|
(28.1
|
)%
|
|||
Corporate-level activity
|
8,449
|
|
|
|
|
12,303
|
|
|
|
|
(3,854
|
)
|
|
(31.3
|
)%
|
|||||
Total
|
$
|
103,261
|
|
|
13.2
|
%
|
|
$
|
144,078
|
|
|
17.6
|
%
|
|
$
|
(40,817
|
)
|
|
(28.3
|
)%
|
•
|
Revenue recognition
|
•
|
Inventory valuation
|
•
|
Accounting for goodwill, other intangible assets and long-lived assets
|
•
|
Income taxes
|
•
|
the amount by which the fair value of the reporting unit exceeded its carrying values as of the date of the most recent quantitative impairment analysis (April 30, 2020), which was greater than $30 million and which indicated there would need to be substantial negative developments in the markets in which the Direct Marketing reporting unit operates in order for there to be potential impairment;
|
•
|
the carrying value of the reporting unit as of June 30, 2020 compared to the previously calculated fair value as of the date of the most recent quantitative impairment analysis;
|
•
|
the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis;
|
•
|
public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses, such as significant declines in market capitalization or significant goodwill impairment charges that could be an indication that the goodwill of our reporting units was potentially impaired;
|
•
|
changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of the reporting unit had significantly decreased; and
|
•
|
whether there had been any significant increases to the weighted average cost of capital (WACC) rate for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach.
|
|
Page
|
|
July 31, 2020
|
|
July 31, 2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
75,887
|
|
|
$
|
32,548
|
|
Accounts receivable, trade, net of allowance for doubtful accounts of $134 and $1,804 at July 31, 2020 and 2019, respectively
|
93,072
|
|
|
112,141
|
|
||
Inventories, net
|
15,354
|
|
|
23,674
|
|
||
Funds held for clients
|
18,755
|
|
|
13,516
|
|
||
Prepaid expenses and other current assets
|
20,475
|
|
|
31,445
|
|
||
Total current assets
|
223,543
|
|
|
213,324
|
|
||
Property and equipment, net
|
79,678
|
|
|
91,268
|
|
||
Goodwill
|
257,128
|
|
|
257,128
|
|
||
Other intangible assets, net
|
135,263
|
|
|
162,518
|
|
||
Operating right-of-use assets
|
56,140
|
|
|
—
|
|
||
Other assets
|
7,420
|
|
|
7,325
|
|
||
Total assets
|
$
|
759,172
|
|
|
$
|
731,563
|
|
|
|
|
|
||||
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
70,002
|
|
|
$
|
85,898
|
|
Accrued expenses
|
111,380
|
|
|
112,658
|
|
||
Funds held for clients
|
18,755
|
|
|
13,516
|
|
||
Current portion of long-term debt
|
5,527
|
|
|
5,732
|
|
||
Current lease obligations
|
14,318
|
|
|
127
|
|
||
Other current liabilities
|
29,950
|
|
|
38,919
|
|
||
Total current liabilities
|
249,932
|
|
|
256,850
|
|
||
Convertible note payable
|
8,054
|
|
|
7,432
|
|
||
Long-term debt, excluding current portion
|
365,468
|
|
|
368,505
|
|
||
Long-term lease obligations
|
43,211
|
|
|
—
|
|
||
Other long-term liabilities
|
8,509
|
|
|
10,898
|
|
||
Total long-term liabilities
|
425,242
|
|
|
386,835
|
|
||
Total liabilities
|
675,174
|
|
|
643,685
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2020 and 2019
|
35,180
|
|
|
35,186
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at July 31, 2020 and 2019; zero shares issued and outstanding at July 31, 2020 and 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 62,787,919 issued and outstanding shares at July 31, 2020; 61,805,856 issued and outstanding shares at July 31, 2019
|
628
|
|
|
618
|
|
||
Additional paid-in capital
|
7,478,047
|
|
|
7,477,327
|
|
||
Accumulated deficit
|
(7,433,700
|
)
|
|
(7,426,287
|
)
|
||
Accumulated other comprehensive income
|
3,843
|
|
|
1,034
|
|
||
Total stockholders' equity
|
48,818
|
|
|
52,692
|
|
||
Total liabilities, contingently redeemable preferred stock and stockholders' equity
|
$
|
759,172
|
|
|
$
|
731,563
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2020
|
|
2019
|
||||
Net revenue:
|
|
|
|
||||
Products
|
$
|
444,360
|
|
|
$
|
486,902
|
|
Services
|
338,453
|
|
|
332,928
|
|
||
Total net revenue
|
782,813
|
|
|
819,830
|
|
||
Cost of revenue:
|
|
|
|
||||
Products
|
345,173
|
|
|
372,683
|
|
||
Services
|
274,681
|
|
|
297,417
|
|
||
Cost of revenue
|
619,854
|
|
|
670,100
|
|
||
Gross profit
|
162,959
|
|
|
149,730
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative
|
103,261
|
|
|
144,078
|
|
||
Amortization of intangible assets
|
27,255
|
|
|
30,446
|
|
||
Loss on sale of property
|
—
|
|
|
485
|
|
||
Total operating expenses
|
130,516
|
|
|
175,009
|
|
||
Operating income (loss)
|
32,443
|
|
|
(25,279
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest income
|
61
|
|
|
528
|
|
||
Interest expense
|
(33,969
|
)
|
|
(41,951
|
)
|
||
Other gains, net
|
2,098
|
|
|
4,603
|
|
||
Total other expense
|
(31,810
|
)
|
|
(36,820
|
)
|
||
Income (loss) before income taxes
|
633
|
|
|
(62,099
|
)
|
||
Income tax expense
|
5,917
|
|
|
4,670
|
|
||
Gains on investments in affiliates, net of tax
|
—
|
|
|
(42
|
)
|
||
Net loss
|
(5,284
|
)
|
|
(66,727
|
)
|
||
Less: Preferred dividends on redeemable preferred stock
|
(2,129
|
)
|
|
(2,129
|
)
|
||
Net loss attributable to common stockholders
|
$
|
(7,413
|
)
|
|
$
|
(68,856
|
)
|
|
|
|
|
||||
Basic net loss per share attributable to common stockholders
|
$
|
(0.12
|
)
|
|
$
|
(1.13
|
)
|
Diluted net loss per share attributable to common stockholders
|
$
|
(0.12
|
)
|
|
$
|
(1.13
|
)
|
Weighted average common shares used in:
|
|
|
|
||||
Basic loss per share
|
61,644
|
|
|
61,180
|
|
||
Diluted loss per share
|
61,644
|
|
|
61,180
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2020
|
|
2019
|
||||
Net loss
|
$
|
(5,284
|
)
|
|
$
|
(66,727
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustment
|
8
|
|
|
(1,331
|
)
|
||
Net loss on securities, net of tax
|
(96
|
)
|
|
(85
|
)
|
||
Pension liability adjustments, net of tax
|
2,897
|
|
|
(284
|
)
|
||
Other comprehensive income (loss)
|
2,809
|
|
|
(1,700
|
)
|
||
Comprehensive loss
|
$
|
(2,475
|
)
|
|
$
|
(68,427
|
)
|
|
Number of
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Stockholders' Equity |
|||||||||||
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 ASC 606 on August 1, 2018, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
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
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,284
|
)
|
|
—
|
|
|
(5,284
|
)
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,129
|
)
|
|
—
|
|
|
(2,129
|
)
|
|||||
Issuance of common stock pursuant to employee stock purchase plan
|
21,540
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Restricted stock grants, net of forfeitures
|
960,523
|
|
|
10
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
720
|
|
|
—
|
|
|
—
|
|
|
720
|
|
|||||
Other comprehensive items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,809
|
|
|
2,809
|
|
|||||
Balance at July 31, 2020
|
62,787,919
|
|
|
$
|
628
|
|
|
$
|
7,478,047
|
|
|
$
|
(7,433,700
|
)
|
|
$
|
3,843
|
|
|
$
|
48,818
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(5,284
|
)
|
|
$
|
(66,727
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
23,075
|
|
|
22,058
|
|
||
Amortization of intangible assets
|
27,255
|
|
|
30,446
|
|
||
Amortization of deferred financing costs
|
435
|
|
|
771
|
|
||
Accretion of debt discount
|
622
|
|
|
3,433
|
|
||
Impairment of long-lived assets
|
—
|
|
|
3,015
|
|
||
Share-based compensation
|
720
|
|
|
1,267
|
|
||
Other gains, net
|
(2,098
|
)
|
|
(4,603
|
)
|
||
Gains on investments in affiliates
|
—
|
|
|
(42
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
20,305
|
|
|
(14,090
|
)
|
||
Inventories, net
|
8,510
|
|
|
2,482
|
|
||
Prepaid expenses and other current assets
|
12,396
|
|
|
5,519
|
|
||
Accounts payable and accrued expenses
|
(17,464
|
)
|
|
36,486
|
|
||
Refundable and accrued income taxes, net
|
(630
|
)
|
|
(1,482
|
)
|
||
Other assets and liabilities
|
3,782
|
|
|
2,316
|
|
||
Net cash provided by operating activities
|
71,624
|
|
|
20,849
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property and equipment
|
(12,070
|
)
|
|
(14,539
|
)
|
||
Proceeds from the disposition of property and equipment
|
21
|
|
|
19
|
|
||
Proceeds from the sale of available-for-sale securities
|
163
|
|
|
—
|
|
||
Proceeds from investments in affiliates
|
—
|
|
|
42
|
|
||
Net cash used in investing activities
|
(11,886
|
)
|
|
(14,478
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of convertible note
|
—
|
|
|
14,940
|
|
||
Proceeds from the Cerberus revolving facility
|
19,000
|
|
|
10,000
|
|
||
Payments on the Cerberus revolving facility
|
(25,000
|
)
|
|
(4,000
|
)
|
||
Payments on maturity of convertible notes
|
—
|
|
|
(63,925
|
)
|
||
Payments of long-term debt
|
(3,154
|
)
|
|
(14,879
|
)
|
||
Payments of debt financing and amendment costs
|
(914
|
)
|
|
—
|
|
||
Payments of preferred dividends
|
(2,135
|
)
|
|
(2,129
|
)
|
||
Purchases of the Company's convertible notes
|
—
|
|
|
(3,700
|
)
|
||
Repayments on capital lease obligations
|
(100
|
)
|
|
(134
|
)
|
||
Proceeds from issuance of common stock
|
19
|
|
|
15
|
|
||
Net cash used in financing activities
|
(12,284
|
)
|
|
(63,812
|
)
|
||
Net effect of exchange rate changes on cash and cash equivalents
|
1,124
|
|
|
(321
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
48,578
|
|
|
(57,762
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
46,064
|
|
|
103,826
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
94,642
|
|
|
$
|
46,064
|
|
(1)
|
NATURE OF OPERATIONS
|
(2)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
•
|
Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time.
|
•
|
Contract assets when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to marketing solutions offerings and supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the Company's consolidated balance sheets.
|
•
|
Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Balance at beginning of year
|
$
|
1,804
|
|
|
$
|
480
|
|
Provisions charged to expense
|
111
|
|
|
1,418
|
|
||
Accounts written off
|
(1,781
|
)
|
|
(94
|
)
|
||
|
$
|
134
|
|
|
$
|
1,804
|
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Cash and bank deposits
|
$
|
70,770
|
|
|
$
|
32,183
|
|
Money market funds
|
5,117
|
|
|
365
|
|
||
|
$
|
75,887
|
|
|
$
|
32,548
|
|
Category
|
|
Useful Lives
|
Buildings
|
|
32 years
|
Machinery and equipment
|
|
3 to 7 years
|
Furniture and fixtures
|
|
5 to 7 years
|
Automobiles
|
|
5 years
|
Software
|
|
3 to 8 years
|
Leasehold improvements
|
|
Shorter of the lease term or the estimated useful life of the asset
|
(3)
|
INVENTORIES
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
14,216
|
|
|
$
|
21,322
|
|
Work-in-process
|
253
|
|
|
587
|
|
||
Finished goods
|
885
|
|
|
1,765
|
|
||
|
$
|
15,354
|
|
|
$
|
23,674
|
|
(4)
|
PROPERTY AND EQUIPMENT
|
|
July 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
942
|
|
|
$
|
942
|
|
Machinery and equipment
|
112,407
|
|
|
99,961
|
|
||
Leasehold improvements
|
24,659
|
|
|
23,711
|
|
||
Software
|
53,715
|
|
|
52,961
|
|
||
Other
|
20,138
|
|
|
24,230
|
|
||
|
211,861
|
|
|
201,805
|
|
||
Less: accumulated depreciation and amortization
|
(132,183
|
)
|
|
(110,537
|
)
|
||
Property and equipment, net
|
$
|
79,678
|
|
|
$
|
91,268
|
|
(5)
|
GOODWILL AND INTANGIBLE ASSETS
|
|
|
|
July 31, 2020
|
|
July 31, 2019
|
||||||||||||||||
|
Weighted Average Amortization Period
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
||||||||||||
|
(in years)
|
|
(In thousands)
|
||||||||||||||||||
Customer Relationships
|
15
|
|
$
|
192,730
|
|
$
|
60,032
|
|
$
|
132,698
|
|
|
$
|
192,730
|
|
$
|
39,617
|
|
$
|
153,113
|
|
Trademarks and Trade Names
|
3
|
|
20,520
|
|
17,955
|
|
2,565
|
|
|
20,520
|
|
11,115
|
|
9,405
|
|
||||||
Total
|
|
|
$
|
213,250
|
|
$
|
77,987
|
|
$
|
135,263
|
|
|
$
|
213,250
|
|
$
|
50,732
|
|
$
|
162,518
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Customer relationships
|
$
|
20,415
|
|
|
$
|
23,606
|
|
Trademarks and trade names
|
6,840
|
|
|
6,840
|
|
||
Total
|
$
|
27,255
|
|
|
$
|
30,446
|
|
(6)
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
Accrued Expenses
|
(In thousands)
|
||||||
Accrued taxes
|
$
|
60,744
|
|
|
$
|
59,057
|
|
Accrued compensation
|
25,439
|
|
|
22,584
|
|
||
Accrued interest
|
476
|
|
|
467
|
|
||
Accrued audit, tax and legal
|
3,399
|
|
|
3,148
|
|
||
Accrued contract labor
|
981
|
|
|
1,650
|
|
||
Accrued worker's compensation
|
3,949
|
|
|
4,549
|
|
||
Accrued other
|
16,392
|
|
|
21,203
|
|
||
|
$
|
111,380
|
|
|
$
|
112,658
|
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
Other Current Liabilities
|
(In thousands)
|
||||||
Accrued pricing liabilities
|
$
|
13,499
|
|
|
$
|
14,309
|
|
Customer postage deposits
|
8,551
|
|
|
11,816
|
|
||
Revolving credit facility
|
—
|
|
|
6,000
|
|
||
Other
|
7,900
|
|
|
6,794
|
|
||
|
$
|
29,950
|
|
|
$
|
38,919
|
|
(7)
|
DEBT
|
|
July 31, 2020
|
|
July 31, 2019
|
||||
|
(In thousands)
|
||||||
Secured
|
|
|
|
||||
Cerberus Term Loan due December 15, 2022
|
$
|
371,972
|
|
|
$
|
375,125
|
|
Unsecured
|
|
|
|
||||
7.50% Convertible Senior Note due March 1, 2024
|
14,940
|
|
|
14,940
|
|
||
Credit Facilities
|
|
|
|
||||
Cerberus Bank Credit Facility
|
—
|
|
|
6,000
|
|
||
MidCap Credit Facility
|
—
|
|
|
—
|
|
||
Less: unamortized discounts and issuance costs
|
(7,863
|
)
|
|
(8,396
|
)
|
||
Total debt, net
|
379,049
|
|
|
387,669
|
|
||
Less: current portion of debt, net
|
(5,527
|
)
|
|
(5,732
|
)
|
||
Total long-term debt, net
|
$
|
373,522
|
|
|
$
|
381,937
|
|
|
Fiscal Year Ended
July 31, 2019 |
||
|
(In thousands)
|
||
Interest expense related to contractual interest coupon
|
$
|
1,932
|
|
Interest expense related to accretion of the discount
|
2,741
|
|
|
Interest expense related to debt issuance costs
|
243
|
|
|
|
$
|
4,916
|
|
|
July 31, 2020
|
|
July 31, 2019
|
||||
|
(In thousands)
|
||||||
Principal amount outstanding on the Term Loan
|
$
|
371,972
|
|
|
$
|
375,125
|
|
Unamortized debt issuance costs
|
(977
|
)
|
|
(888
|
)
|
||
Net carrying value of the Term Loan
|
$
|
370,995
|
|
|
$
|
374,237
|
|
|
July 31, 2020
|
|
July 31, 2019
|
||||
|
(In thousands)
|
||||||
Carrying amount of equity component
|
$
|
8,200
|
|
|
$
|
8,200
|
|
|
|
|
|
||||
Principal amount of note
|
$
|
14,940
|
|
|
$
|
14,940
|
|
Unamortized debt discount
|
(6,886
|
)
|
|
(7,508
|
)
|
||
Net carrying amount
|
$
|
8,054
|
|
|
$
|
7,432
|
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Interest expense related to contractual interest coupon
|
$
|
1,142
|
|
|
$
|
473
|
|
Interest expense related to accretion of the discount
|
622
|
|
|
692
|
|
||
|
$
|
1,764
|
|
|
$
|
1,165
|
|
(8)
|
LEASES
|
|
Fiscal Year Ended
July 31, 2020 |
||
|
(In thousands)
|
||
Operating lease cost
|
$
|
16,722
|
|
Short-term lease expense
|
2,358
|
|
|
Variable lease cost
|
68
|
|
|
Amortization of finance lease assets
|
38
|
|
|
Interest on finance lease liabilities
|
11
|
|
|
|
$
|
19,197
|
|
|
Operating Leases
|
|
Finance Leases
|
||||
|
(In thousands)
|
||||||
2021
|
$
|
16,059
|
|
|
$
|
76
|
|
2022
|
13,039
|
|
|
76
|
|
||
2023
|
7,904
|
|
|
38
|
|
||
2024
|
5,579
|
|
|
—
|
|
||
2025
|
5,410
|
|
|
—
|
|
||
Thereafter
|
18,329
|
|
|
—
|
|
||
Total lease payments
|
66,320
|
|
|
190
|
|
||
Less: imputed interest
|
8,972
|
|
|
9
|
|
||
Present value of lease payments
|
57,348
|
|
|
181
|
|
||
Less: current lease obligations
|
14,207
|
|
|
111
|
|
||
Long-term lease obligations
|
$
|
43,141
|
|
|
$
|
70
|
|
Weighted average remaining lease term:
|
|
|
Operating leases
|
6.1
|
years
|
Finance leases
|
2.4
|
years
|
|
|
|
Weighted average discount rate:
|
|
|
Operating leases
|
|
4.4%
|
Finance leases
|
|
3.8%
|
Cash paid for amounts included in measurement of lease liabilities:
|
|||
Operating cash flows from operating leases
|
$
|
15,885
|
|
Operating cash flows from finance leases
|
$
|
9
|
|
Financing cash flows from finance leases
|
$
|
100
|
|
(9)
|
COMMITMENTS AND CONTINGENCIES
|
(10)
|
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
|
|
|
July 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Change in benefit obligation
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
34,538
|
|
|
$
|
29,849
|
|
Service cost
|
185
|
|
|
365
|
|
||
Interest cost
|
543
|
|
|
633
|
|
||
Actuarial (gain) loss
|
(691
|
)
|
|
5,125
|
|
||
Employee contributions
|
28
|
|
|
72
|
|
||
Benefits and administrative expenses paid
|
(212
|
)
|
|
(197
|
)
|
||
Adjustments
|
—
|
|
|
(20
|
)
|
||
Effect of curtailment
|
(2,390
|
)
|
|
—
|
|
||
Currency translation
|
1,926
|
|
|
(1,289
|
)
|
||
Benefit obligation at end of year
|
$
|
33,927
|
|
|
$
|
34,538
|
|
|
|
|
|
||||
Change in plan assets
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
27,267
|
|
|
$
|
22,860
|
|
Actual return on plan assets
|
476
|
|
|
5,136
|
|
||
Employer contributions, net
|
(39
|
)
|
|
422
|
|
||
Employee contributions
|
28
|
|
|
73
|
|
||
Settlements
|
—
|
|
|
(19
|
)
|
||
Benefits and administrative expenses paid
|
(212
|
)
|
|
(197
|
)
|
||
Currency translation
|
1,530
|
|
|
(1,008
|
)
|
||
Fair value of plan assets at end of year
|
$
|
29,050
|
|
|
$
|
27,267
|
|
|
|
|
|
||||
Funded status
|
|
|
|
||||
Current liabilities
|
$
|
(31
|
)
|
|
$
|
(13
|
)
|
Noncurrent liabilities
|
(4,846
|
)
|
|
(7,259
|
)
|
||
Net amounts recognized on the consolidated balance sheet
|
$
|
(4,877
|
)
|
|
$
|
(7,272
|
)
|
|
July 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Projected benefit obligation
|
$
|
33,927
|
|
|
$
|
34,538
|
|
Accumulated benefit obligation
|
$
|
33,927
|
|
|
$
|
32,361
|
|
Fair value of plan assets
|
$
|
29,050
|
|
|
$
|
27,267
|
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Service cost
|
$
|
185
|
|
|
$
|
365
|
|
Interest costs
|
543
|
|
|
633
|
|
||
Expected return on plan assets
|
(458
|
)
|
|
(492
|
)
|
||
Amortization of net actuarial loss
|
74
|
|
|
127
|
|
||
Curtailment gain
|
(143
|
)
|
|
—
|
|
||
Net periodic pension costs
|
$
|
201
|
|
|
$
|
633
|
|
|
Fiscal Year Ended
July 31, |
||||
|
2020
|
|
2019
|
||
Discount rate
|
1.48
|
%
|
|
1.48
|
%
|
Rate of compensation increase
|
1.96
|
%
|
|
1.97
|
%
|
|
Fiscal Year Ended
July 31, |
||||
|
2020
|
|
2019
|
||
Discount rate
|
1.39
|
%
|
|
1.46
|
%
|
Expected long-term rate of return on plan assets
|
1.37
|
%
|
|
1.45
|
%
|
Rate of compensation increase
|
1.77
|
%
|
|
1.92
|
%
|
|
Pension Benefit
Payments
|
|
|
(In thousands)
|
|
For the fiscal year ending July 31:
|
|
|
2021
|
247
|
|
2022
|
258
|
|
2023
|
309
|
|
2024
|
472
|
|
2025
|
396
|
|
Next 5 years
|
2,811
|
|
(11)
|
REVENUE RECOGNITION
|
|
Fiscal Year Ended
July 31, 2020 |
|
Fiscal Year Ended
July 31, 2019 |
||||||||||||||||||||
|
Direct Marketing
|
|
Supply Chain
|
|
Consolidated
Total
|
|
Direct Marketing
|
|
Supply Chain
|
|
Consolidated
Total
|
||||||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||||||||||
Major Goods/Service Lines
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketing solutions offerings
|
$
|
444,360
|
|
|
$
|
—
|
|
|
$
|
444,360
|
|
|
$
|
486,902
|
|
|
$
|
—
|
|
|
$
|
486,902
|
|
Supply chain management services
|
—
|
|
|
336,491
|
|
|
336,491
|
|
|
—
|
|
|
331,022
|
|
|
331,022
|
|
||||||
Other
|
—
|
|
|
1,962
|
|
|
1,962
|
|
|
—
|
|
|
1,906
|
|
|
1,906
|
|
||||||
|
$
|
444,360
|
|
|
$
|
338,453
|
|
|
$
|
782,813
|
|
|
$
|
486,902
|
|
|
$
|
332,928
|
|
|
$
|
819,830
|
|
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Products transferred over time
|
$
|
444,360
|
|
|
$
|
—
|
|
|
$
|
444,360
|
|
|
$
|
486,902
|
|
|
$
|
—
|
|
|
$
|
486,902
|
|
Services transferred over time
|
—
|
|
|
338,453
|
|
|
338,453
|
|
|
—
|
|
|
332,928
|
|
|
332,928
|
|
||||||
|
$
|
444,360
|
|
|
$
|
338,453
|
|
|
$
|
782,813
|
|
|
$
|
486,902
|
|
|
$
|
332,928
|
|
|
$
|
819,830
|
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Accounts receivable, trade, net
|
$
|
93,072
|
|
|
$
|
112,141
|
|
Contract assets
|
$
|
13,016
|
|
|
$
|
21,473
|
|
|
|
|
|
||||
Deferred revenue - current
|
$
|
2,860
|
|
|
$
|
2,967
|
|
Deferred revenue - long-term
|
85
|
|
|
62
|
|
||
Total deferred revenue
|
$
|
2,945
|
|
|
$
|
3,029
|
|
|
Fiscal year ended July 31, 2020
|
||
|
(In thousands)
|
||
Balance at beginning of period
|
$
|
3,029
|
|
Deferral of revenue
|
4,310
|
|
|
Recognition of deferred amounts upon satisfaction of performance obligation
|
(4,394
|
)
|
|
Balance at end of period
|
$
|
2,945
|
|
(12)
|
OTHER GAINS, NET
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Foreign currency exchange gains, net
|
$
|
890
|
|
|
$
|
337
|
|
Derecognition of accrued pricing liabilities
|
810
|
|
|
4,573
|
|
||
Other, net
|
398
|
|
|
(307
|
)
|
||
|
$
|
2,098
|
|
|
$
|
4,603
|
|
(13)
|
SHARE-BASED PAYMENTS
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Cost of revenue
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative
|
720
|
|
|
1,267
|
|
||
|
$
|
720
|
|
|
$
|
1,267
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average
Remaining
Contractual Term
(Years)
|
|||
|
(In thousands, except exercise price and years)
|
|||||||
Stock options outstanding, July 31, 2019
|
325
|
|
|
$
|
4.07
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
Forfeited or expired
|
(130
|
)
|
|
3.38
|
|
|
|
|
Stock options outstanding, July 31, 2020
|
195
|
|
|
4.54
|
|
|
0.45
|
|
Stock options exercisable, July 31, 2020
|
195
|
|
|
$
|
4.54
|
|
|
0.45
|
|
Number of Shares
|
|
Weighted Average
Grant Date Fair
Value
|
|||
|
(Share amounts in thousands)
|
|||||
Nonvested stock outstanding, July 31, 2019
|
905
|
|
|
$
|
1.60
|
|
Granted
|
1,060
|
|
|
0.80
|
|
|
Vested
|
(438
|
)
|
|
1.72
|
|
|
Forfeited
|
(133
|
)
|
|
1.47
|
|
|
Nonvested stock outstanding, July 31, 2020
|
1,394
|
|
|
$
|
0.97
|
|
(14)
|
INCOME TAXES
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Income (loss) from operations before income taxes:
|
|
|
|
||||
U.S.
|
$
|
(9,168
|
)
|
|
$
|
(68,959
|
)
|
Foreign
|
9,801
|
|
|
6,860
|
|
||
Total income (loss) from operations before income taxes
|
$
|
633
|
|
|
$
|
(62,099
|
)
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Income tax expense from operations
|
$
|
5,917
|
|
|
$
|
4,670
|
|
Total income tax expense
|
$
|
5,917
|
|
|
$
|
4,670
|
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Accruals and reserves
|
$
|
8,563
|
|
|
$
|
21,297
|
|
Tax basis in excess of financial basis of investments in affiliates
|
—
|
|
|
6,534
|
|
||
Tax basis in excess of financial basis for intangible and fixed assets
|
225
|
|
|
187
|
|
||
Net operating loss and capital loss carry forwards
|
468,132
|
|
|
469,735
|
|
||
Total gross deferred tax assets
|
476,920
|
|
|
497,753
|
|
||
Less: valuation allowance
|
(452,969
|
)
|
|
(451,189
|
)
|
||
Net deferred tax assets
|
$
|
23,951
|
|
|
$
|
46,564
|
|
Deferred tax liabilities:
|
|
|
|
||||
Financial basis in excess of tax basis for intangible and fixed assets
|
$
|
(22,889
|
)
|
|
$
|
(43,885
|
)
|
Convertible debt
|
(1,595
|
)
|
|
(1,761
|
)
|
||
Total gross deferred tax liabilities
|
(24,484
|
)
|
|
(45,646
|
)
|
||
Net deferred tax asset
|
$
|
(533
|
)
|
|
$
|
918
|
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Computed "expected" income tax expense (benefit)
|
$
|
160
|
|
|
$
|
(13,041
|
)
|
Increase (decrease) in income tax expense resulting from:
|
|
|
|
||||
Change in valuation allowance
|
2,227
|
|
|
16,158
|
|
||
Foreign tax rate differential
|
(23
|
)
|
|
(593
|
)
|
||
Nondeductible expenses
|
3,010
|
|
|
2,484
|
|
||
Foreign withholding taxes
|
553
|
|
|
336
|
|
||
Addition of uncertain tax position reserves
|
498
|
|
|
645
|
|
||
State benefit of U.S. loss
|
(624
|
)
|
|
—
|
|
||
State income taxes, net of federal benefit
|
133
|
|
|
113
|
|
||
Other
|
(17
|
)
|
|
(1,432
|
)
|
||
Actual income tax expense
|
$
|
5,917
|
|
|
$
|
4,670
|
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Balance as of beginning of year
|
$
|
2,207
|
|
|
$
|
1,525
|
|
Additions for current year tax positions
|
667
|
|
|
704
|
|
||
Currency translation
|
2
|
|
|
(22
|
)
|
||
Reductions for lapses in statute of limitations
|
(416
|
)
|
|
—
|
|
||
Balance as of end of year
|
$
|
2,460
|
|
|
$
|
2,207
|
|
(15)
|
EARNINGS (LOSS) PER SHARE
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands, except per share data)
|
||||||
Net loss
|
$
|
(5,284
|
)
|
|
$
|
(66,727
|
)
|
Less: Preferred dividends on redeemable preferred stock
|
(2,129
|
)
|
|
(2,129
|
)
|
||
Net loss attributable to common stockholders
|
(7,413
|
)
|
|
(68,856
|
)
|
||
Effect of dilutive securities:
|
|
|
|
||||
7.50% Convertible Senior Note
|
—
|
|
|
—
|
|
||
Redeemable preferred stock
|
—
|
|
|
—
|
|
||
Net loss attributable to common stockholders after assumed conversions
|
$
|
(7,413
|
)
|
|
$
|
(68,856
|
)
|
Weighted average common shares outstanding
|
61,644
|
|
|
61,180
|
|
||
Weighted average common equivalent shares arising from dilutive stock options, restricted stock, convertible notes and convertible preferred stock
|
—
|
|
|
—
|
|
||
Weighted average number of common and potential common shares
|
61,644
|
|
|
61,180
|
|
||
Basic and diluted net loss per share attributable to common stockholders
|
$
|
(0.12
|
)
|
|
$
|
(1.13
|
)
|
(16)
|
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, 2019
|
$
|
5,017
|
|
|
$
|
(4,079
|
)
|
|
$
|
96
|
|
|
$
|
1,034
|
|
Foreign currency translation adjustment
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Net unrealized holding loss on securities
|
—
|
|
|
—
|
|
|
(96
|
)
|
|
(96
|
)
|
||||
Pension liability adjustments
|
—
|
|
|
2,897
|
|
|
—
|
|
|
2,897
|
|
||||
Net current-period other comprehensive income (loss)
|
8
|
|
|
2,897
|
|
|
(96
|
)
|
|
2,809
|
|
||||
Accumulated other comprehensive income (loss) at July 31, 2020
|
$
|
5,025
|
|
|
$
|
(1,182
|
)
|
|
$
|
—
|
|
|
$
|
3,843
|
|
(17)
|
STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION
|
|
July 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
75,887
|
|
|
$
|
32,548
|
|
Funds held for clients
|
18,755
|
|
|
13,516
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
94,642
|
|
|
$
|
46,064
|
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Cash paid for interest
|
$
|
32,799
|
|
|
$
|
38,525
|
|
Cash paid for income taxes
|
$
|
4,991
|
|
|
$
|
5,451
|
|
(18)
|
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.
|
(19)
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
(In thousands)
|
July 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds
|
$
|
5,117
|
|
|
$
|
5,117
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
(In thousands)
|
July 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds
|
$
|
365
|
|
|
$
|
365
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(20)
|
SEGMENT INFORMATION
|
|
Fiscal Year Ended
July 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Net revenue:
|
|
|
|
||||
Direct Marketing
|
$
|
444,360
|
|
|
$
|
486,902
|
|
Supply Chain
|
338,453
|
|
|
332,928
|
|
||
|
$
|
782,813
|
|
|
$
|
819,830
|
|
Operating income (loss):
|
|
|
|
||||
Direct Marketing
|
$
|
12,940
|
|
|
$
|
(9,154
|
)
|
Supply Chain
|
27,952
|
|
|
(3,822
|
)
|
||
Total segment operating income (loss)
|
40,892
|
|
|
(12,976
|
)
|
||
Corporate-level activity
|
(8,449
|
)
|
|
(12,303
|
)
|
||
Total operating income (loss)
|
32,443
|
|
|
(25,279
|
)
|
||
Total other expense
|
(31,810
|
)
|
|
(36,820
|
)
|
||
Income (loss) before income taxes
|
$
|
633
|
|
|
$
|
(62,099
|
)
|
|
July 31,
2020 |
|
July 31,
2019 |
||||
|
(In thousands)
|
||||||
Total assets:
|
|
|
|
||||
Direct Marketing
|
$
|
584,477
|
|
|
$
|
600,390
|
|
Supply Chain
|
138,773
|
|
|
112,712
|
|
||
Sub-total—segment assets
|
723,250
|
|
|
713,102
|
|
||
Corporate
|
35,922
|
|
|
18,461
|
|
||
|
$
|
759,172
|
|
|
$
|
731,563
|
|
(21)
|
RELATED PARTY TRANSACTIONS
|
|
(a)
|
|
(b)
|
|
(c)
|
|
||||
Plan Category
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
|
|
||||
Equity compensation plans approved by security holders
|
1,549,134
|
|
|
$
|
0.55
|
|
|
8,734,038
|
|
(1)(2)
|
Equity compensation plans not approved by security holders
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Total
|
1,549,134
|
|
|
$
|
0.55
|
|
|
8,734,038
|
|
|
(1)
|
Includes:
|
▪
|
Approximately 87,000 shares available for issuance under the Company's Amended and Restated 1995 Employee Stock Purchase Plan, as amended.
|
▪
|
8,646,038 shares available for future issuance under the 2020 Stock Incentive Compensation Plan.
|
(2)
|
On June 12, 2020, the Company's Board of Directors adopted, subject to stockholder approval, the Steel Connect Inc. 2020 Stock Incentive Compensation Plan ("2020 Incentive Plan"), and on July 23, 2020, the 2020 Incentive Plan was approved. The 2020 Incentive Plan replaces the 2010 Incentive Award Plan, as amended (the "2010 Incentive Plan"). The Company also has a 2005 Non-Employee Director Plan (the "2005 Director Plan"). As of December 2010, no grants were allowed under the 2005 Director Plan. As of July 23, 2020, no additional grants may be issued under the 2010 Incentive Plan. Any awards that are outstanding under the 2010 Incentive Plan continue to be subject to the terms and conditions of such plan.
|
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
|
|
|
|
|
|
10.24*
|
|
|
|
|
|
10.25*
|
|
|
|
|
|
10.26*
|
|
|
|
|
|
10.27*
|
|
|
|
|
|
10.28*
|
|
|
|
|
|
10.29*
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33*
|
|
|
|
|
10.34*
|
|
|
|
|
|
10.35*
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38++
|
|
|
|
|
|
10.39†
|
|
|
|
|
|
10.40
|
|
|
|
|
|
10.41*/**
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43*/**
|
|
|
|
|
|
10.44*/**
|
|
|
|
|
|
10.45*/**
|
|
|
|
|
|
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, 2020, (ii) Audited Consolidated Statement of Operations for the fiscal year ended July 31, 2020, (iii) Audited Consolidated Statement of Cash Flows for the fiscal year ended July 31, 2020 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.
|
**
|
Filed herewith.
|
‡
|
Furnished herewith.
|
++
|
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Regulation S-K. Item 601(b)(10). Such
|
†
|
The schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Steel Connect, Inc.
|
|
STEEL CONNECT, INC.
|
||
|
|
|
|
Date: September 30, 2020
|
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
|
|
September 30, 2020
|
Warren G. Lichtenstein
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/S/ DOUGLAS B. WOODWORTH
|
|
Chief Financial Officer
|
|
September 30, 2020
|
Douglas B. Woodworth
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/S/ JOSEPH B. SHERK
|
|
Chief Accounting Officer
|
|
September 30, 2020
|
Joseph B. Sherk
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/S/ JEFFREY J. FENTON
|
|
Director
|
|
September 30, 2020
|
Jeffrey J. Fenton
|
|
|
|
|
|
|
|
|
|
/S/ GLEN M. KASSAN
|
|
Vice Chairman and Director
|
|
September 30, 2020
|
Glen M. Kassan
|
|
|
|
|
|
|
|
|
|
/S/ MARIA U. MOLLAND
|
|
Director
|
|
September 30, 2020
|
Maria U. Molland
|
|
|
|
|
|
|
|
|
|
/S/ JEFFREY S. WALD
|
|
Director
|
|
September 30, 2020
|
Jeffrey S. Wald
|
|
|
|
|
|
|
|
|
|
/S/ JACK L. HOWARD
|
|
Director
|
|
September 30, 2020
|
Jack L. Howard
|
|
|
|
|
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/ DOUGLAS B. WOODWORTH
|
|
|
Douglas B. Woodworth
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
By:
|
/S/ WARREN G. LICHTENSTEIN
|
|
|
Warren G. Lichtenstein
|
|
|
Interim Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
By:
|
/S/ DOUGLAS B. WOODWORTH
|
|
|
Douglas B. Woodworth
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|