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RESTRUCTURING
 6 Months Ended
Jan. 31, 2022
Restructuring and Related Activities [Abstract]  
RESTRUCTURING RESTRUCTURING
IWCO Direct Restructuring Activities
On June 2, 2021, the Board approved a Competitive Improvement Plan (“CIP”) for IWCO Direct, which addressed the changing requirements of its customers and markets it serves, as well as the current competitive landscape. The CIP contemplated a total investment of approximately $54 million primarily over a 24-month period. The Company estimated the CIP cost would consist of approximately: (1) $38 million for digital press and insertion equipment, and technology build out cost (of which approximately $34 million in lease/purchase agreements were entered into subsequent to the year ended July 31, 2021), and (2) $16 million for severance, employee retention, facilities optimization, and other implementation costs. In addition, the Company expected to incur approximately $12 million for non-cash accelerated depreciation expense. The cost estimates did not include amounts for potential non-cash asset impairment charges relating to facilities and equipment optimization. The timing and amount of the future costs incurred will depend on a number of factors. These investments are to be funded by IWCO Direct. After the IWCO Direct Disposal, the Company will have no further obligation for the CIP which had estimated future cash outflows remaining of approximately $44 million. See Note 1 for details regarding the disposition of IWCO Direct.
Accelerated depreciation costs primarily relate to operating facilities and equipment to be sold or closed as part of the programs. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions.
As part of the CIP, the Company announced on August 23, 2021 that it will be optimizing its manufacturing footprint by closing IWCO Direct’s Little Falls, Minnesota facility. The facility closed in January of 2022.

ModusLink Restructuring Activities

During the fiscal year ended July 31, 2021, ModusLink implemented a strategic plan to reorganize its sales function and the e-Business operations. The restructuring charges associated with this plan were incurred during the fiscal year ended July 31, 2021 and were primarily composed of employee termination costs. In November 2021, ModusLink amended its strategic plan to include reorganizing its supply chain operations and recorded a restructuring charge of approximately $0.9 million during the three and six months ended January 31, 2022.

The tables below present restructuring charges by type of cost:
Three Months Ended January 31, 2022Six Months Ended January 31, 2021
Direct
Marketing		Supply ChainConsolidated
Total		Direct
Marketing		Supply ChainConsolidated
Total
(In thousands)
Accelerated depreciation$3,700 $— $3,700 $8,095 $— $8,095 
Impairment of long-lived assets— — — 70 — 70 
Employee termination costs 1,386 856 2,242 3,371 856 4,227 
Contractual obligations113 — 113 308 — 308 
Other344 — 344 344 — 344 
Total restructuring charges$5,543 $856 $6,399 $12,188 $856 $13,044 

Three Months Ended January 31, 2022Six Months Ended January 31, 2021
Direct
Marketing		Supply ChainConsolidated
Total		Direct
Marketing		Supply ChainConsolidated
Total
(In thousands)
Cost of revenue $5,008 $646 $5,654 $11,351 $646 $11,997 
Selling, general and administrative535 210 745 837 210 1,047 
$5,543 $856 $6,399 $12,188 $856 $13,044 

Changes to the restructuring liability during the six months ended January 31, 2022 were as follows:

(in thousands)Employee Termination CostsContractual ObligationsAsset ImpairmentOtherRestructuring Liability
(In thousands)
Balance as of July 31, 2021$1,055 $— $— $— $1,055 
Costs incurred4,800 199 8,165 472 13,636 
Cash payments(3,759)(164)— (472)(4,395)
Non-cash relief of accrual(7)— (8,165)— (8,172)
Change in estimates(655)— — — (655)
Balance as of January 31, 2022$1,434 $35 $— $— $1,469