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DEFINED BENEFIT PENSION PLANS
 12 Months Ended
Jul. 31, 2023
Retirement Benefits [Abstract]  
DEFINED BENEFIT PENSION PLANS DEFINED BENEFIT PENSION PLANS
The Company sponsors two defined benefit pension plans covering certain of ModusLink's employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined. During the year ended July 31, 2020, the Netherlands defined benefit plan was amended so active participants no longer accrued benefits as of January 1, 2020 which resulted in a pre-tax curtailment gain of $2.4 million recognized in accumulated other comprehensive income.

The plan assets of the two defined benefit plans associated with the ModusLink's Netherlands facility consist of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2023 and 2022, classified by fair value hierarchy:
SuccessorFair Value Measurements at Reporting Date Using
(In thousands)July 31, 2023Asset
Allocations		Level 1Level 2Level 3
Insurance contract$14,926 97 %$— $— $14,926 
Other investments388 3 %— — 388 
$15,314 100 %$— $— $15,314 
PredecessorFair Value Measurements at Reporting Date Using
(In thousands)July 31, 2022Asset
Allocations		Level 1Level 2Level 3
Insurance contract$17,560 98 %$— $— $17,560 
Other investments416 2 %— — 416 
$17,976 100 %$— $— $17,976 
The following table summarizes the changes in benefit obligation, plan assets and funded status for these plans:
SuccessorPredecessor
July 31, 2023July 31, 2022
(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year$21,103 $33,584 
Adjustment related to unconditional indexation of benefits1,077 — 
Service cost10 11 
Interest cost679 462 
Actuarial gain(4,885)(8,674)
Benefits and administrative expenses paid(275)(227)
Settlements(109)— 
Currency translation1,519 (4,053)
Benefit obligation at end of year$19,119 $21,103 
Change in plan assets
Fair value of plan assets at beginning of year$17,976 $29,223 
Actual return on plan assets(3,759)(7,544)
Employer contributions, net225 5 
Settlements(108)— 
Benefits and administrative expenses paid(275)(227)
Currency translation1,255 (3,481)
Fair value of plan assets at end of year$15,314 $17,976 
Funded status
Current liabilities$(9)$(11)
Noncurrent liabilities(3,796)(3,116)
Net amounts recognized on the consolidated balance sheets$(3,805)$(3,127)
As discussed above, during the year ended July 31, 2020, a Netherlands defined benefit pension plan was amended such that active participants no longer accrued benefits as of January 1, 2020. At that time, the active plan participants were moved into a new defined benefit contribution pension plan. During the fiscal year ended July 31, 2023, the Company recorded an increase of approximately $1.1 million to accrued pension liabilities for the defined benefit pension plan as it was determined that plan participants are entitled to unconditional indexation of benefits for as long as they remain in active service with the Company.
Additionally, as discussed in Note 3 - "Exchange Transaction", the defined benefit pension plan assets were remeasured at fair value as of the date of the Exchange Transaction, which resulted in a $0.5 million decrease to the pension liability, with the offset to goodwill. The incremental decrease of $36.2 thousand to the pension liability was booked to accumulated other comprehensive income in July 2023 based off of the fair value of the defined benefit pension plan assets as of July 31, 2023.

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:
SuccessorPredecessor
July 31, 2023July 31, 2022
(In thousands)
Projected benefit obligation$19,119 $21,103 
Accumulated benefit obligation$19,119 $21,103 
Fair value of plan assets$15,314 $17,976 

The following table summarizes the components of net periodic pension cost:
SuccessorPredecessor
July 31, 2023July 31, 2022
(In thousands)
Service cost$10 $11 
Interest costs679 462 
Expected return on plan assets(574)(407)
Amortization of net actuarial loss9 4 
Net periodic pension costs$124 $70 

Assumptions

The table below summarizes the weighted average assumptions used to determine benefit obligations:
SuccessorPredecessor
July 31, 2023July 31, 2022
Discount rate4.21 %2.96 %
Rate of compensation increase— %— %

The table below summarizes weighted average assumptions used to determine net periodic pension cost:
SuccessorPredecessor
July 31, 2023July 31, 2022
Discount rate3.91 %2.58 %
Expected long-term rate of return on plan assets3.88 %2.51 %
Rate of compensation increase— %— %

The discount rate reflects the Company's best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as of July 31, 2023 for the appropriate duration of the plan.

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

Benefit Payments

The following table summarizes expected benefit payments from the plans through fiscal year 2032. Actual benefit payments may differ from expected benefit payments. The minimum employer required contributions to the plans are expected to be approximately $0.6 million in fiscal year 2024.
Pension Benefit
Payments
(In thousands)
For the fiscal year ending July 31:
2024$340 
2025372 
2026463 
2027444 
2028509 
Thereafter3,451 

The current target allocations for plan assets are primarily insurance contracts.
Valuation Technique

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