To amplify what merlyn said, the relevant quote from perlop is:

Ordinarily you must assign the returned value to a variable, but there is one situation where an automatic assignment happens. If and only if the input symbol is the only thing inside the conditional of a "while" statement (even if disguised as a "for(;;)" loop), the value is automatically assigned to the global variable $_, destroying whatever was there previously. (This may seem like an odd thing to you, but you'll use the construct in almost every Perl script you write.) The $_ variable is not implicitly localized. You'll have to put a "local $_;" before the loop if you want that to happen.

However, I can not seem to find in the perl manual pages the explicit example from the Llama book (2nd edition):

Remember that this special magic requires a while loop. If you use the input operator anywhere else, you must assign the result explicitly if you want to keep the value:

if (<STDIN>) { print; } # WRONG, prints old value of $_
if ($_ = <STDIN>) { print; } # okay
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It does feel weird to be quoting merlyn in a comment by merlyn. :)

Yes, I'd assumed that it was the scalar context that made it magic. Stupidly I'd thought about changing the if to a while before I posted, but decided it didn't matter ... ahh well, I may be slow but I've got there in the end. So...

sub next_record() {
  local $/ = "DELIM";
  while (<FILE>) { return 1; }
  return 0;          
}

while (next_record())
{
...
}
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...is what I should have posted about 10 posts up the thread.