IDT Corporation – Results for Fourth Quarter and Full Year Fiscal 2011

NEWARK, NJ — October 6, 2011: IDT Corporation (NYSE: IDT) reported net income of $0.2 million, or $0.01 per diluted share, for its fourth quarter of fiscal 2011. For its fiscal year ended July 31, 2011, net income was $26.8 million, or $1.19 per diluted share.

FOURTH QUARTER FISCAL 2011 SUMMARY

$ in millions, except EPS	4Q11	3Q11	4Q10	YoY Change (%/$)
Revenues	$407.5	$394.0	$354.6	+14.9%
Gross profit	$70.2	$74.4	$71.8	(2.2)%
Gross margin percentage	17.2%	18.9%	20.2%	(300 basis points)
Total SG&A expense (including corporate SG&A, and research and development expense)	$68.1	$62.9	$56.7	+20.0%
Adjusted EBITDA	$2.1	$11.5	$15.1	(85.8)%
(Loss) income from operations	$(3.5)	$6.2	$7.8	$(11.3)
Net income attributable to IDT	$0.2	$7.0	$7.5	(97.0)%
Diluted EPS attributable to IDT	$0.01	$0.31	$0.33	$(0.32)
Net cash provided by operating activities	$11.4	$21.0	$8.7	+30.5%

 

 

FULL-YEAR FISCAL 2011 SUMMARY

$ in millions, except EPS	FY11	FY10	Change (%/$)
Revenues	$1,555.5	$1,394.9	+11.5%
Gross profit	$286.1	$284.2	+0.7%
Gross margin percentage	18.4%	20.4%	(200 basis points)
Total SG&A expense (including corporate SG&A and research and development expense)	$248.5	$223.9	+11.0%
Adjusted EBITDA	$37.6	$60.3	(37.7)%
Income from operations	$21.9	$32.2	(32.0)%
Net income attributable to IDT	$26.8	$20.3	+32.1%
Diluted EPS attributable to IDT	$1.19	$0.94	+$0.25
Net cash provided by operating activities	$61.8	$56.2	+10.0%

 

NOTES:

 Adjusted EBITDA for all periods presented is a non-GAAP measure representing income (loss) from operations exclusive of depreciation and amortization, severance and other charges, and other operating gains (losses), net. It is one of several key metrics used by management to evaluate the operating performance of the Company and its individual business units.  See reconciliations provided below. 

Certain reclassifications have been made to prior periods to conform to the current presentation.

MANAGEMENT COMMENTS

Howard Jonas, IDT’s Chairman and CEO, said, “Fiscal 2011 was a great year for IDT. We grew revenue, increased cash flow from operations and paid our quarterly dividends while stepping up investment in our key growth initiatives. In Colorado and Israel, our oil shale projects continued to progress toward their respective pilot tests. Looking ahead, as we prepare to spin-off Genie Energy to our stockholders, both IDT and Genie are well positioned to grow and reward stockholders as separate entities.”

IDT’s Chief Financial Officer, Bill Pereira, said, “IDT continued to grow its top line at an impressive rate in the fourth quarter. Both of our core telecom and energy businesses accelerated investment in their respective businesses resulting in significantly higher SG&A expense. This investment, however, is intended to grow market share and create long term value for our shareholders.”

INCOME STATEMENT, BALANCE SHEET AND CASH FLOW HIGHLIGHTS

Net income attributable to IDT in 4Q11 was $0.2 million, compared to $7.5 million in 4Q10 and $7.0 million in the prior quarter.   For fiscal 2011, net income attributable to IDT increased to $26.8 million ($1.19 per diluted share) from $20.3 million ($0.94 per diluted share) in fiscal 2010.

 

Net income attributable to IDT included a $3.5 million non-cash gain from discontinued operations.  In September 2011, IDT finalized a settlement of open issues related to the 1Q07 sale of IDT Entertainment to Liberty Media Corporation.  Liberty Media also paid IDT $2.0 million in cash, which will be recorded as income from discontinued operations in 1Q12. 

 

At July 31, 2011, IDT reported $264.4 million of cash, cash equivalents and certificates of deposit, including $6.6 million of restricted cash and cash equivalents, compared to $233.9 million, including $11.8 million in restricted cash and cash equivalents, a year earlier. Cur
rent assets totaled $434.4 million compared to $381.1 million a year earlier, and current liabilities totaled $325.1 million, compared to $285.0 million at the close of fiscal year 2010.

 

Net cash provided by operating activities was $11.4 million in 4Q11, compared to $8.7 million during the year ago quarter. Net cash provided by operating activities during fiscal 2011 totaled $61.8 million compared to $56.2 million for fiscal 2010. Capital expenditures in fiscal 2011 totaled $13.5 million, compared to $8.3 million in the prior year. The increase in capital expenditures resulted from IDT’s efforts to move components of the telecommunications network to a hosted facility and upgrades to internal systems and network. IDT expects to recoup this investment over the next few years through operational cost savings.

 

OPERATING RESULTS BY SEGMENT

IDT TELECOM 

IDT Telecom is comprised of two reporting segments: Telecom Platform Services (TPS) and Consumer Phone Services (CPS). TPS provides various telecommunications solutions, including prepaid and rechargeable calling cards, a range of Voice over Internet Protocol (VoIP) communications services and wholesale carrier services. CPS provides both bundled (unlimited local and long distance) services as well as long distance-only services to consumers in the United States. 

IDT TELECOM – FOURTH QUARTER FISCAL 2011 SUMMARY

$ in millions	4Q11	3Q11	4Q10	YoY Change (%)
Revenues	$358.9	$337.7	$306.6	+17.1%
Gross profit	$57.4	$55.6	$59.2	(2.9)%
Gross margin percentage	16.0%	16.5%	19.3%	(330 basis points)
SG&A expense	$49.1	$44.9	$44.9	+9.5%
Adjusted EBITDA	$8.3	$10.7	$14.4	(42.2)%
Income from operations	$3.4	$6.4	$7.5	(55.1)%

 

IDT TELECOM – FULL-YEAR FISCAL 2011 SUMMARY

$ in millions	FY11	FY10	Change (%)
Revenues	$1,343.0	$1,187.3	+13.1%
Gross profit	$224.9	$221.1	+1.7%
Gross margin percentage	16.7%	18.6%	(190 basis points)
SG&A expense	$181.2	$173.7	+4.3%
Adjusted EBITDA	$43.8	$47.4	(7.7)%
Income from operations	$28.7	$26.9	+6.8%

 

IDT TELECOM:   Telecom Platform Services (TPS)

TPS – FOURTH QUARTER FISCAL 2011 SUMMARY

$ in millions	4Q11	3Q11	4Q10	YoY Change (%)
Revenues	$353.1	$331.5	$298.3	+18.4%
Minutes of use (in millions)	6,987	6,615	5,603	+24.7%
Gross profit	$54.2	$52.3	$54.3	(0.1)%
Gross margin percentage	15.3%	15.8%	18.2%	(290 basis points)
SG&A expense	$47.4	$43.1	$43.0	+10.3%
Adjusted EBITDA	$6.8	$9.2	$11.3	(40.0)%
Income from operations	$1.8	$4.9	$4.5	(59.1)%

 

TPS – FULL-YEAR FISCAL 2011 SUMMARY

$ in millions	FY11	FY10	Change (%)
Revenues	$1,316.6	$1,150.1	+14.5%
Minutes of use (in millions)	26,240	20,685	+26.9%
Gross profit	$210.6	$200.3	+5.2%
Gross margin percentage	16.0%	17.4%	(140 basis points)
SG&A expense	$174.0	$165.5	+5.1%
Adjusted EBITDA	$36.6	$34.8	+5.3%
Income from operations	$21.6	$14.4	+50.0%

 

NOTE: Certain reclassifications have been made to prior periods to conform to the current presentation.

 

For the fourth quarter of fiscal 2011, TPS’ revenues increased 18.4% year over year to $353.1 million, and rose 6.5% sequentially.  Compared to both the year ago and sequential quarters, strong growth in the wholesale carrier business – which accounted for approximately 45% of TPS’ revenues in fiscal 2011 – was supplemented by revenue increases in our retail channel – which accounted for approximately 42% of TPS’ revenues in fiscal 2011. (Comparisons of both minutes of use and financial results versus 3Q11 are influenced by the three additional calendar days in the fourth quarter of fiscal 2011 compared to the third quarter, and by the significant minutes of use typically generated by Mothers’ Day and Fathers’ Day, both of which fall within the fourth quarter of IDT’s fiscal year.) The increase in revenue in our retail channel was driven by sales of BOSS Revolution, IDT Telecom’s pay-as-you-go cardless international calling service, and international mobile top-up (IMTU) products.

TPS’ minutes of use totaled 7.0 billion in 4Q11, a 24.7% increase compared to 4Q10 and a 5.6% increase sequentially. TPS’ wholesale carrier and reseller businesses generated most of the minutes increase year over year, while wholesale carrier and the U.S. retail channel led minutes growth sequentially.

For fiscal 2011, TPS’ revenues totaled $1,316.6 million, a 14.5% increase over fiscal 2010 primarily reflecting growth in the wholesale carrier channel. Wholesale carrier revenue increased 28.1% as a result of good execution of sales and marketing strategies as well as an effective pricing and costing strategy despite continuing declines in wholesale’s average revenue per minute. Within our retail channel, revenues from the sale of traditional, IDT-branded disposable calling cards declined compared to fiscal 2010, but were more than offset by increases in revenues from BOSS Revolution and IMTU sales. 

 

TPS’ minutes of use increased 26.9% compared to fiscal 2010 to 26.2 billion minutes, driven by strong volume increases in both the wholesale carrier and reseller businesses. Our retail channels in Europe and South America also generated minutes of use growth, which more than offset decreases in our retail channels in the U.S. and Asia.

 

TPS’ gross margin percentage in 4Q11 was 15.3%, generating $54.2 million in gross profit. Gross margin percentage declined 280 basis points year over year. Sequentially, gross margin percentage declined by 50 basis points. For fiscal 2011, TPS’ gross margin percentage was 16.0%, a 140 basis point decline. The declines in gross margin for both 4Q11 and fiscal 2011 were primarily due to product mix changes, specifically revenues from our relatively lower margin wholesale carrier, BOSS Revolution and IMTU products, and reseller channel traffic have increased while revenues from relatively higher margin traditional prepaid calling cards have declined.

TPS’ SG&A expense in 4Q11 was $47.4 million, a 10.3% increase compared to 4Q10
, and a 10.0% increase sequentially. For fiscal 2011, TPS’ SG&A expense totaled $174.0 million, a 5.1% increase compared to fiscal 2010. The increases in SG&A expenses in 4Q11 and fiscal 2011 were primarily due to higher external legal fees (primarily related to litigations). 

TPS generated $6.8 million in Adjusted EBITDA in 4Q11, a 40.0% decrease compared to the year-ago period, and a 26.3% decrease compared to the prior quarter.  

For fiscal 2011, TPS’ Adjusted EBITDA totaled $36.6 million, a 5.3% increase from the prior year.

TPS’ depreciation and amortization expense was $3.9 million in 4Q11, a 45.0% decline from the year ago period and a 10.3% decline sequentially. For fiscal 2011, TPS’ depreciation and amortization expense was $17.6 million, a 39.7% reduction compared to fiscal 2010.  TPS’ depreciation and amortization expense declined due to more of its assets becoming fully depreciated and lower levels of capital expenditures in recent periods. 

 

TPS’ income from operations was $1.8 million in 4Q11, a 59.1% decline compared to 4Q10. For fiscal 2011, TPS’ income from operations totaled $21.6 million, a 50.0% increase compared to the prior year. 

TPS’ income from operations included net other operating (losses) gains of $(1.1) million in 4Q11, $0.4 million in 4Q10, $3.5 million in fiscal 2011 and $10.4 million in fiscal 2010.  The net other operating gain in fiscal 2011 reflected a $14.4 million payment received from Cablevision in December 2010, offset by a $10.8 million accrual recorded in connection with the verdict in the patent litigation initiated by Alexsam, Inc. The other operating gain in fiscal 2010 was the result of the March 2010 settlement of calling card litigation between IDT and certain defendants in which IDT received $10.0 million, as well as a gain of $0.4 million in 4Q10 for the settlement of certain other claims. The expense of $1.1 million in 4Q11 was due to an adjustment to our accrual for the Alexsam patent litigation.    

IDT TELECOM: Consumer Phone Services (CPS)

CPS, which includes sales of both bundled (unlimited local and long distance) services as well as long distance-only services, has been in “harvest mode” since fiscal 2006 – maximizing revenues from current customers while maintaining SG&A and other expenses at the minimum levels essential to operate the business.

CPS’ 4Q11 revenues were $5.8 million, a 29.7% decline year over year, and a 7.3% decline sequentially. For fiscal 2011, CPS’ revenues totaled $26.4 million, a 28.9% decline compared to fiscal 2010.

Gross margin for CPS in 4Q11 was 55.6%, a 450 basis point decrease year over year, and a 310 basis point decrease sequentially. For fiscal 2011, CPS’ gross margin averaged 54.3%, a 190 basis point decrease from the prior year.

CPS’ SG&A expense for 4Q11 was $1.7 million, a 9.5% decline year over year, and a 3.7% decrease sequentially. For fiscal 2011, SG&A expense declined to $7.2 million, a 12.8% reduction compared to fiscal 2010.

CPS’ Adjusted EBITDA in 4Q11 was $1.5 million, a 50.3% decline year over year, but a 0.4% increase sequentially. For fiscal 2011, Adjusted EBITDA totaled $7.2 million, a 43.4% decrease compared to fiscal 2010.

CPS’ income from operations for 4Q11was $1.5 million, a 49.1% decline year over year, but a 0.8% increase compared to the prior quarter. For fiscal 2011, income from operations totaled $7.1 million, a 43.1% reduction compared to the prior year.

Overall, CPS’ performance was in line with expectations. Management anticipates that CPS’ customer base and revenues will continue to decline, and that sometime in calendar 2013, CPS will no longer generate positive cash flow. At that point, IDT Telecom intends to exit the business.

§                     GENIE ENERGY

Genie Energy includes the IDT Energy and Genie Oil and Gas segments. The Genie Oil and Gas segment consists of Genie’s interest in AMSO, LLC – a 50/50 joint venture with Total SA to develop oil shale on federal lands in Colorado, and Israel Energy Initiatives, Ltd. (IEI), an oil shale exploration and production venture in Israel. IDT has announced that it will spin-off Genie Energy to its stockholders later this year.

GENIE ENERGY – FOURTH QUARTER FISCAL 2011 SUMMARY

 

$ in millions	4Q11	3Q11	4Q10	YoY Change (%/$)
Revenues	$46.4	$53.8	$46.5	(0.1)%
Gross profit	$11.0	$16.8	$11.2	(1.2)%
Gross margin percentage	23.8%	31.2%	24.0%	(20 basis points)
SG&A expense (including R&D expense)	$13.7	$10.9	$7.4	+85.3%
Adjusted EBITDA	$(2.6)	$5.9	$3.8	$(6.4)
(Loss) income from operations	$(2.6)	$5.9	$3.7	$(6.4)

 

 

GENIE ENERGY – FULL-YEAR FISCAL 2011 SUMMARY

$ in millions	FY11	FY10	Change (%)
Revenues	$203.6	$201.4	1.1%
Gross profit	$53.8	$57.8	(6.9)%
Gross margin percentage	26.5%	28.7%	(220 basis points)
SG&A expense (including R&D expense)	$41.6	$26.3	+58.2%
Adjusted EBITDA	$12.2	$31.5	(61.2)%
Income from operations	$12.2	$31.3	(61.0)%

 

IDT Energy

 

 IDT ENERGY – FOURTH QUARTER FISCAL 2011 SUMMARY

 

$ in millions	4Q11	3Q11	4Q10	YoY Change (%/$)
Revenues	$46.4	$53.8	$46.5	(0.1)%
Gross profit	$11.0	$16.8	$11.2	(1.2)%
Gross margin percentage	23.8%	31.2%	24.0%	(20 basis points)
SG&A expense	$11.3	$8.2	$5.5	+106.6%
Adjusted EBITDA	$(0.3)	$8.6	$5.7	$(6.0)
(Loss) income from operations	$(0.3)	$8.6	$5.6	$(5.9)

 

IDT ENERGY – FULL-YEAR FISCAL 2011 SUMMARY

$ in millions	FY11	FY10	Change (%)
Revenues	$203.6	$201.4	1.1%
Gross profit	$53.8	$57.8	(6.9)%
Gross margin percentage	26.5%	28.7%	(220 basis points)
SG&A expense	$31.4	$19.8	58.2%
Adjusted EBITDA	$22.5	$38.0	(40.8)%
Income from operations	$22.5	$37.8	(40.6)%

 

IDT Energy’s revenues were $46.4 million during 4Q11, a negligible decrease compared to 4Q10.  For fiscal 2011, IDT Energy revenues totaled $203.6 million, a 1.1% increase compared to fiscal 2010.

 

Total meters served as of July 31, 2011 were approximately 405,000, a 9.7% increase compared to July 31, 2010 and a 7.2% increase compared to the total on April 30, 2011, the last day of 3Q11.   Customer churn increased to 5.2% in 4Q11 compared to 3.5% in the year ago quarter reflecting, in part, the increased proportion of new customers resulting from accelerated rates of customer acquisition. New customers typically churn more frequently than long term customers.

 

The average rates of annualized energy consumption for all IDT Energy meters served, as measured by residential customer equivalents (RCEs), are presented in the chart below. (An RCE represents a natural gas customer with annual consumption of 100MM Btus or an electricity customer with annual consumption of 10 MWhrs.)  Because different customers have different rates of energy consumption, RCEs are a useful metric for evaluating the consumption profile of IDT Energy’s customer base. The sequential and year over year increases in customer RCEs resulted primarily from growth in meters served and the acquisitions of customers with relatively higher consumption profiles.

 

IDT Energy – RCEs at End of Quarter (in thousands)
	4Q11	3Q11	2Q11	1Q11	4Q10
Electricity customers	136	119	124	122	117
Natural gas customers	99	94	91	87	88
Total	235	213	215	209	205

 

 

Electric revenue of $40.0 million in 4Q11 decreased 2.0% compared to 4Q10, and increased 36.0% sequentially. Year over year, IDT Energy sold more kWh as a result of an increase in meters served, but consumption per meter and revenue per kWh both declined. The decline in revenue per kWh reflected a reduction in the underlying commodity cost and reduced target margin per kWh sold.

 

During 4Q11, IDT Energy added approximately 22,000 net electric meters. As of July 31, 2011, IDT Energy served approximately 232,000 electric meters compared to approximately 210,000 at both July 31, 2010 and at April 30, 2011.

 

For fiscal 2011, electric revenue was $137.8 million, a 4.3% increase compared to fiscal 2010.  KWh sold increased compared to the prior year reflecting relatively higher usage meters added in new territories, coupled with warmer temperatures in 1Q11 compared to the same period in fiscal 2010. Average revenue per kWh also increased compared to the prior year as a result of an increase in the underlying commodity cost. 

 

Gas revenue in 4Q11 was $6.4 million, a 13.2% increase compared to 4Q10 reflecting a 6.2% increase in revenue per therm, and a 6.6% increase in therms sold. IDT Energy served approximately 173,000 gas meters as of July 31, 2011, compared to 159,000 at July 31, 2010 and 168,000 at April 30, 2011. 

 

For fiscal 2011, gas revenues were $65.8 million, a 5.0% decline compared to fiscal 2010. Although therms sold increased by a modest 1.4% compared to fiscal 2010 reflecting the increase in meters served in the second half of fiscal 2011 compared to the same period in fiscal 2010, revenue per therm declined 6.3% reflecting discounted promotional rates for new customers as well as a de
cline in the cost per therm.

 

Gross margin at IDT Energy was 23.8% in 4Q11, a 20 basis point decline compared to the year ago period and a 740 basis point decrease compared to the prior quarter.  Unit pricing to customers and gross margin targets were reduced to facilitate new customer acquisitions. 

 

For fiscal 2011, gross margin averaged 26.5%, a 220 basis point decrease compared to the prior year. Management previously cautioned that fiscal year 2010’s gross margin levels were likely not sustainable. The decline in gross margin compared to fiscal 2010 reflects increased competition, and the impact of expansion into new territories in New Jersey and Pennsylvania, where gross margin was sacrificed in an effort to facilitate new customer acquisitions.

 

SG&A expense in 4Q11 was $11.3 million, a 106.6% increase compared to the year ago period, and a 38.7% increase compared to the prior quarter.  The year over year and sequential increases reflected the impact of increased customer acquisition costs and marketing expense reflecting the accelerated pace of customer acquisitions and an accrual related to ongoing tax audits. The accrual represents management’s best estimate of the potential liability that could result from these audits.

 

For fiscal 2011, SG&A expense was $31.4 million, a 58.2% increase compared to fiscal 2010. The increase was primarily due to investment in customer base growth including the launch of new marketing channels to acquire higher consumption customers and higher customer acquisition costs associated with the expansion of the business into new territories.

 

Adjusted EBITDA for 4Q11 was $(0.3) million, a $6.0 million decrease compared to the year ago quarter reflecting the decrease in gross profit and increase in SG&A expense. Sequentially, Adjusted EBITDA declined $8.9 million primarily as the result of the seasonal reduction in gas revenue and gross profit, as well as the increase in SG&A expense.

 

For fiscal 2011, IDT Energy’s Adjusted EBITDA totaled $22.5 million, a 40.8% decrease compared to fiscal 2010 reflecting the reduced gross profit and increased SG&A expenses associated with entering the initial territories within the new Pennsylvania and New Jersey markets as well as the tax accrual previously mentioned.

 

Loss from operations in 4Q11 was $(0.3) million, a $5.9 million decrease year over year and an $8.9 million decrease sequentially.

 

For fiscal 2011, IDT Energy generated $22.5 million in income from operations, a 40.6% decline compared to the prior year.

 

Genie Oil and Gas

 

Genie Oil and Gas has no revenue. Its operating expenses consist primarily of costs incurred by IEI.  

 

IEI holds an exclusive Shale Oil Exploration and Production License covering 238 square kilometers in the Shfela basin region in Israel.  During 4Q11, IEI continued resource appraisal and characterization work in the license area. To date, the results from the appraisal process, both from field tests and laboratory experiments, confirm IEI’s expectations as to the attractiveness of the oil shale resource in the license area from the standpoint of richness, thickness and hydrology.  

 

IEI is continuing permitting and other preparatory work required prior to construction of a pilot plant and operation of a pilot test. The pilot test will provide a basis for determining the technical, environmental and economic viability of IEI’s proposed process for extracting oil from the oil shale resource. Pilot plant design has begun, and construction is scheduled to begin in calendar 2012 if not delayed by permitting, regulatory action or pending litigation. Pilot test operations could begin as early as calendar 2013.

 

Genie Oil and Gas’ loss from operations of $2.3 million in 4Q11 was comprised of $0.2 million in SG&A expense and $2.1 million in research and development expense. In the year ago quarter, the loss from operations totaled $1.9 million and was comprised of $0.3 million in SG&A expense and $1.6 million in research and development expense. The loss from operations increased $0.4 million compared to the year ago quarter reflecting the increase in research and development expense partially offset by adjustments to the valuations of stock based compensation included in SG&A expense.

 

For fiscal 2011, Genie Oil and Gas’ loss from operations was $10.2 million, compared to $6.5 million in fiscal 2010.  Management expects that Genie’s loss from operations will further increase materially in fiscal 2012 reflecting costs associated with the expected construction, drilling and operations of IEI’s pilot test as well as further staffing to support engineering and scientific operations and business development activities.

 

Genie accounts for its 50% interest in AMSO, LLC using the equity method.  Genie’s equity in the net loss of AMSO, LLC – $2.3 million in 4Q11 and $5.2 million in fiscal 2011 – is included in “Other (expense) income, net” in the consolidated statement of income. During 4Q11, AMSO, LLC, a joint venture oil shale exploration and production initiative with Total, SA, continued construction and ongoing research and development work to prepare for its upcoming pilot test. The pilot test is expected to begin in the fall of 2011 barring permitting or operational delays. The pilot test is intended to confirm the accuracy of several of the key underlying assumptions of AMSO, LLC’s proposed in-situ heating and retorting process.

 

OTHER RECENT DEVELOPMENTS

On June 20, 2011, a Special Committee of IDT’s Board of Directors approved the purchase by IDT of 0.3 million shares of IDT’s Class B common stock from Howard Jonas at $24.83 per share, the closing price for the Class B common stock on that day. IDT paid an aggregate of $7.5 million to purchase the shares.

 

On August 5, 2011, the Administrative Court in Gothenburg, Sweden rejected IDT’s appeal and upheld the Swedish Tax Agency’s imposition of a value added tax (“VAT”) assessment including penalties and interest of approximately SEK 147 million ($23.3 million) for the period from January 2004 through June 2008. Our potential exposure for VAT, penalties and interest for the period from July 2008 through July 2011 is an additional SEK 38 million ($6.0 million). IDT, in consultation with its counsel, has determined that it is likely to prevail upon appeal and accordingly has not recorded an accrual for this matter. However, in the event its appeal is unsuccessful, imposition of assessments and penalties could have a material adverse effect on IDT’s results of operations, cash flows and financial condition.

 

On August 26, 2011, Genie Energy Ltd. (“Genie”) filed an initial registration statement, including an information statement, related to the anticipated spin-off of Genie to IDT stockholders. The filed materials are available through the Securities and Exchange Commission's website at http://www.sec.gov/cgi-bin/browse-edgar?CIK=0001528356&action=getcompany. IDT has also obtained a private letter ruling from the IRS opining on the tax free nature of the spin-off. T
he spin-off is scheduled to occur before the end of the calendar year, and as early as October 31^st.

 

On September 19, 2011, IDT’s Board of Directors declared a $0.23 dividend for the fourth quarter payable to stockholders of both IDT Class A and Class B common stock. 

 

IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL INFORMATION

§         Management’s discussion of IDT’s financial and operational results is posted in an audio file on the IDT website at https://www.idt.net/about/ir/overview.asp. The audio file (in MP3 format) may be played directly from the website or downloaded for later playback.

§         An archived copy of this audio file will be available on the Investor Relations page of the IDT website, under the “Presentations” heading, for at least one year after the webcast.

§         Copies of this release – which includes a reconciliation of the Non-GAAP financial measures that are both used herein and referenced during management’s discussion of results – are available in the Investor Relations portion of IDT’s website, at https://www.idt.net/about/ir/overview.asp.

§         Q&A will be in a written format. Investors and others interested in IDT are invited to e-mail questions for management to invest@idt.net. IDT will accept questions received through the close of business on Tuesday, October 11, 2011. Questioners must identify themselves by name and (if applicable) firm. When management can constructively answer the question, the initial question, the questioner’s name and firm, and management’s response will be posted in a document available on IDT’s website and in a Form 8-K filing as early as Monday, October 17, 2011 following the market close.

ABOUT IDT CORPORATION

IDT Corporation (www.idt.net) is a consumer services company with operations primarily in the telecommunications and energy industries. IDT Corporation's Class B Common Stock trades on the New York Stock Exchange under the ticker symbol IDT.

In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate, “target” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K.  These factors include, but are not limited to, the following: potential declines in prices for our products and services; our ability to maintain and grow our calling card business, our wholesale telecommunication businesses and our retail energy business; availability of termination capacity to particular destinations; our ability to maintain carrier agreements with foreign carriers; our ability to obtain telecommunications products or services required for our products and services; the business and regulatory evolution of and competition and unfair business practices in, the energy services business in New York State, New Jersey and Pennsylvania; financial stability of our major customers; our ability to maintain our income and improve our cash flow; impact of government regulation; effectiveness of our marketing and distribution efforts; and general economic conditions.  We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.

Contact:

IDT Corporation Investor Relations

Bill Ulrey

invest@idt.net

973-438-3838

 

IDT CORPORATION

 

CONSOLIDATED BALANCE SHEETS

 

 

 

 

IDT CORPORATION

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

Note: Certain reclassifications have been made to prior periods to conform to the current presentation.

Year ended July 31 (in thousands)	2011	2010
	(Unaudited)
OPERATING ACTIVITIES
Net income	$        23,371	$         20,273
Adjustments to reconcile net income to net cash provided by operating activities:
Net (income) loss from discontinued operations	(3,500 )	380
Depreciation and amortization	20,976	33,426
Severance and other payments	(2,978 )	(2,457 )
Deferred income taxes	(2,814 )	—
Provision for doubtful accounts receivable	3,377	3,777
Net realized gains from sales of marketable securities	(5,379 )	(336 )
Gain on proceeds from insurance	(2,637 )	—
Gain on sales of buildings	—	(675 )
Interest in the equity of investments	5,295	3,467
Stock-based compensation	4,832	2,541
Change in assets and liabilities:
Trade accounts receivable	(24,381 )	21,672
Prepaid expenses, other current assets and other assets	(2,784 )	(8,072 )
Trade accounts payable, accrued expenses, other current liabilities and other liabilities	42,741	(21,348 )
Income taxes payable	(2,385 )	552
Deferred revenue	8,115	3,003
Net cash provided by operating activities	61,849	56,203
INVESTING ACTIVITIES
Capital expenditures	(13,453 )	(8,310 )
(Repayment) collection of notes receivable, net	(88 )	130
Capital contributions to AMSO, LLC	(3,943 )	(1,991 )
Increase in investments	(3,015 )	(400 )
Proceeds from sales and redemptions of investments	2,446	2,762
Decrease in restricted cash and cash equivalents	5,250	53,161
Proceeds from sales of buildings	100	5,270
Proceeds from insurance	3,524	500
Proceeds from marketable securities	5,731	4,618
Purchases of certificates of deposit	(5,503 )	—
Proceeds from maturities of certificates of deposit	2,258	—
Net cash (used in) provided by investing activities	(6,693 )	55,740
FINANCING ACTIVITIES
Cash of subsidiaries deconsolidated as a result of the CTM Spin-Off	—	(9,775 )
Dividends paid	(15,178 )	—
Distributions to noncontrolling interests	(2,010 )	(1,939 )
Proceeds from sales of stock of subsidiaries	10,000	5,690
Repurchase of noncontrolling interests	(1,528 )	—
Proceeds from exercise of stock options	1,674	90
Repayments of capital lease obligations	(4,821 )	(5,955 )
Repayments of borrowings	(4,602 )	(622 )
Repurchases of Class B common stock from Howard S. Jonas	(7,499 )	—
Repurchases of common stock and Class B common stock	(205 )	(1,879 )
Net cash used in financing activities	(24,169 )	(14,390 )
DISCONTINUED OPERATIONS
Net cash provided by operating activities	—	930
Net cash used in investing activities	—	(44 )
Net cash used in financing activities	—	(471 )
Net cash provided by discontinued operations	—	415
Effect of exchange rate changes on cash and cash equivalents	1,513	(597 )
Net increase in cash and cash equivalents	32,500	97,371
Cash and cash equivalents at beginning of year	221,753	124,382
Cash and cash equivalents at end of year	$      254,253	$        221,753
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments made for interest	$          5,008	$           4,822
Cash payments made for income taxes	$          4,235	$           4,898
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES
Receivable for issuance of equity of subsidiary	$          1,000	$               —
Mortgage notes payable settled in connection with the sales of buildings	$              —	$           8,837
Net assets excluding cash and cash equivalents of subsidiaries deconsolidated as a result of the CTM Spin-Off	$              —	$           6,011