NEWARK, NJ
— June 8, 2009: IDT Corporation (NYSE: IDT; IDT.C)
today announced financial results for its fiscal 2009 third quarter ended
April 30, 2009. The Company has scheduled a webcast to discuss its financial
and operational results for 5:00 PM Eastern today. In a change from prior
practice, in lieu of taking questions during the webcast, IDT management will
accept questions relating to the Company that are e-mailed to invest@corp.idt.net
before 5:00 PM on Tuesday, June 9th. If management can
constructively answer questions, it will do so by posting the question along
with its answers on the IDT Corporation website’s (www.idt.net)
Investor Relations page as early as Friday, June 12th, after the
market close, and through filing the material on a Form 8-K.
OVERALL RESULTS
§
Adjusted EBITDA for Q3 2009 was $14.7 million, compared to negative
Adjusted EBITDA of ($38.5) million for Q3 2008, and to Adjusted EBITDA of
$21.2 million for Q2 2009.
§
Revenues fell 11.7% year over year (Q3 2009 compared to Q3 2008) and
11.0% sequentially (Q3 2009 compared to Q2 2009), to $389.0 million.
§
Gross margin percentage increased 350 basis points year over year and
80 basis points sequentially, to 24.0%, on gross profit of $93.3 million.
§
Selling, General and Administrative (“SG&A”) expenses declined by 36.5%
(a $42.6 million reduction from Q3 2008), to $74.2 million.
§
Impairment charges, consisting of write-offs of goodwill and a
write-down of real estate, of $62.1 million were recorded in the current
quarter. Goodwill impairments are preliminary and subject
to adjustment (see below).
§
Loss from operations for Q3 2009 was ($57.3) million including the
$62.1 million impairment charge and restructuring charges of $0.6 million,
compared to an operating loss of ($72.4) million during Q3 2008 (when
impairment and restructuring charges totaled $16.5 million), and to an
operating loss of ($8.8) million in Q2 2009 (when impairment and restructuring
charges totaled $16.8 million).
§
Cash, cash equivalents and marketable securities increased to $201.5
million at the end of the quarter from $195.6 million at January 31, 2009.
Included in these balances were restricted cash, cash equivalents and
marketable securities of $63.9 million at April 30, 2009 compared to $58.5
million at January 31, 2009 and cash and cash equivalents of discontinued
operations of $0.2 million at April 30, 2009 compared to $2.8 million at
January 31, 2009.
§
Cash flow from operating activities in Q3 2009 was a negative $3.9
million, due in part to $25.0 million in payments to the IRS during the
quarter for outstanding federal income tax related to fiscal years 2001-2004.
§
Capital expenditures, primarily at IDT Telecom, were $5.0 million in Q3
2009, and the Company also expended $1.5 million in repurchases of its Class B
common stock and common stock during the quarter.
Adjusted EBITDA for all periods presented is a non-GAAP measure representing
operating income exclusive of depreciation and amortization, restructuring and
impairment charges, and, in the current quarter, gain on sale of an interest
in AMSO, LLC It is one of several key metrics used by
management to evaluate the Company’s and its segments’ operating performance.
The accompanying schedule reconciles Adjusted EBITDA to the
corresponding GAAP measure loss from operations.
IDT revenues for the third quarter of fiscal 2009 were $389.0 million compared
to $440.7 million for the third quarter of fiscal 2008 – a drop of 11.7% –
reflecting continued declines in IDT Telecom revenues. Total
direct cost of revenues in Q3 2009 fell to $295.7 million, down 15.6% from the
year ago quarter. Total SG&A fell by 36.5% (a $42.6 million reduction from Q3
2008), to $74.2 million as a result of the Company’s cost cutting and ongoing
restructuring program. SG&A in Q3 2008 included a $10.5 million accrual for a
pre-tax litigation charge.
IDT reported an operating loss of ($57.3) million for Q3 2009, including
$62.1 million in impairment charges. In the comparable period a year ago, the
Company reported an operating loss of ($72.4) million, including $16.5 million
in restructuring charges. IDT recorded estimated goodwill impairment in the
second and third quarters of fiscal 2009 based on preliminary results of its
goodwill impairment tests under GAAP. The impairment recorded in fiscal 2009
is subject to adjustment as the analysis is completed. As of April 30, 2009,
IDT reported total goodwill of $12.4 million.
IDT’s net loss was ($63.4) million, or ($2.88) per diluted share, in the
third quarter of fiscal 2009 compared to a net loss of ($82.2) million, or
($3.29) per diluted share, in the third quarter of fiscal 2008. The weighted-average
number of shares used to calculate basic and diluted earnings per share was
22.1 million and 25.0 million in Q3 2009 and Q3 2008, respectively
– which reflects the Company’s 1-for-3 reverse stock split that
took place in February 2009 as well as the impact of the Company’s stock
buyback program. Net loss in Q3 2009 includes losses from discontinued
operations, related to IDT Carmel, of ($3.0) million, and net loss in Q3 2008
is net of income from discontinued operations of $1.4 million.
“During the past year, we narrowed IDT’s strategic focus and streamlined
operations. Consequently, the Company’s operational performance during the
third quarter improved significantly compared to a year ago,” said CEO Jim
Courter. “IDT Energy led with another strong quarter.
Aggressive cost cutting at IDT Telecom and at corporate also contributed to
very strong year-over-year Adjusted EBITDA improvement. All in all, we have
made tremendous progress in the past year and now have a solid foundation on
which to build.
“Looking ahead, by the end of Q1 2010, we expect to have worked through
most of the restructuring and other non-operational legacy costs that have so
adversely impacted our bottom line in recent quarters. This should bring
commensurate improvement in our bottom line performance and stability to our
balance sheet in fiscal 2010, although we cannot predict the impact of further
deterioration in the broader economy. Nevertheless, challenging competitive
environments in our key telecommunications markets and less favorable market
conditions for IDT Energy will likely constrain further Adjusted EBITDA growth
over the next several quarters,” Courter concluded.
RESULTS BY SEGMENT
IDT TELECOM
Adjusted EBITDA at IDT Telecom jumped to $10.0 million in Q3 2009, compared to
a loss of ($0.9) million in the same period a year ago. Declines in revenue
year-over-year were more than offset by aggressive reductions in SG&A spending
and network connectivity costs.
Revenues declined to $312.2 million in Q3 2009, down $49.2 million (13.6%)
year-over-year. Gross margin percentage for IDT Telecom was
21.3% in the third quarter of fiscal 2009, compared to 21.9% in Q3 2008.
SG&A expenses declined $21.4 million (28.7%), to $53.2 million in Q3 2009,
primarily as a result of lower compensation and employee benefit costs,
resulting from previously announced headcount, salary and benefit reductions.
IDT Telecom recorded restructuring and impairment charges of $29.3 million
during Q3 2009, almost all of it stemming from the write-off of goodwill
pertaining to our rechargeable US
calling card unit, a line of business within our Telecom Platform Services
segment. These charges tipped IDT Telecom to a loss from
operations of ($29.4) million in the third quarter of fiscal 2009, compared to
a loss of ($27.2) million during Q3 2008, when IDT Telecom also reported $12.0
million in restructuring related charges.
Telecom Platform Services (Wholesale and Retail Services)
The Telecom Platform Services segment carried 5.270 billion minutes of traffic
in the third quarter of fiscal 2009, a decrease of 5.2% year-over-year. The
average revenue per minute declined by 8.6%.
Revenues during the quarter fell to $299.6 million, down $42.8 million (12.5%)
compared to Q3 2008. The revenue decline is due to both the
softness in minute volume as well as the contraction in average revenue per
minute, as a result of the ongoing challenging business conditions in the
global economy, fierce competition in both our retail and wholesale channels,
and in line with recent declines in international wholesale industry traffic
levels.
Gross margin improved to 19.9% during the quarter, up from 19.3% in the year
ago quarter, as aggressive reductions to network connectivity costs, combined
with improvements to average termination cost per minute, more than offset the
negative margin impact of top line volume and pricing declines. Our global
calling card retail businesses maintained stable gross profit performance,
holding well against the continued impact of the global economic downturn on
the primary immigrant communities that we serve.
SG&A spending was substantially reduced year over year, from $71.6 million in
Q3 2008 to $50.5 million in Q3 2009, primarily as a result of lower
compensation and employee benefit costs resulting from previously announced
headcount reductions. Aggressive cost cuts were also made in other areas of
SG&A spending, such as legal and other professional fees, office and network
facilities, and equipment/software maintenance costs.
As a result of the aggressive reductions to Telecom Platform Services cost
structure, both in terms of network connectivity and SG&A, Adjusted EBITDA
improved to $6.4 million during Q3 2009, compared to an Adjusted EBITDA loss
of ($10.3) million a year earlier.
Consumer Phone Services (CPS)
Consumer Phone Services, which includes both bundled (unlimited local and long
distance) services customers as well as long distance-only customers, has been
in “harvest mode” since fiscal 2006. During
Q3 2009, subscriber attrition continued at rates consistent with historical
experience, with notably higher depletion rates for bundled phone service
customers.
The customer base for bundled phone services was approximately 32,000 as of
April 30, 2009, compared to approximately 54,000 as of April 30, 2008. The
customer base for long distance-only services was approximately 108,000 as of
April 30, 2009 compared to approximately 142,000 as of April 30, 2008.
Revenues declined to $12.6 million in the quarter, down 33.7% from the same
period a year ago, and down 11.1% sequentially.
Gross margin for this segment was 53.2% in the third quarter of fiscal 2009,
in line with our run-rate expectations. In Q3 2008, gross
margin for CPS was 67.7%, due to a reversal of certain service connectivity
accruals, resulting from a positive settlement of a billing dispute that
raised the margin in Q3 2008 above historic and subsequent levels. Similarly,
in Q2 2009, gross margin was again elevated – at 66.5%, due to a reversal in
Q2 2009 of certain direct costs previously accrued.
SG&A declined to $2.7 million for the quarter, an 8.3% reduction
year-over-year, helping CPS contribute $3.6 million in Adjusted EBITDA during
the third quarter of fiscal 2009, compared to $9.4 million in Adjusted EBITDA
in the same period a year ago.
IDT ENERGY
IDT Energy reported another strong quarter. Adjusted EBITDA
climbed to $12.8 million in Q3 2009 from $0.9 million during Q3 2008. Favorable
market conditions and customer base acquisition growth again helped IDT Energy
improve gross profit and margins year over year even as revenues remained
relatively flat.
The total number of meters as of April 30, 2009 was approximately 414,000,
comprised of 178,000 gas and 236,000 electric meters. Total
meters were up 20.9% year over year from 343,000 on April
30, 2008. The pace of sequential meter growth slowed to 6.1%
during Q3 2009 compared to 16.2% in Q2 2009 as the level of sales and
marketing efforts decreased, and IDT Energy attempted to sharpen the focus of
its customer acquisition program to concentrate on acquiring meters with
higher consumption per meter. Churn
during the quarter averaged 4.54% per month, on par with the per month average
churn during the same period a year ago, and slightly better than the 5.01%
recorded for the previous quarter.
Revenues for the quarter held at $66.7 million, virtually unchanged compared
to $66.3 million during the same period a year ago. Revenues
generated by the larger customer base and slightly higher per meter
consumption were nearly offset by declining prices.
Declining costs for both electricity and gas drove direct costs down by 21.7%
compared to the same period a year ago to $46.9 million. As a result, the
gross margin percentage tripled from 9.7% in the third quarter a year ago to
29.7% in Q3 2009.
SG&A rose to $6.9 million in Q3 2009, a 29.5% year over year increase. SG&A
costs were driven primarily by higher variable fees charged by the utilities,
as well as by Keyspan’s introduction of a purchase of receivables (POR)
program. These increases were offset somewhat by lower
commission costs - reflecting the slower pace of customer acquisitions - and
lower compensation costs.
IDT Energy reported $12.8 million in income from operations during the
quarter, compared to $0.9 million in the year ago quarter.
IDT CAPITAL
IDT Capital reported revenues of $10.1 million in Q3 2009 compared to $13.1
million in Q3 2008. The revenue decline primarily reflects
the ongoing effort by the Company to shut down or dispose of non-core business
initiatives. Within IDT Capital, revenues of the Local
Media Group - comprised of CTM Media Group, WMET, and our interest in IDW
Publishing - fell slightly to $7.1 million, down 4.6% from a year ago.
American Shale Oil, LLC (AMSO) and Israel Energy Initiatives (IEI) comprise
the Alternative Energy Group. These early stage ventures
did not generate revenue.
Cost cutting as well as business closings and dispositions helped to drive
down direct costs, nearly doubling the gross margin percentage from 36.6% in
Q3 2008 to 69.4% a year later.
SG&A for IDT Capital was also reduced sharply over the same period, falling
38.8% to $8.3 million in Q3 2009 compared to the same period a year ago.
Research and development costs incurred by our Alternative Energy Group, which
were $6.2 million in Q3 2008, declined by 88% to just $0.7 million, reflecting
the impact of our initial investment in AMSO, which was charged to research
and development costs in Q3 2008. Following the sale of a
stake in AMSO to Total, effective March 2009 we no longer consolidate AMSO.
Instead, we account for our 50% ownership interest in AMSO using the equity
method since we have the ability to exercise significant influence over its
operating and financial matters, although we no longer control AMSO.
In addition, as a result of the Total transaction, we recorded a $2.6 million
gain, which is reported within IDT Capital’s loss from operations.
On an Adjusted EBITDA basis, IDT Capital lost ($2.3) million in Q3 2009, a
significant (84.8%) improvement over the ($15.1) million Adjusted EBITDA loss
during the third quarter of 2008. The Adjusted EBITDA loss
generated by the Local Media Group was reduced nearly 50% to ($0.5) million
from ($1.0) million in Q3 2008.
IDT Capital impairments totaled $33.1 million in Q3 2009, primarily related to
write-offs of the goodwill of CTM Media and the WMET radio station, and the
write-down of certain real estate.
IDT Capital reported an operating loss of ($34.3) million in the third quarter
of 2009 compared to an operating loss of ($17.7) million in the comparable
period last year, mainly as a result of the CTM goodwill impairment charge of
$29.7 million recorded in Q3 2009.
Zedge (http://www.zedge.net),
the destination for free mobile content, continues to grow. The site is
visited by just over 14 million monthly unique visitors. The combined web and
mobile traffic averages just over 16 million daily page views. Zedge’s
advertising revenue has been negatively impacted by weakness in the broader
advertising market and Zedge is looking at ways to diversify its sources of
revenue.
During Q4 2008, IEI was granted a license to explore certain public lands in Israel
for the potential production of shale oil. IEI has begun
resource characterization activities.
On May 12, 2009, IDT’s Board of Directors approved a spin-off to its
stockholders of the IDT Capital businesses in the Local Media Group. The
proposed spin-off is discussed in greater detail in “Other Recent
Developments” below.
OTHER RECENT DEVELOPMENTS
On January 27, 2009, IDT entered into a modified installment agreement with
the IRS, whereby it agreed to pay remaining amounts owed to the IRS for fiscal
years 2001 – 2004. During Q3 2009, IDT paid $25 million to the IRS on its
outstanding balance. By June 15, 2009, IDT will have paid up to an additional
$13.4 million to fully satisfy its obligation under the modified agreement.
The final payment may be reduced if the IRS waives the penalties.
On September 30, 2008 and October 8, 2008, IDT received notices from the New
York Stock Exchange (NYSE) that it was no longer in compliance with the NYSE’s
$100 million market capitalization threshold and the $1.00 average closing
price over a consecutive 30-day trading period requirement, respectively,
required for continued listing. IDT submitted a plan to the NYSE to regain
compliance, and that plan was accepted. The NYSE monitors compliance with the
plan and may commence delisting procedures if IDT fails to meet the milestones
set forth in its plan. On February 25, 2009, IDT implemented a one-for-three
reverse stock split for each class of its outstanding shares effective with
the start of trading. On April 8, 2009, the NYSE notified IDT that the
Company’s listed equity securities (IDT and IDT.C) had regained compliance
with the NYSE’s minimum share price continued listing requirement. IDT
has until March 2010 to regain compliance with the $100 million market
capitalization standard. In addition, according to the rules of the NYSE, the
NYSE will promptly initiate suspension and delisting procedures with respect
to a listed company that is determined to have average global market
capitalization over a consecutive 30 trading-day period of less than $25
million. The NYSE has reduced this $25 million threshold to $15 million until
June 30, 2009. As of the close of trading on June 10, 2009,
IDT’s global market capitalization exceeded the $25 million threshold.
During Q3 2009, IDT purchased an aggregate of 1.4 million shares of its
Class B Common Stock and Common Stock for $1.5 million under an existing stock
buyback program. As of June 8, 2009, 7.0 million shares (of either class)
remained authorized for repurchase under the current stock buyback plan.
On May 18, 2009, IDT was served with notice of a complaint filed on May 15,
2009 by T-Mobile USA, Inc. (T-Mobile) in the Superior Court of the State of Washington,
KingCounty.
The complaint alleges that IDT Domestic Telecom breached a wholesale
supply agreement with T-Mobile entered into on February 2005 by failing to
purchase at least $75 million in services from T-Mobile. T-Mobile
claims that IDT Domestic Telecom purchased only approximately $31 million of
services under the agreement. T-Mobile is seeking monetary
damages, including interest and costs, in an amount to be determined at trial.
IDT intends to conduct a vigorous legal defense.
On May 12, 2009, IDT’s Board of Directors approved a spin-off to its
stockholders of the equity of CTM Media Holdings, Inc. (CTM), a newly-formed
subsidiary of the Company. Prior to effecting the spin-off,
the following subsidiaries of the Company would be transferred through a
company restructuring: CTM Media Group, Inc.; Beltway Acquisition Corporation
(which holds the broadcast license of the WMET-AM radio station); IDT Local
Media, Inc. (which is an indirect subsidiary of IDT that conducted certain
operations related to CTM Media Group, which business lines are no longer
active) and IDT Internet Mobile Group, Inc. (which owns approximately 53% of
the equity interests in Idea and Design Works, LLC (known as IDW Publishing)).
Approval of the spin-off by IDT’s stockholders is not required. The planned
spin-off will be accomplished through a pro rata distribution of CTM’s common
stock to IDT stockholders of record as of the close of business on the record
date, which has yet to be determined. Under the current plan, each IDT
stockholder will receive one share of CTM’s Class A common stock for every
three shares of the IDT common stock and Class B common stock; and one share
of CTM’s Class B common stock for every three shares of IDT Class A common
stock held on the record date. IDT stockholders will receive cash in lieu of
fractional shares of CTM common stock. On May 13, 2009, CTM filed a
registration statement on Form 10 with the U.S. Securities and Exchange
Commission including detailed information such as results of operations for
the entities to be included in the spin-off. IDT’s
Board of Directors may, amend, modify or abandon the spin-off or the
transactions related thereto at any time prior to the distribution of CTM’s
common stock to IDT stockholders.
On March 3, 2009, IDT announced that it had closed on the sale to Total, the
fifth largest integrated oil and gas company in the world, of a fifty percent
interest in IDT’s AMSO subsidiary. Total and IDT will
jointly develop a research and demonstration program to produce and
commercialize shale oil utilizing a new in-situ technology on AMSO’s federal
leasehold in western Colorado.
Total will provide a majority of the funding during the research, development
and demonstration (RD&D) phase of the project, and technical assistance
throughout the life of the project. AMSO will continue to
manage operations during the RD&D phase of the project. Total
will assume management responsibilities during the subsequent commercial phase.
On February 23, 2009, IDT announced that, as part of its ongoing effort to
reduce overhead and operating costs, it will consolidate operations in newly
leased offices located at 550
Broad Street in Newark,
NJ on an interim basis, while
evaluating other long term relocation options. IDT is
currently in the process of completing necessary work on the new space and
moving equipment and personnel into the new building. The
Company is assessing its options with regard to the 520
Broad Street building. The
property is owned by a subsidiary of IDT and the outstanding mortgage on this
property is $26.1 million as of April 30, 2009.
On January 30, 2009, IDT sold substantially all of the consumer debt
portfolios held by its IDT Carmel
division, for $18.0 million, and reclassified the segment as a discontinued
operation. The Company subsequently exited the debt portfolio management and
collections business during Q3 2009. As a result, IDT incurred additional
close down costs in the third quarter, including severance and lease
termination costs, of approximately $1.4 million. IDT Carmel’s loss from
operations in Q3 2009 was ($3.1) million.
IDT EARNINGS WEBCAST INFORMATION & SUPPLEMENTAL INFORMATION
§
The earnings webcast is scheduled for today, June 8, 2009, at 5:00 PM
Eastern time.
§
The webcast may be accessed by visiting the IDT Corporation website at www.idt.net,
or by using the following hyperlink: http://www.investorcalendar.com/IC/CEPage.asp?ID=141724.
§
Windows Media software is required to listen to the streaming feed.
Please allow at least 15 minutes to download any necessary audio software
prior to the webcast.
§
An archived copy of the webcast will be available on the Investor
Relations page of the IDT website, at http://www.idt.net/about/ir/overview.asp
under the “Presentations” heading, for at least one year after the webcast.
§
A reconciliation of the Non-GAAP financial measures discussed during
the webcast is available below and on the Investor Relations portion of IDT’s
website, at http://www.idt.net/about/ir/overview.asp.
§
In a change from prior practice, the webcast will not include a Q&A
session. In lieu of asking questions during the webcast,
investors and others interested in the Company are invited to e-mail questions
to invest@corp.idt.net. The
company will accept questions received through close of business on Tuesday,
June 9th. 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’s name, and
management’s response will be posted in a document available on the IDT
Corporation’s website and in an 8-K filing as early as Friday, June 12th
following the market close.
ABOUT IDT CORPORATION
IDT
Corporation (www.idt.net)
is a multinational holding company focused on the telecommunications and
energy industries. IDT
Corporation's Class B Common Stock and Common Stock trade on the New York
Stock Exchange under the ticker symbols IDT and IDT.C, respectively.
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
retail telecommunications services, particularly our prepaid calling card
business; availability of termination capacity; financial stability of our
customers; our ability to maintain carrier agreements with foreign carriers;
effectiveness of our marketing and distribution efforts; increased
competition, particularly from regional bell operating companies; our ability
to manage our growth; impact of government regulation; our ability to obtain
telecommunications products or services required for our products and
services; and general economic conditions, particularly in the
telecommunications markets. 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
973-438-3838
william.ulrey@idt.net
IDT CORPORATION |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
April 30, |
|
July 31, |
2009 |
|
2008 |
|
(Unaudited) |
|
|
|
(in thousands) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$126,095 |
|
$163,152 |
Restricted cash and cash equivalents |
58,671 |
|
4,133 |
Marketable securities |
16,553 |
|
111,462 |
Trade accounts receivable, net of allowance for doubtful accounts of $20,641 at April 30, 2009 and $21,589 at July 31, 2008 |
138,075 |
|
178,594 |
Prepaid expenses |
16,351 |
|
22,572 |
Investments—short-term |
5,464 |
|
22,563 |
Other current assets |
32,510 |
|
55,761 |
Assets of discontinued operations |
354 |
|
68,202 |
|
|
|
|
Total current assets |
394,073 |
|
626,439 |
Property, plant and equipment, net |
197,530 |
|
227,944 |
Goodwill |
12,355 |
|
74,509 |
Licenses and other intangibles, net |
2,182 |
|
9,394 |
Investments—long-term |
10,481 |
|
40,295 |
Deferred income tax assets, net |
— |
|
2,300 |
Other assets |
19,281 |
|
22,094 |
|
|
|
|
Total assets |
$635,902 |
|
$1,002,975 |
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Trade accounts payable |
$54,816 |
|
$82,974 |
Accrued expenses |
159,824 |
|
202,534 |
Deferred revenue |
69,305 |
|
88,618 |
Income taxes payable |
33,599 |
|
123,000 |
Capital lease obligations—current portion |
7,682 |
|
9,316 |
Notes payable—current portion |
2,185 |
|
2,115 |
Other current liabilities |
14,534 |
|
15,021 |
Liabilities of discontinued operations |
1,732 |
|
1,472 |
|
|
|
|
Total current liabilities |
343,677 |
|
525,050 |
Capital lease obligations—long-term portion |
6,831 |
|
11,148 |
Notes payable—long-term portion |
98,494 |
|
100,150 |
Other liabilities |
17,474 |
|
18,441 |
|
|
|
|
Total liabilities |
466,476 |
|
654,789 |
Minority interests |
3,353 |
|
5,849 |
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued |
— |
|
— |
Common stock, $.01 par value; authorized shares—100,000; 9,242 and 8,358 shares issued and 4,295 and 4,847 shares outstanding at April 30, 2009 and July 31, 2008, respectively |
92 |
|
84 |
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and outstanding at April 30, 2009 and July 31, 2008 |
33 |
|
33 |
Class B common stock, $.01 par value; authorized shares—200,000; 22,913 and 21,301 shares issued and 16,309 and 17,083 shares outstanding at April 30, 2009 and July 31, 2008, respectively |
229 |
|
213 |
Additional paid-in capital |
720,188 |
|
717,256 |
Treasury stock, at cost, consisting of 4,947 and 3,511 shares of common stock and 6,604 and 4,218 shares of Class B common stock at April 30, 2009 and July 31, 2008, respectively |
(292,104) |
|
(285,536) |
Accumulated other comprehensive (loss) income |
(3,218) |
|
6,754 |
Accumulated deficit |
(259,147) |
|
(96,467) |
Total stockholders’ equity |
166,073 |
|
342,337 |
|
|
|
|
Total liabilities and stockholders’ equity |
$635,902 |
|
$1,002,975 |
IDT CORPORATION |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
April 30, |
|
April 30, |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
(In thousands, except per share data) |
Revenues |
$388,989 |
|
$440,735 |
|
$1,258,781 |
|
$1,363,497 |
Costs and expenses: |
|
|
|
|
|
|
|
Direct cost of revenues (exclusive of depreciation and amortization) |
295,706 |
|
350,550 |
|
963,865 |
|
1,077,620 |
Selling, general and administrative (i) |
74,169 |
|
116,768 |
|
239,732 |
|
346,065 |
Depreciation and amortization |
11,894 |
|
17,345 |
|
38,869 |
|
51,717 |
Bad debt |
2,820 |
|
3,078 |
|
7,623 |
|
8,321 |
Research and development |
1,548 |
|
8,885 |
|
7,932 |
|
9,808 |
Impairments |
62,120 |
|
54 |
|
72,761 |
|
262 |
Restructuring charges |
609 |
|
16,453 |
|
8,438 |
|
20,427 |
|
|
|
|
|
|
|
|
Total costs and expenses |
448,866 |
|
513,133 |
|
1,339,220 |
|
1,514,220 |
Gain on sale of interest in AMSO, LLC |
2,606 |
|
— |
|
2,606 |
|
— |
Arbitration award income |
— |
|
— |
|
— |
|
40,000 |
|
|
|
|
|
|
|
|
Loss from operations |
(57,271) |
|
(72,398) |
|
(77,833) |
|
(110,723) |
Interest (expense) income, net |
(2,092) |
|
(299) |
|
(4,796) |
|
5,308 |
Other income (expense), net |
1,141 |
|
(8,348) |
|
(30,637) |
|
(9,633) |
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(58,222) |
|
(81,045) |
|
(113,266) |
|
(115,048) |
Minority interests |
(822) |
|
(317) |
|
(36) |
|
(976) |
Provision for income taxes |
(1,353) |
|
(2,208) |
|
(10,511) |
|
(8,707) |
|
|
|
|
|
|
|
|
Loss from continuing operations |
(60,397) |
|
(83,570) |
|
(123,813) |
|
(124,731) |
Discontinued operations, net of tax: |
|
|
|
|
|
|
|
(Loss) income from discontinued operations |
(3,039) |
|
1,844 |
|
(38,867) |
|
(8,640) |
Loss on sale of discontinued operations |
— |
|
(485) |
|
— |
|
(4,529) |
|
|
|
|
|
|
|
|
Total discontinued operations |
(3,039) |
|
1,359 |
|
(38,867) |
|
(13,169) |
|
|
|
|
|
|
|
|
Net loss |
(63,436) |
|
(82,211) |
|
(162,680) |
|
(137,900) |
Earnings per share: |
|
|
|
|
|
|
|
Basic and diluted: |
|
|
|
|
|
|
|
Loss from continuing operations |
($2.74) |
|
($3.34) |
|
($5.36) |
|
($4.89) |
Total discontinued operations |
(0.14) |
|
0.05 |
|
(1.69) |
|
(0.51) |
|
|
|
|
|
|
|
|
Net loss |
($2.88) |
|
($3.29) |
|
($7.05) |
|
($5.40) |
Weighted-average number of shares used in calculation of basic and diluted earnings per share |
22,052 |
|
25,005 |
|
23,081 |
|
25,518 |
|
|
|
|
|
|
|
|
(i) Stock-based compensation included in selling, general and administrative expenses |
760 |
|
$ — |
|
2,720 |
|
3,169 |
IDT CORPORATION |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
Nine Months Ended |
April 30, |
|
2009 |
|
2008 |
|
(in thousands) |
Net cash used in operating activities |
($96,729) |
|
($115,303) |
Investing activities |
|
|
|
Capital expenditures |
(10,703) |
|
(13,937) |
Purchase of building |
— |
|
(24,778) |
Repayment of notes receivable, net |
168 |
|
14,789 |
Investments and acquisitions |
(2,504) |
|
(21,749) |
Proceeds from sale and redemption of investments |
26,351 |
|
10,945 |
Restricted cash and cash equivalents |
(54,538) |
|
791 |
Proceeds from sale of interest in AMSO, LLC |
3,198 |
|
— |
Proceeds from sale of building |
— |
|
4,872 |
Proceeds from sales and maturities of marketable securities |
145,316 |
|
633,242 |
Purchases of marketable securities |
(56,035) |
|
(402,058) |
|
|
|
|
Net cash provided by investing activities |
51,253 |
|
202,117 |
Financing activities |
|
|
|
Distributions to minority shareholders of subsidiaries |
(2,285) |
|
(3,897) |
Proceeds from sales of stock of subsidiaries |
1,187 |
|
— |
Proceeds from exercise of stock options |
— |
|
94 |
Proceeds from employee stock purchase plan |
36 |
|
808 |
Repayments of capital lease obligations |
(5,984) |
|
(22,722) |
Repayments of borrowings |
(1,585) |
|
(3,032) |
Repurchases of common stock and Class B common stock |
(6,568) |
|
(45,279) |
|
|
|
|
Net cash used in financing activities |
(15,199) |
|
(74,028) |
Discontinued operations |
|
|
|
Net cash (used in) provided by operating activities |
(2,808) |
|
6,966 |
Net cash provided by (used in) investing activities |
29,687 |
|
(48,224) |
Net cash (used in) provided by financing activities |
(43) |
|
382 |
|
|
|
|
Net cash provided by (used in) discontinued operations |
26,836 |
|
(40,876) |
Effect of exchange rate changes on cash and cash equivalents |
(4,728) |
|
3,913 |
|
|
|
|
Net decrease in cash and cash equivalents |
(38,567) |
|
(24,177) |
Cash and cash equivalents (including discontinued operations) at beginning of period |
164,886 |
|
151,404 |
|
|
|
|
Cash and cash equivalents (including discontinued operations) at end of period |
126,319 |
|
127,227 |
Less cash and cash equivalents of discontinued operations at end of period |
(224) |
|
(2,379) |
|
|
|
|
Cash and cash equivalents (excluding discontinued operations) at end of period |
$126,095 |
|
$124,848 |
Supplemental schedule of non-cash investing activities |
|
|
|
Purchases of property, plant and equipment through capital lease obligations |
$95 |
|
$234 |
Assumption of mortgage payable in connection with the purchase of building |
$ — |
|
$26,851 |
IDT CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA |
|
|
THREE MONTHS ENDED APRIL 30, 2009 |
|
|
|
|
|
|
|
|
Figures may not foot or cross-foot due to rounding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
|
|
|
|
|
|
|
|
|
Revenues |
$388,989 |
|
$299,595 |
|
$12,577 |
|
$66,669 |
|
$10,148 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Direct cost of revenues |
295,706 |
|
239,839 |
|
5,889 |
|
46,874 |
|
3,104 |
(exclusive of depreciation and amortization) |
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
74,169 |
|
50,475 |
|
2,698 |
|
6,912 |
|
8,276 |
Depreciation and amortization |
11,894 |
|
10,039 |
|
50 |
|
30 |
|
1,463 |
Bad debt |
2,820 |
|
2,113 |
|
351 |
|
35 |
|
320 |
Research and development |
1,548 |
|
801 |
|
— |
|
— |
|
747 |
Restructuring and impairment charges |
62,729 |
|
29,340 |
|
— |
|
— |
|
33,121 |
Total costs and expenses |
448,866 |
|
332,607 |
|
8,988 |
|
53,851 |
|
47,032 |
Gain on sale of business……….. |
2,606 |
|
— |
|
— |
|
— |
|
2,606 |
(Loss) income from operations |
(57,271) |
|
(33,012) |
|
3,588 |
|
12,819 |
|
(34,278) |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
(2,092) |
|
|
|
|
|
|
|
|
Other income, net |
1,141 |
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(58,222) |
|
|
|
|
|
|
|
|
Minority interests |
(822) |
|
|
|
|
|
|
|
|
Provision for income taxes |
(1,353) |
|
|
|
|
|
|
|
|
Loss from continuing operations |
(60,397) |
|
|
|
|
|
|
|
|
Loss from discontinued operations |
(3,039) |
|
|
|
|
|
|
|
|
Net loss |
(63,436) |
|
|
|
|
|
|
|
|
IDT Corporation |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Loss |
|
|
|
|
|
|
|
|
|
|
Figures may not foot or cross-foot due to rounding to millions. |
|
|
|
|
|
|
|
|
|
|
|
$ in millions |
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
Corporate |
Three Months Ended April 30, 2009 (Q3 2009) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$14.7 |
|
$6.4 |
|
$3.6 |
|
$12.8 |
|
($2.3) |
|
($5.8) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of interest in AMSO, LLC |
2.6 |
|
- |
|
- |
|
- |
|
2.6 |
|
- |
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
11.9 |
|
10.0 |
|
- |
|
- |
|
1.5 |
|
0.3 |
Restructuring and impairment charges |
62.7 |
|
29.3 |
|
- |
|
- |
|
33.1 |
|
0.3 |
(Loss) income from operations |
(57.3) |
|
(33.0) |
|
3.6 |
|
12.8 |
|
(34.3) |
|
(6.4) |
Interest expense, net |
(2.1) |
|
|
|
|
|
|
|
|
|
|
Other income, net |
1.1 |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(58.2) |
|
|
|
|
|
|
|
|
|
|
Minority interests |
(0.8) |
|
|
|
|
|
|
|
|
Provision for income taxes |
(1.4) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
(60.4) |
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
(3.0) |
|
|
|
|
|
|
|
|
|
|
Net loss |
($63.4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
Corporate |
Three Months Ended January 31, 2009 (Q2 2009) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$21.2 |
|
$8.7 |
|
$6.1 |
|
$16.5 |
|
($4.1) |
|
($6.0) |
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
13.1 |
|
10.8 |
|
- |
|
0.1 |
|
1.9 |
|
0.3 |
Restructuring and impairment charges |
16.8 |
|
4.7 |
|
- |
|
- |
|
11.1 |
|
1.0 |
(Loss) income from operations |
(8.8) |
|
($6.9) |
|
$6.1 |
|
$16.4 |
|
($17.1) |
|
($7.3) |
Interest expense, net |
(1.8) |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
(10.6) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(21.1) |
|
|
|
|
|
|
|
|
|
|
Minority interests |
0.6 |
|
|
|
|
|
|
|
|
Provision for income taxes |
(6.2) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
(26.7) |
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
(35.3) |
|
|
|
|
|
|
|
|
|
|
Net loss |
($62.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
Corporate |
Three Months Ended April 30, 2008 (Q3 2008) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
($38.5) |
|
($10.3) |
|
$9.4 |
|
$0.9 |
|
($15.1) |
|
($23.4) |
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
17.3 |
|
13.6 |
|
0.7 |
|
- |
|
2.6 |
|
0.4 |
Restructuring and impairment charges |
16.5 |
|
11.5 |
|
0.5 |
|
- |
|
- |
|
4.5 |
(Loss) income from operations |
(72.4) |
|
($35.4) |
|
$8.2 |
|
$0.9 |
|
($17.7) |
|
($28.3) |
Interest expense, net |
(0.3) |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
(8.3) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(81.0) |
|
|
|
|
|
|
|
|
|
|
Minority interests |
(0.3) |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
(2.2) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
(83.6) |
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
1.4 |
|
|
|
|
|
|
|
|
|
|
Net loss |
($82.2) |
|
|
|
|
|
|
|
|
|
|
IDT Corporation |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Loss |
|
|
|
|
|
|
|
|
|
|
Figures may not foot or cross-foot due to rounding to millions. |
|
|
|
|
|
|
|
|
|
|
|
$ in millions |
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
Corporate |
Nine Months Ended April 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$39.6 |
|
$15.7 |
|
$15.8 |
|
$40.5 |
|
($9.5) |
|
($22.9) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of interest in AMSO, LLC |
2.6 |
|
- |
|
- |
|
- |
|
2.6 |
|
- |
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
38.9 |
|
32.1 |
|
0.4 |
|
0.1 |
|
5.3 |
|
1.0 |
Restructuring and impairment charges |
81.2 |
|
33.2 |
|
- |
|
- |
|
45.3 |
|
2.6 |
(Loss) income from operations |
(77.8) |
|
($49.6) |
|
$15.3 |
|
$40.4 |
|
($57.5) |
|
($26.4) |
Interest expense, net |
(4.8) |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
(30.6) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before minority interests and income taxes |
(113.3) |
|
|
|
|
|
|
|
|
|
|
Minority interests |
- |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
(10.5) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
(123.8) |
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
(38.9) |
|
|
|
|
|
|
|
|
|
|
Net loss |
(162.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT Corporation |
|
Telecom Platform Services |
|
Consumer Phone Services |
|
IDT Energy |
|
IDT Capital |
|
Corporate |
Nine Months Ended April 30, 2008 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
($78.3) |
|
($7.6) |
|
$21.2 |
|
$4.6 |
|
($38.6) |
|
($57.8) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Arbitration award income |
40.0 |
|
40.0 |
|
- |
|
- |
|
- |
|
- |
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
51.7 |
|
42.1 |
|
2.2 |
|
- |
|
6.1 |
|
1.3 |
Restructuring and impairment charges |
20.7 |
|
13.7 |
|
0.5 |
|
0.1 |
|
0.9 |
|
5.5 |
(Loss) income from operations |
(110.7) |
|
($23.4) |
|
$18.5 |
|
$4.5 |
|
($45.6) |
|
($64.6) |
Interest income, net |
5.3 |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
(9.6) |
|
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Loss from continuing operations before minority interests and income taxes |
(115.0) |
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Minority interests |
(0.9) |
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Provision for income taxes |
(8.7) |
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Loss from continuing operations |
(124.7) |
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Loss from discontinued operations |
(13.2) |
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Net loss |
($137.9) |
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