Idt Corp 10-K for FY2020

Idt Corp (IDT)

10-K 2020-10-14 For: 2020-07-31

Added on April 12, 2026

About this 10-K

Idt Corp filed this 10-K on October 14, 2020, covering the fiscal year ended July 31, 2020 (FY2020).

Headline figures

Fiscal year ended July 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.35B; down 4.5% from $1.41B a year earlier
Net income: $21.43M; up 15892.5% from net income of $134K a year earlier
Diluted EPS: $0.81; up 8000.0% from $0.01 a year earlier

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Delaware		22-3415036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol		Name of each exchange on which registered
Class B common stock, par value $0.1 per share		IDT		New York Stock Exchange

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

Part I		1

Item 1.	Business.	1
Item 1A.	Risk Factors.	14
Item 1B.	Unresolved Staff Comments.	26
Item 2.	Properties.	26
Item 3.	Legal Proceedings.	26
Item 4.	Mine Safety Disclosures.	27

Part II		28

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	28
Item 6.	Selected Financial Data.	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	28
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks.	40
Item 8.	Financial Statements and Supplementary Data.	40
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	41
Item 9A.	Controls and Procedures.	41
Item 9B.	Other Information.	42

Part III		43

Item 10.	Directors, Executive Officers and Corporate Governance.	43
Item 11.	Executive Compensation.	44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	44
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	44
Item 14.	Principal Accounting Fees and Services.	44

Part IV		45

Item 15.	Exhibits, Financial Statement Schedules.	45
Item 16.	Form 10-K Summary.	46

Signatures		47

	●	our extensive distribution and retail networks provide us with a strong presence in communities of foreign-born residents, a significant portion of which purchase our services with cash;

	●	continued migration of our retail customers to our digital platform including the BOSS Revolution Calling app;

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)
May 1 – 31, 2020		—		—		—		6,862,643
June 1 – 30, 2020		314,020	$	6.14		314,020		6,548,623
July 1 – 31, 2020		316,334	$	6.45		316,334		6,232,289
Total		630,354	$	6.30		630,354

Year ended July 31	2020			2019
REVENUES:
Telecom & Payment Services		96.2	%		96.6	%
net2phone		3.8			3.4
TOTAL REVENUES		100.0			100.0
COSTS AND EXPENSES:
Direct cost of revenues (exclusive of depreciation and amortization)		80.5			83.3
Selling, general and administrative		16.0			14.5
Depreciation and amortization		1.5			1.6
Severance		0.3			0.1
TOTAL COSTS AND EXPENSES		98.3			99.5
Other operating expense, net		(0.4	)		(0.6	)
INCOME (LOSS) FROM OPERATIONS		1.3			(0.1	)
Interest income, net		0.1			0.1
Other (expense) income, net		(0.1	)		—
INCOME BEFORE INCOME TAXES		1.3	%		—	%

(in millions)	Change
Year ended July 31	2020		2019		$			%
Revenues	$	1,294.9	$	1,361.9	$	(67.0	)		(4.9	)%
Direct cost of revenues		1,072.0		1,161.2		(89.2	)		(7.7	)
Selling, general and administrative		161.6		161.1		0.5			0.3
Depreciation and amortization		12.3		16.1		(3.8	)		(23.1	)
Severance		3.5		1.4		2.1			141.0
Other operating expense, net		3.2		7.8		(4.6	)		(58.6	)
Income from operations	$	42.3	$	14.3	$	28.0			195.2	%

(in millions) Year ended July 31	2020			2019
Foreign currency transaction gains (losses)	$	0.4		$	(0.7	)
Write-off of tax assets related to prior periods		(1.3	)		—
(Loss) gain on investments		(0.3	)		1.8
Other		(0.1	)		(0.4	)
TOTAL	$	(1.3	)	$	0.7

(in millions)	Total		Less than 1 year		1—3 years		4—5 years		After 5 years
Purchase commitments	$	2.3	$	2.3	$	—	$	—	$	—
Connectivity obligations under service agreements		1.6		0.9		0.7		—		—
Operating leases including short-term leases		11.0		3.3		4.5		3.2		—
TOTAL CONTRACTUAL OBLIGATIONS (1)	$	14.9	$	6.5	$	5.2	$	3.2	$	—

1.	Report of Management on Internal Control Over Financial Reporting

	Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

	Reports of Independent Registered Public Accounting Firms on Consolidated Financial Statements

	Consolidated Financial Statements covered by Reports of Independent Registered Public Accounting Firms

Exhibit Number		Description of Exhibits
3.01(1)		Third Restated Certificate of Incorporation of the Registrant.

3.02(2)		Sixth Amended and Restated By-laws of the Registrant.

10.01(3)		Fourth Amended and Restated Employment Agreement, dated December 14, 2016, between the Registrant and Howard S. Jonas.

10.02(4)		2005 Stock Option and Incentive Plan, as amended and restated, of IDT Corporation.

10.03(5)		2015 Stock Option and Incentive Plan of IDT Corporation.

10.04(6)		Employment Agreement, dated January 12, 2015, between IDT Telecom and Bill Pereira.

10.05(7)		Agreement, dated December 5, 2017, between IDT Corporation, Bill Pereira and IDT Telecom.

10.06(8)		Stock Option Agreement between the Registrant and Howard Jonas, dated May 2, 2017.

10.07(8)		Assignment Agreement between the Registrant and Howard Jonas, dated September 19, 2017.

Exhibit Number		Description of Exhibits

21.01*		Subsidiaries of the Registrant.

23.01*		Consent of BDO USA, LLP

23.02*		Consent of Grant Thornton, LLP

31.01*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.02*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	IDT CORPORATION

	By:	/s/ Shmuel Jonas
		Shmuel Jonas Chief Executive Officer

Signature	Titles	Date

/s/ Shmuel Jonas	Chief Executive Officer	October 14, 2020
Shmuel Jonas	(Principal Executive Officer)

/s/ Marcelo Fischer	Chief Financial Officer	October 14, 2020
Marcelo Fischer	(Principal Financial Officer)

/s/ Mitch Silberman	Chief Accounting Officer and Controller	October 14, 2020
Mitch Silberman	(Principal Accounting Officer)

/s/ Howard S. Jonas	Chairman of the Board	October 14, 2020
Howard S. Jonas

/s/ Bill Pereira	Director	October 14, 2020
Bill Pereira

/s/ Michael Chenkin	Director	October 14, 2020
Michael Chenkin

/s/ Eric F. Cosentino	Director	October 14, 2020
Eric F. Cosentino

/s/ Judah Schorr	Director	October 14, 2020
Judah Schorr

Report of Independent Registered Public Accounting Firm	F-2

Report of Independent Registered Public Accounting Firm	F-3

Consolidated Balance Sheets as of July 31, 2020 and 2019	F-4

Consolidated Statements of Income for the years ended July 31, 2020 and 2019	F-5

Consolidated Statements of Comprehensive Income for the years ended July 31, 2020 and 2019	F-6

Consolidated Statements of Equity for the years ended July 31, 2020 and 2019	F-7

Consolidated Statements of Cash Flows for the years ended July 31, 2020 and 2019	F-9

Notes to Consolidated Financial Statements	F-10

July 31 (in thousands)	2020			2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	84,860		$	80,168
Restricted cash and cash equivalents		116,362			177,031
Debt securities		18,363			2,534
Equity investments		5,964			5,688
Trade accounts receivable, net of allowance for doubtful accounts of $6,085 and $5,444 at July 31, 2020 and 2019, respectively		44,166			58,060
Prepaid expenses		33,115			20,276
Other current assets		19,302			24,704
TOTAL CURRENT ASSETS		322,132			368,461
Property, plant and equipment, net		30,061			34,355
Goodwill		12,858			11,209
Other intangibles, net		3,959			4,196
Equity investments		8,833			9,319
Operating lease right-of-use assets		9,490			—
Deferred income tax assets, net		8,512			4,589
Other assets		8,905			11,574
TOTAL ASSETS	$	404,750		$	443,703
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade accounts payable	$	31,147		$	37,077
Accrued expenses		125,544			127,834
Deferred revenue		40,114			42,479
Customer deposits		115,992			175,028
Other current liabilities		12,073			6,652
TOTAL CURRENT LIABILITIES		324,870			389,070
Operating lease liabilities		7,353			—
Other liabilities		1,388			1,076
TOTAL LIABILITIES		333,611			390,146
Commitments and contingencies
EQUITY:
IDT Corporation stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at July 31, 2020 and 2019		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 25,961 and 25,803 shares issued and 24,345 and 24,895 shares outstanding at July 31, 2020 and 2019, respectively		260			258
Additional paid-in capital		277,443			273,313
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 1,616 and 908 shares of Class B common stock at July 31, 2020 and 2019, respectively		(56,221	)		(51,739	)
Accumulated other comprehensive loss		(7,410	)		(4,858	)
Accumulated deficit		(139,333	)		(160,763	)
Total IDT Corporation stockholders’ equity		74,772			56,244
Noncontrolling interests		(3,633	)		(2,687	)
TOTAL EQUITY		71,139			53,557
TOTAL LIABILITIES AND EQUITY	$	404,750		$	443,703

Year ended July 31 (in thousands, except per share data)	2020			2019
REVENUES	$	1,345,769		$	1,409,172
COSTS AND EXPENSES:
Direct cost of revenues (exclusive of depreciation and amortization)		1,084,009			1,174,015
Selling, general and administrative (i)		214,846			204,366
Depreciation and amortization		20,406			22,632
Severance		3,503			1,438
TOTAL COSTS AND EXPENSES		1,322,764			1,402,451
Other operating expense, net (see Note 12)		(5,063	)		(7,726	)
Income (loss) from operations		17,942			(1,005	)
Interest income, net		1,043			776
Other (expense) income, net		(1,267	)		682
Income before income taxes		17,718			453
Benefit from (provision for) income taxes		3,700			(123	)
NET INCOME		21,418			330
Net loss (income) attributable to noncontrolling interests		12			(196	)
NET INCOME ATTRIBUTABLE TO IDT CORPORATION	$	21,430		$	134

Earnings per share attributable to IDT Corporation common stockholders:
Basic	$	0.82		$	0.01
Diluted	$	0.81		$	0.01

Weighted-average number of shares used in calculation of earnings per share:
Basic		26,278			25,293
Diluted		26,441			25,308

(i) Stock-based compensation included in selling, general and administrative expenses	$	3,856		$	2,236

Year ended July 31 (in thousands)	2020			2019
NET INCOME	$	21,418		$	330
Other comprehensive (loss) income:
Change in unrealized gain on available-for-sale securities		42			1
Foreign currency translation adjustments		(2,594	)		80
Other comprehensive (loss) income		(2,552	)		81
COMPREHENSIVE INCOME		18,866			411
Comprehensive loss (income) attributable to noncontrolling interests		12			(196	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO IDT CORPORATION	$	18,878		$	215

	IDT Corporation Stockholders
	Class A Common Stock				Class B Common Stock				Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital			Stock			Loss			Deficit			Interests			Equity
BALANCE AT JULY 31, 2018		3,272	$	33		25,594	$	256	$	294,047		$	(85,597	)	$	(4,972	)	$	(173,103	)	$	639		$	31,303
Adjustment from the adoption of change in revenue recognition (see Note 2)		—		—		—		—		—			—			—			9,064			—			9,064
Adjustment from the adoption of change in accounting for equity investments (see Note 7)		—		—		—		—		—			—			33			1,140			—			1,173
BALANCE AT AUGUST 1, 2018		3,272		33		25,594		256		294,047			(85,597	)		(4,939	)		(162,899	)		639			41,540
Correction of noncontrolling interests (see Note 17)		—		—		—		—		—			—			—			2,002			(2,002	)		—
Repurchases of Class B common stock through repurchase program		—		—		—		—		—			(3,854	)		—			—			—			(3,854	)
Sale of Class B common stock to Howard S. Jonas		—		—		—		—		(22,968	)		37,740			—			—			—			14,772
Restricted Class B common stock purchased from employees		—		—		—		—		—			(28	)		—			—			—			(28	)
Stock-based compensation		—		—		209		2		2,234			—			—			—			—			2,236
Distributions to noncontrolling interests		—		—		—		—		—			—			—			—			(1,520	)		(1,520	)
Other comprehensive income		—		—		—		—		—			—			81			—			—			81
Net income for the year ended July 31, 2019		—		—		—		—		—			—			—			134			196			330
BALANCE AT JULY 31, 2019		3,272	$	33		25,803	$	258	$	273,313		$	(51,739	)	$	(4,858	)	$	(160,763	)	$	(2,687	)	$	53,557

Year ended July 31 (in thousands)	Balance at beginning of year		Additions charged to costs and expenses		Deductions (1)			Balance at end of year
2020
Reserves deducted from accounts receivable:
Allowance for doubtful accounts	$	5,444	$	3,109	$	(2,468	)	$	6,085
2019
Reserves deducted from accounts receivable:
Allowance for doubtful accounts	$	5,358	$	2,028	$	(1,942	)	$	5,444

Level 1 –	quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 –	quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 –	unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.

(in thousands)	Telecom & Payment Services		net2phone		Total
Year ended July 31, 2020
United States	$	888,728	$	34,136	$	922,864
Outside the United States:
United Kingdom		134,339		12		134,351
Netherlands		210,743		—		210,743
Other		61,137		16,674		77,811
Total outside the United States		406,219		16,686		422,905
TOTAL	$	1,294,947	$	50,822	$	1,345,769

Year ended July 31, 2019
United States	$	901,997	$	33,857	$	935,854
Outside the United States:
United Kingdom		195,661		21		195,682
Netherlands		192,284		—		192,284
Other		71,966		13,386		85,352
Total outside the United States		459,911		13,407		473,318
TOTAL	$	1,361,908	$	47,264	$	1,409,172

Year ended July 31 (in thousands)	2020
Operating lease cost	$	2,832
Short-term lease cost		246
TOTAL LEASE COST	$	3,078

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,745

July 31	2020
Weighted-average remaining lease term-operating leases		4.2 years
Weighted-average discount rate-operating leases		3.12	%

July 31 (in thousands)	2020
Operating lease liabilities included in “Other current liabilities”	$	2,350
Operating lease liabilities included in noncurrent liabilities		7,353
TOTAL	$	9,703

(in thousands)
Year ending July 31:
2021	$	2,621
2022		2,453
2023		2,072
2024		1,827
2025		1,418
Thereafter		—
Total lease payments		10,391
Less imputed interest		(688	)
Total operating lease liabilities	$	9,703

(in thousands)
Cash paid	$	450
Contingent consideration		375
Total fair value of consideration	$	825

(in thousands)
Trade accounts receivable	$	142
Other current assets		21
Property, plant and equipment		84
Goodwill		1,437
Non-compete agreement (4-year useful life)		50
Customer relationships (7-year useful life)		130
Tradename (2-year useful life)		30
Deferred income tax assets		118
Other assets		10
Trade accounts payable		(302	)
Accrued expenses		(136	)
Other current liabilities		(408	)
Other liabilities		(351	)
Net assets acquired	$	825

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
July 31, 2020
Certificates of deposit*	$	13,844	$	58	$	—		$	13,902
U.S. Treasury bills		2,498		—		—			2,498
Municipal bonds		1,979		—		(16	)		1,963
TOTAL	$	18,321	$	58	$	(16	)	$	18,363
July 31, 2019
Certificates of deposit*	$	2,234	$	—	$	—		$	2,234
Municipal bonds		300		—		—			300
TOTAL	$	2,534	$	—	$	—		$	2,534

(in thousands)	Fair Value
Within one year	$	15,941
After one year through five years		1,449
After five years through ten years		209
After ten years		764
TOTAL	$	18,363

(in thousands)	Unrealized Losses		Fair Value
July 31, 2020
Municipal bonds	$	16	$	1,963
July 31, 2019
Total	$	—	$	—

July 31 (dollars in thousands)	2020		2019
Zedge, Inc. Class B common stock, 42,282 shares at July 31, 2020 and 2019	$	59	$	68
Rafael Holdings, Inc. Class B common stock, 27,806 and 27,419 shares at July 31, 2020 and 2019, respectively		389		567
Mutual funds		5,516		5,053
Current equity investments	$	5,964	$	5,688

Visa Series C Preferred	$	3,825	$	3,619
Hedge funds		4,783		5,475
Other		225		225
Noncurrent equity investments	$	8,833	$	9,319

(in thousands)	Level 1		Level 2		Level 3			Total
July 31, 2020
Debt securities	$	2,498	$	15,865	$	—		$	18,363
Equity investments included in current assets		5,964		—		—			5,964
Equity investments included in noncurrent assets		—		—		3,825			3,825
TOTAL	$	8,462	$	15,865	$	3,825		$	28,152
Contingent consideration included in other noncurrent liabilities (see Note 5)	$	—	$	—	$	(396	)	$	(396	)

July 31, 2019
Debt securities	$	—	$	2,534	$	—		$	2,534
Equity investments included in current assets		5,688		—		—			5,688
Equity investments included in noncurrent assets		—		—		3,619			3,619
TOTAL	$	5,688	$	2,534	$	3,619		$	11,841

Year ended July 31,
(in thousands)	2020		2019
Balance, beginning of period	$	3,619	$	—
Transfer into Level 3 from adoption of change in accounting for equity investments		—		2,793
Total gains included in “Other (expense) income, net”		206		826
BALANCE, END OF PERIOD	$	3,825	$	3,619

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	—	$	—