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IDT Corporation – Results for Third Quarter Fiscal 2011


NEWARK, NJ — June 13, 2011:  IDT Corporation (NYSE: IDT) reported net income of $7.0 million ($0.31 per diluted share) for its third quarter of fiscal 2011, the three months ended April 30, 2011.


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NOTE: 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, 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.


Howard Jonas, IDT's Chairman and CEO, said, “IDT reported its sixth straight quarter of positive net income even as we continue to invest in growth opportunities.  IDT Energy ramped up customer acquisitions adding five thousand net meters.  IDT Telecom continues to build its global distribution capabilities, and launched its remittance clearing house – a significant step in the development of a money transfer business.  Our oil shale projects are making good progress and pilot test operations are expected to begin in Colorado later this summer.”

IDT's Chief Financial Officer, Bill Pereira said, “Operationally, the third quarter was distinguished by a substantial rebound in IDT Energy's gross margin and another strong performance from IDT Telecom's Telecom Platform Services segment which recorded a 14.8% year over year revenue increase on a 24.2% jump in minutes of use. Overall, we reported the highest gross profit in the past seven quarters and our balance sheet and cash position continue to improve even as we simultaneously increase our rate of investment in future growth and distribute dividends.”


In 3Q11, net income attributable to IDT of $7.0 million reflected a non-routine tax benefit of $3.5 million related to the closure of IDT Telecom's operations in Puerto Rico (see Other Recent Developments below). 

At April 30, 2011, IDT reported $279.9 million of cash, cash equivalents and certificates of deposit, including $7.0 million of restricted cash and cash equivalents.  Current assets totaled $450.1 million, and current liabilities totaled $317.8 million.  Non-current liabilities totaled $44.4 million, of which $33.5 million was mortgage debt on real estate.

Net cash provided by operating activities in 3Q11 was $21.0 million.  Capital expenditures during the same period totaled $3.1 million.  For the first nine months of the fiscal year, net cash provided by operating activities was $50.5 million and capital expenditures were $9.2 million.   Net cash provided by operating activities during the first nine months of FY 2010 were $47.5 million, and capital expenditures totaled $6.6 million.



IDT Telecom includes 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:  Telecom Platform Services (TPS)


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 TPS' revenue in 3Q11 was $334.5 million, a 14.8% increase compared to 3Q10 and flat compared to the prior quarter.  Average revenue per minute declined 7.6% compared to the year ago period, and by 0.8% sequentially, reflecting both a continuing industry-wide decline in termination prices for international long distance calls, and changes in the product/call destination mix.

Wholesale carrier revenue, which accounted for 42.6% of TPS' revenue in 3Q11 and 39.8% in 3Q10, increased 23.0% year over year, but declined by 2.3% sequentially.  The YoY increase reflected the strong growth in minutes of use as a result of continued success in IDT Telecom's sales, marketing and pricing efforts.  The third quarter of IDT's 2011 fiscal year was comprised of 89 days, compared to 92 days for Q2.  The sequential decline in revenue, as a result of a decline in wholesale carrier minutes of use during Q3, mirrors the sequential reduction of days in the quarter.

Revenue from TPS' retail sales channels increased year over year and had a nominal increase sequentially.  In the United States, BOSS Revolution, IDT's pay-as-you-go, cardless international calling service grew very strongly, while international mobile top-up (IMTU) card revenue increased as well.  These year over year gains offset declining revenue from the sale of traditional, disposable IDT-branded calling cards.  

Overseas, YoY, European retail revenues declined slightly.  Calling card revenues increased in South America, while falling in Asia. 

TPS' minutes of use in 3Q11 were 6.615 billion, a 24.2% increase year over year.  The increase was driven by the wholesale carrier and reseller channels, partly offset by declines in U.S. and Asian retail minutes of use.  Sequentially, minutes of use increased slightly despite the fact that 3Q11 had three fewer days than 2Q11. The sequential increase was almost wholly attributable to growth in minutes of use generated by the reseller channel.

Gross profit at TPS was $55.3 million, a 5.0% increase compared to 3Q10 and a 0.2% increase compared to 2Q11.

TPS' gross margin was 16.5%, a 160 basis point decrease YoY and unchanged from the prior quarter.  YoY, revenue from relatively lower margin IMTU cards, wholesale carrier and reseller channel traffic increased, while revenue from relatively higher margin traditional prepaid calling card products decreased to yield the net decrease in gross margin.

TPS' SG&A costs were $46.1 million, an 8.5% increase compared to 3Q10 and a 3.1% increase compared to 2Q11.  As a percentage of revenue, SG&A costs were 13.8%, compared to 14.6% in 3Q10 and 13.4% in 2Q11.  Compared to the year ago quarter, marketing costs, compensation and third party commissions, and legal fees increased, but at a lower rate than revenue growth.  The increase in SG&A costs compared to 2Q11 was due primarily to higher litigation-related legal fees.

TPS' Adjusted EBITDA for 3Q11 was $9.2 million, a 9.4% decrease YoY and a 12.0% decrease sequentially. 

TPS' depreciation and amortization expense was $4.3 million in 3Q11, a 34.2% decline from the year ago period and a 9.3% decline sequentially.  The significant YoY decline reflects lower levels of capital expenditures in recent quarters and the reaching of full depreciation of older property, plant and equipment. Going forward, management expects continued YoY reductions in depreciation and amortization expense although at a reduced rate. 

TPS' income from operations was $4.9 million, compared to $12.8 million in 3Q10 and $9.4 million in 2Q11. TPS' income from operations benefitted from $10.0 million and $4.6 million in Other Gains in 3Q10 and 2Q11, respectively. The $10.0 million gain in 3Q10 was the result of the March 2010 settlement of calling card litigation between IDT and certain defendants. The $4.6 million gain in 2Q11 was the result of a $14.4 million payment that we received from Cablevision, offset by a $9.8 million accrual that we recorded in connection with the verdict in the patent litigation initiated by Alexsam, Inc. (see Other Recent Developments below).

IDT TELECOM:  Consumer Phone Services (CPS)


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CPS 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. During 3Q11, CPS generally performed to expectations and results were consistent with long term historical trends.


Genie Energy is comprised of IDT Energy and Genie Oil and Gas.  IDT Energy operates an energy services company that resells electricity and natural gas to residential and small business customers in New York State, New Jersey and Pennsylvania.  Genie Oil and Gas consists mainly of (1) American Shale Oil Corporation (AMSO) which holds and manages Genie's interest in American Shale Oil, LLC (AMSO, LLC), a shale oil initiative in Colorado, and (2) Genie's interest in Israel Energy Initiatives, Ltd. (IEI), a shale oil initiative in Israel.



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IDT Energy's revenue in 3Q11 was $53.8 million, the same as in 3Q10.  Increases in natural gas (Therms (THM)) and electric (Kilowatt Hours (kWh)) units sold were offset by lower revenue per THM sold and, to a lesser extent, lower revenue per kWh sold. Revenue decreased 7.0% sequentially primarily reflecting the seasonal decrease in gas consumption.

As of April 30, 2011, IDT Energy served approximately 378,000 meters compared to 364,000 meters as of April 30, 2010 – a 3.9% increase YoY- and 373,000 meters as of January 31, 2011 – a 1.5% increase. 

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 slight decline in electricity customer RCE's sequentially resulted primarily from the acquisitions of customers with average consumption profiles relatively lower than the consumption profiles of customers who switched to other providers during the quarter. 

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Electric revenue in 3Q11 was $29.4 million, a 0.1% increase YoY.  Compared to the year ago quarter, kWh sold increased 1.2%, partially offset by a decline of 1.1% in average revenue per kWh.  Electric revenue declined 0.7% sequentially reflecting a seasonal reduction in kWh sold almost wholly offset by an increase in revenue per kWh. 

At April 30, 2011, IDT Energy served approximately 210,000 electric meters, representing 119,000 RCEs, compared to approximately 205,000 meters, representing approximately 103,000 RCEs, at April 30, 2010.

Natural gas revenue in 3Q11 was $24.4 million, a 0.3% decline YoY.  Sequentially, natural gas revenue declined 13.6% reflecting the seasonal decrease in gas consumption for heating.  THM sold increased 8.7% compared to 3Q10, but the increase was offset by a decline in average revenue per THM of 8.3%. 

At April 30, 2011, IDT Energy served approximately 168,000 gas meters, representing 94,000 RCEs, compared to approximately 159,000 meters, representing approximately 88,000 RCEs, at April 30, 2010.

IDT Energy's gross margin in 3Q11 was 31.2%, a 210 basis point increase YoY and a 1,160 basis point increase sequentially.  Gross margin for electric sales was 39.3%, a 510 basis point increase YoY, and a 2,210 basis point increase sequentially.  The gross margin for natural gas was 21.4% in 3Q11, a 170 basis point decline YoY and a 60 basis point decline sequentially. 

IDT Energy's margin on electricity sales was impacted by 8.8% and 18.2% declines, respectively, in YoY and sequential average costs per kWh.  The margin declines in gas sales reflected reductions in average cost per THM of 6.2% and 2.5% compared to 3Q10 and 2Q11 respectively, which were more than offset by declines in average revenue per THM.  IDT Energy reduced its gas prices charged to customers to facilitate new customer acquisition and reduce churn among existing customers during the latter part of the heating season.

SG&A expense in 3Q11 was $8.2 million, a 42.4% increase YoY and a 38.6% increase sequentially, primarily reflecting higher customer acquisition and marketing costs associated with the continued expansion into New Jersey and Pennsylvania, which began in 3Q10.  Gross meter acquisitions in 3Q11 were approximately 56,000 compared to 32,000 in the same period a year ago and 47,000 in the previous quarter. 

IDT Energy generated $8.6 million in Adjusted EBITDA in 3Q11, a 13.5% decline YoY but a 59.2% increase sequentially.  Income from operations was also $8.6 million, a 13.4% decline YoY but a 59.2% increase sequentially.

GENIE ENERGY:  Genie Oil and Gas

IDT accounts for Genie's stake in AMSO, LLC using the equity method.  IDT's equity in the net loss of AMSO, LLC – $1.2 million in 3Q11 – is included in “Other (expense) income, net” in IDT's consolidated statement of operations. 

During 3Q11, AMSO, LLC continued advanced stage construction work on the surface oil and gas processing facilities while drilling pilot wells for its upcoming pilot test in Colorado.  The pilot test is expected to begin late this summer and is intended to confirm the accuracy of several of the key underlying assumptions of AMSO, LLC's proposed in-situ heating and retorting process. 

Genie Oil and Gas' operating expenses consist primarily of costs incurred by IEI.  Genie Oil and Gas reported a loss from operations of $2.7 million during 3Q11, a 35.3% increase compared to 3Q10 and a 13.7% decrease compared to 2Q11.  The loss from operations in 3Q11, 3Q10 and 2Q11 includes $2.2 million, $1.6 million and $1.8 million, respectively, in research and development (R&D) expense.

During 3Q11, IEI continued working on the resource appraisal and characterization study phase of the project. IEI expects to finalize the field work of this phase during calendar 2011. 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 also continuing permitting and other preparatory work required prior to construction and operation of a pilot plant and operation of a pilot test. If not delayed by permitting, regulatory action or pending litigation, pilot test construction could begin during the fourth quarter of calendar 2011, and pilot test operations could begin in calendar 2012. 

In future quarters, management anticipates continued, significant increases in operating costs for both AMSO, LLC and IEI reflecting the costs of facility construction, drilling and operations of their respective pilot tests as well as further staffing for engineering and scientific operations and business development activities.


On February 15, 2011, Alexsam, Inc. secured a $9.1 million verdict against IDT for damages related to alleged infringement by IDT of two patents related to the activation of phone and gift cards over a point-of-sale terminal.  IDT intends to appeal the verdict and does not expect that the decision will have a material impact on its future business operations.

In February 2011, IDT liquidated its Puerto Rico operating entity.  The final Puerto Rico tax return was filed in April claiming a refund of $4.8 million, which IDT expects to receive in calendar 2011.

On March 15, 2011, IDT's subsidiary, Innovative Communications Technologies, Inc. (ICTI) filed a Form 10 registration statement with the SEC related to the spin-off of ICTI to IDT's stockholders.  ICTI will own a portfolio of patents related primarily to communications over computer networks, including VoIP, and the licensing business related to those patents.   IDT is currently evaluating issues related to the spin-off to achieve the greatest combination of value creation and risk management. 

In March 2011, IDT amended its lease for office space at 550 Broad Street, Newark, New Jersey to extend the term of the lease to September 2012. The lease was set to expire in May 2011.

On April 4, 2011, IDT shareholders voted to amend IDT's certificate of incorporation so that each remaining share of Common Stock was converted and reclassified into one share of Class B Common Stock.  The Common Stock (formerly IDT.C) was subsequently delisted from the NYSE and de-registered under the Securities Exchange Act of 1934.  IDT now has only two classes of common stock – Class A Common Stock and Class B Common Stock. Only shares of IDT's Class B common stock (NYSE: IDT) are publicly traded. 


§         Management's discussion of IDT's financial and operational results is posted in an audio file on the IDT website at  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

§         Q&A will be in a written format.  Investors and others interested in IDT are invited to e-mail questions for management to  IDT will accept questions received through the close of business on Thursday June 16, 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 Tuesday, June 21, 2011 following the market close.


IDT Corporation ( 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.


IDT Corporation Investor Relations
Bill Ulrey