NEWARK, N.J.— October 24, 2002 —IDT Corporation (NYSE: IDT.B, IDT) today reported record revenues of $416.7 million for the fourth quarter of its Fiscal Year 2002, the three months ended July 31, 2002. Revenues for the fourth quarter increased 3.8% from the third quarter, and 25.9% over the revenues recorded during the fourth quarter of Fiscal Year 2001. For the Fiscal Year ended July 31, 2002, IDT recorded revenues of $1.532 billion, up 24.4% from Fiscal 2001. Excluding its Winstar division, acquired in the second quarter, IDT’s revenue gains in the fourth quarter would have been 5.7% above the Q3 figure. Revenue growth for the year would have been 18.0%.
The net loss for the fourth quarter of Fiscal Year 2002 was $78.2 million, or $0.99 per share. This compares with a net loss of $49.6 million, or $0.64 per share, in the third quarter of Fiscal Year 2002, and a net loss of $171.8 million, or $2.44 per share, in last year’s fourth quarter.
The Company’s pro-forma fourth quarter results exclude the following four items, accounting for an $89.1 million after-tax loss:
· Non-cash impairment charges of $61.5 million, primarily related to the write-down of the TyCom fiber asset
· A loss of $20.2 million related to the results of the recently-acquired Winstar business;
· A loss of $5.8 million attributable to IDT’s noncash share of losses at Net2Phone;
· A loss of $1.6 million relating to the formation of NTOP Holdings, LLC.
Excluding these items IDT would have reported net income of $10.9 million, or $0.13 per diluted share for the fourth quarter.
For Fiscal Year 2002, the Company recorded a net loss of $303.3 million ($4.04 per share). This compares with net income of $532.4 million ($7.12 per diluted share) in Fiscal Year 2001. Results for Fiscal Year 2002 include a non-cash, after-tax charge of $147.0 million, or $1.96 per share, related to an impairment of goodwill, in connection with the adoption of SFAS No. 142. Excluding the cumulative effect of this accounting change, the net loss for Fiscal Year 2002 amounted to $156.4 million, or $2.08 per share.
“I am about to certify IDT’s 10K financial report for the first time,” said Jim Courter, Vice Chairman and CEO. “And I am proud to do it. The IDT Telecom Division is setting records while competitors are falling by the wayside. The Company is growing responsibly, conserving its strong balance sheet. The IDT Media Division is building entertainment platforms that should develop lasting value as they mature. There is a remarkable turnaround underway in IDT’s Winstar Division.”
RESULTS OF OPERATIONS
IDT recorded a loss from operations for the fourth quarter of Fiscal Year 2002 of $141.1 million, compared to an operating loss of $42.8 million in the third quarter of Fiscal Year 2002, and a loss of $268.6 million in the fourth quarter of Fiscal Year 2001. Excluding impairment charges, the operating losses would have been $29.6 million in the fourth quarter of Fiscal Year 2002, $42.8 million in Fiscal Q3 2002, and $74.4 million in Fiscal Q4 2001. Excluding both the impairment charges and the operating losses of the Winstar division, IDT would have produced operating profits of $4 million for the fourth quarter and an operating loss of $13.3 million for the year.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, and excluding minority interests and impairment charges) in the fourth quarter of Fiscal Year 2002 amounted to a loss of $10.4 million, versus a loss of $57.0 million in the fourth quarter of Fiscal Year 2001 and a loss of $26.1 million in the third quarter of Fiscal Year 2002. Excluding the company’s Winstar division results, EBITDA would have been $19.8 million in Q4 of Fiscal Year 2002 (up from $14.8 million on that basis in Q3 of Fiscal Year 2002) and $46.0 million for all of Fiscal Year 2002.
IDT Telecom Division
The IDT Telecom core telecommunications services business enjoyed the most successful quarter in its history in the fourth quarter of Fiscal Year 2002. IDT Telecom reported record revenues of $383.6 million for the fourth quarter of Fiscal Year 2002, and $1.43 billion for Fiscal Year 2002. This represents an increase of 5.3% from the revenues recorded in the third quarter of Fiscal Year 2002, an increase of 18.3% versus the fourth quarter of Fiscal Year 2001, and an increase of 18.8% over Fiscal Year 2001’s revenues. Revenue growth for Fiscal Year 2002 was driven by strong revenue gains in the retail division. Retail telecom revenues for Fiscal Year 2002 were $1.122 billion, up from $816 million in Fiscal Year 2001, an increase of 37.4%. This revenue increase more than offset the decline in the wholesale telecom business, which generated $309 million of revenues during Fiscal Year 2002, down from $388.1 million in Fiscal Year 2001, a decline of 20.4% for the year.
IDT Telecom recorded EBITDA of $29.8 million and operating income of $14.2 million for the fourth quarter, and EBITDA and operating income of $88.7 million and $30.8 million, respectively, for the year. In comparison, EBITDA was $25.6 million in the third quarter of Fiscal Year 2002, and IDT Telecom had an EBITDA loss of $9.9 million in Fiscal Q4 2001 and a loss of $53.4 million for all of Fiscal Year 2001. The EBITDA margin improved from 7.0% in Fiscal Q3 to 7.8% in Fiscal Q4, and amounted to 6.2% for the full fiscal year.
Gross margins for IDT Telecom amounted to 24.0% for Fiscal Q4, up from 14.7% in Fiscal Q4 2001 and virtually unchanged from the margins achieved in Q3 of Fiscal Year 2002. IDT Telecom’s gross margins for Fiscal Year 2002 increased dramatically to 22.6%, from 12.3% in Fiscal Year 2001. Margin improvements were seen across all of IDT Telecom’s major lines of business, reflecting efficiency gains and vigorous cost reduction programs. In addition, Telecom gross margins benefited from a shift in revenues toward higher-margin retail services.
IDT’s retail telecommunications services division posted $296.2 million in revenues for the fourth quarter, up 3.8% from the previous quarter, and 21.3% more than the retail revenues recorded during Fiscal Q4 of Fiscal 2001. Retail Telecom revenues for the Fiscal Year were $1.122 billion, up 37.4% from Fiscal Year 2001.
Calling card revenues amounted to $263.4 million for the fourth quarter, up 3.2% from the previous quarter, and 17.9% more than the calling card revenues of the fourth quarter of Fiscal 2001. For Fiscal 2002, calling card revenues were $1.009 billion, an increase of 33.6% from 2001, as the business witnessed strong growth in both the U.S. and in Europe.
Gross margins for calling cards were 24.1% in Fiscal Q4 2002, unchanged from the third quarter of Fiscal Year 2002 level but considerably improved from 14.9% in Fiscal Year 2001’s final quarter. Margins for calling cards continued to benefit from increased scale, network efficiency improvements and reduced termination costs to the Company’s highest-volume calling destinations.
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