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IDT to Revise Fiscal 2002 Results To Consolidate Net2Phone · Changes to Have No Effect on Net Loss or Loss Per Share · Quarterly Reports for Fiscal 2003 Already Consolidate Net2Phone

NEWARK, N.J. — July 21, 2003 —IDT Corporation (NYSE: IDT, IDT.C) today announced that it plans to file with the Securities and Exchange Commission (“SEC”) an amendment to its Annual Report on Form 10-K for the fiscal year ended July 31, 2002 (“Fiscal 2002”) to revise the financial statements and other financial information included therein to consolidate the results of Net2Phone, Inc. (NASDAQ: NTOP) for the period beginning on October 23, 2001 through July 31, 2002. The Company will also file with the SEC amendments to its Quarterly Reports on Form 10-Q for the fiscal year ending July 31, 2003 (“Fiscal 2003”) to revise the Fiscal 2002 comparative information contained therein accordingly.

Until these revisions, the Company has accounted for its investment in Net2Phone during Fiscal 2002 using the equity method. The change in accounting for IDT’s investment in Net2Phone from the equity method to consolidation does not change the Company’s Net Loss or Loss Per Share for any previously reported period. The Company had previously begun consolidating Net2Phone’s results in its financial statements effective August 1, 2002.

The decision to amend these filings was made by the Company in the context of resolving the comments made by the staff of the SEC during its ordinary course review of the Company’s SEC filings. During the review process, the SEC staff had questioned the Company’s decision to continue using the equity method of accounting rather than consolidation to account for its interest in Net2Phone for the period beginning on October 23, 2001 through the end of Fiscal 2002.

As fully disclosed in the Company’s Fiscal 2002 Form 10-K and Fiscal 2003 Form 10-Q filings, on October 23, 2001, the Company and AT&T Corporation each contributed their minority stakes in Net2Phone into a newly formed limited liability company (the “LLC”), which was owned by the Company, AT&T and Liberty Media Corporation. After these contributions, the LLC held a majority voting stake in Net2Phone. Under the terms of the LLC’s operating agreement, the Company was granted the right to vote the LLC’s stake in Net2Phone. As a result, the Company effectively controlled the voting power of Net2Phone. However, the LLC’s operating agreement also granted each owner of the LLC the unilateral right, effective January 1, 2004, to cause the immediate liquidation of the LLC. Accordingly, the Company’s ability to control the voting power of Net2Phone would immediately terminate on January 1, 2004, the effective date of the liquidation rights.

Under the accounting rules that existed at the time of the formation of the LLC, an entity was prohibited from consolidating a controlled subsidiary if that control was likely to be temporary. Therefore, the Company believed that it should not consolidate Net2Phone during the approximately 26-month period (i.e., October 23, 2001 through December 31, 2003) that it would control Net2Phone (the “Control Period”), as the length of this period rendered its control temporary. Instead, the Company continued to account for its investment in Net2Phone through the end of Fiscal 2002 using the equity method.

In commenting on the Company’s SEC filings, and in subsequent conversations with the Company, members of the SEC staff contended that, although they were unaware of any clear accounting guidance as to the definition of “temporary” control, the Control Period of approximately 26 months was too long to render the Company’s control temporary. Accordingly, the staff believed that Net2Phone’s results should have been consolidated during the period from October 23, 2001 through the end of Fiscal 2002. Therefore, the Company is revising its results of that fiscal year to consolidate the results of Net2Phone for that period.

As of July 31, 2002, the Company’s effective economic interest in Net2Phone (through the LLC) was 19.2%. Accordingly, through the revised consolidation of the results of operations of Net2Phone for Fiscal 2002, the Company will record in minority interests the 80.8% of Net2Phone’s results attributable to the other shareholders of Net2Phone.

The Company had previously begun consolidating Net2Phone’s results in its financial statements effective August 1, 2002, when it adopted the new accounting rules that eliminated the prohibition from consolidation for a controlled subsidiary for which control is likely to be temporary.

Please see attached document for financial charts.