f8k073113_idt.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 31, 2013
 
IDT CORPORATION
(Exact name of registrant as specified in its charter)
 
 
Delaware
  
1-16371
  
22-3415036
(State or other jurisdiction
of Incorporation)
  
(Commission File Number)
  
(IRS Employer
Identification No.)
 
520 Broad Street
Newark, New Jersey
  
07102
(Address of principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code: (973) 438-1000
 
Not Applicable
(Former name or former address, if changed since last report.)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
Item 2.01. Completion of Acquisition or Disposition of Assets.

On July 31, 2013 (the “Distribution Date”), IDT Corporation (“IDT” or the “Registrant”) completed the spin-off of the common stock of Straight Path Communications Inc. (“SPCI”), which, prior thereto, was a wholly-owned subsidiary of IDT, to IDT’s stockholders.  In the spin-off, IDT distributed its 100% interest in SPCI to IDT’s stockholders. Upon completion of the spin-off, IDT’s businesses consist primarily of IDT Telecom, as well as other interests and smaller operations, including IDT’s interests in Zedge and Fabrix. SPCI consists of Straight Path Spectrum, Inc. (formerly known as IDT Spectrum Inc.), and an 84.5% interest in Straight Path IP Group, Inc. (formerly known as Innovative Communications Technologies, Inc.).
 
The spin-off of SPCI occurred by way of a pro rata distribution of SPCI Class A common stock and Class B common stock to IDT’s stockholders. In the distribution, on the Distribution Date, each IDT stockholder received one share of SPCI Class A common stock for every two shares of IDT Class A stock and one share of SPCI Class B common stock for every two shares of IDT Class B common stock, held on or about 5:00 p.m., Eastern Time, on July 25, 2013, the record date for the spin-off.
 
Item 9.01
Financial Statements and Exhibits.
 
(b)
Pro Forma Financial Information
 
 
2
 
 
IDT CORPORATION
 INDEX TO UNAUDITED PRO FORMA INFORMATION
 
 
  
Page
Pro Forma Consolidated Financial Statements – Basis of Presentation
  
F-1
     
Pro Forma Consolidated Balance Sheet as of April 30, 2013
  
F-2
   
Pro Forma Consolidated Statement of Operations for the nine months ended April 30, 2013
  
F-3
     
Pro Forma Consolidated Statement of Operations for the year ended July 31, 2012
  
F-4
   
Pro Forma Consolidated Statement of Operations for the year ended July 31, 2011
  
F-5
   
Notes and Management’s Assumptions to Pro Forma Consolidated Financial Statements
  
F-6
 
 
3
 
 
IDT CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
(unaudited)
 
The pro forma consolidated balance sheet as of April 30, 2013, and the pro forma consolidated statements of operations for the nine months ended April 30, 2013 and for the years ended July 31, 2012 and 2011 are based on the historical financial statements of the Registrant.
 
The pro forma condensed balance sheet as of April 30, 2013, is presented as if the disposition of SPCI, as described in item 2.01 of this Form 8-K occurred in its entirety on April 30, 2013.  As set forth in Item 2.01 of this Form 8-K, as of July 31, 2013 such disposition has been consummated.
 
The pro forma consolidated statements of operations for the nine months ended April 30, 2013 and for the years ended July 31, 2012 and 2011, are presented as if the disposition of SPCI occurred on August 1, 2010. The pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes related thereto appearing in the Registrant’s Form 10-K for the years ended July 31, 2012 and 2011.
 
Preparation of the pro forma information was based on assumptions considered appropriate by the Registrant’s management. The pro forma financial information is unaudited and is not necessarily indicative of the results which would have occurred if the disposition described above had been consummated on August 1, 2010 for the pro forma consolidated statements of operations and on April 30, 2013 for the pro forma consolidated balance sheet, nor does it purport to represent the financial position and the results of operations for future periods. In management’s opinion, all adjustments necessary to reflect the effects of the disposition of SPCI have been made.
 
F-1
 
 
IDT CORPORATION
 PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF APRIL 30, 2013
(in thousands)
(unaudited)
  
   
Historical
    
Pro forma adjustments
      
Pro forma
  
ASSETS
                    
CURRENT ASSETS:
                    
Cash and cash equivalents
   $ 152,081     $ (15,000 )
(A)
   $ 137,081  
Restricted cash and cash equivalents – short-term
     29,058                 29,058  
Marketable securities
     10,830                 10,830  
Trade accounts receivable, net
     63,994       (74 )
(B)
     63,920  
Prepaid expenses
     22,210                 22,210  
Deferred income tax assets, net – current portion
     2,799                 2,799  
Other current assets
     12,120       (85 )
(B)
     12,035  
                           
TOTAL CURRENT ASSETS
     293,092                 277,933  
Property, plant and equipment, net
     85,435                 85,435  
Goodwill
     14,778                 14,778  
Other intangibles, net
     1,449                 1,449  
Investments
     9,819                 9,819  
Restricted cash and cash equivalents – long-term
     9,471                 9,471  
Deferred income tax assets, net – long-term portion
     22,298                 22,298  
Other assets
     10,065       (107 )
(B)
     9,958  
                           
TOTAL ASSETS
   $ 446,407               $ 431,141  
                           
LIABILITIES AND EQUITY
                          
CURRENT LIABILITIES:
                          
Trade accounts payable
   $ 33,120     $ (1 )
(B)
   $ 33,119  
Accrued expenses
     151,000       (1,449 )
(B)
     149,551  
Deferred revenue
     89,923       (161 )
(B)
     89,762  
Customer deposits
     25,213                 25,213  
Income taxes payable
     1,657       (20 )
(B)
     1,637  
Notes payable–current portion
     21,831                 21,831  
Other current liabilities
     3,709                 3,709  
                           
TOTAL CURRENT LIABILITIES
     326,453                 324,822  
Notes payable—long-term portion
     6,689                 6,689  
Other liabilities
     8,147       (262 )
(B)
     7,885  
                           
TOTAL LIABILITIES
     341,289                 339,396  
                           
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 outstanding
     33                 33  
Class B common stock, $.01 par value; authorized shares—200,000; 24,151 shares issued and 21,273 shares outstanding
     242                 242  
Additional paid-in capital
     399,379       (13,292 )
(B)
     386,087  
Treasury stock, at cost, consisting of 1,698 shares of Class A common stock and 2,878 shares of Class B common stock
     (98,836 )               (98,836 )
Accumulated other comprehensive income
     1,630                 1,630  
Accumulated deficit
     (198,224 )               (198,224 )
                           
Total IDT Corporation stockholders’ equity
     104,224                 90,932  
Noncontrolling interests
     894       (81 )
(B)
     813  
TOTAL EQUITY
     105,118                 91,745  
                           
TOTAL LIABILITIES AND EQUITY
   $ 446,407               $ 431,141  
 
 
F-2
 
 
IDT CORPORATION
 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED APRIL 30, 2013
(in thousands, except per share data)
(unaudited)
 
   
Historical
    
Pro forma adjustments
      
Pro forma
  
                     
REVENUES
   $ 1,209,491     $ (982 )
(C)
   $ 1,208,509  
COSTS AND EXPENSES:
                          
Direct cost of revenues (exclusive of depreciation and amortization)
     1,010,941       (598 )
(C)
     1,010,343  
Selling, general and administrative
     166,854       (3,353 )
(C)
     163,501  
Depreciation and amortization
     10,972                 10,972  
Research and development
     4,918                 4,918  
                           
TOTAL COSTS AND EXPENSES
     1,193,685                 1,189,734  
Other operating gains, net
     9,401       (150 )
(C)
     9,251  
                           
Income from operations
     25,207                 28,026  
         Interest expense, net
     (790 )     (8 )
(C)
     (798 )
         Other income, net
     5,133                 5,133  
                           
Income from continuing operations before income taxes
     29,550                 32,361  
         Provision for income taxes
     (12,763 )     12  
(C)
     (12,751 )
Income from continuing operations
     16,787                 19,610  
Income from continuing operations attributable to noncontrolling interest
     (1,529 )     (107 )
(C)
     (1,636 )
                           
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO IDT CORPORATION
   $ $15,258               $ 17,974  
                           
Earnings per share attributable to IDT Corporation common stockholders:
                          
                           
Basic:
   $ $0.73               $ 0.86  
Diluted:
   $ $0.69               $ 0.81  
                           
Weighted-average number of shares used in calculation of earnings per share                          
                           
Basic:
    
20,847
                
20,847
  
Diluted:
    
22,178
                
22,178
  
 
 
F-3
 
 
IDT CORPORATION
 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2012
(in thousands, except per share data)
(unaudited)
 
   
Historical
    
Pro forma adjustments
      
Pro forma
  
                     
REVENUES
   $ 1,506,836     $ (553 )
(C)
   $ 1,506,283  
COSTS AND EXPENSES:
                          
Direct cost of revenues (exclusive of depreciation and amortization)
     1,269,479       (92 )
(C)
     1,269,387  
Selling, general and administrative
     207,843       (937 )
(C)
     206,906  
Depreciation and amortization
     16,648                 16,648  
Research and development
     4,569                 4,569  
                           
TOTAL COSTS AND EXPENSES
     1,498,539                 1,497,510  
Other operating losses, net
     (10,540 )     (5,330 )
(C)
     (15,870 )
                           
Loss from operations
     (2,243 )               (7,097 )
         Interest expense, net
     (2,976 )     (8 )
(C)
     (2,984 )
         Other expense, net
     (1,767 )               (1,767 )
                           
Loss from continuing operations before income taxes
     (6,986 )               (11,848 )
         Benefit from income taxes
     42,756       25  
(C)
     42,781  
Income from continuing operations
     35,770                 30,933  
Income from continuing operations attributable to noncontrolling interest
     (1,033 )               (1,033 )
                           
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO IDT CORPORATION
   $ 34,737               $ 29,900  
                           
Earnings per share attributable to IDT Corporation common stockholders:
                          
                           
Basic:
   $ $1.68               $ 1.44  
Diluted:
   $ $1.57               $ 1.36  
                           
Weighted-average number of shares used in calculation of earnings per share                          
                           
Basic:
    
       20,717
                
    20,717
  
Diluted:
    
       22,060
                
    22,060
  
 
 
F-4
 
 
IDT CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2011
(in thousands, except per share data)
(unaudited)
 
   
Historical
    
Pro forma adjustments
    
Pro forma
  
                   
REVENUES
   $ 1,351,916     $ (4,000 )(C)   $ 1,347,916  
COSTS AND EXPENSES:
                        
Direct cost of revenues (exclusive of depreciation and amortization)
     1,119,665       (308 )(C)     1,119,357  
Selling, general and administrative
     204,078       (1,419 )(C)     202,659  
Depreciation and amortization
     20,952               20,952  
Research and development
     2,834               2,834  
Severance and other charges
     1,053               1,053  
                         
TOTAL COSTS AND EXPENSES
     1,348,582               1,346,855  
Other operating gains, net
     6,324               6,324  
                         
Income from operations
     9,658               7,385  
         Interest expense, net
     (3,706 )     8  (C)     (3,698 )
         Other income, net
     3,990       (79 )(C)     3,911  
                         
Income from continuing operations before income taxes
     9,942               7,598  
         Benefit from income taxes
     12,484       904 (C)     13,388  
Income from continuing operations
     22,426               20,986  
Income from continuing operations attributable to noncontrolling interest
     (743 )             (743 )
                         
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO IDT CORPORATION
   $ 21,683             $ 20,243  
                         
Earnings per share attributable to IDT Corporation common stockholders:
                        
   Basic:
   $ $1.05             $ 0.98  
   Diluted:
   $ $0.96             $ 0.90  
                         
Weighted-average number of shares used in calculation of earnings per share                        
Basic:     20,565               20,565  
Diluted:     22,482               22,482  
 
 
F-5
 

IDT CORPORATION
NOTES AND MANAGEMENT’S ASSUMPTIONS
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
The following is a description of the pro forma adjustments to the historical consolidated financial statements:
 
(A)
Reflects (i) the removal of $3.3 million of cash of SPCI and (ii) the transfer of $11.7 million in cash to SPCI. As a result of these assumed transactions, SPCI’s total pro forma cash balance was approximately $15 million as of April 30, 2013. IDT transferred cash to SPCI prior to the spin-off such that SPCI had approximately $15 million in cash on the Distribution Date.
 
(B)
Reflects the removal of assets, liabilities, and noncontrolling interests of SPCI as if the spin-off was consummated on April 30, 2013.
 
(C)
Reflects the removal of the results of operations of SPCI as if the spin-off was consummated on August 1, 2010.
 
 
F-6
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
IDT CORPORATION
   
By:
/s/ Marcelo Fischer
 
Name: Marcelo Fischer
 
Title: Senior VP of Finance
 
Dated: August 15, 2013
 
 
 
4