Transcript (Download) - IDT Creative Center
IDT Corporation
December 2003 Confidential Howard Jonas, Chairman Jim Courter, Chief Executive Officer Ira Greenstein, President Steve Brown, Chief Financial Officer Marcelo Fischer, Chief Accounting Officer
IDT Corporation Summary Market Information
Market Cap: Fiscal 2003 Revenues: Cash Balance: Exchange: Headquarters: Employees: Offices: State Of Incorporation: Equity Research: Attorneys: Auditors: Board Representation: Tickers:
Price As Of 12/12/03:
52 Week High: 52 Week Low:
Shares Outstanding:
As Of 10/20/03
$1.6 Billion $1.8 Billion $1 Billion NYSE Newark, NJ 3,800 17 Countries On 5 Continents Delaware Wm Smith Securities, Janco Partners McDermott Will & Emery Ernst & Young 8 Outside Directors, 6 Inside Directors
IDT IDT.C
Class A
$20.00
$19.25
Not Traded $20.50
$13.75
$19.50
$13.70
51.2 Mil. 22.1 Mil.
9.8 Mil.
83.1 Mil Total
2
IDT Corporation IDT Revenue Run Rate Q4 2003 Telecom
(95% owned) $1.8 billion Retail $1.3 billion Wholesale $502 million
Solutions
(100% owned) $85 million Calling Cards $1.17 billion Domestic $955 million International $165 million Consumer Phone Services $149 million Callback $0.5 million
IDT Corporation Revenue $2.1 billion Entertainment
(94% owned) $48 million Digital Production Solutions (90% owned) Film Roman (82% owned) Vanguard Anim.
(12.5% owned) MainFrame Entertainment (62% owned) Anchor Bay Ent. (100% owned upon closing)
Media
(94% owned) $23 million Liberty Broadcasting WMET CTM Brochure Display OTV
Net2Phone
(controlled, 22% owned) $76 million Net2Phone Global Services Net2Phone Cable Telephony
3
IDT Corporation Ownership & Control Of IDT Corporation
Economic Interest: Voting Interest: Institutional Holders 43.9% Howard Jonas 21.4% Retail Holders 20.6% Liberty Media 12.3% AT&T 1.6% Howard Jonas 56.3% Institutional Holders 33.0% Retail Holders 8.6% Liberty Media 1.8% AT&T 0.2% Class B Common Class A Class A 51.2 Million Shares 22.1 Million Shares 9.8 Million Shares NYSE: IDT 1/10 Vote/Share NYSE: IDT.C 1 Vote/Share 3 Votes/Share Convert To Common Upon Sale
4
IDT Corporation
600 500 400
IDT History
International Retail Serv ices Internet/Media Prepaid Calling Cards Solutions Wholesale Carrier Serv ices Net2Phone Consumer Phone Serv ices Entertainment December 2001 Acquire Winstar Assets August 2000 Sell NTOP Shares To AT&T October 2001 Reacquire NTOP February 2001 List on NYSE Control Acquire PT1 300 200 100 July 1996 Launch Net2Phone July 1997 Begin Marketing Prepaid Cards April 1995 Introduce Carrier Service March 1996 IPO July 1999 Net2Phone IPO 0 2Q95 4Q95 2Q96 4Q96 2Q97 4Q97 2Q98 4Q98 2Q99 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 2Q03 4Q03 5
IDT Telecom
6
IDT Telecom Overview Telecom Fast Facts
Provides retail and wholesale telecommunications services worldwide Telecom minutes-of-use run-rate in excess of 1.5 billion minutes per month, 19 billion annually Fiscal 2003 revenue of $1.6 billion
Operating Income ($ millions)
25 20 15 10 5 0 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 1,600 1,400 1,200 1,000 800 600 400 200 0
Revenue ($ millions)
500 400 300 200 100 0 Q1 03 Q2 03 Q3 03 Q4 03
Telecom Minutes Of Use (millions)
Q1 04 7
IDT Telecom Telecom Major Services
Calling cards – Monthly sales exceed 18 million cards – Over 350,000 global points of distribution – Access to 230 countries – Private label - high margin business • Walgreens – Largest major retail private label customer • Also sell corporate cards and promotional cards Consumer phone services – Five cents-a-minute plan has over 525,000 customers – America Unlimited Flat Rate Service roll out began in August 2003 – America Unlimited customer count 70,000 and growing about 8,000 per week – Currently offered in NY, NJ, PA, MD, DE, WV, MA and NH Wholesale carriers 8
IDT Telecom Wholesale Carrier
Our customers include most of the largest, most important Telecom companies in the world.
9
IDT Telecom Contribution Of Telecom Services $ Millions Fiscal 2003 Revenue Gross Profits
Calling Cards Wholesale Carrier $1,080.0
405.5
Consumer Phone Services 152.0
Callback Total 1.3
$1,638.7
$240.0
22.2%
45.6
11.2%
85.8
56.5%
0.7
59.3%
$372.2
22.7%
Revenue Q1 2004 Gross Profits Revenue Growth
292.0
7.9% 125.6
37.2
0.1
455.0
66.2
22.7%
13.8
11.0%
19.4
52.2%
–
57.4%
99.6
21.9%
50.5% 4.4% – 16.6% 10
IDT Telecom U.S. Calling Card Operations
Dark blue shaded areas represent states where significant numbers of IDT calling cards are distributed. 11
IDT Solutions
Services provided by Winstar Communications L.L.C., an IDT Company 12
IDT Solutions The Winstar Network
Hybrid fixed-wireless and fiber infrastructure “Last Mile” wireless connectivity to customer using licensed commercial spectrum – Spectrum holdings cover 100% of U.S.
Rights to 1,200 intra-city fiber miles and 250 interstate fiber miles Access to nationwide fiber network Customer building to hub to switch – 4800 Buildings with access rights – 2300 Provisioned (wired) buildings – 154 Hubs – 5 Data POPs – 21 Voice switches – 54 Data switches Two network operating centers – Herndon, VA – Seattle, WA 13
IDT Solutions Service Offerings
IDT Solutions provides a full range of broadband and telephony services to commercial and governmental customers.
– Voice services • Local • Long distance (dedicated & switched) • International – Internet & data services • High Speed Internet • Dedicated internet • Private lines • WAN – Other services • Conferencing • Web hosting • Calling cards
Winstar Central Office Customer Location
14
IDT Solutions IDT Solutions Unique Value Proposition
One of few carriers that can deliver a bundled suite of local, long distance and data services Provide true network diversity and redundancy to fiber-based networks Competitive pricing Service reliability, performance and security – multi-layered fault tolerant architecture 15
IDT Solutions IDT Solutions Acquisition December 19, 2001, – April 17, 2002
Cash IDT Class B Shares Purchase Working Capital*
Total
$ 30.0 million 25.8 million $ 55.8 million 150.0 million
$205.8 million
*Amount funded as of July 2003 16
IDT Solutions 22 Cities Of IDT Solutions
17 Offices 12,500 Customer accounts *Top 5 cities (account for 45% of on-net revenue) Atlanta Baltimore Boston Chicago* Cincinnati Dallas/Ft. Worth* Denver Detroit Houston Los Angeles* Miami Minneapolis/St Paul New York City* Newark (NJ) Orange County (CA) Philadelphia Phoenix San Francisco Seattle Stamford (CT) Tampa Washington DC* 17
IDT Solutions IDT Solutions Burn Reduction Plan
Interim Goal – $2.5 Million Maximum Monthly Cash Burn
Reduce excess capacity on network Terminate leases on buildings with limited revenue potential Measure and enforce productivity targets for sales Eliminate underused hubs, thereby further reducing real estate and capacity costs without sacrificing current or future revenue Reduce headcount
Burn Reduction Plan
Preserves current revenue Does not prevent future growth Does not destroy asset value 18
IDT Entertainment
Leadership In …
High Quality 3D Computer Animation And 2D Cel Animation Developing/Acquiring Libraries Of Animated Intellectual Properties Distribution Of Owned And Licensed Intellectual Properties To Retail
19
IDT Entertainment Global Animation Studios
4 production hubs in Newark, LA, Toronto, Israel linking 2500 global animators Highest quality animation at low costs, high speed and improved management control Recent productions: Monster Monster Trucks, Cabbage Patch Kids – JUMP!, Hip Hop & Hamilton Currently in development: Starpoint Academy, Happily N’ever After, one other film Requires credibility and recognition to gain access to better project flow
Film Roman, Inc.
Controlling interest acquired May 2003 Leading 2-D animation producer of primetime series (Simpsons™, King of the Hill™) Creative strength and credibility in the television industry 20
IDT Entertainment Vanguard Films, Inc.
Minority stake purchased in July 2003 Feature film industry powerhouse known for creativity, discipline, efficiency Relationships with Disney, Dreamworks, Warner Brothers, Sony, Nickelodeon
Mainframe Entertainment Inc.
Controlling interest acquired September 2003 Leading 3-D animation producer for TV and direct-to-video products Canadian animation hub Relationships with Hasbro, Mattel, Sony
Anchor Bay Entertainment Group
A leading independent video distributor of licensed intellectual properties to retailers such as Wal-Mart, K-Mart and Target Specializes in horror and children genres; #1 distributor of fitness home-video titles Relationships with proven Hollywood directors including Sam Raimi, Werner Herzog and George Romero Distributes titles such as Thomas the Tank Engine and Crunch fitness videos 21
IDT Entertainment
IDT Entertainment
DPS (90% owned)
Starpoint Academy Monster Monster Trucks Happily N’Ever After Hip Hop & Hamilton
Film Roman
(85% owned) The Simpsons King Of The Hill X-Men: Evolutions Tripping The Rift
MainFrame (62% owned)
Barbie Spider-Man Alien Legion Tony Hawks SHADE
Vanguard (12.5% owned)
Valiant
Anchor Bay
(100% owned) Thomas The Tank Engine Crunch Halloween Evil Dead
22
IDT Entertainment IDT Entertainment Acquisitions Film Roman, Inc.
Vanguard Films, Inc.
MainFrame Entertainment, Inc.
Anchor Bay Entertainment Group Total $ Millions
2.1
2.0
14.0
60.0
78.1
Dates
May-03 Jul. 2003 Sept. 2003 Dec. 2003 Sep-03
23
IDT Entertainment Executive Bios
John Hyde, President and CEO, Film Roman – extensive experience in entertainment production and distribution, as well as management consulting and restructuring of entertainment companies. CEO of Crossroads V Communications and Starbound Records, Chairman and CEO of MCEG Sterling. John Williams, CEO, Vanguard Animation – originating producer of Shrek, other credits include “The Tuxedo” and “Seven Years in Tibet.” Neil Braun, President, Vanguard Animation - President of the NBC Television Network, Chairman and CEO of Viacom Entertainment, President of Imagine Entertainment, and Senior Vice President of HBO Rick Mischel, CEO, Mainframe Entertainment - President and Chief Operating Officer at The Harvey Entertainment Company, Senior Vice President of Live Entertainment. 24
IDT Media
Innovative, Technologically Advanced Communications Platforms
25
IDT Media Liberty Broadcasting Systems
Barter syndication networks 5 Million+ listeners Long Form programs + features CY 2003 Revenue exceeds CY2002 by about 50% Intelligent product includes current hosts William Kristol and Linda Chavez; Charles Krauthammer to begin in March
WMET
Building out station to 50K watts daytime DC will serve as a distribution point for the new “Intelligent Talk” format Liberty Broadcasting System) 26
IDT Media Delivering Video To The Office Desktop
Broadcast quality 24/7 news delivered to the office desktop via high speed IP Research indicates demand for news product at significant markup exists Content agreements reached Ops tests completed / Microsoft endorsed Patent pending “plug-ins” in development Subscription / advertising financial model – 1MM desktops = $90MM in annual revenue Will be marketed via IDT Solutions, private internet and direct to fortune 1000 companies 27
IDT Media CTM Achieves Record Sales / EBITDA
Primarily distributes brochures to hotels, travel hubs and corporations 10,000+ racks, estimated 70% market share east of the Mississippi in the U.S. and Canada Recently entered Puerto Rico market FY 2003 revenue exceeds $15MM EBITDA approaches 25% Growth will come from expansion of delivery areas, printing and diversification into collateral distribution 28
Net2Phone
Communication Without Borders
29
Net2Phone Net2Phone Key Points
Interim goal – $2.5 million maximum monthly cash burn Cable telephony subscribers expected to grow almost 30% annually through 2006, exceeding 22MM subscribers – Telecom providers in the U.S. projected to lose over $10bn in revenues to cable VoIP by 2012 Net2phone the only fully outsourced, proven “PSTN” quality cable telephony solution for MSOS Proven ability to develop and deploy VoIP services Profitable core business, which earned $1.8 million in FY 2003 on revenues of $91 million Conservative capital structure and strong liquidity. Recent secondary offering netted $63 million, raising liquid assets to $157 million 30
Net2Phone Net2Phone Voice Over IP Offerings
International Communication Services (ICS) – 55% of NGS revenue – Channel sales • Integrated sale of VoIP hardware and minutes through distribution channels worldwide • Emerging markets are a significant growth opportunity – PC-to-phone service – Wholesale Services to Carriers using VoIP technology – Big market opportunities on the horizon as telecommunication markets deregulate, including Latin America and the Middle East Calling card services – 45% of NGS revenue – Disposable – Rechargeable Net2Phone cable telephony targeting a sizeable, immediate market – Complete suite of NCT services allow cable companies to deliver residential phone service – Only fully outsourced, proven “PSTN” telecom solution for cable operators – Leverage existing technology – Tailored to meet MSO’s strategic and financial needs – Conforms to CableLabs’ PacketCable standards – Initial contract signed in October 31
Net2Phone Cable Market Opportunity
Cable telephony a likely replacement for traditional phone – Users spend just as much on cable telephony as they do on regular telephony ($53/month) (FCC and ATT Broadband) – When a cable provider adds telephony services to their suite, penetration rates increase 25-30% (DB Alex. Brown) – Cox reports cable telephony bundle has 30% penetration of homes passed in mature markets – AT&T Broadband reports a 40-50% churn reduction by offering triple play; Cox reports 53% churn reduction among triple play subs, vs. 25% among video and data only subs – By outsourcing IP telephony, cable operators can reduce their incremental deployment costs for telephony by 90% – Primary line cable telephony revenue to hit $4.4 billion by 2006 (JP Morgan) Net2Phone’s opportunity: Second tier cable – Internal estimate of Net2Phone’s cable market opportunity is 82 million homes – Competitive edge by offering “triple play” – Second tier companies need incremental revenue – 20% of MSO’s revenue will come from telephony services by 2007 (Goldman Sachs) – Can’t spend the Cap Ex – Have regulatory commitments to deliver telephony – Cable companies do not have telecom expertise Net2Phone cable business model – Licensing fees – Per minute recurring revenue – Annual maintenance and support fees 32
Net2Phone Net2Phone Investment Breakout
Economic Interest: Voting Interest: NTOP Holdings, LLC 38.8% Other 61.2% NTOP Holdings, LLC 55.9% Other 44.1%
Additionally, Net2Phone is obliged to issue 6.9 million shares of restricted Class A Common Stock to IDT upon signing a telecom services agreement which has been negotiated. There are a total of 74.4 million NTOP shares outstanding.
As of 11/25/2003 NTOP Holdings, LLC is a group consisting of IDT Corp. and Liberty Media. IDT controls the right to vote for the LLC in most matters, and is the managing member of the LLC. IDT and Liberty Media each also hold 1,250,000 shares of Net2Phone outside the LLC.
33
Financial Information
Services provided by Winstar Communications L.L.C., an IDT Company 34
Financial Information
Consolidated Balance Sheet In Thousands Assets
Current assets: Cash and cash equivalents Marketable securities Trade accounts receivable, net Other current assets
Total current assets 10-31-01
1,180,350 26,709 118,628 54,664
1,380,351
347,048 Property, plant and equipment, net Licenses and other intangibles,net Restricted cash Goodwill Investments Other noncurrent assets
Total assets
Shares outstanding 48,984 25,186 200,281
2,001,850 Liabilities and stockholders' equity
Current liabilities: Trade accounts payable Accrued expenses Deferred revenue Notes payable - current Capital lease obligations - current Other current liabilities
Total current liabilities
139,610 75,612 92,884 7,439 24,937 21,824
362,306
Deferred tax liability, net Notes payable - long term Capital lease obligations - long term Other Long Term Liabilities 380,764 8,752 58,642 566
Total liabilities
Minority Interest
811,030
294,162 Stockholders' equity: Common stock at par value Additional paid-in capital Treasury stock Other comprehensive income Deferred compensation Retained earnings
Total stockholders' equity Total liabilities & equity
496,082 (153,375) 698 (10,662) 563,904
896,658 2,001,850
70,918,604
1-31-02
1,075,882 117,516 147,836 66,267
1,407,501
377,769 52,023 34,209 196,839
2,068,341
137,725 125,287 98,227 6,955 27,515 19,034
414,743
344,332 8,729 55,444 2,168
825,416
301,960 546,692
940,965 2,068,341
75,845,492
4-30-02
830,849 294,222 133,893 60,477
1,319,441
296,303 21,982 35,812 41,838 194,114
1,909,490
123,811 155,806 106,137 7,873 26,116 12,576
432,319
314,573 51,016 2,142
800,050
180,625
7-31-02
415,464 684,502 129,308 78,796
1,308,070
283,506 27,242 34,411 44,085 80,348
1,777,662
128,863 160,159 120,206 25,963 19,491
454,682
233,518 48,068 5,060
741,328
166,564 759 555,393 (153,713) (8,166) 780 589,327 (153,713) (4,678) 794 606,387 (153,713) (2,435) 497,099
928,815 1,909,490
78,031,042 418,737
869,770 1,777,662
79,466,303
10-31-02
315,830 798,642 119,905 77,901
1,312,278
271,429 24,826 34,689 43,639 44,581
1,731,442
125,537 138,302 119,111 26,186 19,473
428,609
227,908 42,883 5,332
704,732
168,355
1-31-03
162,010 916,465 123,393 85,302
1,287,170
281,974 25,974 34,302 39,194 47,771
1,716,385
122,335 142,599 122,073 26,324 34,122
447,453
205,420 41,540 6,565
700,978
162,585
4-30-03
243,415 794,259 133,127 88,199
1,259,000
288,070 24,310 21,290 34,424 39,471 54,928
1,721,493
97,760 173,601 120,836 25,318 33,412
450,927
191,436 38,502 14,299
695,164
162,184
7-31-03 10-31-03
99,046 921,669 126,303 81,304
1,228,322
286,807 23,503 23,064 41,651 41,628 87,367
1,732,342
106,836 179,665 145,343 27,862 8,061
467,767
150,131 45,084 24,486
687,468
147,347 141,465 859,206 134,871 80,893
1,216,435
291,941 22,777 23,485 41,859 50,749 64,616
1,711,862
70,046 207,477 146,509 24,989 7,426
456,447
150,131 46,548 22,630
675,756
135,581 795 609,371 (153,713) (1,837) (10,907) 414,646
858,355 1,731,442
79,496,690 799 615,250 (153,713) (2,397) (9,304) 402,187
852,822 1,716,385
79,954,255 805 636,445 (153,713) (4,369) (7,907) 392,884
864,145 1,721,493
80,570,054 820 654,170 (150,603) (8,080) 401,220
897,527 1,732,342
81,986,556 833 666,259 (149,067) (4,754) 387,254
900,525 1,711,862
83,266,466
Note: Net2Phone consolidated starting 10/31/02
35
Financial Information
Consolidated Income Statement
$ Million
Revenues
Telecommunications Wholesale Retail Total Telecom Winstar Net2Phone * Internet/Ventures/Media
Total Revenues Costs and Expenses
Direct Costs Selling, G & A Depreciation & Amortization Non-cash compensation Settlement by Net2Phone of litigation Impairment Charges
Total Costs and Expenses
Income (Loss) from Operations Minority Interest
Net Income before Interest and Taxes
Interest and Other (net) Income (Loss) before Taxes Taxes Net Income (Loss) before Extraordinary Item Extraordinary Items
Net Income (Loss)
Adjusted EBITDA 1999 Years Ending July 31 2000 289.0
395.5
684.5
0.0
30.7
16.9
732.1
575.0
128.5
36.4
0.0
739.9
(7.8) (3.3)
(11.1)
(3.3) (14.3) 7.3
(21.6) (3.3)
(18.2)
28.6
520.5
502.5
1,023.0
0.0
56.1
14.8
1,093.9
918.2
342.7
48.6
1.0
0.0
1,310.5
(216.6) 59.3
(157.3)
609.5
452.2
218.4
233.8
(3.0)
230.9
(167.1) 2001 388.1
816.4
1,204.5
0.0
0.0
26.4
1,230.9
1,066.8
334.0
60.4
3.1
199.4
1,663.7
(432.7) (5.7)
(438.4)
1,180.2
741.8
209.4
532.4
0.0
532.4
(169.9) * Net2Phone not consolidated in Fiscal Year 2001; it was reconsolidated on Oct. 23, 2002.
2002 2003 257.5
2,024.1
(440.3) 151.4
(288.9)
8.2
(280.7) (124.3) (156.4) (147.0)
(303.4)
(82.5) 289.3
1,121.7
1,411.0
79.6
71.9
21.3
1,583.8
1,214.8
451.5
83.9
16.4
405.5
1,233.2
1,638.7
87.6
80.8
27.5
1,834.5
1,409.5
421.8
89.3
32.3
(58.0) 13.3
1,908.2
(73.7) (43.0)
(116.7)
28.8
(87.9) (70.4) (17.6) 0.0
(17.6)
61.2
36
Financial Information
Consolidated Quarterly Income Statement
$ Millions
Revenues
Telecommunications Wholesale Retail Total Telecom Entertainment Internet/Solutions Net2Phone Ventures/Media
Total Revenues Costs and Expenses
Direct Costs Selling, G & A
10-31-01
67.5
265.3
332.8
3.0
5.7
341.6
267.1
70.9
Non-cash Compensation Depreciation & Amortization Impairment & Other Charges
Total Costs and Expenses
Income (Loss) from Operations Minority Interest 20.7% 0.5
15.9
8.7
363.1
(21.5) 3.3
Net Income before Interest and Taxes Interest and Other (net) Income (Loss) before Taxes Taxes
(18.2)
(11.3) (29.6) Net Income (Loss) before Ex traordinary Item Extraordinary Items
Net Income (Loss)
(18.2) (11.3) (147.0)
(158.3) 01-31-02
65.9
274.7
340.6
19.2
26.4
5.7
391.9
296.6
129.4
33.0% 6.3
22.2
15.3
469.7
(77.8) 32.6
(45.2)
12.2
(32.9) (15.7) (17.2) 0.0
(17.2) 04-30-02
73.2
285.4
358.7
33.1
23.5
4.2
419.4
323.1
131.5
31.4% 9.1
23.8
114.4
601.9
(182.4) 111.5
(70.9)
0.1
(70.8) (21.2) (49.6) 0.0
(49.6) 07-31-02
82.7
296.2
378.9
27.3
18.9
5.7
430.8
328.0
119.7
27.8% 0.6
22.0
119.1
589.5
(158.6) 4.1
(154.6)
7.2
(147.4) (69.2) (78.2) 0.0
(78.2) 10-31-02
83.4
306.8
390.2
0.1
24.5
22.6
5.6
443.2
340.1
105.3
23.8% 3.9
21.3
(51.8)
418.8
24.3
(46.5)
(22.1)
4.4
(17.7) (13.6) (4.1) 0.0
(4.1) 01-31-03
95.6
308.2
403.8
0.3
20.7
21.1
4.9
450.8
349.0
106.6
23.6% 3.2
21.6
1.0
481.5
(30.7) 0.5
(30.2)
1.4
(28.8) (16.3) (12.5) 0.0
(12.5) 04-30-03 07-31-03 10-31-03 % of
Revenue 109.2
299.9
409.0
0.2
20.8
19.6
5.3
454.9
347.1
105.0
23.1% 16.6
22.3
1.7
492.8
(37.9) (1.0)
(38.9)
18.8
(20.1) (10.8) (9.3) 0.0
(9.3)
117.3
318.3
435.6
4.4
21.6
17.4
6.7
485.7
373.3
105.0
21.6% 8.5
24.0
4.3
515.1
(29.4) 3.9
(25.5)
4.2
(21.3) (29.6) 8.3
0.0
8.3
125.6
329.4
455.0
12.1
21.3
19.0
5.8
513.1
24.5% 64.2% 88.7% 2.3% 4.2% 3.7% 1.1% 100.0% 394.2
106.6
20.8% 3.6
22.7
4.4
531.5
(18.4) (12.9)
(31.3)
22.1
(9.2) 4.7
(14.0) 0.0
(14.0)
76.8% 20.8% 0.0% 0.7% 4.4% 0.9% 103.6% -3.6% -2.5% -6.1% 4.3% -1.8% 0.9% -2.7% 0.0% -2.7% 37
Financial Information
Telecom Quarterly Operating Statement
$ Millions
Revenues
Wholesale Retail
Total Revenues 10-31-01
67.5
265.3
332.8
01-31-02
65.9
274.7
340.6
04-30-02
73.2
285.4
358.7
07-31-02
82.7
296.2
378.9
10-31-02
83.4
306.8
390.2
Gross Profit Wholesale Retail
Total Gross Profit
5.1
7.6% 62.3
23.5%
67.4
20.3% 7.9
12.0% 68.2
24.8%
76.1
22.3% 10.1
13.8% 78.1
27.4%
88.2
24.6% 11.2
13.6% 80.8
27.3%
92.1
24.3% 8.4
10.0% 83.5
27.2%
91.9
23.5%
Costs & Expenses
S G & A 51.2
15.4% 59.0
17.3% 62.6
17.5% 62.2
16.4% Non-cash Compensation Depreciation Impairment Charge
Total Costs & Expenses
Income (Loss) from Operations
Adjusted EBITDA
13.3
2.8
67.5
(0.0) 0.0%
16.2
4.9% 13.0
0.0
72.1
4.0
1.2%
17.0
5.0% 13.0
0.0
75.7
12.5
3.5%
25.6
7.1% 15.3
0.4
78.1
14.0
3.7%
29.8
7.9% 59.3
15.2% 2.3
15.4
1.5
78.4
13.4
3.4%
32.5
8.3%
01-31-03
95.6
308.2
403.8
11.2
11.7% 78.8
25.6%
90.0
22.3% 60.9
15.1% 0.0
14.8
0.0
75.8
14.3
3.5%
29.1
7.2%
04-30-03 07-31-03 10-31-03
109.2
299.9
409.1
13.3
12.2% 79.6
26.5%
92.9
22.7% 61.4
15.0% 0.2
15.6
0.0
77.2
15.7
3.8%
31.5
7.7% 117.3
318.3
435.6
12.8
10.9% 84.7
26.6%
97.5
22.4% 61.8
14.2% 0.3
15.4
0.0
77.4
20.0
4.6%
35.7
8.2% 125.6
329.4
455.0
13.8
11.0% 85.5
26.0%
99.3
21.8% 61.6
13.5% 0.1
15.3
0.0
77.0
22.3
4.9%
37.7
8.3% 38
Financial Information
IDT Solutions Quarterly Operating Statement
$ Millions
10-31-02 01-31-03 04-30-03 07-31-02 10-31-03
Total Revenues Direct Costs
Gross Profit
Costs & Expenses S G & A Non-cash Compensation Depreciation Impairment Charges
Total Costs & Expenses
Loss from Operations
Adjusted EBITDA
% change in Adjusted EBITDA 24.5
28.5
(4.0)
18.2
2.5
20.7
(24.7)
(22.2)
-26.6% 20.7
24.3
(3.7)
15.7
3.8
19.5
(23.2)
(19.4)
-12.5% * Business was acquired midway through the quarter ended 1/31/02.
20.8
20.7
0.1
16.2
3.6
19.7
(19.6)
(16.1)
-17.2% 21.6
20.2
1.4
14.6
3.7
4.5
22.7
(21.3)
(13.1)
-18.4% 21.3
18.3
3.0
15.1
3.8
4.2
23.1
(20.1)
(12.1)
-7.6% 39
Financial Information
Media Quarterly Operating Statement
$ Millions
10-31-02 01-31-03 04-30-03 07-31-03 10-31-03
Total Revenues Direct Costs Gross Profit Costs & Expenses S G & A Depreciation
Total Costs & Expenses
Loss from Operations 5.6
0.6
5.1
5.6
0.3
5.8
(0.8) 4.9
0.5
4.4
6.2
0.4
6.6
(2.2) 5.3
0.3
4.9
6.1
0.6
6.6
(1.7) 6.7
2.2
4.5
5.8
0.7
6.5
(2.1) 5.8
0.1
5.7
6.4
0.6
7.0
(1.3) EBITDA (0.5) (1.8) (1.1) (1.3) (0.7) Notes: Quarter Ended 7-31-02 omits an impairment charge of $111.1 million due to the write-down of undersea fiber assets.
40
Financial Information
Entertainment Operating Statement
$ Millions
10-31-02 01-31-03 04-30-03 07-31-03 10-31-03
Total Revenues Direct Costs Gross Profit 0.1
0.0
0.1
0.3
0.0
0.3
0.2
0.0
0.2
4.4
3.9
0.5
12.1
10.6
1.5
Costs & Expenses S G & A Depreciation
Total Costs & Expenses
Loss from Operations EBITDA 0.6
0.0
0.6
(0.5) (0.5) 0.9
0.0
0.9
(0.6) (0.6) 0.8
0.0
0.8
(0.6) (0.6) 1.2
0.0
1.2
(0.6) (0.6) 2.1
0.1
2.2
(0.7) (0.6) 41
Financial Information
Corporate Quarterly Operating Statement
$ Millions
10-31-01 01-31-02 04-30-02 07-31-02 10-31-02 01-31-03 04-30-03 07-31-02 10-31-03
Costs & Expenses S G & A Non-cash Compensation Depreciation
Loss from Operations
5.5
0.7
6.2
6.2
0.7
6.9
5.9
0.6
6.5
6.5
0.4
6.9
7.9
0.6
8.5
8.2
0.5
0.3
9.0
7.9
13.7
0.4
22.0
9.0
0.0
0.4
9.4
8.9
1.7
0.4
11.0
Note: The 4-31-03 quarter's non-cash compensation is predominantly due to the exchange of options to purchase IDT.C shares for an identical number of identically priced shares of IDT.
42
Financial Information
Net2Phone Quarterly Operating Statement
$ Millions Total Revenues Direct Costs
Gross Profit 10-31-01
3.0
1.2
1.8
60.5%
01-31-02
26.4
11.1
15.3
58.1%
04-30-02
23.5
9.8
13.7
58.4%
07-31-02
18.9
7.4
11.5
60.7% Costs & Expenses S G & A Non-cash Compensation Depreciation Restructuring, Impairment & Other
Total Costs & Expenses
Income (Loss) from Operations 3.7
0.5
0.7
5.9
10.8
(8.9) 36.5
6.3
7.3
15.3
65.4
(50.0) 25.1
6.7
7.0
114.4
153.3
(139.6) 17.5
1.0
2.9
7.6
29.0
(17.5)
10-31-02
22.6
12.6
10.0
44.2%
01-31-03
21.1
10.4
10.8
50.9%
04-30-03
19.6
10.0
9.6
49.2%
07-31-03 10-31-03
17.4
19.0
8.9
8.5
49.0% 9.5
9.5
49.8% 13.7
1.7
2.5
(53.3) (35.5) 45.5
14.6
2.7
2.4
1.1
20.7
(10.0) 12.7
2.7
2.3
1.7
19.5
(9.8) 12.6
8.2
3.9
(0.2) 24.5
(16.0) 12.5
1.8
2.5
0.2
17.1
(7.6) Adjusted EBITA (1.9) (21.1) (11.4) (6.0) (3.7) (3.8) (3.1) (4.1) (3.1) 43
Financial Information
Corporate Governance Independent Directors
IDT Corporation
J. Warren Blaker Senator Rudy Boschwitz Saul K. Fenster Governor James S. Gilmore The Honorable Jack Kemp Michael J. Levitt Admiral William Owens Governor William Weld
Telecom
Secretary William Cohen Muni Figueres Vito Spitaleri
Solutions
Claire Calandra Director Jacob Lew George Rupp Howard Safir Herbert H. Tate
Media & Entertainment
Merv Adelson Rev. Eric Cosentino Rabbi Irwin Katsof Roberto Muller Harvey Schiller Governor Pete Wilson
Net2Phone
Stephen Goldsmith Jesse King Harry McPherson James R. Mellor Marc J. Openheimer Dan Schulman Dr. Michael Weiss Tony Werner
44
Financial Information
Corporate Governance IDT Corp.
Independent Directors
J. Warren Blaker
Professor, Fairleigh Dickinson University Former CEO of University Optical Products, Inc.
Senator Rudy Boschwitz
Chairman of the Advisory Committee of the Center for Global Food Issues Former U.S. Senator
Saul K. Fenster
President of NJ Institute of Technology
Governor James S. Gilmore
Partner at Kelley Drye and Warren LLP, practicing homeland security, corporate and technology law Sixty-eighth Governor of the Commonwealth of Virginia
The Honorable Jack Kemp
Former 9-term U.S. Congressman and former Secretary of Housing & Urban Development
Michael J. Levitt
Chairman of Ilios Capital LLC Former partner, Hicks,Muse, Tate & Furst, Inc.
Former Deputy Head of Investment Banking, Smith Barney
Admiral William Owens Governor William Weld
Vice Chairman and Co-Chief Executive Officer of Teledisic LLC Former Vice Chairman of the Joint Chiefs of Staff Principal, Leeds Weld & Co. Former Governor of Massachusetts 45
Financial Information
Corporate Governance IDT Telecom
Independent Directors
Secretary William Cohen
Chairman and CEO of The Cohen Group Former Secretary of Defense and former 3-term U.S. Senator
Muni Figueres
Writer on Economics and Politics Former External Relations Advisor of the Inter-American Development Bank Former Costa Rican Minster of Foreign Trade
Vito Spitaleri
Financial Advisor Former Vice President and Treasurer of Mars, Inc.
46
Financial Information
Corporate Governance IDT Solutions Division
Independent Directors
Claire Calandra
President of the CLC Group Former executive with TyCom Ltd and AT&T
Director Jacob Lew George Rupp
Executive Vice President and Professor of Public Administration at New York University Former Director of the U.S. Office of Management and Budget, and also a former member of the National Security Council President of the International Rescue Committee Prior President of Columbia and Rice Universities
Howard Safir Herbert H. Tate
Chairman and CEO of SafirRosetti Former New York City Police Commissioner Professor, N.J. Institute of Technology Former President of the N.J. Board of Public Utilities 47
Financial Information
Corporate Governance Media & Entertainment
Independent Directors
Merv Adelson
Co-founder of Lorimar Telepictures, where he served as Chairman and CEO
Rev. Eric Cosentino Rabbi Irwin Katsof Roberto Muller Harvey Schiller Governor Pete Wilson
Rector of the Episcopal Church of the Divine Love in Montrose, New York Executive Director of the Jerusalem Fund of Aish HaTorah Co-author with Larry King of Powerful Prayers and
How to Get Your Prayers Answered
President and CEO of The Muller Sports Group Former president of International Founder of PONY Sports and Leisure Chairman and CEO of YankeeNets Former Governor of the State of California Former U.S. Senator Former Mayor of San Diego 48
Financial Information
Corporate Governance Net2Phone
Independent Directors
Stephen Goldsmith
Special Advisor to President Bush. Also Sr. VP for e-Government and Strategic Initiatives with Affiliated Computer Services, Faculty Director for innovations in American Government at Harvard's Kennedy School of Government, and Chairman the Corporation for National and Community Service.
Jesse King
COO, Daniels Fund. Former Operations Manager for Rockefeller Foundation's Next Generation Leadership Program and The Philanthropy Workshop.
Harry McPherson James R. Mellor Dan Schulman
Chairman, Verner, Liipfert, Bernhard, McPherson and Hand. Former Chairman of the U.S. International Cultural and Trade Center Commission.
Chairman, USEC, Inc. Former Chairman and CEO of General Dynamics.
Marc J. Oppenheimer
President and CEO of Crystallex International Corporation. Former Director of Trade and Merchant Banking with Midlantic National Bank.
CEO, Virgin Mobile USA, LLC. Former President and COO of priceline.com. Former President of the AT&T Consumer Markets Division and of AT&T WorldNet Service.
Dr. Michael Weiss Tony Werner
Associate Clinical Professor of Ophthalmology at Columbia College of Physicians and Surgeons and Director of Uveitis Service at the Edward S. Harkness Eye Institute. Chief Technology Officer, Liberty Media. Former CEO of Aurora Networks & CTO for AT&T broadband.
49