Business Segment Information

12 Months Ended

Jul. 31, 2012

Business Segment Information

Note 17—Business Segment Information

The Company has two reportable business segments, Telecom Platform Services and Consumer Phone Services, which comprise the IDT Telecom division. All other operating segments that are not reportable individually are included in All Other. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.

The Telecom Platform Services segment provides telecommunications services, including prepaid and rechargeable calling products and international long distance traffic termination, as well as various payment services. The Consumer Phone Services segment provides consumer local and long distance services in the United States. All Other includes (1) Zedge, which owns and operates an on-line platform, including a popular Android app, that allows users to share and obtain content to personalize mobile phones and tablets, (2) Fabrix, a software development company specializing in highly efficient cloud-based video processing, storage and delivery, (3) IDT Spectrum, which holds and leases fixed wireless spectrum, (4) ICTI, which holds intellectual property primarily related to VoIP technology and the licensing and other businesses related to this intellectual property, (5) the Company’s real estate holdings, and (6) other smaller businesses. Corporate costs include certain services, such as compensation, consulting fees, treasury and accounts payable, tax and accounting services, human resources and payroll, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, business development, and other corporate-related general and administrative expenses including, among others, facilities costs and travel, as well as depreciation expense on corporate assets. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. IDT Telecom depreciation and amortization are allocated to Telecom Platform Services and Consumer Phone Services because the related assets are not tracked separately by segment. There are no other significant asymmetrical allocations to segments.

Operating results for the business segments of the Company are as follows:

(in thousands)	Telecom Platform Services		Consumer Phone Services		All Other			Corporate			Total
Year ended July 31, 2012
Revenues	$	1,477,091	$	19,307	$	10,438		$	—		$	1,506,836
Income (loss) from operations		5,945		4,062		902			(13,152	)		(2,243	)
Depreciation and amortization		14,208		9		2,171			260			16,648
Severance and other charges		—		—		—			—			—
Year ended July 31, 2011
Revenues	$	1,316,601	$	26,440	$	8,875		$	—		$	1,351,916
Income (loss) from operations		21,608		7,100		(2,945	)		(16,105	)		9,658
Depreciation and amortization		17,628		59		2,660			605			20,952
Severance and other charges		926		—		—			127			1,053
Year ended July 31, 2010
Revenues	$	1,150,150	$	37,173	$	6,255		$	—		$	1,193,578
Income (loss) from operations		14,405		12,476		(10,064	)		(15,986	)		831
Depreciation and amortization		29,220		110		2,969			1,042			33,341
Severance and other charges		1,570		63		(63	)		3,172			4,742

Telecom Platform Services’ income from operations in fiscal 2012 included an aggregate of $6.5 million for estimated losses from pending litigation (see Note 13), a gain of $1.8 million for cash received from Broadstripe, LLC on January 17, 2012 upon the confirmation of Broadstripe, LLC’s bankruptcy plan and closing of its bankruptcy sale in settlement of the Company’s claim stemming from Broadstripe, LLC’s rejection of its telephony services agreements with the Company, a loss of $11.0 million from the settlement of litigation with T-Mobile (see Note 13) and a $0.2 million loss on the settlement of an unrelated claim.

Telecom Platform Services’ income from operations in fiscal 2011 included a gain of $14.4 million related to the termination of a cable telephony agreement with one of its customers (see Note 6) and an expense of $10.8 million related to an action alleging patent infringement (see Note 13).

Telecom Platform Services’ income from operations in fiscal 2010 included a gain of $10.0 million from the settlement of litigation with certain defendants affiliated with STi Prepaid, LLC (see Note 6) and a gain of $0.4 million from the settlement of other claims.

All Other’s income from operations in fiscal 2012 included a gain of $5.3 million on the sale of eight wireless spectrum licenses (see Note 6).

All Other’s loss from operations in fiscal 2011 was net of a gain of $2.6 million related to an insurance claim for water damage to portions of the Company’s building and improvements at 520 Broad Street, Newark, New Jersey (see Note 4), and a gain of $0.6 million from the settlement of other claims.

All Other’s loss from operations in fiscal 2010 included expense of $1.5 million for the settlement of certain claims, net of a gain of $0.5 million from the settlement of claims related to IDT Global Israel, Ltd. (see Note 6) and a gain of $0.7 million on the sale of land and building (see Note 6).

Total assets for the reportable segments are not provided because a significant portion of the Company’s assets are servicing multiple segments and the Company does not track such assets separately by segment.

Revenue from customers located outside of the United States was 29%, 32% and 34% of total revenues from continuing operations in fiscal 2012, fiscal 2011 and fiscal 2010, respectively. In fiscal 2012, fiscal 2011 and fiscal 2010, the United Kingdom represented 14%, 13% and 12%, respectively, of total revenues from continuing operations. Revenues by country are determined based on selling location.

Net long-lived assets and total assets held outside of the United States, primarily in Western Europe, totaled $3.9 million and $140.9 million, respectively, as of July 31, 2012, $4.5 million and $137.3 million, respectively, as of July 31, 2011 and $4.3 million and $107.3 million, respectively, as of July 31, 2010.