Commitments and Contingencies

3 Months Ended

Oct. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 9—Commitments and Contingencies

Purchase Commitments

The Company had purchase commitments of $1.5 million as of October 31, 2011.

Tax Audits

The Company is subject to audits in various jurisdictions for various taxes, including utility excise tax, sales and use tax, communications services tax, gross receipts tax and property tax. As of October 31, 2011, the Company had accrued an aggregate of $3.8 million related to these audits. The following is a summary of the more significant audits:

● In December 2010, the New Jersey Division of Taxation filed a Certificate of Debt related to the sales and use tax audit of IDT Domestic Telecom, Inc. that resulted in the entry of a judgment in the amount of $2.1 million, which allows the Division of Taxation to place a lien or levy on the Company’s assets.

● In January 2011 and May 2011, the Company received Notices of Proposed Tax Adjustments from the New York City Finance Department related to the utility excise tax audit of IDT Telecom that included aggregate assessments of tax, interest and penalties of $2.5 million.

● In May 2011, the Company received a Notice of Proposed Assessment from the Florida Department of Revenue related to communications services tax that included an aggregate assessment of tax and interest of $2.7 million.

The Company believes that it has adequately provided for all of the obligations for these taxes, however amounts asserted by taxing authorities or the amount ultimately assessed against the Company could be greater than the accrued amounts. Accordingly, additional provisions may be recorded in the future as revised estimates are made or underlying matters are settled or resolved. Imposition of assessments as a result of audits related to these other taxes could have an adverse affect on the Company’s results of operations, cash flows and financial condition.

Other Commitments and Contingencies

As of October 31, 2011, the Company had letters of credit and surety bonds outstanding totaling $20.1 million, the majority of which expire by October 31, 2012. These letters of credit and surety bonds were collateral to secure primarily mortgage repayments and the $10.1 million Alexsam judgement (see Note 8), respectively. The letters of credit outstanding at October 31, 2011 also included letters of credit for the benefit of Genie of $3.4 million.

As of October 31, 2011 and July 31, 2011, “Trade accounts payable” in the Company’s consolidated balance sheets included refundable customer deposits of $2.8 million and $1.5 million, respectively, related to the Company’s European prepaid payment services business.

The Company’s restricted cash and cash equivalents include collateral for letters of credit and restricted balances pursuant to banking regulatory and other requirements related to IDT Financial Services Holdings Limited, the Company’s Gibraltar-based bank. Restricted cash and cash equivalents consist of the following:

	October 31, 2011		July 31, 2011
	(in thousands)
Restricted cash and cash equivalents-short-term
Letters of credit related	$	5,191	$	2,880
IDT Financial Services related		1,142		1,248
Total short-term		6,333		4,128
Restricted cash and cash equivalents-long-term
Letters of credit related		2,843		3,538
IDT Financial Services related		8,249		8,703
Total long-term		11,092		12,241
Total restricted cash and cash equivalents	$	17,425	$	16,369