Commitments and Contingencies

6 Months Ended

Jan. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 9—Commitments and Contingencies

Purchase Commitments

The Company had purchase commitments of $1.8 million as of January 31, 2012.

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 January 31, 2012, the Company had accrued an aggregate of $3.8 million related to these audits. The following is a summary of the more significant ongoing 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 for the period from January 2004 through December 2009 that included aggregate assessments of tax, interest and penalties of $2.5 million. In February 2012, the Company agreed to resolve these matters and paid $0.9 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.

In February 2011, we liquidated our Puerto Rico legal entity. The final Puerto Rico tax return was filed in April 2011 claiming a refund of $4.8 million, which we expect to receive in calendar year 2012.

Other Commitments and Contingencies

As of January 31, 2012, the Company had letters of credit and surety bonds outstanding totaling $19.3 million, the majority of which expire by January 31, 2013. These letters of credit and surety bonds were collateral to secure primarily mortgage repayments and the $10.1 million Alexsam judgment (see Note 8), respectively. The letters of credit outstanding at January 31, 2012 also included letters of credit for the benefit of Genie of $2.6 million. Genie is in the process of transferring these letters of credit from the Company to Genie. To date, substantially all of the letters of credit have been transferred to Genie.

As of January 31, 2012 and July 31, 2011, “Trade accounts payable” in the Company’s consolidated balance sheets included refundable customer deposits of $4.7 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:

	January 31, 2012		July 31, 2011
	(in thousands)
Restricted cash and cash equivalents-short-term
Letters of credit related	$	3,717	$	2,880
IDT Financial Services related		4,780		1,248
Total short-term		8,497		4,128
Restricted cash and cash equivalents-long-term
Letters of credit related		2,762		3,538
IDT Financial Services related		7,704		8,703
Total long-term		10,466		12,241
Total restricted cash and cash equivalents	$	18,963	$	16,369