Sale of Interest in Fabrix Systems Ltd.

6 Months Ended

Jan. 31, 2016

Sale of Interest in Fabrix Systems Ltd. [Abstract]

Sale of Interest in Fabrix Systems Ltd.

Note 2—Sale of Interest in Fabrix Systems Ltd.

On October 8, 2014, the Company completed the sale of its interest in Fabrix Systems Ltd. (“Fabrix”) to Telefonaktiebolget LM Ericsson (publ) (“Ericsson”). The final sale price for 100% of the shares in Fabrix was $95 million in cash, excluding transaction costs and working capital and other adjustments. The Company owned approximately 78% of Fabrix on a fully diluted basis. The Company’s share of the sale price was $68.1 million, after reflecting the impact of working capital and other adjustments. At January 31, 2016, the Company had received cash of $64.4 million and had aggregate receivables of $3.7 million, which was classified as “Receivable from sale of interest in Fabrix Systems Ltd.” in the accompanying consolidated balance sheet. The Company and the other shareholders placed $13.0 million of the proceeds in escrow for the resolution of post-closing claims that may arise, of which $6.5 million was released in October 2015. Any remaining unclaimed escrow balance will be released in April 2016. The Company recorded a gain on the sale of its interest in Fabrix of $76.9 million, of which $75.6 million was recorded in the six months ended January 31, 2015.

Fabrix’ income before income taxes and income before income taxes attributable to the Company, which is included in the accompanying consolidated statements of income, were as follows:

	Three Months Ended January 31,				Six Months Ended January 31,
	2016		2015		2016		2015
	(in thousands)
Income before income taxes	$	—	$	—	$	—	$	917
Income before income taxes attributable to IDT Corporation	$	—	$	—	$	—	$	1,325