Sale of Interest in Fabrix Systems Ltd.

9 Months Ended

Apr. 30, 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 $69.2 million, after reflecting the impact of working capital and other adjustments. At April 30, 2016, the Company had received cash of $64.4 million and had aggregate receivables of $4.8 million, which was classified as “Receivable from sale of interest in Fabrix Systems Ltd.” in the accompanying consolidated balance sheet. In May 2016, the Company received the remaining $4.8 million. The Company and the other shareholders placed $13.0 million of the proceeds in escrow for the resolution of post-closing claims, of which $6.5 million was released in October 2015 and $6.5 million was released in April 2016. In the three months ended April 30, 2016 and 2015, the Company recorded gain on the sale of its interest in Fabrix of $1.1 million and $1.2 million, respectively, which represented adjustments to the Company’s share of Fabrix’ working capital and estimated transaction costs. The Company recorded gain on the sale of its interest in Fabrix of $1.1 million and $76.9 million in the nine months ended April 30, 2016 and 2015, respectively.

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 April 30,				Nine Months Ended April 30,
	2016		2015		2016		2015
	(in thousands)
Income before income taxes	$	—	$	—	$	—	$	917
Income before income taxes attributable to IDT Corporation	$	—	$	—	$	—	$	1,325