XML 122 R27.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

12 Months Ended

Jul. 31, 2015

Commitments and Contingencies [Abstract]

Note 19— Commitments and Contingencies

Legal Proceedings

On May 5, 2004, the Company filed a complaint in the Supreme Court of the State of New York, County of New York, seeking injunctive relief and damages against Tyco Group, S.A.R.L., Tyco Telecommunications (US) Inc. (f/k/a TyCom (US) Inc.), Tyco International, Ltd., Tyco International (US) Inc., and TyCom Ltd. (collectively “Tyco”). The Company alleged that Tyco breached a settlement agreement that it had entered into with the Company to resolve certain disputes and civil actions among the parties. The Company alleged that Tyco did not provide the Company, as required under the settlement agreement, free of charge and for the Company’s exclusive use, a 15-year indefeasible right to use four Wavelengths in Ring Configuration (as defined in the settlement agreement) on a global undersea fiber optic network that Tyco was deploying at that time. After extensive proceedings, including several decisions and appeals, the New York Court of Appeals affirmed a lower court decision to dismiss the Company’s claim and denied the Company’s motion for re-argument of that decision. On June 23, 2015, the Company filed a new summons and complaint against Tyco in the Supreme Court of the State of New York, County of New York alleging that Tyco breached the settlement agreement. In September 2015, Tyco filed a motion to dismiss the complaint. The parties have stipulated to a briefing schedule.

In addition to the foregoing, the Company is subject to other legal proceedings that have arisen in the ordinary course of business and have not been finally adjudicated. Although there can be no assurance in this regard, the Company believes that none of the other legal proceedings to which the Company is a party will have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Purchase Commitments

The Company had purchase commitments of $2.8 million as of July 31, 2015, which includes commitments related to the renovations of the first four floors of the Company’s building located at 520 Broad Street, Newark, New Jersey.

Lease Commitments

The future minimum payments for operating leases as of July 31, 2015 are as follows:

(in thousands)
Year ending July 31:
2016	$	3,439
2017		2,653
2018		1,307
2019		780
2020		654
Thereafter		128
Total payments	$	8,961

Rental expense under operating leases was $6.1 million, $6.4 million and $5.9 million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. In addition, connectivity charges under operating leases were $8.4 million, $10.4 million and $11.8 million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

Letters of Credit

At July 31, 2015, the Company had letters of credit outstanding totaling $3.2 million for collateral to secure mortgage repayments and for IDT Telecom’s business. The letters of credit outstanding at July 31, 2015 expire in the fiscal year ending July 31, 2016.

Performance Bonds

IDT Payment Services and IDT Telecom have performance bonds issued through third parties for the benefit of various states in order to comply with the states’ financial requirements for money remittance licenses and telecommunications resellers, respectively. At July 31, 2015, the Company had aggregate performance bonds of $11.3 million outstanding.

Customer Deposits

At July 31, 2015 and 2014, “Customer deposits” in the Company’s consolidated balance sheets included refundable customer deposits of $84.4 million and $62.7 million, respectively, related to IDT Financial Services, the Company’s Gibraltar-based bank.

Substantially Restricted Cash and Cash Equivalents

The Company treats unrestricted cash and cash equivalents held by IDT Payment Services and IDT Financial Services Ltd. as substantially restricted and unavailable for other purposes. At July 31, 2015 and 2014, “Cash and cash equivalents” in the Company’s consolidated balance sheets included an aggregate of $7.5 million and $12.9 million, respectively, held by IDT Payment Services and IDT Financial Services that was unavailable for other purposes.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents consist of the following:

July 31
(in thousands)	2015		2014
Restricted cash and cash equivalents—short-term
Letters of credit related	$	3,163	$	665
IDT Financial Services customer deposits		87,613		64,415
Other		259		626
Total short-term		91,035		65,706
Restricted cash and cash equivalents—long-term
Letters of credit related		—		2,763
Total restricted cash and cash equivalents	$	91,035	$	68,469