The accompanying unaudited consolidated financial statements of IDT Corporation and its subsidiaries (the “Company” or “IDT”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and ~~footnotes~~notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, ~~2018.~~2020. The balance sheet at July 31, ~~2017~~2019 has been derived from the Company’s audited financial statements at that date but does not include all of the information and ~~footnotes~~notes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017,~~2019, as filed with the U.S. Securities and Exchange Commission (“SEC”).

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal ~~2018~~2020 refers to the fiscal year ending July 31, ~~2018)~~2020).

Note 2— ~~IDT Financial Services Holding Limited Assets and Liabilities Held for Sale~~Revenue Recognition

~~On June 22, 2017,~~The Company earns revenue from contracts with customers, primarily through the provision of retail telecommunications and payment offerings as well as wholesale international long-distance traffic termination. The Company has two reportable business segments, Telecom & Payment Services and net2phone. The Telecom & Payment Services segment is comprised of Core and Growth verticals. Core includes BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide, and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payment offerings, many in harvest mode. Growth includes National Retail Solutions, which operates a point-of-sale terminal-based network for retailers, BOSS Revolution Money Transfer, an international money remittance service for customers in the United States, and BOSS Revolution Mobile, a mobile virtual network operator in the United States. The net2phone segment is comprised of net2phone-Unified Communications as a Service (“UCaaS”), a unified cloud-based communications service for businesses in North and South America and certain other international markets, and net2phone-Platform Services, which provides telephony services to cable operators and other businesses by leveraging a common technology platform.

The Company’s core operations are mostly minute-based, paid-voice communications services, and revenue is primarily recognized at a point in time. The Company’s Telecom & Payment Services’ growth initiatives and net2phone-UCaaS are technology-driven, synergistic businesses that leverage the Company’s ~~wholly-owned subsidiary IDT~~core assets, and revenue, in some cases, is recognized over time. The Company’s most significant revenue streams are from BOSS Revolution Calling, Mobile Top-Up, and Carrier Services. BOSS Revolution Calling and Mobile Top-Up are sold direct-to-consumers and through distributors and retailers.

The following table shows the Company’s revenues disaggregated by business segment and service offered to customers:

The following table shows the Company’s revenues disaggregated by geographic region, which is determined based on selling location:

The Company’s revenue is generally recognized in the same period that its performance obligations are satisfied. The Company does not have any significant revenue from performance obligations satisfied or partially satisfied in previous reporting periods, or any significant portion of transaction price to be allocated to performance obligations that are unsatisfied (or partially unsatisfied) at the end of a reporting period.

The timing of revenue recognition may differ from the time of billing to the Company’s customers. Trade accounts receivable in the Company’s consolidated balance sheets represent unconditional rights to consideration. An entity records a contract asset when revenue is recognized in advance of the entity’s right to bill and receive consideration. The Company has not identified any contract assets.

Contract liabilities arise when the Company receives consideration or bills its customers prior to providing the goods or services promised in the contract. The primary component of the Company’s contract liability balance is the payments received for its prepaid BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up services. Contract liabilities are recognized as revenue when services are provided to the customer.The contract liability balances are presented in the Company’s consolidated balance sheet as “Deferred revenue”.

The following table presents information about the Company’s contract liability balance:

The Company incurs incremental costs of obtaining a customer contract, it does not incur direct costs to fulfill contracts. The Company’s incremental costs of obtaining a customer contract are sales commissions paid to acquire customers. For Telecom ~~Inc.~~& Payment Services, the Company applies the practical expedient whereby the Company primarily charges these costs to expense when incurred because the amortization period would be one year or less for the asset that would have been recognized from deferring these costs. For net2phone-UCaaS sales, employees and third parties receive commissions on sales to end users. The Company amortizes the deferred costs over the expected customer relationship period when it is expected to exceed one year.

The Company’s amortization of deferred customer contract acquisition costs during the periods were as follows:

On August 1, 2019, the Company adopted Accounting Standards Update No. 2016-02,Leases (Topic 842), and the amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“~~IDT Telecom”~~ROU”) model that requires a lessee to record a ROU asset and a lease liability on its balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Entities have the option to continue to apply historical accounting under Topic 840, the previously applicable standard, including its disclosure requirements, in comparative periods presented in the year of adoption. An entity that elects this option will recognize a ~~Share Purchase Agreement~~cumulative effect adjustment to the opening balance of retained earnings in the period of adoption instead of the earliest period presented.

The Company elected to apply the optional ASC 842 transition provisions beginning on August 1, 2019. Accordingly, the Company will continue to apply Topic 840 prior to August 1, 2019, including Topic 840 disclosure requirements, in the comparative periods presented. The Company elected the package of practical expedients for all its leases that commenced before August 1, 2019. In addition, the Company elected not to apply the recognition requirements of ASC 842 for its short-term leases.

The Company’s leases primarily consist of operating leases for office space. These leases have remaining terms from one to six years. net2phone-UCaaS also has operating leases for office equipment. Certain of these leases include renewal options that may be exercised and/or options to terminate the lease. The Company has concluded that it is not reasonably certain that it would exercise the options to extend the lease or terminate the lease.

The adoption of ASC 842 resulted in the recognition of operating lease liabilities of $12.4 million and operating ROU assets of the same amount as of August 1, 2019 based on the present value of the remaining minimum rental payments associated with ~~JAR Fintech Limited (“JAR Fintech”)~~the Company’s leases. As the Company’s leases do not provide an implicit rate, nor is one readily available, the Company used its incremental borrowing rate based on information available at August 1, 2019 to determine the present value of its future minimum rental payments.

net2phone has equipment leases that were classified as capital leases under Topic 840 and ~~JAR Capital Limited~~are finance leases under ASC 842. net2phone is also the lessor in various equipment leases that were classified as sales-type capital leases under Topic 840, that are classified as sales-type finance leases under ASC 842. The assets and liabilities related to ~~sell~~these finance leases are not material to the ~~capital stock~~Company’s consolidated balance sheets.

Supplemental disclosures related to the Company’s operating leases were as follows:

Future minimum maturities of ~~IDT Financial Services Holding Limited,~~operating lease liabilities were as follows:

The following table provides a ~~company incorporated under~~reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported in the ~~laws~~consolidated balance sheet that equals the total of ~~Gibraltar~~the same amounts reported in the consolidated statement of cash flows:

At October 31, 2019 and ~~a wholly-owned subsidiary of IDT Telecom (“IDTFS Holding”), to JAR Fintech. IDTFS Holding is the sole shareholder of~~July 31, 2019, restricted cash and cash equivalents included $190.1 million and $176.8 million, respectively, in restricted cash and cash equivalents held by IDT Financial Services Limited, (“IDTFS”), a Gibraltar-based bank and e-money issuer, providing prepaid card solutions across the European Economic Area. The Share Purchase Agreement provides for an aggregate purchase price for the outstanding equity interests of IDTFS Holding of approximately $4.1 million plus an amount equal to the value of IDTFS’ net assets, to be paid at closing, subject to adjustments relating to customer assets of IDTFS. The net asset value of IDTFS was $14.5 million at January 31, 2018. A portion of the purchase price will be placed in escrow at closing and released to IDT Telecom once all of the conditions have been met under the Share Purchase Agreement. The sale is expected to close in the second quarter of calendar 2018, subject to regulatory approval and other customary conditions set forth in the Share Purchase Agreement. The remaining closing conditions are outside of the Company’s ~~control and there can be no assurance that the sale will be completed.~~

The pending disposition of IDTFS Holding did not meet the criteria to be reported as a discontinued operation and accordingly, its results of operations and cash flows have not been reclassified. The IDTFS Holding assets and liabilities held for sale included the following:

IDTFS Holding is included in the Telecom Platform Services segment. IDTFS Holding’s (loss) income before income taxes and (loss) income before income taxes attributable to the Company, which is included in the accompanying consolidated statements of operations, were as follows:

~~Note 3—Spin-Off of Rafael Holdings, Inc. and Investment in Rafael Pharmaceuticals, Inc.~~

On or about March 26, 2018, the Company expects to spin-off its subsidiary, Rafael Holdings, Inc. (“RHI”), to the Company’s stockholders, so that RHI will be a separate publicly traded company. Approval of the spin-off by the Company’s stockholders is not required. The Company’s Board of Directors believes that the spin-off will allow RHI to better focus on its strategic mission and that its potential can be better realized as an independent entity. The spin-off of RHI will occur by way of a pro rata distribution of RHI’s capital stock to the Company’s stockholders. On the distribution date, each of the Company’s stockholders as of the record date for the distribution of March 13, 2018 will receive one share of RHI Class A common stock for every two shares of the Company’s Class A common stock and one share of RHI Class B common stock for every two shares of the Company’s Class B common stock. Completion of the RHI spin-off is subject to receipt of a favorable opinion as to the spin-off’s tax-free status.

RHI owns the commercial real estate assets held by the Company and interests in two clinical stage pharmaceutical companies. The commercial real estate holdings consist of the Company’s headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for the Company and certain affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc. (“Rafael Pharma”), which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., a pharmaceutical development company based in Israel. In addition, prior to the spin-off, the Company intends to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.

RHI’s interests in Rafael Pharma, which are held through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC (“IDT-Rafael Holdings”), include convertible notes issued by Rafael Pharma, and a warrant held by the Company and certain minority holders to purchase up to a majority equity stake in Rafael Pharma at the Company’s discretion in accordance with the terms of the convertible note and the warrant. The remaining 10% of IDT-Rafael Holdings is held by Howard S. Jonas, the Company’s Chairman of the Board, and Chairman of the Board of Rafael Pharma.

IDT-Rafael Holdings had the contractual right to receive additional shares of Rafael Pharma representing 10% of the outstanding capital stock of Rafael Pharma that will be issued upon the occurrence of any of the following: (i) Food and Drug Administration approval of a Rafael Pharma drug application, (ii) an initial public offering of Rafael Pharma at a valuation of over $500 million, or (iii) a sale of Rafael Pharma above certain valuations. Currently, none of the conditions have been satisfied and the right remains contingent. On September 14, 2017, IDT-Rafael Holdings distributed this right to its members on a pro rata basis such that the Company received the right to 9% of the outstanding capital stock of Rafael Pharma and Howard Jonas received the right to 1% of the outstanding capital stock of Rafael Pharma. In addition, as compensation for assuming the role of Chairman of the Board of Rafael Pharma, and to create additional incentive to contribute to the success of Rafael Pharma, on September 19, 2017, the Company transferred its right to receive 9% of the outstanding capital stock of Rafael Pharma to Mr. Jonas. The right is further transferable at the discretion of Mr. Jonas.

Howard Jonas and his wife Deborah Jonas jointly own $525,000 of Series C Convertible Notes of Rafael Pharma, and The Howard S. and Deborah Jonas Foundation own an additional $525,000 of Series C Convertible Notes of Rafael Pharma.

IDT-Rafael Holdings’ controlled 50%-owned subsidiary, CS Pharma Holdings, LLC (“CS Pharma”), holds Rafael Pharma’s Series D convertible promissory note with a principal amount of $10 million (the “Series D Note”). The Series D Note earns interest at 3.5% per annum, with principal and accrued interest due and payable on September 16, 2018. The Series D Note is convertible at the holder’s option into shares of Rafael Pharma’s Series D Preferred Stock. The Series D Note also includes a mandatory conversion into Rafael Pharma common stock upon a qualified initial public offering, and conversion at the holder’s option upon an unqualified financing event. In all cases, the Series D Note conversion price is based on the applicable financing purchase price.

IDT-Rafael Holdings and CS Pharma hold warrants to purchase shares of capital stock of Rafael Pharma representing in the aggregate up to 56% of the then issued and outstanding capital stock of Rafael Pharma, on an as-converted and fully diluted basis. The right to exercise warrants as to the first $10 million thereof is held by CS Pharma. The exercise price of the warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments. The minimum initial and subsequent exercises of the warrant shall be for such number of shares that will result in at least $5 million of gross proceeds to Rafael Pharma, or such lesser amount as represents 5% of the outstanding capital stock of Rafael Pharma, or such lesser amount as may then remain unexercised. The warrant will expire upon the earlier of December 31, 2020 or a qualified initial public offering or liquidation event. Gibraltar-based bank.

~~The Company’s investment in Rafael Pharma, which was included in “Investments” in the accompanying consolidated balance sheets, consists of the following:~~

Rafael Pharma is a variable interest entity, however, the Company has determined that it is not the primary beneficiary as the Company does not have the power to direct the activities of Rafael Pharma that most significantly impact Rafael Pharma’s economic performance. At January 31, 2018, the Company’s maximum exposure to loss as a result of its involvement with Rafael Pharma was its $11.7 million investment, since there were no other arrangements, events or circumstances that could expose the Company to additional loss.

~~At January 31, 2018 and July 31, 2017, the Company owned 24,923 and 23,227 shares, respectively, of Zedge, Inc. Class B common stock that had a fair value of $76,000 and $48,000, respectively.~~

Proceeds from maturities and sales of ~~available-for-sale~~debt securities and sales of equity investments were ~~$12.1~~$0.8 million and ~~$10.8~~$3.4 million in the three months ended ~~January~~October 31, 2019 and 2018, ~~and 2017, respectively, and $31.6 million and $16.8 million in the six months ended January 31, 2018 and 2017,~~ respectively. ~~The gross~~There were no realized gains or realized losses ~~that were included in earnings as a result~~from sales of ~~sales were $16,000 and $9,000~~debt securities in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively. The gross realized gains that were included in earnings as a result of sales were $0.3 million in the three~~2019 and ~~six months ended January 31, 2017.~~2018. The Company uses the specific identification method in computing the ~~gross~~ realized gains and ~~gross~~ realized losses on the sales of ~~marketable~~debt securities.

The contractual maturities of the Company’s available-for-sale debt securities at ~~January~~October 31, ~~2018~~2019 were as follows:

On June 1, 2016, the Company completed a pro rata distribution of the common stock that the Company held in the Company’s subsidiary Zedge, Inc. to the Company’s stockholders of record as of the close of business on May 26, 2016. On March 26, 2018, the Company completed a pro rata distribution of the common stock that the Company held in the Company’s subsidiary Rafael Holdings, Inc. (“Rafael”) to the Company’s stockholders of record as of the close of business on March 13, 2018. The Company received the Zedge and Rafael shares in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain of the Company’s employees and the Company’s payment of taxes related thereto.

In June 2016, upon the acquisition of Visa Europe Limited by Visa, Inc., IDT Financial Services Limited received 1,830 shares of Visa Series C Preferred among other consideration. Each share of Visa Series C Preferred is convertible into 13.886 shares of Visa Class A common stock, subject to certain conditions, starting in June 2020 and will be convertible at the holder’s option beginning in June 2028.

The ~~following available-for-sale securities were~~changes in ~~an unrealized loss position~~the carrying value of the Company’s equity investments without readily determinable fair values for which ~~other-than-temporary impairments have not been recognized:~~the Company elected the measurement alternative was as follows:

~~At July~~In the three months ended October 31, 2017, there were no securities in a continuous unrealized loss position for 12 months or longer. At January 31, 2018, the following available-for-sale securities included in the table above were in a continuous unrealized loss position for 12 months or longer:

~~At January 31,~~2019 and 2018, the Company ~~did not intend to sell~~increased the ~~securities that were in~~carrying value of the 1,830 shares of Visa Series C Preferred it held by $18,000 and $22,000, respectively, based on the fair value of Visa Class A common stock and a ~~continuous unrealized loss position~~discount for ~~12 months or longer, and it is not more likely than not that the Company will be required to sell the securities before recovery~~lack of ~~their amortized cost bases, which may be at maturity.~~current marketability.

The following tables present the balance of assets measured at fair value on a recurring basis:

(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities

At ~~January~~October 31, ~~2018~~2019 and July 31, ~~2017,~~2019, the Company had $5.5 million in investments in hedge funds, which were included in noncurrent “Equity investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds were accounted for using the equity method, therefore they were not measured at fair value.

At October 31, 2019 and July 31, 2019, the Company did not have any liabilities measured at fair value on a recurring basis.

At January 31, 2018 and July 31, 2017, the fair value of the Rafael Pharma Series D Note, which was classified as Level 3, was estimated based on a valuation of Rafael Pharma and other factors that could not be corroborated by the market.

The following table summarizes the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3). There were no liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 and ~~2017.~~2018.

At January 31, 2018 and July 31, 2017, the Company had $8.8 million and $8.6 million, respectively, in investments in hedge funds, which were included in “Investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds are accounted for using the equity method or the cost method, therefore investments in hedge funds are not measured at fair value.

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents, other current assets, customer deposits, and other current liabilities.At ~~January~~October 31, ~~2018~~2019 and July 31, ~~2017,~~2019, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents and restricted cash and cash equivalents were classified as Level 1 and other current assets, customer deposits, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities.At ~~January~~October 31, ~~2018~~2019 and July 31, ~~2017,~~2019, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.

~~The Company’s investments at January 31, 2018 and July 31, 2017 included investments in the equity~~Note 8—Acquisition of certain privately held entities and other investments that are accounted for at cost. It is not practicable to estimate the fair value of these investments because of the lack of a quoted market price for the shares of these entities, and the inability to estimate their fair value without incurring excessive cost. The carrying value of these investments was $10.4 million and $10.8 million at January 31, 2018 and July 31, 2017, respectively, which the Company believes was not impaired.

In the six months ended January 31, 2018, the Company paid cash dividends of $0.38 per share on its Class A common stock and Class B common stock, or $9.4 million in total. In the six months ended October 31, 2016, the Company paid cash dividends of $0.38 per share on its Class A common stock and Class B common stock, or $8.8 million in total.Versature Corp.

On ~~March 5,~~September 14, 2018, the Company acquired 100% of the outstanding shares of Versature Corp., a UCaaS provider serving the Canadian market, for cash of $5.9 million. Versature’s operating results from the date of acquisition, which were not significant, are included in the Company’s ~~Board~~consolidated financial statements.

The following table presents unaudited pro forma information of ~~Directors declared~~the Company as if the acquisition occurred on August 1, 2018:

The following table summarizes the other operating expense, net by business segment:

On July 31, 2013, the Company completed a ~~dividend~~pro rata distribution of ~~$0.09 per share for~~ the ~~second quarter of fiscal 2018 to holders~~common stock of the Company’s ~~Class A common stock and Class B common stock. The dividend will be paid on or about March 23, 2018~~subsidiary Straight Path Communications Inc. (“Straight Path”) to the Company’s stockholders of record as of the close of business on ~~March 19, 2018.~~July 25, 2013. As discussed in Note 15, a putative class action on behalf of Straight Path’s stockholders and derivative complaint was filed naming the Company, among others. In the three months ended October 31, 2019 and 2018, the Company incurred legal fees of $0.7 million and $0.2 million, respectively, related to this action. Also, in the three months ended October 31, 2019, the Company recorded insurance proceeds for this matter of $0.4 million.

Indemnification Claim

In June 2019, as part of a commercial resolution, the Company indemnified a net2phone cable telephony customer related to patent infringement claims brought against the customer.

Accrual for Non-Income Related Taxes

In the fourth quarter of fiscal 2019, the Company recorded an $8.0 million accrual for non-income related taxes related to one of its foreign subsidiaries. A portion of the accrual related to each of the fiscal quarters in fiscal 2019. Accordingly, the Company corrected its consolidated financial statements for the three months ended October 31, 2018, January 31, 2019, and April 30, 2019 to include the accrued expense and the related income tax benefit. The Company has determined that the adjustments were not material to its previously issued quarterly financial statements. The impact of the correction on the Company’s previously issued consolidated financial statements for the three months ended October 31, 2018 was as follows:

	Three Months Ended October 31, 2018
	Previously Reported			Error Correction			As Adjusted
	(in thousands, except per share data)
Consolidated Statement of Operations:
Other operating expense	$	(195	)	$	(1,100	)	$	(1,295	)
Provision for income taxes	$	(1,189	)	$	250		$	(939	)
Net loss	$	(1,148	)	$	(850	)	$	(1,998	)
Net loss attributable to IDT Corporation	$	(1,449	)	$	(850	)	$	(2,299	)
Loss per share attributable to IDT Corporation common stockholders:
Basic	$	(0.06	)	$	(0.04	)	$	(0.10	)
Diluted	$	(0.06	)	$	(0.04	)	$	(0.10	)

Note 10—Equity

Stock Repurchases

The Company has aan existing stock repurchase program authorized by its Board of Directors for the repurchase of up to an aggregate of 8.0 million shares of the Company’s Class B common stock. There were no repurchases under the program in the ~~six~~three months ended ~~January~~October 31, 2019. In the three months ended October 31, 2018, ~~or 2017.~~the Company repurchased 729,110 shares of Class B common stock for an aggregate purchase price of $3.9 million. At ~~January~~October 31, ~~2018, 8.0~~2019, 6.9 million shares remained available for repurchase under the stock repurchase program.

In the six months ended January 31, 2018 and 2017, the Company paid $0.1 million and $1.8 million, respectively, to repurchase 5,170 shares and 94,338 shares, respectively, of Class B common stock that were tendered by employees of the Company to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by the Company based on their fair market value on the trading day immediately prior to the vesting date.

2015 Stock Option and Incentive Plan

In the three months ended October 31, 2019, the Company received proceeds from the exercise of stock options of $0.3 million for which the Company issued 32,551 shares of its Class B common stock. There were no stock option exercises in the three months ended October 31, 2018.

On ~~December 14, 2017,~~September 12, 2019, the Company’s ~~stockholders approved an amendment to~~Board of Directors amended the Company’s 2015 Stock Option and Incentive Plan to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional ~~0.3~~0.4 million shares.

In The amendment is subject to approval by the ~~six months ended January 31, 2017, the Company received proceeds from the exercise~~Company’s stockholders at its annual meeting of its stock options of $0.8 million. There were no stock option exercises in the six months ended January 31, 2018. In the six months ended January 31, 2017, the Company issued 73,471 shares of its Class B common stock for the stock option exercises.stockholders on December 12, 2019.

Note ~~7— Earnings (Loss)~~11—Loss Per Share

Basic earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

The ~~weighted-average number of shares used in the calculation of basic and diluted earnings (loss) per share attributable to the Company’s common stockholders consists of the following:~~

Three Months Ended
January 31,

Six Months Ended
January 31,

2018

2017

2018

2017

(in thousands)
Basic weighted-average number of shares 24,643 22,768 24,635 22,740
Effect of dilutive securities:
Stock options 10 77 — 58
Non-vested restricted Class B common stock 71 118 — 133
Diluted weighted-average number of shares 24,724 22,963 24,635 22,931

~~The~~ following shares were excluded from the diluted ~~earnings~~loss per share ~~computation:~~computations because their inclusion would have been anti-dilutive:

	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended October 31,
	2018		2017		2018		2017		2019		2018
	(in thousands)								(in thousands)
Stock options		1,160		3		1,273		18		1,190		1,243
Non-vested restricted Class B common stock		—		—		191		—		616		49
Shares excluded from the calculation of diluted earnings per share		1,160		3		1,464		18		1,806		1,292

InThe diluted loss per share equals basic loss per share in the three months ended ~~January~~October 31, ~~2018,~~2019 and in the three and six months ended January 31, 2017, stock options with an exercise price that was greater than the average market price of the Company’s stock during the period were excluded from the diluted earnings per share computation.

~~In the six months ended January 31,~~ 2018 ~~the diluted loss per share computation equals basic loss per share~~ because the Company had a net loss and the impact of the assumed exercise of stock options and the vesting of restricted stock would have been anti-dilutive.

Note 8—12—Revolving Credit ~~Facility~~Loan Payable

~~The~~As of October 31, 2019, the Company’s subsidiary, IDT Telecom, Inc., entered into a credit agreement ~~dated July 12, 2012,~~ with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. ~~The credit agreement was amended as of January 31, 2018.~~ IDT Telecom may use the proceeds to finance working capital requirements, acquisitions and ~~for~~ other general corporate purposes. The line of credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at ~~the option of IDT Telecom, at either (a) the U.S. Prime Rate less 125 basis points, or (b)~~ the LIBOR rate adjusted by the Regulation D maximum reserve requirement plus 125 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of ~~January 31,~~July 15, 2020. ~~At January 31, 2018 and July 31, 2017, there were no amounts outstanding under the facility. The Company intends to borrow under the facility from time to time.~~ IDT Telecom pays a quarterly unused commitment fee of ~~0.325%~~0.3% per annum on the average daily balance of the unused portion of the $25.0 million commitment. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain financial targets and ratios during the term of the ~~line of credit,~~facility, including ~~restrictions on dividend payments on~~ IDT Telecom may not pay any dividend on its capital ~~stock and restrictions on IDT Telecom’s aggregate loans and advances to affiliates or subsidiaries.~~stock.

Note 9—13—Accumulated Other Comprehensive Loss

The accumulated balances for each classification of other comprehensive loss were as follows:

Unrealized Gain (Loss) on Available-for-Sale Securities

Foreign Currency Translation

Accumulated Other Comprehensive Loss

Location of (Gain) Loss Recognized
(in thousands)
Balance, July 31, 2017 $ 2,134 $ (4,477 ) $ (2,343 )
Other comprehensive loss attributable to IDT Corporation before reclassifications (159 ) (38 ) (197 )
Less: reclassification for loss included in net loss 9 — 9 Other income (expense), net
Net other comprehensive loss attributable to IDT Corporation (150 ) (38 ) (188 )
Balance, January 31, 2018 $ 1,984 $ (4,515 ) $ (2,531 )

~~At both January 31, 2018 and July 31, 2017, unrealized gain on available-for-sale securities included unrealized gain of $2.1 million on the Rafael Pharma Series D Note.~~

	Unrealized Gain (Loss) on Available-for-Sale Securities		Foreign Currency Translation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance, July 31, 2019	$	—	$	(4,858	)	$	(4,858	)
Other comprehensive loss attributable to IDT Corporation		—		(1,204	)		(1,204	)
Balance, October 31, 2019	$	—	$	(6,062	)	$	(6,062	)

Note ~~10—~~14—Business Segment Information

The Company has two reportable business segments, Telecom ~~Platform~~& Payment Services and ~~net2phone-Unified Communications as a Service (“net2phone-UCaaS”) (formerly known as UCaaS).~~net2phone. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations.

~~Telecom Platform Services and net2phone-UCaaS comprise the IDT Telecom division.~~ The Telecom ~~Platform~~& Payment Services segment provides retail telecommunications and payment offerings as well as wholesale international ~~long distance~~long-distance traffic termination. The ~~net2phone-UCaaS~~net2phone segment ~~is comprised of (1) cable~~provides unified cloud communications and telephony ~~(2) cloud-based private branch exchange, or PBX,~~ services ~~offered~~ to ~~enterprise customers exclusively through value-added resellers, service providers, telecom agents~~business customers. Depreciation and ~~managed service providers, (3) Session Initiation Protocol, or SIP, trunking, which supports inbound~~amortization are allocated to Telecom & Payment Services and ~~outbound domestic and international calling from an IP PBX, and (4) PicuP, a highly-automated business phone service that answers, routes and manages voice calls.~~net2phone because the related assets are not tracked separately by segment. There are no other significant asymmetrical allocations to segments.

Beginning in the first quarter of fiscal 2018, the Telecom Platform Services segment includes Consumer Phone Services, which was previously reported as a separate segment. Consumer Phone Services provides consumer local and long distance services in certain U.S. states. Comparative results have been reclassified and restated as if Consumer Phone Services was included in Telecom Platform Services in all periods presented.

~~Operating segments not reportable individually are included in All Other. All Other includes the Company’s real estate holdings and other smaller businesses.~~ Corporate costs include ~~certain services, such as~~ compensation, consulting fees, treasury and accounts payable, tax and accounting services, human resources and payroll, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, business development, charitable contributions, travel and other corporate-related general and administrative ~~expenses including, among others, facilities costs, charitable contributions and travel, as well as depreciation expense on corporate assets.~~expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. IDT Telecom depreciation and amortization are allocated to Telecom Platform Services and net2phone-UCaaS because the related assets are not tracked separately by segment. There are no other significant asymmetrical allocations to segments.

Operating results for the business segments of the Company are as follows:

(in thousands) Telecom
Platform
Services net2phone-UCaaS All Other Corporate Total
Three Months Ended January 31, 2018
Revenues $ 387,065 $ 8,299 $ 519 $ — $ 395,883
Income (loss) from operations 4,589 (790 ) (1,019 ) (3,260 ) (480 )
Severance 195 — — — 195
Other operating expense — — — (846 ) (846 )

Three Months Ended January 31, 2017
Revenues $ 359,924 $ 7,142 $ 490 $ — $ 367,556
Income (loss) from operations 7,187 (464 ) 82 (3,677 ) 3,128
Other operating expense — — — (889 ) (889 )

Six Months Ended January 31, 2018
Revenues $ 772,129 $ 16,087 $ 1,222 $ — $ 789,438
Income (loss) from operations 9,150 (1,464 ) (1,650 ) (6,433 ) (397 )
Severance 605 — — 30 635
Other operating expense — — — (1,625 ) (1,625 )

Six Months Ended January 31, 2017
Revenues $ 721,435 $ 14,278 $ 994 $ — $ 736,707
Income (loss) from operations 13,732 (639 ) 172 (4,951 ) 8,314
Other operating expense — — — (1,088 ) (1,088 )

(in thousands)	Telecom & Payment Services			net2phone			Corporate			Total
Three Months Ended October 31, 2019
Revenues	$	327,618		$	12,627		$	—		$	340,245
Income (loss) from operations		4,372			(3,263	)		(2,501	)		(1,392	)
Other operating expense, net		(2,150	)		(365	)		(260	)		(2,775	)

Three Months Ended October 31, 2018
Revenues	$	351,849		$	10,467		$	—		$	362,316
Income (loss) from operations		4,169			(1,500	)		(2,487	)		182
Other operating expense, net		(1,100	)		—			(195	)		(1,295	)

Note ~~11—~~15—Commitments and Contingencies

Legal Proceedings

On ~~July 31, 2013,~~April 12, 2019, Scarleth Samara filed a putative class action against IDT Telecom in the U.S. District Court for the Eastern District of Louisiana alleging certain violations of the Telephone Consumer Protection Act of 1991. Plaintiff alleges that in October of 2017, IDT Telecom sent unauthorized marketing messages to her cellphone. IDT Telecom filed a motion to compel arbitration. On or about August 19, 2019, the plaintiff agreed to dismiss the pending court action and the parties intend to proceed with arbitration. At this stage, the Company ~~completed~~is unable to estimate its potential liability, if any. The Company intends to vigorously defend the claim.

On January 22, 2019, Jose Rosales filed a ~~pro rata distribution~~putative class action against IDT America, IDT Domestic Telecom and IDT International in California state court alleging certain violations of employment law. Plaintiff alleges that these companies failed to compensate members of the ~~common stock~~putative class in accordance with California law. The Company is evaluating the claims, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend the claims. In August 2019, the Company filed a cross complaint against Rosales alleging trade secret and other violations.

On May 21, 2018, Erik Dennis filed a putative class action against IDT Telecom and the Company in the U.S. District Court for the Northern District of Georgia alleging violations of Do Not Call Regulations promulgated by the U.S. Federal Trade Commission. On October 31, 2019, the parties settled the matter and filed a stipulation of dismissal with prejudice.

On May 2, 2018, Jean Carlos Sanchez filed a putative class action against IDT Telecom in the U.S. District Court for the Northern District of Illinois alleging that the Company sent unauthorized marketing messages to cellphones in violation of the ~~Company’s subsidiary Straight Path~~Telephone Consumer Protection Act of 1991. On July 26, 2018, the parties filed a stipulation of dismissal. The Company is evaluating the claim, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend this matter.

On April 24, 2018, Sprint Communications ~~Inc. (“Straight Path”)~~Company L.P. filed a patent infringement claim against the Company and certain of its affiliates in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 6,298,064; 6,330,224; 6,343,084; 6,452,932; 6,463,052; 6,473,429; 6,563,918; 6,633,561; 6,697,340; 6,999,463; 7,286,561; 7,324,534; 7,327,728; 7,505,454; and 7,693,131. Plaintiff was seeking damages and injunctive relief. On June 28, 2018, Sprint dismissed the complaint without prejudice. The Company is evaluating the underlying claim, and at this stage, is unable to ~~the Company’s stockholders~~estimate its potential liability, if any. The Company intends to vigorously defend any claim of ~~record as~~infringement of the ~~close of business on July 25, 2013 (the “Straight Path Spin-Off”).~~ listed patents.

On July 5, 2017, plaintiff JDS1, LLC, on behalf of itself and all other similarly situated stockholders of Straight Path, and derivatively on behalf of Straight Path as nominal defendant, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against the Company, The Patrick Henry Trust (a trust formed by Howard S. Jonas that held record and beneficial ownership of certain shares of Straight Path he formerly held), Howard S. Jonas, and each of Straight Path’s directors. The complaint alleges that the Company aided and abetted Straight Path Chairman of the Board and Chief Executive Officer Davidi Jonas, and Howard S. Jonas in his capacity as controlling stockholder of Straight Path, in breaching their fiduciary duties to Straight Path in connection with the settlement of claims between Straight Path and the Company related to potential indemnification claims concerning Straight Path’s obligations under the Consent Decree it entered into with the Federal Communications Commission (“FCC”), as well as the ~~proposed~~ sale of Straight Path’s subsidiary Straight Path IP Group, Inc. ~~(“SPIP”)~~ to the Company in connection with that settlement. That action was consolidated with a similar action that was initiated by The Arbitrage Fund. The Plaintiffs are seeking, among other things, (i) a declaration that the action may be maintained as a class action or in the alternative, that demand on the Straight Path Board is excused; (ii) that the term sheet is invalid; (iii) awarding damages for the unfair price stockholders ~~are receiving~~received in the merger between Straight Path and Verizon Communications Inc. for their shares of Straight Path’s Class B common stock; and (iv) ordering Howard S. Jonas, Davidi Jonas, and the Company to disgorge any profits for the benefit of the class Plaintiffs. On August 28, 2017, the Plaintiffs filed an amended complaint. On September 24, 2017, the Company filed a motion to dismiss the amended complaint. Following closing of the transaction, the Delaware Chancery Court denied the motion to dismiss. On February 22, 2019, the Delaware Supreme Court affirmed the denial of the motion to dismiss. The parties are engaged in discovery. The Company intends to vigorously defend the action. On November 20, 2017, the Delaware Chancery Court issued an order staying the case pending the closing of the transaction between Verizon and Straight Path on the grounds that the claims are not ripe. That transaction closed on February 28, 2018 and the Court was so notified. In the three and six months ended January 31, 2018,this matter (see Note 9). At this stage, the Company ~~incurred legal fees of $0.2 million and $1.0 million, respectively, related~~is unable to ~~this putative class action, which is included in “Other operating expense” in the accompanying consolidated statement of operations.~~

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, which the Company opposed. Oral argument was held on March 9, 2016. On October 17, 2016, the judge granted Tyco’s motion and dismissed the complaint. In August 2017, the Company filed an appeal, which Tyco opposed. On November 22, 2017, oral argument was held on the appeal. On December 21, 2017, the Company’s appeal was denied. On January 22, 2018, the Company filed a motion for leave to appeal to the New York Court of Appeals. On February 6, 2018, Tyco opposed the Company’s motion. The Company awaits the court’s decision.estimate its potential liability, if any.

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.

Sales Tax Contingency

On June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. The Company is evaluating its state tax filings with respect to the Wayfair decision and is in the process of reviewing its collection practices. It is possible that one or more jurisdictions may assert that the Company has liability for periods for which it has not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect the Company’s business, financial position and operating results. One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to the Company’s operations, and if such changes were made it could materially and adversely affect the Company’s business, financial position and operating results.

Regulatory ~~Fees~~Fee Audit

The Company’s 2017 FCC Form 499-A, which reports its calendar year 2016 revenue, related to payments due to the FCC, is currently under audit by the Internal Audit Division of the Universal Service Administrative Company. At ~~January~~October 31, ~~2018~~2019 and July 31, ~~2017,~~2019, the Company’s accrued expenses included ~~$39.7~~$42.1 million and ~~$43.5~~$44.7 million, respectively, for these regulatory fees for the years covered by the audit, as well as prior and subsequent years.

Purchase Commitments

~~The~~At October 31, 2019, the Company had purchase commitments of ~~$18.7~~$30.7 million, ~~at January 31, 2018,~~ including the aggregate commitment of $26.5 million under the ~~Reciprocal Services Agreement~~telecom services commitments described below.

~~Reciprocal~~Telecom Services ~~Agreement~~Commitments

In May 2019, the Company entered into a Memorandum of Understanding (“MOU”) with a telecom operator in Central America for among other things, termination of inbound and outbound international long-distance voice calls. The MOU is effective until December 31, 2019, unless superseded by the execution of a definitive agreement. The Company has committed to pay such telecom operator monthly committed amounts during the term of the MOU. The parties intend to draft and execute a definitive agreement as soon as practicable.

In August 2017, the Company entered into a Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls. The Company has committed to pay such telecom operator monthly committed amounts during the term of the agreement. In addition, under certain limited circumstances, ~~the parties may renegotiate the amount of the monthly payments. In the event the parties do not agree on re-pricing terms after good faith negotiations, then~~ either party has the right to terminate the agreement. Pursuant to the agreement, ~~in September 2017,~~ the Company deposited ~~$11.75~~$9.2 million into an escrow account as security for the benefit of the telecom operator, which is included in “Other current assets” in the accompanying consolidated balance ~~sheet.~~sheet based on the terms and conditions of the agreement.

Performance Bonds

~~IDT Payment Services and IDT Telecom have~~The Company has 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.~~resellers. At ~~January~~October 31, ~~2018,~~2019, the Company had aggregate performance bonds of ~~$15.1~~$17.5 million outstanding.

~~Substantially~~Company Restricted Cash and Cash Equivalents

The Company treats unrestricted cash and cash equivalents held by IDT Payment Services, which provides the Company’s international money transfer services in the United States, as substantially restricted and unavailable for other purposes. At ~~January~~October 31, ~~2018~~2019 and July 31, ~~2017,~~2019, “Cash and cash equivalents” in the Company’s consolidated balance sheets included an aggregate of ~~$10.0~~$9.8 million and ~~$10.8~~$13.2 million, respectively, held by IDT Payment Services that was unavailable for other purposes.

FCC Investigation of Straight Path Spectrum LLC

~~Straight Path Communications Inc. Settlement Agreement and Mutual Release~~

The Company entered into various agreements with Straight Path prior to the Straight Path Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for the Company’s relationship with Straight Path after the spin-off. On September 20, 2016, the Company received a letter of inquiry from the Enforcement Bureau of the FCC requesting certain information and materials related to an investigation of potential violations by Straight Path Spectrum LLC (formerly a subsidiary of the Company and ~~currently a subsidiary of~~ Straight Path) in connection with licenses to operate on the 28 GHz and 39 GHz bands of the Fixed Microwave Services. The Company has cooperated with the FCC in this matter and has responded to the letter of inquiry. If the FCC were to pursue separate action against the Company, the FCC could seek to fine or impose regulatory penalties or civil liability on the Company related to activities during the period of ownership by the Company.

The Separation and Distribution Agreement provides for the Company and Straight Path to indemnify each other for certain liabilities. The Company and Straight Path each communicated that it was entitled to indemnification from the other in connection with the inquiry described above and related matters. On October 24, 2017, the Company, Straight Path, SPIP and PR-SP IP Holdings LLC (“PR-SP”), an entity owned by Howard Jonas, entered into a Settlement Agreement and Release that provides for, among other things, the settlement and mutual release of potential liabilities and claims that may exist or arise under the Separation and Distribution Agreement between the Company and Straight Path. In exchange for the mutual release, the Company paid Straight Path an aggregate of $16 million in cash, Straight Path transferred to the Company its majority ownership interest in Straight Path IP Group Holding, Inc. (“New SPIP”), which holds the equity of SPIP, the entity that holds intellectual property primarily related to communications over computer networks, subject to the right to receive 22% of the net proceeds, if any, received by SPIP from licenses, settlements, awards or judgments involving any of the patent rights and certain transfers of the patents or related rights, that will be retained by Straight Path’s stockholders (such equity interest, subject to the retained interest right, the “IP Interest”), and the Company undertook certain funding and other obligations related to SPIP. The Settlement Agreement and Release allocates (i) $10 million of the payment and the retained interest right to the settlement of claims and the mutual release and (ii) $6 million to the transfer of the IP Interest.

Consistent with the contemplated arrangement that was previously disclosed, on October 24, 2017, the Company sold its entire majority interests in New SPIP to PR-SP in exchange for $6 million and the assumption by PR-SP of the funding and other obligations undertaken by the Company.

Note ~~12—~~16—Other Income (Expense), Net

Other income (expense), net consists of the following:

	Three Months Ended January 31,						Six Months Ended January 31,					Three Months Ended October 31,
	2018			2017			2018			2017		2019			2018
	(in thousands)											(in thousands)
Foreign currency transaction gains (losses)	$	169		$	(729	)	$	(559	)	$	1,330	$	671		$	(1,205	)
(Loss) gain on sale of marketable securities		(16	)		305			(9	)		305
Gain on investments		179			32			59			295
Gain (loss) on investments													26			(46	)
Other		38			(27	)		53			44		(463	)		(98	)
Total other income (expense), net	$	370		$	(419	)	$	(456	)	$	1,974	$	234		$	(1,349	)

Note ~~13—Income Tax and New Jersey Corporation Business Tax~~

~~Tax Cuts and Jobs Act~~

On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”, which is commonly referred to as “The Tax Cuts and Jobs Act” (the “Tax Act”). The Tax Act reduces the U.S. federal statutory corporate tax rate from 35.0% to 21.0% effective January 1, 2018, requires companies to pay a one-time repatriation tax on earnings of certain foreign subsidiaries that were previously tax deferred (“transition tax”), and makes other changes to the U.S. income tax code. Due to the Company’s July 31 fiscal year-end, the lower corporate income tax rate is phased in, resulting in a blended U.S. federal statutory tax rate of approximately 26.9% for the Company’s fiscal year ending July 31, 2018, and 21.0% for the Company’s fiscal years thereafter.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), expressing its views regarding the Financial Accounting Standards Board (“FASB”)’s Accounting Standards Codification 740,~~Income Taxes~~, in the reporting period that includes the enactment date of the Tax Act. SAB 118 recognizes that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. Specifically, SAB 118 allows a company to report provisional estimates in the reporting period that includes the enactment date if the company does not have the necessary information available, prepared, or fully analyzed for certain income tax effects of the Tax Act. The provisional estimates would be adjusted during a measurement period not to exceed 12 months from the enactment date of the Tax Act, at which time the accounting for the income tax effects of the Tax Act is required to be completed.

As of January 31, 2018, the Company had not completed its accounting for the income tax effects of the Tax Act; however, the Company had made a reasonable estimate of the effect on its existing AMT credit carryover. Because the AMT credit will be refundable if not utilized in the next four years, the Company reversed the valuation allowance that offset the AMT credit. As a result, in the three months ended January 31, 2018, the Company recorded a noncurrent receivable and an income tax benefit of $3.3 million for the anticipated refund. The reduction in the corporate tax rate is not expected to impact the Company’s results of operations or financial position in the foreseeable future because the income tax benefit from the reduced tax rate will be offset by the valuation allowance.

The transition tax is based on total post-1986 earnings and profits which were previously deferred from U.S. income taxes. The Company expects to utilize net operating loss carryforwards to offset any transition tax that it may incur. Therefore the Company did not record any provisional income tax expense for the transition tax for its foreign subsidiaries. At January 31, 2018, the undistributed earnings of the Company’s foreign subsidiaries continued to be permanently reinvested and the Company does not intend to repatriate any of the amounts. As a result, the Company has not provided for additional income or withholding taxes for the undistributed earnings or for any additional outside basis differences with respect to the foreign entities. The Company continues to review the anticipated impacts of the global intangible low taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”), which are not effective until August 1, 2018. The Company has not recorded any impact associated with either GILTI or BEAT in the three months ended January 31, 2018.

The Company anticipates that its assumptions and estimates may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB, and various other taxing jurisdictions. In particular, the Company anticipates that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Tax Act, either in its entirety or with respect to specific provisions. Legislative and interpretive actions could result in adjustments to the Company’s provisional estimates when the accounting for the income tax effects of the Tax Act is completed. The Company will continue to evaluate the impact of the Tax Act on its financial statements, and will record the effect of any reasonable changes in its estimates and adjustments.

~~Elmion Netherlands B.V. Deferred Tax Assets~~

In the six months ended January 31, 2017, the Company determined that its valuation allowance on the losses of Elmion Netherlands B.V., a Netherlands subsidiary, was no longer required due to an internal reorganization that generated income and a projection of income in future periods. The Company recorded a benefit from income taxes of $16.6 million in the six months ended January 31, 2017 from the full recognition of the Elmion Netherlands B.V. deferred tax assets.

~~New Jersey Corporation Business Tax~~

In September 2017, the Company, IDT Domestic Telecom, Inc. (a subsidiary of the Company) and certain other affiliates, were certified by the New Jersey Economic Development Authority as having met all of the requirements of the Grow New Jersey Assistance Act Tax Credit Program. The corporation business tax credits to be received are a maximum of $21.1 million. The Company may claim a tax credit each tax year for ten years beginning in 2017. The tax credit can be applied to 100% of the Company’s New Jersey tax liability each year, and the unused amount of the annual credit can be carried forward. In addition, the Company may apply for a tax credit transfer certificate to sell unused tax credits to another business. The tax credits must be sold for no less than 75% of the value of the tax credits. The tax credits are subject to reduction, forfeiture and recapture if, among other things, the number of full-time employees declines below the program or statewide minimum.

~~Note 14—~~17—Recently Issued Accounting Standard Not Yet Adopted

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards (“IFRS”). The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company expects to adopt this standard on August 1, 2018 using the modified retrospective approach. The Company has identified its main revenue streams, which include Boss Revolution PIN-less international calling revenue, wholesale carrier services revenue, and domestic and international airtime top-up revenue. The Company is currently reviewing contracts and other relevant documents related to its wholesale carrier services revenue to determine how to apply the new standard to this revenue stream. The Company expects to continue its review and evaluation for its other revenue streams in fiscal 2018. Currently, the Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.

In January 2016, the FASB issued an ASU to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will have to reassess at each reporting period whether an investment qualifies for this practicability exception. The Company will adopt the amendments in this ASU on August 1, 2018. The Company is evaluating the impact that the ASU will have on its consolidated financial statements.

In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In June 2016, the ~~FASB~~Financial Accounting Standards Board issued ~~an ASU~~Accounting Standards Update No. 2016-13,Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking ~~“expected loss”~~current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, ~~2020.~~2023. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. The Company will adopt the amendments in this ASU on August 1, 2018. The adoption will impact the Company’s beginning of the period and end of the period cash and cash equivalents balance in its statement of cash flows, as well as its net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. The Company will adopt the amendments in this ASU on August 1, 2018. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The Company will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for the Company on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company is evaluating the impact that this ASU will have on its consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017,~~2019, as filed with the U.S. Securities and Exchange Commission (or SEC).

As used below, unless the context otherwise requires, the terms “the Company,” “IDT,” “we,” “us,” and “our” refer to IDT Corporation, a Delaware corporation, its predecessor, International Discount Telecommunications, Corp., a New York corporation, and their subsidiaries, collectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2019. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2019.

Overview

We are a multinational ~~holding~~ company with operations primarily in the telecommunications and payment industries. We have two reportable business segments, Telecom ~~Platform~~& Payment Services and ~~net2phone-Unified Communications as a Service, or net2phone-UCaaS (formerly known as UCaaS). The~~net2phone. Our Telecom ~~Platform~~& Payment Services segment provides retail telecommunications and payment offerings as well as wholesale international ~~long distance~~long-distance traffic termination. ~~The net2phone-UCaaS~~Our net2phone segment ~~is comprised of (1) cable~~provides unified cloud communications and telephony ~~(2) cloud-based private branch exchange, or PBX,~~ services ~~offered~~ to enterprise customers exclusively through value-added resellers, service providers, telecom agents and managed service providers, (3) Session Initiation Protocol, or SIP, trunking, which supports inbound and outbound domestic and international calling from an IP PBX, and (4) PicuP, a highly-automated business phone service that answers, routes and manages voice calls. Telecom Platform Services and net2phone-UCaaS comprise our IDT Telecom division. Operating segments not reportable individually are included in All Other. All Other includes our real estate holdings and other smaller businesses.

Since our inception, we have derived the majority of our revenues and operating expenses from IDT Telecom’s businesses. IDT Telecom’s revenues represented 99.8% and 99.9% of our total revenues in the six months ended January 31, 2018 and 2017, respectively.customers.

On ~~or about~~ March 26, 2018, we ~~expect to spin-off~~completed a pro rata distribution of the common stock of our former subsidiary, Rafael Holdings, Inc., or ~~RHI,~~Rafael, to our stockholders ~~so that RHI will be a separate publicly traded company. Approval~~ of the spin-off by our stockholders is not required. Our Board of Directors believes that the spin-off will allow RHI to better focus on its strategic mission and that its potential can be better realized as an independent entity. The spin-off of RHI will occur by way of a pro rata distribution of RHI’s capital stock to our stockholders. On the distribution date, each of our stockholdersrecord as of the ~~record date for the distribution~~close of business on March 13, 2018, ~~will receive one share of RHI Class A common stock for every two shares of our Class A common stock~~which we refer to as the Rafael Spin-Off. We lease office space and one share of RHI Class B common stock for every two shares of our Class B common stock. Completion of the RHI spin-off is subject to receipt of a favorable opinion as to the spin-off’s tax-free status.

~~RHI owns the commercial real estate assets held by us and interests~~parking in ~~two clinical stage pharmaceutical companies. The commercial real estate holdings consist of our headquarters~~Rafael’s building and ~~its associated public~~parking garage inlocated at 520 Broad St, Newark, New ~~Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building~~Jersey. We also lease office space in Israel ~~that hosts offices for us~~from Rafael. The Newark lease expires in April 2025 and ~~certain affiliates. The pharmaceutical holdings include debt interests~~the Israel lease expires in July 2025. In the three months ended October 31, 2019 and ~~warrants~~2018, we incurred rent expense of $0.5 million and $0.4 million, respectively, in connection with the Rafael Pharmaceuticals, Inc., or Rafael Pharma, which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., or Lipomedix, a pharmaceutical development company based in Israel. In addition, prior to the spin-off, we intend to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.leases.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal ~~2017.~~year ended July 31, 2019. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill, valuation of long-lived ~~and intangible~~ assets, income taxes and regulatory agency fees, and ~~IDT Telecom~~ direct cost of revenues—disputed amounts. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal ~~2017.~~year ended July 31, 2019.

Recently Issued Accounting Standard Not Yet Adopted

In ~~May 2014,~~June 2016, the Financial Accounting Standards Board ~~or FASB, and the International~~issued Accounting Standards ~~Board jointly issued a comprehensive new revenue recognition standard that will supersede most~~Update No. 2016-13,Financial Instruments—Credit Losses (Topic 326),Measurement of ~~the current revenue recognition guidance under U.S. GAAP and International~~Credit Losses on Financial Reporting Standards, or IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. We expect to adopt this standard on August 1, 2018 using the modified retrospective approach. We have identified our main revenue streams, which include Boss Revolution PIN-less international calling revenue, wholesale carrier services revenue, and domestic and international airtime top-up revenue. We are currently reviewing contracts and other relevant documents related to our wholesale carrier services revenue to determine how to apply the new standard to this revenue stream. We expect to continue our review and evaluation for our other revenue streams in fiscal 2018. Currently, we cannot reasonably estimate the impact that the adoption of the standard will have on our consolidated financial statements.

In January 2016, the FASB issued an ASU to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will have to reassess at each reporting period whether an investment qualifies for this practicability exception. We will adopt the amendments in this ASU on August 1, 2018. We are evaluating the impact that the ASU will have on our consolidated financial statements.

In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are evaluating the impact that the new standard will have on our consolidated financial statements.

~~In June 2016, the FASB issued an ASU~~Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking ~~“expected loss”~~current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on August 1, ~~2020.~~2023. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. We will adopt the amendments in this ASU on August 1, 2018. The adoption will impact our beginning of the period and end of the period cash and cash equivalents balance in our statement of cash flows, as well as our net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. We will adopt the amendments in this ASU on August 1, 2018. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. We will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for us on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. We are evaluating the impact that this ASU will have on our consolidated financial statements.

Results of Operations

Three ~~and Six~~ Months Ended ~~January~~October 31, ~~2018~~2019 Compared to Three ~~and Six~~ Months Ended ~~January~~October 31, ~~2017~~2018

We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

Telecom ~~Platform~~& Payment Services Segment

Telecom ~~Platform~~& Payment Services, which represented ~~97.8%~~96.3% and ~~97.9%~~97.1% of our total revenues in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017,~~2018, respectively, markets and distributes ~~multiple~~the following communications and payment ~~services across three broad business verticals:~~services:

●

~~Retail Communications~~Core includes our three largest communications and payments offerings by revenue: BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, Carrier Services, which provides international long-distance ~~calling products primarily~~termination and outsourced traffic management solutions to ~~foreign-born communities~~telecoms worldwide, ~~with its core markets~~and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payments offerings, many in ~~the United States;~~harvest mode.

●

~~Wholesale Carrier Services is~~Growth comprises National Retail Solutions, which operates a ~~global telecom carrier, terminating international long distance calls around the world~~point-of-sale, or POS, terminal-based network for ~~Tier 1 fixed line and mobile network operators, as well as other service providers; and~~

●

~~Payment Services provides payment offerings, including international and domestic airtime top-up and~~retailers, BOSS Revolution Money Transfer, an international money ~~transfer.~~remittance service for customers in the United States, and BOSS Revolution Mobile, a mobile virtual network operator which provides mobile phone service over a third-party network for customers in the United States.

Our Telecom & Payment Services segment’s most significant revenue streams are from BOSS Revolution Calling, Mobile Top-Up, and Carrier Services. BOSS Revolution Calling and Mobile Top-Up are sold direct-to-consumers and through distributors and retailers. We receive payments for BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up prior to providing the services. We recognize the revenue when services are provided to the customer. International prepaid calling revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year’s Day) and the fourth fiscal quarter (which contains Mother’s Day and Father’s Day) typically showing higher minute volumes.

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 387.1 $ 359.9 $ 27.2 7.5 % $ 772.1 $ 721.4 $ 50.7 7.0 %
Direct cost of revenues 334.6 308.0 26.6 8.6 668.6 617.7 50.9 8.2
Selling, general and administrative 43.6 40.7 2.9 6.8 85.7 81.8 3.9 4.7
Depreciation 4.1 4.0 0.1 3.5 8.1 8.2 (0.1 ) (0.7 )
Severance 0.2 — 0.2 nm 0.6 — 0.6 nm
Income from operations $ 4.6 $ 7.2 $ (2.6 ) (36.2 )% $ 9.1 $ 13.7 $ (4.6 ) (33.4 )%

	Three months ended October 31,				Change
	2019		2018		$			%
	(in millions)
Revenues	$	327.6	$	351.8	$	(24.2	)		(6.9	)%
Direct cost of revenues		276.5		301.6		(25.1	)		(8.4	)
Selling, general and administrative		40.8		40.9		(0.1	)		(0.1	)
Depreciation and amortization		3.2		4.0		(0.8	)		(21.2	)
Severance		0.6		—		0.6			nm
Other operating expense, net		2.1		1.1		1.0			94.5
Income from operations	$	4.4	$	4.2	$	0.2			4.9	%

nm—not meaningful

Revenues. Telecom ~~Platform~~& Payment Services’ revenues and minutes of use ~~and average revenue per minute~~ for the three months ended ~~January~~October 31, ~~2018~~2019 and ~~2016~~2018 consisted of the following:

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018

2017

$/#

%

2018

2017

$/#

%

(in millions, except revenue per minute)
Telecom Platform Services Revenues
Retail Communications $ 145.2 $ 154.6 $ (9.4 ) (6.1 )% $ 291.4 $ 313.1 $ (21.7 ) (6.9 )%
Wholesale Carrier Services 172.5 145.8 26.7 18.3 343.0 289.1 53.9 18.6
Payment Services 69.4 59.5 9.9 16.5 137.7 119.2 18.5 15.5
Total Telecom Platform Services revenues $ 387.1 $ 359.9 $ 27.2 7.5 % $ 772.1 $ 721.4 $ 50.7 7.0 %
Minutes of use
Retail Communications 1,416 1,708 (292 ) (17.1 )% 2,889 3,537 (648 ) (18.3 )%
Wholesale Carrier Services 5,385 5,057 328 6.5 10,601 9,405 1,196 12.7
Total minutes of use 6,801 6,765 36 0.5 % 13,490 12,942 548 4.2 %
Average revenue per minute
Retail Communications $ 0.1026 $ 0.0905 $ 0.0121 13.3 % $ 0.1009 $ 0.0885 $ 0.0124 14.0 %
Wholesale Carrier Services 0.0320 0.0288 0.0032 11.1 0.0324 0.0307 0.0017 5.2

	Three months ended October 31,				Change
	2019		2018		$/#			%
	(in millions)
Core Operations:
BOSS Revolution Calling	$	116.3	$	123.5	$	(7.2	)		(5.9	)%
Carrier Services		113.5		142.2		(28.7	)		(20.2	)
Mobile Top-Up		76.8		65.3		11.5			17.6
Other		11.2		14.8		(3.6	)		(23.8	)
Growth		9.8		6.0		3.8			63.1
Total revenues	$	327.6	$	351.8	$	(24.2	)		(6.9	)%
Minutes of use
BOSS Revolution Calling		1,002		1,108		(106	)		(9.6	)%
Carrier Services		4,314		4,508		(194	)		(4.3	)

~~Retail Communications’ revenue~~Revenues and minutes of use from BOSS Revolution Calling decreased ~~6.1% and 6.9%~~ in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017,~~2019 in line with our expectations. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and Retail Communications’ minutes of use decreased 17.1% and 18.3% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017. The decrease in Retail Communications’ revenues and minutes of use was primarily due to increased competition from wireless network operators, mobile virtual network operators, and ~~alternative communications solutions such as~~the increasing penetration of free and paid over-the-top voice and messaging services. ~~Revenue~~

Revenues and minutes of use from ~~our Boss Revolution international calling service, which is Retail Communications’ most significant offering, declined 4.2% and 4.8%~~Carrier Services decreased in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017, and Boss Revolution’s minutes of use declined 14.1% and 15.3% in~~2019. Over the ~~three and six months ended January 31, 2018, respectively, compared~~long-term, we expect that Carrier Services will continue to the similar periods in fiscal 2017. In addition, the decrease in Retail Communications’ revenue and minutes of use in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 was due to continuing declines in Europe, South America and Asia, and continuing declinesbe adversely impacted as communications globally transition away from traditional ~~disposable calling cards in the U.S. Retail Communications’ revenue comprised 37.8% and 43.4% of Telecom Platform Services’ revenue in the six months ended January 31, 2018 and 2017, respectively.~~

~~Wholesale Carrier Services’ revenue increased 18.3% and 18.6% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017, and Wholesale~~international long-distance voice operators. However, Carrier Services’ minutes of use ~~increased 6.5%~~ and ~~12.7%~~revenues will likely continue to fluctuate significantly from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues.

Revenues from Mobile Top-Up increased in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017,~~2019 due to ~~an increase in traditional carrier~~expanded bundled offerings of minutes, text and data, and growth from the addition of ~~use and revenues. Wholesale Carrier Services’ revenue comprised 44.4% and 40.1% of Telecom Platform Services’ revenue in the six months ended January 31, 2018 and 2017, respectively.~~new mobile partners.

~~Payment Services’ revenue~~Revenues from our Growth initiatives increased ~~16.5% and 15.5%~~ in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017 due~~2019. BOSS Revolution Money Transfer revenues increased 56% to increases in revenue from our international and domestic airtime top-up service, our international money transfer service (specifically transactions originating from our direct to consumer channels), and our National Retail Solutions point-of-sale terminal business. The increase in revenues from airtime top-up$7.4 million in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017 reflected growth~~2019 as revenues from ~~new mobile partners~~both the direct-to-consumer and diversification of airtime top-up offerings. We have money transmitter licenses in 47 of the 49 states that require such a license, as well as in Puerto Rico and Washington, D.C. Future growth in Payment Services is expectedretail channels increased. Revenues from ~~the Boss~~BOSS Revolution Money ~~app that features~~Transfer direct-to-consumer increased 69% to $4.6 million in the three months ended October 31, 2019 compared to the similar period in fiscal 2019 due to expansion of our international ~~money transfers, airtime top-up~~disbursement network, enhanced transaction fulfillment technology, and ~~electronic gift cards.~~intensified marketing. National Retail ~~Solutions is also expected to continue expanding. Payment Services’ revenue comprised 17.8% and 16.5% of Telecom Platform Services’ revenue~~Solutions’ revenues increased 93% in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 compared to the similar period in fiscal 2019 driven by expansion of its POS network to additional retailers and ~~2017, respectively.~~increased revenue from advertising, data analytics and credit card processing that supplement the monthly recurring fees generated by the use of its terminals.

	Three months ended January 31,									Six months ended January 31,									Three months ended October 31,
	2018			2017			Change			2018			2017			Change			2019			2018			Change
Telecom Platform Services
Telecom & Payment Services
Direct cost of revenues as a percentage of revenues		86.5	%		85.6	%		0.9	%		86.6	%		85.6	%		1.0	%		84.4	%		85.7	%		(1.3	)%

Direct Cost of Revenues. Direct cost of revenues in Telecom ~~Platform~~& Payment Services ~~increased~~decreased in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017 mainly~~2019 primarily due to ~~the 6.5% and 12.7% increase~~decreases in ~~Wholesale~~ Carrier Services’ ~~minutes~~and BOSS Revolution Calling’s direct cost of ~~use~~revenues in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017.~~2019, partially offset by an increase in Mobile Top-Up’s direct cost of revenues in the three months ended October 31, 2019 compared to the similar period in fiscal 2019. Direct cost of revenues as a percentage of revenues in Telecom ~~Platform~~& Payment Services ~~increased 90 and 100~~decreased 130 basis points in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017~~2019 primarily due to a shift to higher margin traffic in ~~the revenue mix within our Telecom Platform Services segment towards Wholesale~~ Carrier Services ~~which typically exhibits higher direct cost~~resulting from the implementation of ~~revenues as~~an outsourcing agreement in a ~~percentage~~key calling corridor, and the continued migration of ~~revenues than our Retail Communications’ offerings.~~BOSS Revolution Calling customers to the direct-to-consumer channel.

Selling, General and Administrative. Selling, general and administrative expense in our Telecom ~~Platform~~& Payment Services segment ~~increased~~decreased in the three months ended ~~January~~October 31, ~~2018~~2019 compared to the similar period in fiscal ~~2017~~2019 primarily due to ~~increases~~a decrease in employee compensation, and credit card charges. Selling, general and administrative expense in our Telecom Platform Services segment increased in the six months ended January 31, 2018 compared to the similar period in fiscal 2017 primarily due to increases in employee compensation and credit card charges, partially offset by ~~a decrease in marketing expense. The increase in credit card charges relates to~~ increases in ~~Boss Revolution~~stock-based compensation and ~~international money transfer direct to consumer transactions.~~marketing expense. As a percentage of Telecom ~~Platform~~& Payment Services’ revenue, Telecom ~~Platform~~& Payment Services’ selling, general and administrative expense ~~decreased~~increased to ~~11.2%~~12.5% from ~~11.3%~~11.6% in the three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017, respectively, and decreased to 11.1% from 11.3% in the six months ended January 31,~~ 2018, ~~and 2017,~~ respectively.

Depreciation and Amortization. Depreciation and amortization expense ~~increased 3.5%~~in our Telecom & Payment Services segment decreased in the three months ended ~~January~~October 31, ~~2018~~2019 compared to the similar period in fiscal ~~2017,~~2019 as more of our property, plant and ~~was substantially unchanged in the six months ended January 31, 2018 compared~~equipment became fully depreciated, partially offset by depreciation of equipment added to ~~the similar period in fiscal 2017. Depreciation~~our telecommunications network and ~~amortization expense increased due to increases in depreciation of~~ capitalized costs of consultants and employees developing internal use software.

Severance. In the three ~~and six~~ months ended ~~January~~October 31, ~~2018,~~2019, Telecom ~~Platform~~& Payment Services ~~completed an adjustment to its workforce and~~ incurred severance expense of ~~$0.2~~$0.6 million.

Other Operating Expense, net. In the three months ended October 31, 2019 and 2018, Telecom & Payment Services recorded accruals for non-income related taxes related to one of its foreign subsidiaries of $2.1 million and ~~$0.6~~$1.1 million, respectively.

net2phone Segment

~~net2phone-UCaaS Segment~~

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 8.3 $ 7.1 $ 1.2 16.2 % $ 16.1 $ 14.3 $ 1.8 12.7 %
Direct cost of revenues 2.6 2.9 (0.3 ) (10.7 ) 5.1 6.2 (1.1 ) (17.7 )
Selling, general and administrative 5.3 3.8 1.5 40.0 10.0 7.1 2.9 41.0
Depreciation 1.2 0.9 0.3 31.4 2.5 1.6 0.9 51.5
Loss from operations $ (0.8 ) $ (0.5 ) $ (0.3 ) (70.3 )% $ (1.5 ) $ (0.6 ) $ (0.9 ) (129.3 )%

~~Revenues.~~ ~~net2phone-UCaaS’ revenue increased 16.2%~~Our net2phone segment, which represented 3.7% and ~~12.7%~~2.9% of our total revenues in the three ~~and six~~ months ended ~~January~~October 31, 2019 and 2018, respectively, is comprised of two verticals:

●

net2phone-Unified Communications as a Service, or UCaaS, a unified cloud communications service for businesses in North and South America and certain other international markets; and

●

net2phone-Platform Services, which provides telephony services to cable operators and other businesses by leveraging a common technology platform.

	Three months ended October 31,						Change
	2019			2018			$			%
	(in millions)
Revenues	$	12.6		$	10.5		$	2.1			20.6	%
Direct cost of revenues		3.0			3.0			—			(1.2	)
Selling, general and administrative		10.4			7.4			3.0			41.1
Depreciation and amortization		2.1			1.6			0.5			36.1
Other operating expense, net		0.4			—			0.4			nm
Loss from operations	$	(3.3	)	$	(1.5	)	$	(1.8	)		(117.5	)%

nm—not meaningful

Revenues. net2phone’s revenues in the three months ended October 31, 2019 and 2018 consisted of the following:

	Three months ended October 31,				Change
	2019		2018		$			%
	(in millions)
net2phone-UCaaS	$	7.2	$	4.8	$	2.4			50.3	%
net2phone-Platform Services		5.4		5.7		(0.3	)		(4.5	)
Total revenues	$	12.6	$	10.5	$	2.1			20.6	%

net2phone-UCaaS’s revenues increased in the three months ended October 31, 2019 compared to the similar ~~periods~~period in fiscal ~~2017 primarily due to continued~~2019 driven by the expansion of its U.S. channel partner network and growth ~~from its cloud-based communications offering – both~~in South American markets. On September 14, 2018, net2phone-UCaaS entered the Canadian market through the acquisition of Versature Corp. Versature’s revenues increased $1.0 million in the ~~U.S. and in South America. In light of~~three months ended October 31, 2019 compared to the ~~strong growth in the cloud-based communications offering in Argentina and Brazil, net2phone-UCaaS anticipates additional international expansion in South America and Asia~~similar period in fiscal ~~2018.~~2019.

Three months ended
January 31, Six months ended
January 31,
2018 2017 Change 2018 2017 Change
net2phone-UCaaS
Direct cost of revenues as a percentage of revenues 31.5 % 41.0 % (9.5 )% 31.8 % 43.5 % (11.7 )%

	Three months ended October 31,
	2019			2018			Change
net2phone
Direct cost of revenues as a percentage of revenues		23.7	%		29.0	%		(5.3	)%

Direct Cost of Revenues. Direct cost of revenues ~~in net2phone-UCaaS~~ decreased in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017~~2019 primarily because of a decrease in the direct cost of revenues in ~~cable telephony service,~~ net2phone-Platform Services,partially offset by an increase in the direct cost of revenues ~~of cloud-based communications.~~in net2phone-UCaaS. Direct cost of revenues as a percentage of revenues ~~in net2phone-UCaaS~~ decreased ~~950 and 1,170~~530 basis points in the three ~~and six~~ months ended ~~January~~October 31, ~~2018, respectively,~~2019 compared to the similar ~~periods~~period in fiscal ~~2017 primarily~~2019 because of ~~the decrease in the direct cost of revenues in cable telephony service, as well as~~ decreases in direct cost of revenues as a percentage of revenues in ~~cloud-based communications~~both net2phone-UCaaS and ~~SIP trunking.~~net2phone-Platform Services.

Selling, General and Administrative. Selling, general and administrative expense ~~in our net2phone-UCaaS segment~~ increased in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017~~2019 due to ~~an increase~~increases in employee compensation, ~~resulting from an increase~~sales commissions, and marketing expense. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expenses were 82.5% and 70.5% in the ~~number of sales~~three months ended October 31, 2019 and ~~information technology employees. We increased employees and compensation in our net2phone-UCaaS segment as we invested in the growth of net2phone-UCaaS’ lines of business.~~

2018, respectively.

~~Depreciation.~~Depreciation and Amortization. The increase in depreciation and amortization expense in the ~~net2phone-UCaaS segment in the~~ three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017~~2019 was due to increases in depreciation of net2phone-UCaaS’ customer premises equipment, additional depreciation and amortization due to the acquisition of Versature, and capitalized costs of consultants and employees developing internal use software to support our new products.

~~All Other~~

~~Currently, operating segments not reportable individually are included in All Other.~~

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 0.5 $ 0.5 $ — 5.8 % $ 1.2 $ 1.0 $ 0.2 23.0 %
Direct cost of revenues — — — — — — — —
Selling, general and administrative 1.1 — 1.1 nm 2.0 — 2.0 nm
Depreciation 0.4 0.4 — 3.4 0.8 0.8 — 3.2
(Loss) income from operations $ (1.0 ) $ 0.1 $ (1.1 ) nm $ (1.6 ) $ 0.2 $ (1.8 ) nm

~~nm—not meaningful~~

~~Revenues.~~Other Operating Expense, net.~~In April 2016, we entered into two leases with tenants for space in our headquarters building at 520 Broad Street, Newark, New Jersey. One lease is for a portion~~ Other operating expense, net of the sixth floor for an eleven-year term, of which the first six years are non-cancellable. The other lease is for a portion of the ground floor and basement for a term of ten years and seven months. The tenant under this lease has the right to extend the term for three consecutive periods of five years each. Rental income from the first lease commenced in December 2016, and rental income from the second lease commenced in March 2017. In addition, in April 2017, we entered into a third lease for another portion of the ground floor for a term of ten years, four months. Rental income from the third lease commenced in March 2018.

~~Selling, General and Administrative~~~~. Selling, general and administrative expense increased~~$0.4 million in the three ~~and six~~ months ended ~~January~~October 31, ~~2018 compared to the similar periods in fiscal 2017 primarily~~2019 was due to ~~increases in expenses~~our indemnification of a net2phone cable telephony customer related to ~~RHI, including Lipomedix, and our commercial real estate. We began consolidating Lipomedix in November 2017 after we purchased additional shares and increased our ownership to 50.6% of~~patent infringement claims brought against the ~~issued and outstanding ordinary shares of Lipomedix. Selling, general and administrative expense of Lipomedix in the three and six months ended January 31, 2018 was $0.4 million.~~customer.

Corporate

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018

2017

$

%

2018

2017

$

%

(in millions)
General and administrative $ 2.4 $ 2.8 $ (0.4 ) (13.4 )% $ 4.8 $ 3.9 $ 0.9 23.7 %
Other operating expense 0.9 0.9 — 4.8 1.6 1.1 0.5 49.3

Loss from operations $ 3.3 $ 3.7 $ (0.4 ) (11.4 )% $ 6.4 $ 5.0 $ 1.4 29.9 %

	Three months ended October 31,				Change
	2019		2018		$			%
	(in millions)
General and administrative expenses	$	2.2	$	2.3	$	(0.1	)		(2.2	)%
Other operating expense, net		0.3		0.2		0.1			33.6
Loss from operations	$	2.5	$	2.5	$	—			0.6	%

Corporate costs include compensation, consulting fees, treasury and accounts payable, tax and accounting services, human resources and payroll, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, ~~business development,~~charitable contributions, travel and other corporate-related general and administrative ~~expenses, including, among others, facilities costs, charitable contributions and travel.~~expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

General and Administrative. ~~The decrease in~~ Corporate general and administrative expense decreased in the three months ended ~~January~~October 31, ~~2018~~2019 compared to the similar period in fiscal ~~2017 was~~2019 primarily ~~due to~~because of decreases in ~~employee compensation~~legal, professional, and ~~stock-based compensation expense,~~consulting fees, partially offset by an increase in legal fees. The increase in Corporate general and administrative expense in the six months ended January 31, 2018 compared to the similar period in fiscal 2017 was primarily due to increases in legal fees and employee compensation, partially offset by a decrease in stock-based ~~compensation expense.~~compensation. As a percentage of our total consolidated revenues, Corporate general and administrative expense ~~were~~was 0.7% and 0.6% ~~and 0.8%~~ in the three months ended ~~January~~October 31, 2019 and 2018, ~~and 2017, respectively, and 0.6% and 0.5% in the six months ended January 31, 2018 and 2017,~~ respectively.

Other Operating Expense, net. On July 31, 2013, we completed a pro rata distribution of the common stock of our former subsidiary Straight Path Communications Inc., or Straight Path, to our stockholders. In the three and six months ended January 31, 2018, we incurred legal fees of $0.2 million and $1.0 million, respectively, related to the Straight Path stockholders’ putative class action and derivative complaint. In addition,As discussed in the three and six months ended January 31, 2018, we incurred fees of $0.6 million related to other legal matters. In the three and six months ended January 31, 2017, we incurred legal fees of $0.9 million and $1.1 million, respectively, related to a letter of inquiry from the Federal Communications Commission, or FCC, in connection with its investigation of potential license violations by Straight Path Spectrum LLC (a subsidiary of Straight Path and formerly a subsidiary of ours). (See Note 1115 to the Consolidated Financial Statements included in Item 1 to Part I of ~~the~~this Quarterly Report on Form ~~10-Q).~~10-Q, a putative class action on behalf of Straight Path’s stockholders and derivative complaint was filed naming us, among others. In the three months ended October 31, 2019 and 2018, we incurred legal fees of $0.7 million and $0.2 million, respectively, related to this action. Also, in the three months ended October 31, 2019, we recorded insurance proceeds for this matter of $0.4 million.

Consolidated

The following is a discussion of our consolidated stock-based compensation expense, and our consolidated income and expense line items below income from operations.

Stock-Based Compensation Expense. Stock-based compensation expense included in consolidated selling, general and administrative expenses was ~~$1.0~~$1.4 million and ~~$1.4~~$0.4 million in the three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017, respectively, and $1.8 million and $2.1 million in the six months ended January 31,~~ 2018, ~~and 2017,~~ respectively. At ~~January~~October 31, ~~2018,~~2019, unrecognized compensation cost related to non-vested stock-based compensation ~~including stock options and restricted stock,~~ was an aggregate of ~~$4.1~~$3.9 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in ~~2020.~~2022.

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018
2017

$

%

2018

2017

$

%

(in millions)
(Loss) income from operations $ (0.5 ) $ 3.1 $ (3.6 ) (115.3 )% $ (0.4 ) $ 8.3 $ (8.7 ) (104.8 )%
Interest income, net 0.3 0.3 — (7.4 ) 0.6 0.6 — 6.4
Other income (expense), net 0.4 (0.4 ) 0.8 188.3 (0.4 ) 2.0 (2.4 ) (123.1 )
Benefit from (provision for) income taxes 1.5 (1.7 ) 3.2 186.0 0.1 12.7 (12.6 ) (99.2 )
Net income (loss) 1.7 1.3 0.4 34.4 (0.1 ) 23.6 (23.7 ) (100.5 )
Net income attributable to noncontrolling interests (0.2 ) (0.4 ) 0.2 54.5 (0.5 ) (0.8 ) 0.3 38.0
Net income (loss) attributable to IDT Corporation $ 1.5 $ 0.9 $ 0.6 73.3 % $ (0.6 ) $ 22.8 $ (23.4 ) (102.5 )%

	Three months ended October 31,						Change
	2019			2018			$			%
	(in millions)
(Loss) income from operations	$	(1.4	)	$	0.2		$	(1.6	)		(864.8	)%
Interest income, net		0.3			0.1			0.2			151.9
Other income (expense), net		0.2			(1.3	)		1.5			117.3
Provision for income taxes		(0.5	)		(1.0	)		0.5			42.9
Net loss		(1.4	)		(2.0	)		0.6			28.8
Net income attributable to noncontrolling interests		(0.1	)		(0.3	)		0.2			69.8
Net loss attributable to IDT Corporation	$	(1.5	)	$	(2.3	)	$	0.8			34.2	%

Other Income (Expense), net. Other income (expense), net consists of the following:

Three months ended
January 31,

Six months ended
January 31,

2018

2017

2018

2017

(in millions)
Foreign currency transaction gains (losses) $ 0.2 $ (0.7 ) $ (0.6 ) $ 1.3
Gain on sale of marketable securities — 0.3 — 0.3
Gain on investments 0.2 — 0.1 0.3
Other — — 0.1 0.1
Total other income (expense), net $ 0.4 $ (0.4 ) $ (0.4 ) $ 2.0

	Three months ended October 31,
	2019			2018
	(in millions)
Foreign currency transaction gains (losses)	$	0.7		$	(1.2	)
Other		(0.5	)		(0.1	)
Total other income (expense), net	$	0.2		$	(1.3	)

~~Benefit from (Provision for)~~Provision for Income Taxes. On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”, which is commonly referred to as “The Tax Cuts and Jobs Act”, or the Tax Act. The Tax Act provides for comprehensive tax legislation that reduces the U.S. federal statutory corporate tax rate from 35.0% to 21.0% effective January 1, 2018, requires companies to pay a one-time repatriation tax, or transition tax, on earnings of certain foreign subsidiaries that were previously tax deferred, and makes other changes to the U.S. income tax code. Due to our July 31 fiscal year-end, the lower corporate income tax rate is phased in, resulting in a blended U.S. federal statutory tax rate of approximately 26.9% for our fiscal year ending July 31, 2018, and 21.0% for our fiscal years thereafter.

~~On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118, or SAB 118, expressing its views regarding the FASB’s Accounting Standards Codification 740,~~~~Income Taxes~~, in the reporting period that includes the enactment date of the Tax Act. SAB 118 recognizes that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. Specifically, SAB 118 allows a company to report provisional estimates in the reporting period that includes the enactment date if the company does not have the necessary information available, prepared, or fully analyzed for certain income tax effects of the Tax Act. The provisional estimates would be adjusted during a measurement period not to exceed 12 months from the enactment date of the Tax Act, at which time the accounting for the income tax effects of the Tax Act is required to be completed.

As of January 31, 2018, we had not completed our accounting for the income tax effects of the Tax Act; however, we had made a reasonable estimate of the effect on our existing AMT credit carryover. Because the AMT credit will be refundable if not utilized in the next four years, we reversed the valuation allowance that offset the AMT credit. As a result, in the three months ended January 31, 2018, we recorded a noncurrent receivable and an income tax benefit of $3.3 million for the anticipated refund. The reduction in the corporate tax rate is not expected to impact our results of operations or financial position in the foreseeable future because the income tax benefit from the reduced tax rate will be offset by the valuation allowance.

The transition tax is based on total post-1986 earnings and profits which were previously deferred from U.S. income taxes. We expect to utilize net operating loss carryforwards to offset any transition tax that we may incur. Therefore we did not record any provisional income tax expense for the transition tax for our foreign subsidiaries. At January 31, 2018, the undistributed earnings of our foreign subsidiaries continued to be permanently reinvested and we do not intend to repatriate any of the amounts. As a result, we have not provided for additional income or withholding taxes for the undistributed earnings or for any additional outside basis differences with respect to the foreign entities. We continue to review the anticipated impacts of the global intangible low taxed income, or GILTI, and base erosion anti-abuse tax, or BEAT, which are not effective until August 1, 2018. We have not recorded any impact associated with either GILTI or BEAT in the three months ended January 31, 2018.

We anticipate that our assumptions and estimates may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB, and various other taxing jurisdictions. In particular, we anticipate that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Tax Act, either in its entirety or with respect to specific provisions. Legislative and interpretive actions could result in adjustments to our provisional estimates when the accounting for the income tax effects of the Tax Act is completed. We will continue to evaluate the impact of the Tax Act on our financial statements, and will record the effect of any reasonable changes in our estimates or adjustments.

In the six months ended January 31, 2017, we determined that our valuation allowance on the losses of Elmion Netherlands B.V., or Elmion, a Netherlands subsidiary, was no longer required due to an internal reorganization that generated income and a projection that the income would continue. We recorded a benefit from income taxes of $16.6 million in the six months ended January 31, 2017 from the full recognition of the Elmion deferred tax assets.

~~The change~~decrease in income tax expense in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017, excluding the benefits from income taxes in the three and six months ended January 31, 2018 and in the six months ended January 31, 2017,~~2019 was ~~generally~~primarily due to ~~the~~ differences in the ~~tax rates~~amount of income earned in the ~~jurisdictions where the results were recorded.~~various taxing jurisdictions.

Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three ~~and six~~ months ended ~~January~~October 31, ~~2018~~2019 compared to the similar ~~periods~~period in fiscal ~~2017~~2019 was ~~primarily~~ due to the net loss attributable to noncontrolling interests of one of our subsidiaries of $0.1 million in the three months ended October 31, 2019. We did not record the net loss attributable to noncontrolling interests of this subsidiary in the similar period in fiscal 2019. In addition, the reduction in the net income attributable to noncontrolling interests of other subsidiaries in the three months ended October 31, 2019 compared to the similar period in fiscal 2019 was the result of a decrease in the net income attributable to the noncontrolling interests in certain IDT Telecom subsidiaries, as well as net loss attributable to the noncontrolling interests in Lipomedix in the three and six months ended January 31, 2018. We began consolidating Lipomedix in November 2017.of these subsidiaries.

Liquidity and Capital Resources

General

We currently expect our cash from operations in the next twelve months and the balance of cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments that we held ~~at January~~on October 31, ~~2018~~2019 to be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending ~~January~~October 31, ~~2019.~~2020.

At ~~January~~October 31, ~~2018,~~2019, we had cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments of ~~$100.3~~$77.8 million and a working capital deficit (current ~~assets~~liabilities in excess of current ~~liabilities)~~assets) of ~~$1.1~~$22.7 million. ~~At January 31, 2018, we also had $8.8 million in investments in hedge funds, which were included in “Investments” in our consolidated balance sheet.~~

On or about March 26, 2018, we expect to spin-off our wholly-owned subsidiary, RHI, to our stockholders. RHI owns certain commercial real estate assets and interests in Rafael Pharma and Lipomedix. Prior to the spin-off, we intend to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.

We treat unrestricted cash and cash equivalents held by IDT Payment Services as substantially restricted and unavailable for other purposes. At ~~January~~October 31, ~~2018,~~2019, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of ~~$10.0~~$9.8 million held by IDT Payment Services that was unavailable for other purposes.

We have not recorded U.S. income tax expense for foreign earnings, since such earnings are permanently reinvested outside the United States. Upon distribution of these foreign earnings to our domestic entities, we may be subject to U.S. income taxes and withholding of foreign taxes, however, it is not practicable to determine the amount, if any, which would be paid.

Six months ended
January 31,

2018

2017

(in millions)
Cash flows (used in) provided by:
Operating activities $ (27.0 ) $ (0.8 )
Investing activities 0.9 (21.0 )
Financing activities (10.2 ) (9.3 )
Effect of exchange rate changes on cash and cash equivalents 0.6 (0.9 )
Decrease in cash and cash equivalents $ (35.7 ) $ (32.0 )

	Three months ended October 31,
	2019			2018
	(in millions)
Cash flows (used in) provided by:
Operating activities	$	(5.0	)	$	8.2
Investing activities		(11.2	)		(6.5	)
Financing activities		—			(4.8	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		11.4			(4.6	)
Decrease in cash, cash equivalents, and restricted cash and cash equivalents	$	(4.8	)	$	(7.7	)

Operating Activities

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.

Gross trade accounts receivable ~~increased~~decreased to ~~$74.3~~$56.6 million at ~~January~~October 31, ~~2018~~2019 from ~~$67.6~~$63.5 million at July 31, ~~2017~~2019 primarily due to ~~a $6.8 million increase in IDT Telecom’s gross trade accounts receivable balance. The increase in IDT Telecom’s gross trade accounts receivable balance was primarily due to amounts billed in~~collections in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 in excess of ~~collections~~amounts billed during the period, ~~and~~partially offset by the effect of changes in foreign currency exchange rates.

Deferred revenue ~~as a percentage~~arises from sales of ~~total revenues~~prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue ~~arises from IDT Telecom’s sales of prepaid products. Deferred revenue~~ decreased to ~~$71.8~~$40.7 million at ~~January~~October 31, ~~2018~~2019 from ~~$76.5~~$42.5 million at July 31, ~~2017~~2019 primarily due to ~~a decrease~~decreases in the BOSS Revolution Calling and net2phone-Platform Services deferred revenue balances.

In the three months ended October 31, 2019, customer deposits at IDT ~~Telecom U.S. Boss Revolution balance.~~Financial Services Limited, our Gibraltar-based bank, increased mainly due to the effect of exchange rate changes, which accounted for $11.4 million of the increase. Similarly, restricted cash and cash equivalents also increased by $11.4 million in the three months ended October 31, 2019 due to the effect of exchange rate changes.

On ~~September 20, 2016, we received~~June 21, 2018, in South Dakota v Wayfair Inc., the United States Supreme Court held that states may charge sales tax on purchases made from out-of-state sellers, even if the seller does not have a ~~letter of inquiry from~~physical presence in the ~~Enforcement Bureau of the FCC requesting certain information and materials related to an investigation of potential violations by Straight Path Spectrum LLC in connection~~taxing state. We are evaluating our state tax filings with ~~licenses to operate on the 28 GHz and 39 GHz bands of the Fixed Microwave Services. We have cooperated with the FCC in this matter and have responded~~respect to the ~~letter~~Wayfair decision and are in the process of ~~inquiry. The FCC~~reviewing our collection practices. It is possible that one or more jurisdictions may assert that we have liability for periods for which we have not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could ~~seek~~adversely affect our business, financial position and operating results. One or more jurisdictions may change their laws or policies to ~~fine~~apply their sales, use or ~~impose regulatory penalties or civil liability on us related~~other similar taxes to ~~activities during the period of ownership by us.~~our operations, and if such changes were made it could materially and adversely affect our business, financial position and operating results.

The Separation and Distribution Agreement related to the spin-off of Straight Path provides for us and Straight Path to indemnify each other for certain liabilities. We and Straight Path each communicated that it was entitled to indemnification from the other in connection with the inquiry described above and related matters. On October 24, 2017, we, Straight Path, Straight Path IP Group, Inc., or SPIP, and PR-SP IP Holdings LLC, or PR-SP, an entity owned by Howard Jonas, entered into a Settlement Agreement and Release that provides for, among other things, the settlement and mutual release of potential liabilities and claims that may exist or arise under the Separation and Distribution Agreement between us and Straight Path. In exchange for the mutual release, we paid Straight Path an aggregate of $16 million in cash, Straight Path transferred to us its majority ownership interest in Straight Path IP Group Holding, Inc., or New SPIP, which holds the equity of SPIP, the entity that holds intellectual property primarily related to communications over computer networks, subject to the right to receive 22% of the net proceeds, if any, received by SPIP from licenses, settlements, awards or judgments involving any of the patent rights and certain transfers of the patents or related rights, that will be retained by Straight Path’s stockholders (such equity interest, subject to the retained interest right, the “IP Interest”), and we undertook certain funding and other obligations related to SPIP. The Settlement Agreement and Release allocates (i) $10 million of the payment and the retained interest right to the settlement of claims and the mutual release and (ii) $6 million to the transfer of the IP Interest. In the accompanying consolidated statement of cash flows in the six months ended January 31, 2018, $10 million of the aggregate payment to Straight Path was included in operating activities and $6 million of the aggregate payment was included in investing activities.

In August 2017, we entered into a Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls. We have committed to pay such telecom operator monthly committed amounts during the term of the agreement. In addition, under certain limited circumstances, the parties may renegotiate the amount of the monthly payments. In the event the parties do not agree on re-pricing terms after good faith negotiations, then either party has the right to terminate the agreement. Pursuant to the agreement, in September 2017, we deposited $11.75 million into an escrow account as security for the benefit of the telecom operator, which was included in operating activities in the accompanying consolidated statement of cash flows.

Investing Activities

Our capital expenditures were ~~$10.9~~$3.9 million and ~~$10.5~~$4.5 million in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017,~~2018, respectively. We currently anticipate that total capital expenditures for the twelve-month period ending ~~January~~October 31, ~~2019~~2020 will be ~~between $21~~$20 million to ~~$23~~$22 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments on hand.

On October 24, 2017, we sold our entire majority interests in New SPIP to PR-SP in exchange for $6 million and the assumption by PR-SP of our funding and other obligations. As described above, $6 million of the aggregate payment to Straight Path that was allocated to the transfer of the IP Interest was included in investing activities in the six months ended January 31, 2018.

~~On December 23, 2016,~~September 14, 2018, we acquired ~~all~~100% of the outstanding shares of ~~Live Ninja,~~Versature, a ~~business communications company that provides chat and messaging capabilities for small and medium-sized businesses with~~UCaaS provider serving the ~~ability to transfer a conversation from one channel of communications (for example,~~Canadian market. In the ~~web) to another (such as a mobile phone). We paid $2.0 million at closing, and expect to pay an additional $2.5 million through December~~three months ended October 31, 2018, ~~for fixed and contingent payment obligations. The~~the cash paid for the acquisition net of cash acquired was ~~$1.8~~$5.5 million.

In the six months ended January 31, 2017, we used cash of $8.3 million for additional investments. In September 2016, Rafael Pharma issued to our 50%-owned subsidiary, CS Pharma Holdings, LLC, or CS Pharma, its convertible Series D Note with a principal amount of $10 million, representing the $8 million investment funded on such date plus the conversion of $2 million principal amount convertible promissory notes issued in connection with a prior funding.

Purchases of ~~marketable~~debt securities and equity investments were ~~$19.8~~$8.2 million and ~~$17.2 million~~nil in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017,~~2018, respectively. Proceeds from maturities and sales of ~~marketable~~debt securities and sales of equity investments were ~~$31.6~~$0.8 million and ~~$16.8~~$3.4 million in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Financing Activities

In the six months ended January 31, 2018, we paid cash dividends of $0.38 per share on our Class A common stock and Class B common stock, or $9.4 million in total. In the six months ended January 31, 2017, we paid cash dividends of $0.38 per share on our Class A common stock and Class B common stock, or $8.8 million in total. On March 5, 2018, our Board of Directors declared a dividend of $0.09 per share for the second quarter of fiscal 2018 to holders of our Class A common stock and Class B common stock. The dividend will be paid on or about March 23, 2018 to stockholders of record as of the close of business on March 19, 2018. In light of our intention to continue to invest in our growth initiatives and the impact of the RHI spin-off on our balance sheet, our Board of Directors reduced the dividend for the second quarter of fiscal 2018 from the quarterly dividend of $0.19 per share that was paid in the first two quarters of fiscal 2018.

We distributed cash of ~~$0.7~~$0.2 million and ~~$0.8~~$0.3 million in the ~~six~~three months ended ~~January~~October 31, ~~2018~~2019 and ~~2017,~~2018, respectively, to the ~~holders of~~ noncontrolling interests in certain of our subsidiaries.

~~Our~~In the three months ended October 31, 2019 and 2018, we repaid financing-related other liabilities of $19,000 and $0.6 million, respectively.

In the three months ended October 31, 2019, we received proceeds from the exercise of stock options of $0.3 million for which we issued 32,551 shares of our Class B common stock. There were no stock option exercises in the three months ended October 31, 2018.

We have an existing stock repurchase program authorized by our Board of Directors for the repurchase of up to an aggregate of 8.0 million shares of our Class B common stock. There were no repurchases under the program in the three months ended October 31, 2019. In the three months ended October 31, 2018, we repurchased 729,110 shares of Class B common stock for an aggregate purchase price of $3.9 million. At October 31, 2019, 6.9 million shares remained available for repurchase under the stock repurchase program.

As of October 31, 2019, our subsidiary, IDT Telecom, Inc., entered into a credit agreement ~~dated July 12, 2012,~~ with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. ~~The credit agreement was amended as of January 31, 2018.~~ IDT Telecom may use the proceeds to finance working capital requirements, acquisitions and ~~for~~ other general corporate purposes. The line of credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at ~~the option of IDT Telecom, at either (a) the U.S. Prime Rate less 125 basis points, or (b)~~ the LIBOR rate adjusted by the Regulation D maximum reserve requirement plus 125 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of ~~January 31,~~July 15, 2020. At January 31, 2018 and July 31, 2017, there were no amounts outstanding under the facility. We intend to borrow under the facility from time to time. In the six months ended January 31, 2018, we borrowed and repaid an aggregate of $19.1 million under the facility. IDT Telecom pays a quarterly unused commitment fee of ~~0.325%~~0.3% per annum on the average daily balance of the unused portion of the $25.0 million commitment. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain financial targets and ratios during the term of the ~~line of credit,~~facility, including ~~restrictions on dividend payments on~~ IDT Telecom ~~capital stock and restrictions~~may not pay any dividend on ~~IDT Telecom’s aggregate loans and advances to affiliates or subsidiaries.~~

~~We received proceeds from the exercise of our stock options of $0.8 million in the six months ended January 31, 2017, for which we issued 73,471 shares of our Class B common~~its capital stock.

In connection with our investment in Rafael Pharma, our subsidiary CS Pharma issued member interests to third parties in exchange for cash investment in CS Pharma of $10 million. We hold a 50% interest in CS Pharma and we are the managing member. At July 31, 2016, CS Pharma had received $8.8 million, which was included in “Other current liabilities” pending the issuance of the member interests. In the six months ended January 31, 2017, CS Pharma received an additional $1.2 million from the sale of its member interests.

In the six months ended January 31, 2018 and 2017, we paid $0.1 million and $1.8 million, respectively, to repurchase 5,170 and 94,338 shares, respectively, of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.

We have a stock repurchase program for the repurchase of up to an aggregate of 8.0 million shares of our Class B common stock. There were no repurchases under the program in the six months ended January 31, 2018 or 2017. At January 31, 2018, 8.0 million shares remained available for repurchase under the stock repurchase program.

Other Sources and Uses of Resources

On June 22, 2017, IDT Telecom, Inc. entered into a Share Purchase Agreement with JAR Fintech Limited and JAR Capital Limited to sell the capital stock of IDT Financial Services Holding Limited, a company incorporated under the laws of Gibraltar and a wholly-owned subsidiary of IDT Telecom, to JAR Fintech Limited. IDT Financial Services Holding Limited is the sole shareholder of IDT Financial Services Limited, our Gibraltar-based bank. The Share Purchase Agreement provides for an aggregate purchase price for the outstanding equity interests of IDT Financial Services Holding Limited of £2.9 million ($4.1 million at January 31, 2018) plus an amount equal to the value of IDT Financial Services Holding Limited’s net assets, to be paid at closing, subject to adjustments relating to customer assets of IDT Financial Services Holding Limited. The net asset value of IDT Financial Services Holding Limited was $14.5 million at January 31, 2018. A portion of the purchase price will be placed in escrow and released to IDT Telecom once all of the conditions have been met under the Share Purchase Agreement. The sale is expected to close in the second quarter of calendar 2018, subject to regulatory approval and other customary conditions set forth in the Share Purchase Agreement. The remaining closing conditions are outside of our control and there can be no assurance that the sale will be completed.

We intend to, where appropriate, make strategic investments and acquisitions to complement, expand, and/or enter into new businesses. In considering acquisitions and investments, we search for opportunities to profitably grow our existing businesses and/or to add qualitatively to the range and diversification of businesses in our portfolio. At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our return on investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.

Contractual Obligations and Other Commercial Commitments

~~The following table quantifies our future contractual obligations and commercial commitments at January 31, 2018:~~

Payments Due by Period
(in millions)
Total Less than
1 year 1–3 years 4–5 years After 5 years
Operating leases $ 6.4 $ 2.9 $ 2.1 $ 0.7 $ 0.7
Revolving credit facility (1) 0.2 0.1 0.1 — —
Purchase commitments (2) 18.7 18.7 — — —

Total contractual obligations (3) $ 25.3 $ 21.7 $ 2.2 $ 0.7 $ 0.7

Smaller reporting companies are not required to provide the information required by this item.

~~(1)~~

~~Revolving credit facility includes estimated fees on the unused commitment at January 31, 2018.~~

~~(2)~~

Purchase commitments include the aggregate commitment under the Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls.

~~(3)~~

~~The above table does not include an aggregate of $15.1 million in performance bonds due to the uncertainty of the amount and/or timing of any such payments.~~

Off-Balance Sheet Arrangements

We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following.

In connection with the Rafael Spin-Off in March 2018, we and Rafael entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Rafael after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Rafael with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to the Separation and Distribution Agreement, we indemnify Rafael and Rafael indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, we indemnify Rafael from all liability for taxes of ours, other than Rafael and its subsidiaries, for any taxable period, and from all liability for taxes due to the spin-off.

In connection with our spin-off of Straight Path, in July 2013, we and Straight Path entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Straight Path after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Straight Path with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to the Separation and Distribution Agreement, we indemnify Straight Path and Straight Path indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, we indemnify Straight Path from all liability for taxes of Straight Path or any of its subsidiaries or relating to the Straight Path business with respect to taxable periods ending on or before the spin-off, from all liability for taxes of ours, other than Straight Path and its subsidiaries, for any taxable period, and from all liability for taxes due to the spin-off. (See Note 1115 to the Consolidated Financial Statements included in Item 1 to Part I of ~~the~~this Quarterly Report on Form 10-Q).

In connection with our spin-off of Zedge, Inc., or Zedge, in June 2016, we and Zedge entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Zedge after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Zedge with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to Separation and Distribution Agreement, among other things, we indemnify Zedge and Zedge indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, among other things, Zedge indemnifies us from all liability for taxes of Zedge and any of Zedge’s subsidiaries or relating to Zedge’s business accruing after the spin-off, and we indemnify Zedge from all liability for taxes of Zedge and any of Zedge’s subsidiaries or relating to Zedge’s business with respect to taxable periods ending on or before the spin-off.

~~IDT Payment Services and IDT Telecom~~We 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.~~resellers. At ~~January~~October 31, ~~2018,~~2019, we had aggregate performance bonds of ~~$15.1~~$17.5 million outstanding.

~~Item 3.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risks

~~Foreign Currency Risk~~

Revenues from our international operations were 32% and 31% of our consolidated revenues for the six months ended January 31, 2018 and 2017, respectively. A significant portion of these revenues is in currencies other than the U.S. Dollar. Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non-U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies. While the impact from fluctuations in foreign exchange rates affects our revenue and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.

~~Investment Risk~~Smaller reporting companies are not required to provide the information required by this item.

In addition to, but separate from our primary business, we hold a portion of our assets in marketable securities and hedge funds for strategic and speculative purposes. At January 31, 2018, the carrying value of our marketable securities and investments in hedge funds was $46.2 million and $8.8 million, respectively. Investments in marketable securities and hedge funds carry a degree of risk, and depend to a great extent on correct assessments of the future course of price movements of securities and other instruments. There can be no assurance that our investment managers will be able to accurately predict these price movements. The securities markets have in recent years been characterized by great volatility and unpredictability. Accordingly, the value of our investments may go down as well as up and we may not receive the amounts originally invested upon redemption.

~~Item 4.~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and ~~Principal~~Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and ~~Principal~~Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of ~~January~~October 31, ~~2018.~~2019 because of a material weakness in our internal control over financial reporting relating to management review controls associated with non-income related taxes related to one of our foreign entities. This material weakness was initially identified as of July 31, 2019 (see Item 9A to Part II of our Annual Report on Form 10-K for fiscal year ended July 31, 2019).

Remediation.As set forth below, following our Audit Committee’s independent review, management plans to take the following steps to remediate the material weakness identified above and improve our internal control over financial reporting:

●

Explore engaging an independent third party to assist in our evaluation of all non-income related taxes, relating to material foreign subsidiaries;

●

Provide additional outside training to employees responsible for tax compliance; and

●

Enhance internal documentation support related to our tax position.

Management and our Audit Committee will monitor these remedial measures and the effectiveness of our internal controls and procedures.

Notwithstanding the material weakness described above, we have performed additional analyses and other procedures to enable management to conclude that our financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition and results of operations as of and for the three months ended October 31, 2019.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended ~~January~~October 31, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

Legal proceedings in which we are involved are more fully described in Note 1115 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2019.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases by us of our shares during the ~~second~~first quarter of fiscal ~~2018:~~2020:

Total
Number of
Shares
Purchased

Average
Price
per Share

Total Number
of Shares
Purchased as
part of
Publicly
Announced
Plans or
Programs

Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs (1)

November 1-30, 2017 — $ — — 8,000,000
December 1-31, 2017 — $ — — 8,000,000
January 1–31, 2018 (2) 3,502 $ 10.77 — 8,000,000

Total 3,502 $ 10.77 —

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
August 1-31, 2019		—	$	—		—		6,903,406
September 1–30, 2019		—	$	—		—		6,903,406
October 1–31, 2019		—	$	—		—		6,903,406
Total		—	$	—		—

	(1)	On January 22, 2016, our Board of Directors approved a stock repurchase program to purchase up to 8.0 million shares of our Class B common ~~stock and cancelled the previous stock repurchase program originally approved by the Board of Directors on June 13, 2006, which had 4,636,741 shares remaining available for repurchase.~~
	stock.

~~(2)~~

Consists of shares of Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date and the proceeds utilized to pay the taxes due upon such vesting event.

~~Item 3.~~

~~Defaults Upon Senior Securities~~

Item 3. Defaults Upon Senior Securities

None

~~Item 4.~~

~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not applicable

~~Item 5.~~

~~Other Information~~

Item 5. Other Information

None

~~Item 6~~.

~~Exhibits~~

Item 6. Exhibits

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of ~~Principal~~Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of ~~Principal~~Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

Filed or furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IDT ~~CORPORATION~~

~~March 12, 2018~~	~~By:~~	~~/s/~~ ~~Shmuel Jonas~~Corporation
		~~Shmuel Jonas~~ ~~Chief Executive Officer~~

~~March 12, 2018~~December 10, 2019	By:	/s/ ~~Marcelo Fischer~~Shmuel Jonas
		Shmuel Jonas Chief Executive Officer

December 10, 2019	By:	/s/ Marcelofischer
		Marcelo Fischer ~~Senior Vice President of Finance~~ ~~(Principal~~Chief Financial ~~Officer)~~Officer

3430

Delaware		22-3415036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

520 Broad Street, Newark, New Jersey		07102
(Address of principal executive offices)		(Zip Code)

Title of each class		Name of each exchange on which registered
Class B common stock, par value $.01 per share		New York Stock Exchange

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐☒
Emerging growth company	☐

Class A common stock, $.01 par value:		1,574,326 shares outstanding (excluding 1,698,000 treasury shares)
Class B common stock, $.01 par value:		~~23,279,953~~24,927,890 shares outstanding (excluding ~~2,302,095~~907,659 treasury shares)

	January 31, 2018			July 31, 2017			October 31, 2019			July 31, 2019
	(Unaudited)			(Note 1)			(Unaudited)			(Note 1)
	(in thousands)						(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	54,055		$	90,344		$	62,183		$	80,168
Marketable securities		46,202			58,272
Trade accounts receivable, net of allowance for doubtful accounts of $2,642 at January 31, 2018 and $2,657 at July 31, 2017		71,652			64,979
Restricted cash and cash equivalents								190,218			177,031
Debt securities								9,894			2,534
Equity investments								5,710			5,688
Trade accounts receivable, net of allowance for doubtful accounts of $5,675 at October 31, 2019 and $5,444 at July 31, 2019								50,963			58,060
Prepaid expenses		15,915			14,506			27,809			20,276
Other current assets		30,733			18,749			26,964			24,704
Assets held for sale		138,700			124,267
Total current assets		357,257			371,117			373,741			368,461
Property, plant and equipment, net		88,621			88,994			32,874			34,355
Goodwill		11,447			11,326			11,214			11,209
Investments		24,350			26,894
Other intangibles, net								4,110			4,196
Equity investments								9,337			9,319
Operating lease right-of-use assets								11,597			—
Deferred income tax assets, net		8,653			11,841			4,110			4,589
Other assets		8,616			3,657			12,054			11,574
Assets held for sale		5,285			5,134
Total assets	$	504,229		$	518,963		$	459,037		$	443,703

Liabilities and equity
Current liabilities:
Trade accounts payable	$	37,071		$	40,989		$	37,159		$	37,077
Accrued expenses		113,154			125,359			121,058			127,834
Deferred revenue		71,789			76,451			40,739			42,479
Customer deposits								188,258			175,028
Other current liabilities		4,683			4,659			9,180			6,652
Liabilities held for sale		129,423			115,318
Total current liabilities		356,120			362,776			396,394			389,070
Operating lease liabilities								9,335			—
Other liabilities		1,107			1,080			977			1,076
Liabilities held for sale		642			550
Total liabilities		357,869			364,406			406,706			390,146
Commitments and contingencies
Equity:
IDT Corporation stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—			—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at January 31, 2018 and July 31, 2017		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 25,582 and 25,561 shares issued and 23,280 and 23,264 shares outstanding at January 31, 2018 and July 31, 2017, respectively		256			256
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at October 31, 2019 and July 31, 2019								33			33
Class B common stock, $.01 par value; authorized shares—200,000; 25,836 and 25,803 shares issued and 24,928 and 24,895 shares outstanding at October 31, 2019 and July 31, 2019, respectively								258			258
Additional paid-in capital		396,259			394,462			274,953			273,313
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 2,302 and 2,297 shares of Class B common stock at January 31, 2018 and July 31, 2017, respectively		(83,365	)		(83,304	)
Treasury stock, at cost, consisting of 1,698 shares of Class A common stock and 908 shares of Class B common stock at October 31, 2019 and July 31, 2019								(51,739	)		(51,739	)
Accumulated other comprehensive loss		(2,531	)		(2,343	)		(6,062	)		(4,858	)
Accumulated deficit		(173,386	)		(163,370	)		(162,276	)		(160,763	)
Total IDT Corporation stockholders’ equity		137,266			145,734			55,167			56,244
Noncontrolling interests		9,094			8,823			(2,836	)		(2,687	)
Total equity		146,360			154,557			52,331			53,557
Total liabilities and equity	$	504,229		$	518,963		$	459,037		$	443,703

PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1

	Consolidated Balance Sheets	1

	Consolidated Statements of Operations	2

	Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss	3

	Consolidated Statements of ~~Cash Flows~~Equity	4

	Consolidated Statements of Cash Flows	5

	Notes to Consolidated Financial Statements	56

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3126

Item 4.	Controls and Procedures	3127

PART II. OTHER INFORMATION		3228

Item 1.	Legal Proceedings	3228

Item 1A.	Risk Factors	3228

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3228

Item 3.	Defaults Upon Senior Securities	3228

Item 4.	Mine Safety Disclosures	3228

Item 5.	Other Information	3228

Item 6.	Exhibits	3329

SIGNATURES		3430

	Three Months Ended October 31, 2019 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2019	$	33	$	258	$	273,313	$	(51,739	)	$	(4,858	)	$	(160,763	)	$	(2,687	)	$	53,557
Exercise of stock options		—		—		276		—			—			—			—			276
Stock-based compensation		—		—		1,364		—			—			—			—			1,364
Distributions to noncontrolling interests		—		—		—		—			—			—			(240	)		(240	)
Other comprehensive loss		—		—		—		—			(1,204	)		—			—			(1,204	)
Net loss		—		—		—		—			—			(1,513	)		91			(1,422	)
BALANCE AT OCTOBER 31, 2019	$	33	$	258	$	274,953	$	(51,739	)	$	(6,062	)	$	(162,276	)	$	(2,836	)	$	52,331

	Three Months Ended October 31, 2018 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2018	$	33	$	256	$	294,047	$	(85,597	)	$	(4,972	)	$	(173,103	)	$	639		$	31,303
Adjustment from the adoption of change in revenue recognition		—		—		—		—			—			9,064			—			9,064
Adjustment from the adoption of change in accounting for equity investments		—		—		—		—			33			1,140			—			1,173
ADJUSTED BALANCE AT AUGUST 1, 2018		33		256		294,047		(85,597	)		(4,939	)		(162,899	)		639			41,540
Repurchases of Class B common stock through repurchase program		—		—		—		(3,854	)		—			—			—			(3,854	)
Stock-based compensation		—		—		413		—			—			—			—			413
Distributions to noncontrolling interests		—		—		—		—			—			—			(339	)		(339	)
Other comprehensive income		—		—		—		—			522			—			—			522
Net loss		—		—		—		—			—			(2,299	)		301			(1,998	)
BALANCE AT OCTOBER 31, 2018	$	33	$	256	$	294,460	$	(89,451	)	$	(4,417	)	$	(165,198	)	$	601		$	36,284

	Three Months Ended October 31, 2019
	(in thousands)
Operating lease cost	$	711
Short-term lease cost		58
Total lease cost	$	769
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	684

	October 31, 2019

Weighted-average remaining lease term-operating leases		4.9 years
Weighted-average discount rate-operating leases		3.12	%

	October 31, 2019
	(in thousands)
Operating lease liabilities included in “Other current liabilities”	$	2,417
Operating lease liabilities included in noncurrent liabilities		9,335
Total	$	11,752

	Twelve-month period ending October 31,
	(in thousands)
2020	$	2,776
2021		2,637
2022		2,438
2023		1,996
2024		1,880
Thereafter		986
Total lease payments		12,713
Less imputed interest		(961	)
Total operating lease liabilities	$	11,752

	January 31, 2018		July 31, 2017
	(in thousands)
Current assets held for sale:
Cash and cash equivalents	$	6,287	$	5,716
Restricted cash and cash equivalents		128,153		115,609
Trade accounts receivable, net of allowance for doubtful accounts of $3,239 and $2,550 at January 31, 2018 and July 31, 2017, respectively		2,919		1,844
Prepaid expenses		854		758
Other current assets		487		340
Total current assets held for sale	$	138,700	$	124,267

Noncurrent assets held for sale:
Property, plant and equipment, net	$	19	$	24
Other intangibles, net		164		165
Other assets		5,102		4,945
Total noncurrent assets held for sale	$	5,285	$	5,134

Current liabilities held for sale:
Trade accounts payable	$	2,007	$	372
Accrued expenses		252		226
Customer deposits		127,107		114,689
Other current liabilities		57		31
Total current liabilities held for sale	$	129,423	$	115,318

Noncurrent liabilities held for sale:
Other liabilities	$	642	$	550
Total noncurrent liabilities held for sale	$	642	$	550

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Available-for-sale securities:
January 31, 2018:
Certificates of deposit*	$	24,441	$	2	$	(1	)	$	24,442
Federal Government Sponsored Enterprise notes		3,216		—		(26	)		3,190
International agency notes		399		—		(9	)		390
Mutual funds		5,425		40		—			5,465
Corporate bonds		3,332		—		(39	)		3,293
Equity		79		—		(3	)		76
U.S. Treasury notes		5,397		—		(76	)		5,321
Municipal bonds		4,029		—		(4	)		4,025
Total	$	46,318	$	42	$	(158	)	$	46,202
July 31, 2017:
Certificates of deposit*	$	29,011	$	1	$	(7	)	$	29,005
Federal Government Sponsored Enterprise notes		3,992		—		(14	)		3,978
International agency notes		291		—		—			291
Mutual funds		5,353		77		—			5,430
Corporate bonds		4,643		—		—			4,643
Equity		74		—		(26	)		48
U.S. Treasury notes		6,673		—		—			6,673
Municipal bonds		8,201		4		(1	)		8,204
Total	$	58,238	$	82	$	(48	)	$	58,272

	Unrealized Losses		Fair Value
	(in thousands)
January 31, 2018:
Certificates of deposit	$	1	$	5,340
Federal Government Sponsored Enterprise notes		26		3,190
International agency notes		9		390
Corporate bonds		39		3,293
Equity		3		76
U.S. Treasury notes		76		5,321
Municipal bonds		4		3,067
Total	$	158	$	20,677
July 31, 2017:
Certificates of deposit	$	7	$	12,155
Federal Government Sponsored Enterprise notes		14		3,529
Equity		26		48
Municipal bonds		1		3,349
Total	$	48	$	19,081

	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
	(in thousands)
January 31, 2018
Available-for-sale securities:
Marketable securities	$	10,862	$	35,340	$	—	$	46,202
Rafael Pharma Series D Note		—		—		6,300		6,300
Total	$	10,862	$	35,340	$	6,300	$	52,502
July 31, 2017
Available-for-sale securities:
Marketable securities	$	12,151	$	46,121	$	—	$	58,272
Rafael Pharma Series D Note		—		—		6,300		6,300
Total	$	12,151	$	46,121	$	6,300	$	64,572

	Six Months Ended January 31, 2018
	Attributable to IDT Corporation			Noncontrolling Interests			Total
	(in thousands)
Balance, July 31, 2017	$	145,734		$	8,823		$	154,557
Dividends declared ($0.38 per share)		(9,440	)		—			(9,440	)
Restricted Class B common stock purchased from employees		(61	)		—			(61	)
Transfer of right to receive equity to Howard S. Jonas		—			(40	)		(40	)
Consolidation of Lipomedix Pharmaceuticals Ltd.		—			558			558
Distributions to noncontrolling interests		—			(717	)		(717	)
Stock-based compensation		1,797			—			1,797
Comprehensive income:
Net loss		(576	)		470			(106	)
Other comprehensive loss		(188	)		—			(188	)
Comprehensive income		(764	)		470			(294	)
Balance, January 31, 2018	$	137,266		$	9,094		$	146,360

(in thousands)	Telecom Platform Services		net2phone-UCaaS			All Other			Corporate			Total
Three Months Ended January 31, 2018
Revenues	$	387,065	$	8,299		$	519		$	—		$	395,883
Income (loss) from operations		4,589		(790	)		(1,019	)		(3,260	)		(480	)
Severance		195		—			—			—			195
Other operating expense		—		—			—			(846	)		(846	)

Three Months Ended January 31, 2017
Revenues	$	359,924	$	7,142		$	490		$	—		$	367,556
Income (loss) from operations		7,187		(464	)		82			(3,677	)		3,128
Other operating expense		—		—			—			(889	)		(889	)

Six Months Ended January 31, 2018
Revenues	$	772,129	$	16,087		$	1,222		$	—		$	789,438
Income (loss) from operations		9,150		(1,464	)		(1,650	)		(6,433	)		(397	)
Severance		605		—			—			30			635
Other operating expense		—		—			—			(1,625	)		(1,625	)

Six Months Ended January 31, 2017
Revenues	$	721,435	$	14,278		$	994		$	—		$	736,707
Income (loss) from operations		13,732		(639	)		172			(4,951	)		8,314
Other operating expense		—		—			—			(1,088	)		(1,088	)

	Three months ended January 31,				Change						Six months ended January 31,				Change
	2018		2017		$/#			%			2018		2017		$/#			%
	(in millions, except revenue per minute)
Telecom Platform Services Revenues
Retail Communications	$	145.2	$	154.6	$	(9.4	)		(6.1	)%	$	291.4	$	313.1	$	(21.7	)		(6.9	)%
Wholesale Carrier Services		172.5		145.8		26.7			18.3			343.0		289.1		53.9			18.6
Payment Services		69.4		59.5		9.9			16.5			137.7		119.2		18.5			15.5
Total Telecom Platform Services revenues	$	387.1	$	359.9	$	27.2			7.5	%	$	772.1	$	721.4	$	50.7			7.0	%
Minutes of use
Retail Communications		1,416		1,708		(292	)		(17.1	)%		2,889		3,537		(648	)		(18.3	)%
Wholesale Carrier Services		5,385		5,057		328			6.5			10,601		9,405		1,196			12.7
Total minutes of use		6,801		6,765		36			0.5	%		13,490		12,942		548			4.2	%
Average revenue per minute
Retail Communications	$	0.1026	$	0.0905	$	0.0121			13.3	%	$	0.1009	$	0.0885	$	0.0124			14.0	%
Wholesale Carrier Services		0.0320		0.0288		0.0032			11.1			0.0324		0.0307		0.0017			5.2

Payments Due by Period (in millions)	Total		Less than 1 year		1–3 years		4–5 years		After 5 years
Operating leases	$	6.4	$	2.9	$	2.1	$	0.7	$	0.7
Revolving credit facility (1)		0.2		0.1		0.1		—		—
Purchase commitments (2)		18.7		18.7		—		—		—

Total contractual obligations (3)	$	25.3	$	21.7	$	2.2	$	0.7	$	0.7

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
November 1-30, 2017		—	$	—		—		8,000,000
December 1-31, 2017		—	$	—		—		8,000,000
January 1–31, 2018 (2)		3,502	$	10.77		—		8,000,000

Total		3,502	$	10.77		—