TRIIBoy reiterates his "Run for the Hills the Cattle Are Dying" on IDTC. The company is misleading investors.
Their 10-K earnings is different from their press release. This company has trouble with honesty and straightforwardness.
Short with impunity.
What IDT Didn't Tell Investors When It
Reported Earnings
By Herb Greenberg
Senior Columnist
11/8/99 6:30 AM ET
When IDT (IDTC:Nasdaq) reported its earnings three weeks ago, an item here
pointed out how screwy they were and how IDT was trying to get investors to look
here when they should really be looking there. Then, a week ago, the company
delayed filing its 10-K annual report with the SEC, suggesting that something
was amiss.
The company, which wound up filing its 10-K late last Thursday in conjunction
with a secondary offering by Net2Phone (NTOP:Nasdaq), had blamed the delay
on its rapid growth (IDT controls Net2Phone). Now, with the filing late last
Thursday of the 10-K, it appears that "rapid growth" was a euphemism for "we're
having talks with our auditors."
Turns out that what the company reported in its earnings release to Wall Street
just three weeks ago was quite different from what it reported in its 10-K. And
that's before taking into account some questionable balance-sheet items, which
weren't included in the earnings release. (That's why it's wise to always compare
the quarterly and annual numbers a company reports in its earnings release,
which usually aren't audited, with the audited numbers in its 10-K. That's
especially true for a company like IDT, which has a history of questionable
related party transactions.)
While revenues for the quarter were the same, quite a
few line items in the 10-K income statements had
been changed. For the fourth quarter, for example,
total costs and expenses were almost $1.2 million
higher in the 10-K than the company had originally
reported in its earnings release. And the provision for income taxes for the quarter
was $2 million higher in the 10-K than it was in the earnings release last month.
For some reason, the company also reduced by about $2 million the amount of
debt it originally claimed to have paid off.
Bottom line: Instead of losing 15 cents per share for the quarter, as the original
earnings release stated, the company lost 18 cents, per the 10-K. And that's
before an extraordinary item that hadn't been disclosed in the earnings release,
which brought the actual loss per share for the quarter to 96 cents.
In the case of the year, rather than reporting a profit of 11 cents, it would have
been more like 9 cents. And that's before adding in that extraordinary item.
But that's also before taking into account how the allowance for doubtful
accounts as a percentage of receivables fell to 6.7% from 14%, despite a 178%
rise in receivables. That's important because this allowance is a discretionary
item that is a direct hit to income. Had the allowance stayed at 14%, the
company would have reported around $8.2 million less in pretax income, which
would have translated into a 15 cent per share loss for the year, rather than the
11 cent gain it reported. |
