IDT Reports Results for Fourth Quarter and Fiscal 2005

The net loss for fiscal year 2005 was $43.8 million or ($0.45) pershare, compared with a net loss in fiscal year 2004 of $58.9 millionor ($0.67) per share. The net loss for the fourth quarter of fiscal2005 was nil, or $0.00 per share, compared to a net loss of $23.3million, or ($0.25) per share, in the fourth quarter of fiscal 2004,and a net loss of $14.3 million, or ($0.15) per share, in the thirdquarter of fiscal 2005. In the fourth quarter of fiscal 2005, IDTreceived $44.0 million in settlement of a lawsuit against TelefonicaS.A., Terra Networks, S.A., and Terra Networks, U.S.A., Inc.

In preparing our fourth quarter and year end fiscal 2005 financialstatements, and as part of the Sarbanes Oxley readiness documentationprocedures, we have discovered an overstatement of our accrual forincome taxes related to the first quarter of fiscal 2004. Accordingly,we restated our financial statements for the first quarter and fiscalyear 2004 and recorded a $36.8 million decrease in our deferred taxliability on our balance sheet with a corresponding increase inbenefit from income taxes. As a result reported net loss for the yearended July 31, 2004 decreased from $95.7 million to $58.9 million, andreported net loss per share decreased from ($1.09) per share to($0.67) per share.

As of July 31, 2005, cash and cash equivalents, marketablesecurities, and restricted cash and marketable securities stood at$952.4 million, including $98.0 million held by Net2Phone.

The following table summarizes the operating performance of IDT'sbusiness segments(1):
Revenues
$ Millions FY 2005 FY 2004 Q4 '05 Q3 '05 Q4 '04
------- ------- ------ ------ ------
IDT Retail Telecom $1,616.6 $1,413.4 $402.4 $391.5 $411.7
IDT Wholesale Telecom 541.7 524.5 143.8 139.4 128.9
----- ----- ----- ----- -----
IDT Telecom Total 2,158.3 1,937.9 546.2 531.0 540.6
IDT Entertainment 187.2 106.7 39.8 46.0 30.7
Voice over IP 73.6 78.0 20.3 17.1 19.7
IDT Capital 39.7 22.7 14.8 11.1 6.6
IDT Solutions 9.6 71.6 2.2 1.6 13.7
Corporate 0.0 0.0 0.0 0.0 0.0
--- --- --- --- ---
Total IDT $2,468.5 $2,216.9 $623.3 $606.7 $611.2

Income (Loss) from Operations
$ Millions FY 2005 FY 2004 Q4 '05 Q3 '05 Q4 '04
------- ------- ------ ------ ------
IDT Retail Telecom $67.9 $96.0 $12.9 $16.7 $21.6
IDT Wholesale Telecom (18.5) (17.6) (4.5) (4.6) (5.0)
------ ------ ----- ----- -----
IDT Telecom Total 49.4 78.4 8.4 12.1 16.7
IDT Entertainment 7.5 (0.6) (2.2) 3.1 (1.2)
Voice over IP (53.5) (21.9) (25.4) (11.5) (6.5)
IDT Capital (14.2) (21.2) (4.5) (3.3) (5.8)
IDT Solutions (38.4) (112.5) (5.4) (8.8) (21.6)
Corporate (66.7) (44.2) (26.5) (15.4) (10.5)
------ ------ ------ ------ ------
Total IDT ($115.8)($121.9)($55.6)($23.8)($29.0)

"Fiscal 2005 was very exciting for IDT," said Jim Courter, CEO."We weathered a difficult and turbulent regulatory environment in ourtelecom division, but we're getting back on track with our bundledoffering. Our investments in Entertainment and other projects shouldstart to bear fruit this year and next. Ultimately, the sky really isthe only limit."

MAJOR DEVELOPMENTS

On August 29, 2005 our subsidiary, IDT Spectrum, Inc., announcedthat it filed a registration statement with the Securities andExchange Commission for a proposed initial public offering of itscommon stock. WR Hambrecht + Co., LLC, is acting as the lead managerof the offering. The registration statement relating to thesesecurities has not yet become effective, and these securities may notbe sold nor may offers to buy be accepted prior to the time theregistration statement becomes effective. Note that this press releaseshall not constitute an offer to sell or the solicitation of an offerto buy nor shall there be any sale of these securities in any State inwhich such offer, solicitation or sale would be unlawful prior toregistration or qualification under the securities laws of any suchState.

On June 28, 2005, we delivered to the Board of Directors ofNet2Phone notice of our intention to commence a tender offer for alloutstanding shares of common stock of Net2Phone we do not already own,at a price of $1.70 per share, net to the sellers in cash, withoutinterest. We currently, directly and indirectly, own 2.8 millionshares of Net2Phone common stock and 28.9 million shares of Net2Phoneclass A common stock representing approximately 41% of Net2Phone'soutstanding equity securities and approximately 57% of the totalvoting power of Net2Phone's outstanding equity securities. OnSeptember 6, 2005 we announced that we were changing the form ofconsideration in its proposed offer from $1.70 in cash to $1.70 invalue of IDT's Class B Common Stock, based on the average closingprice for the Class B Common Stock on the New York Stock Exchange of$13.25 per share for the week ending September 2, 2005. This isequivalent to a ratio of 0.1283 IDT shares for each share ofNet2Phone. Net2Phone's independent committee of the Board of Directorshas responded that neither proposed offer is acceptable, and wecontinue to discuss the terms of the offer with them.

RESULTS OF OPERATIONS

IDT Telecom

For the year, IDT Telecom revenues increased 11.4%, to $2.158billion, compared to fiscal 2004's revenues of $1.938 billion, whilefull year operating profits decreased by 37.0%, to $49.4 million, from$78.4 million in fiscal 2004. The fourth quarter was the sixteenthconsecutive quarter during which IDT Telecom produced revenue growthfrom the year-ago figure. Revenues for the fourth quarter of fiscal2005 increased 1.0% year-over-year and 2.9% sequentially.

Gross profits were $515.9 million in fiscal year 2005 and $125.3million in the fourth quarter of fiscal 2005, representing an increaseof 15.7% for the year, and a decrease of 1.0% for the fourth quarterversus the year-ago quarter and a decrease of 0.1% versus the thirdquarter of fiscal 2005. Selling, general and administrative (SG&A)expenses for IDT Telecom were $372.2 million in the fiscal year, and$91.8 million in the fourth quarter, versus $293.9 million in fiscalyear 2004, $89.1 million in the fourth quarter of fiscal year 2004 and$87.0 million in the third quarter of fiscal year 2005.

Gross margin for fiscal year 2005 was 23.9%, an increase of 90basis points from the 23.0% of fiscal year 2004. The increase in grossmargin was due to both a slight shift in our revenue mix towardsretail services and a 120 basis point increase in retail gross margin,which more than offset a 130 basis point decline in wholesale grossmargin because retail revenues accounted for about 75% of the totalIDT Telecom revenues. The retail gross margin improvement was due to ashift in mix and a gain in calling card margin, both of which aredescribed more completely below. The wholesale gross margin declinewas caused by a decision to temporarily pursue market share at theexpense of gross margin, particularly during the fourth quarter. Grossmargin for the fourth quarter was 22.9%, a decrease of 50 basis pointsfrom the year-ago period, and 70 basis points lower than that recordedin Q3 of fiscal 2005. In comparison with the year-ago period, ourquarterly revenue mix shifted slightly towards wholesale, where werealize a lower gross margin, and the wholesale gross margin declined170 basis points. In comparison to the third quarter, the revenue mixwas stable but the gross margin declined in both wholesale and retail.

IDT Telecom income from operations was $49.4 million in the fiscalyear and $8.4 million in the fourth quarter, representing $29.0million and $3.7 million declines, respectively, when compared to theprior year period. The decrease in operating earnings is due mostly tohigher SG&A expenses in our retail businesses which are discussedbelow, as well as an increase in depreciation charges, reflecting theongoing expansion of our worldwide telecommunications network. Theseincreases more than offset the increase in gross margin for the fullyear.

IDT Telecom minutes of use for the fourth quarter of fiscal 2005increased 4.3% year-over-year to 6.102 billion minutes from 5.849billion minutes, and increased 4.9% from fiscal third quarter 2005's5.817 billion minutes. For fiscal 2005, minutes of use increased 15.2%to 23.565 billion minutes from 20.456 billion minutes. Retail minutesof use increased for fiscal 2005 by 10.8%, to 17.312 billion, whilewholesale minutes of use advanced 29.5%, to 6.253 billion.
IDT Telecom Line of Business Detail(1)
Revenues
--------
$ Millions FY 2005 FY 2004 Q4 '05 Q3 '05 Q4 '04
------- ------- ------ ------ ------
Calling Card $1,283.2 $1,188.6 $327.5 $308.4 $333.2
Consumer Phone Services 333.5 224.9 74.8 83.1 78.5
----- ----- ---- ---- ----
Total Retail 1,616.6 1,413.40 402.4 391.5 411.7
Wholesale 541.7 524.5 143.8 139.4 128.9
----- ----- ----- ----- -----
Total Telecom $2,158.3 $1,937.9 $546.2 $531.0 $540.6

Gross Margin
------------
$ Millions FY 2005 FY 2004 Q4 '05 Q3 '05 Q4 '04
------- ------- ------ ------ ------
Calling Card 23.5% 23.1% 23.6% 23.6% 22.4%
Consumer Phone Services 49.0% 50.8% 46.5% 47.8% 49.3%
----- ----- ----- ----- -----
Total Retail 28.7% 27.5% 27.9% 28.7% 27.6%
Wholesale 9.5% 10.9% 9.2% 9.4% 10.3%
---- ----- ---- ---- -----
Total Telecom 23.9% 23.0% 22.9% 23.6% 23.4%

Retail Telecom

For fiscal year 2005 Retail Telecom revenues increased 14.4%. Forthe fourth quarter revenues declined 2.3% year-over-year to $402.4million, and increased 2.8% from the third quarter of fiscal 2005.Retail Telecom income from operations declined 29.2% in fiscal year2005, to $67.9 million. Income from operations for the fourth quarterwas $12.9 million, a 40.1% decline year-over-year and a 22.7% decreasefrom the third quarter.

-- Calling card revenues increased 8.0% versus fiscal year 2004. In the fourth quarter of fiscal 2005 calling card revenues declined 1.7% versus the year-ago period and increased 6.2% versus the third quarter of fiscal 2005. Both the growth versus the year-ago figure and sequential quarter-over-quarter figure as well as the fourth quarter year-over-year decline were broadly based geographically, with the exception of our calling card operations in Latin America and Asia. These businesses continued to make steady market share progress. Gross profits for calling cards increased 9.6% for the fiscal year, and those of the fourth quarter increased 3.5% year-over-year and 6.4% versus those of the third quarter of fiscal year 2005, as gross margin on calling cards improved by 40 basis points for the fiscal year. For the fourth quarter gross margin improved 120 basis points versus the year-ago period and was unchanged versus the third quarter.

-- Consumer phone services revenues increased 48.3% versus fiscal year 2004. However, in the fourth quarter of fiscal 2005 consumer phone service revenues were 4.7% lower than those recorded in the year-ago period and 10.0% below those of the third quarter of fiscal 2005. The customer base for America Unlimited, the IDT calling plan which features unlimited local and long distance calling within the United States for a fixed monthly rate, was approximately 220,000 as of July 31, 2005. In addition, we had approximately 325,000 long distance-only customers at July 31, 2005. The 10.9% decrease in our combined customer base since April 30, 2005 occurred because we delayed the resumption of advertising for our America Unlimited plan until we signed a long-term services agreement for local phone service with Verizon Communications, Inc., which became effective August 1.
In the United Kingdom, we continue to build the customer base
for our Toucan consumer phone service. As of July 31, 2005, we
had approximately 147,000 active customers, up from
approximately 138,000 active customers on April 30, 2005. The
expansion of the Toucan brand, which has already gained
significant recognition in the U.K. market, involves both a
broadening of the suite of service offerings, as well as
expansion into other markets. During the second quarter of
fiscal 2005, we added Internet access to our offering and
during the fourth quarter of fiscal 2005 we launched
ToucanMobile, our mobile phone service. Our Internet access
service offerings include both dial-up and broadband access
services, marketed under the ToucanSurf brand, which had 9,000
customers as of July 31, 2005. ToucanMobile offers users in
the U.K. a simple post-paid pricing structure with a number of
price plans. We plan to expand Toucan to other European
markets and anticipate the launch of the service in the
Netherlands during the first half of Fiscal 2006.

-- Earlier this month, we announced the launch of TuYo Mobile, a new prepaid wireless service. TuYo Mobile is designed especially for the mobile communications needs of the Hispanic population in the United States. In offering TuYo Mobile, we will be acting as a reseller, under our own brand name, of a major GSM wireless carrier and offer equipment and services competitive with the leading wireless companies. TuYo Mobile will leverage IDT's expertise, experience and infrastructure in the prepaid telecom market that includes an unmatched distribution channel in the urban market, an international long distance network, an innovative prepaid platform and leading calling card brands. We expect to begin the roll out of TuYo Mobile in selected markets by the end of calendar year 2005.

Retail Telecom gross margin for fiscal year 2005 improved 120basis points from fiscal year 2004 due to the increased relativeproportion of consumer phone services, with its higher gross margin,in our mix and to a 34 basis point increase in the gross marginrealized in our calling card services. These factors outweighed a 180basis point decline in consumer phone service overall margin. Theoverall decrease in consumer phone services margin is primarily due tothe suspension of marketing of America Unlimited, which has highergross margin than our internationally-based consumer phone servicesofferings, during a portion of the period. In the fourth quarter offiscal 2005 retail telecom gross margin increased 30 basis points fromtheir year-ago level and decreased 80 basis points from the thirdquarter of fiscal year 2005. The improvement was due to an improvementin calling card gross margin as described above; the decline was dueto the increased proportion of internally-based business, with itslower gross margins, in the overall mix.

Retail Telecom SG&A expenses for fiscal year 2005 increased $83.7million to $325.6 million and for the fourth quarter of fiscal year2005 increased $2.7 million year-over-year and $5.0 million comparedwith the third quarter of fiscal year 2005. The increases were drivenprimarily by increased advertising expenditures related to ourconsumer phone services businesses in the United States (during thefirst half of the fiscal year) and the United Kingdom (throughout thefiscal year), expenditures incurred in the development of newbusinesses, and increased headcount, resulting primarily from ongoinggeographic expansion.

Wholesale Telecom

For fiscal year 2005 Wholesale Telecom revenues increased 3.3% to$541.7 million. For the fourth quarter they increased 11.5%year-over-year to $143.8 million, and 3.1% from the third quarter offiscal 2005. Wholesale Telecom's loss from operations increased 5.3%in fiscal year 2005, to $18.5 million. However, its loss fromoperations for the fourth quarter was $4.5 million, a 9.1% declineyear-over-year and a 2.3% decline from the third quarter.

Wholesale Telecom gross margin was 9.5% for the year and 9.2% inthe fourth quarter, down from 9.4% in the third quarter, and 10.3% inlast year's fourth quarter. The reduction in margin was the result ofa decline in per-minute price realizations, arising from a strategicdecision undertaken during the year to temporarily sacrifice margin inorder to drive volumes and market share.

IDT Entertainment

IDT Entertainment generated revenues of $187.2 million in fiscal2005, up 75.5% from the $106.7 million of revenues generated in fiscalyear 2004. Most of the revenue increase is due to the inclusion ofrevenue from a series of acquisitions that took place during the priorfiscal year. In the fourth quarter of fiscal year 2005 IDTEntertainment recorded revenues of $39.8 million, compared to $30.7million of revenues recorded in the fourth quarter of fiscal 2004 and$46.0 million of revenues generated in the third quarter of fiscal2005. The revenue increase versus the year-ago period occurredprimarily at our video distribution business, and the decline comparedwith the third quarter is due to seasonal factors, also primarily inour video distribution business.

IDT Entertainment's income from operations was $7.5 million infiscal year 2005, versus a loss from operations of $0.6 million infiscal year 2004. In the fourth quarter of fiscal year 2005 IDTEntertainment lost $2.2 million from operations, versus a loss fromoperations of $1.2 million in the year-ago period and income fromoperations of $3.1 million in the previous quarter. The fiscal 2005increase in income from operations versus the prior year is due to theinclusion of all our acquisitions for a full year. The fourth quarterloss from operations is due to the fact that both our videodistribution and production services businesses experience seasonalfluctuations and the fourth quarter is typically the weakest for eachbusiness. In addition, our video distribution business experiencedunusually high returns during the quarter.

Major achievements for IDT Entertainment during fiscal year 2005include the following:

-- The company augmented its management team with several industry veterans, naming Janet Healy President of Animation, Neil Braun President of Feature Films & Television, and Jerry Davis Chief Creative Officer. Ms. Healy's credits include SharkTale, Dinosaur, Tarzan, Mulan, Jurassic Park, Terminator 2 and Casper. Mr. Davis' include Robots, Ice Age, and Iron Giant. Prior to joining the company, Mr. Braun has served in several senior management positions in the entertainment industry, including President of the NBC Television Network and CEO of Viacom Entertainment, among others. Mr. Braun is now the lead financial architect for all IDT Entertainment business deals and will be responsible for the company's aggressive expansion of its feature film and television production offerings. Ms. Healy has been tasked with building out a state-of- the-art Computer Generated (CG) animation pipeline to enable the production of high quality CG animated feature films. Ms. Healy will also oversee all budgets, staff and production schedules for all IDT Entertainment animation projects. Mr. Davis will head up the search for, and development of, creative content and talent for all of IDT Entertainment's animated feature films.

-- The company signed a two-year, multi-picture distribution deal with Twentieth Century Fox, under which Twentieth Century Fox will release CG animated feature films produced by IDT Entertainment.

-- IDT Entertainment obtained a $50 million, five-year, secured revolving credit facility (which may be increased up to $75 million) from a bank syndicate led by J.P. Morgan Chase. The borrowings will be used to provide funding for the production of live action and animated features for television broadcast and home video distribution and to license home video titles for distribution into major retailers.

-- The company launched its live-action division, which is focused on the supernatural/thriller/horror genre, and which began licensing the rights to its productions during fiscal Q3. The division's productions include, among others, the Masters of Horror Series to be aired on the Showtime Network beginning in October.

-- Our home video distribution business reported revenue of $122.8 million. During fiscal 2005 the top selling videos were Third Rock from the Sun, Thomas the Tank Engine and 21 Jump Street.

-- Historically, our video distribution business has been entirely focused on selling third party licensed properties. Due to significant investments in our proprietary projects beginning in fiscal 2005, we expect that an increasing proportion of revenues from our video distribution business will be derived from these proprietary projects as we build our film library. We expect to begin recognizing revenue from these projects in fiscal 2006.

In fiscal 2006, IDT Entertainment expects to bring severalproprietary productions to the direct-to-video and broadcast markets,including The Happy Elf Christmas Special with Harry Connick, Jr.,Wow! Wow! Wubbzy, Me, Eloise, Todd McFarlane's Spawn, Rob Zombie's TheHaunted World of El Superbeasto, and Stan Lee Presents' Mosaic, Condorand a project starring Ringo Starr. The company will also releaseseveral live action horror films including the Masters of Horrorseries.

Voice over IP

IDT's Voice over IP business segment consists primarily of ourinterest in Net2Phone, which is a separate publicly held corporationwhose common stock is quoted on the Nasdaq National Market under thesymbol "NTOP." Net2Phone is subject to the reporting requirements ofthe Securities Exchange Act of 1934. The financial informationrelating to Net2Phone (which is consolidated with our financialresults) for the fiscal quarter and year ended July 31, 2005 reportedin this press release is based on preliminary financial informationprovided to us by Net2Phone and is subject to further adjustment.Primarily because of the elimination of intercompany transactions inour consolidated results, as well as adjustments by IDT to thecarrying value of goodwill associated with IDT's acquisitions ofNet2Phone stock, Net2Phone's independently reported results ofoperations differ from those reported in our consolidated results.Accordingly, the financial information relating to Net2Phone (and ourVoice over IP segment) reported herein will differ from the financialresults of Net2Phone as a whole, which will be reported by Net2Phonein its press release and conference call scheduled for October 6,2005.

Set forth below is a brief description of Net2Phone's preliminaryresults as they are consolidated into IDT's results.

Voice over IP's loss from operations for the fiscal year 2005 was$53.5 million on revenues of $73.6 million, compared to a loss of$21.9 million on revenues of $78.0 million in fiscal year 2004. Forthe fourth quarter of fiscal 2005 we recorded a loss from operationsof $25.4 million on revenues of $20.3 million, compared with a loss of$6.5 million on revenues of $19.7 million in the fourth quarter offiscal 2004 and a loss from operations of $11.5 million on revenues of$17.1 million recorded in the third quarter of fiscal 2005. The lossfrom operations include an impairment charge to goodwill of $15.8million, recorded by IDT during the fourth quarter of fiscal 2005, towrite-down the carrying value of goodwill originally recorded by IDTon its purchases of Net2Phone stock.. This was the largest contributorto the increased loss from Voice over IP operations. Other factorswere increased SG&A expenses associated with booking and launchingcable telephony service products and a decline in carrier and directto consumer revenue.

Notable achievements for the year include:

-- Service agreements signed with cable operators passing 3 million homes.

-- Commercial launches of Net2Phone's cable telephony product by Coditel, EST, Bresnan, Millennium, Northland, Cable & Wireless Cayman Islands and Empresa Telecomunicaciones de Bogota.

IDT's net loss for fiscal year 2005 and for the fourth quarter offiscal year 2005 includes only its ownership stake in the loss ofNet2Phone during each period. IDT's stake in Net2Phone increased fromapproximately 14% to about 40.9% on March 8, 2005, when we acquiredall of Liberty Media Corporation's direct and indirect interests inNet2Phone in exchange for approximately 3.75 million shares of IDTClass B common stock. IDT's ownership stake in Net2Phone averaged26.0% during fiscal year 2005 and 40.8% during the fourth quarter offiscal year 2005. An adjustment to record the share of Net2Phone's netloss attributable to the other shareholders of Net2Phone has been madein 'minority interests' on IDT's Statement of Operations.

IDT CONFERENCE CALL INFORMATION

In connection with this release of quarterly results, IDT will behosting a conference call today, September 27, 2005, for analysts,investors and the general public, at 5:00 PM Eastern Time. To accessthe call from the U.S., dial 1-866-594-2183. For internationalcallers, the dial-in number is 1-973-935-8583. The conference ID#6522198 will speed your connection to the call. A replay of theteleconference will be available for one week after the conferencecall at 1-877-519-4471, passcode #6522198 for domestic callers, or1-973-341-3080, passcode #6522198 for international callers.

Alternatively, interested participants may access a webcast of theconference call by visiting the IDT Website, at www.idt.net. A directlink to the call will be placed on the website. Listening to thewebcast of the call will require Windows Media software. Please allowat least 15 minutes to download the necessary audio software prior tothe call. An archived copy of the call will be available at the IDTWebsite in the Investor Relations section's Presentations for at leastsix months after the call.

A copy of this press release and additional financial andstatistical information presented during the conference call will beavailable on IDT's website at www.idt.net in the "About IDT" PressReleases, and "About IDT" Investor Relations Presentations andFinancial sections.

ABOUT IDT CORPORATION

IDT Corporation is a multinational telecommunications,entertainment and technology company. IDT conducts its businessprimarily through the following operating divisions: IDT Telecomoffers retail and wholesale telecommunications services includingcalling cards, consumer local, long distance, and wireless services;IDT Entertainment operates our animation and entertainmentdistribution businesses; IDT Capital develops and operates newbusiness ventures; and Voice over IP consists primarily of Net2Phone,a global provider of VoIP PacketCable, SIP and wireless solutions.Net2Phone is a separate publicly held corporation whose common stockis traded on the NASDAQ National Market under the symbol "NTOP."

In this press release, all statements that are not purely abouthistorical facts, including, but not limited to, those with the words"believe," "anticipate," "expect," "plan," "intend," "estimate,""target" and similar expressions, are forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of1995. While these forward-looking statements represent IDT's currentjudgment of what may happen in the future, actual results may differmaterially from the results expressed or implied by these statementsdue to numerous important factors. These risks and uncertaintiesinclude, but are certainly not limited to: the sensitivity of ourtelecommunications businesses to declining prices; our reliance onsuccess in the pre-paid calling card market; our ability to obtaincost effective termination capacity worldwide; our reliance on thefinancial health of other telecommunication companies that are ourcustomers; the impact of changes to U.S. and foreign regulations;increases in competition in the consumer phone service market; ourability to integrate and manage acquisitions; our ability toeffectively develop and produce animated films; our ability to protectour proprietary rights; general economic conditions in the globaltelecommunications market; the general condition of the economy of theUnited States and internationally; and any of the other specific risksand uncertainties discussed in our reports filed with the SEC. Allforward-looking statements and risk factors included in this documentare made as of the date hereof, based on information available to theCompany as of the date thereof, and the Company assumes no obligationto update any forward-looking statements or risk factors.

Footnotes

(1) Columns in tables may not add due to rounding.
IDT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended July 31 (in
thousands, except per share
data) 2005 2004 2003
------------------------------- ----------- ----------- -----------
(Restated)

REVENUES $2,468,522 $2,216,905 $1,834,547
COSTS AND EXPENSES:
Direct cost of revenues
(exclusive of depreciation
and amortization) 1,843,088 1,679,153 1,409,465
Selling, general and
administrative 563,615 492,103 421,829
Depreciation and
amortization 111,894 99,868 89,309
Settlement of litigation -- -- (58,034)
Non-cash compensation (all
of which is attributable to
selling, general and
administrative) 31,549 9,492 32,286
Restructuring and impairment
charges 34,212 58,220 13,312
------------------------------- ----------- ----------- -----------
TOTAL COSTS AND EXPENSES 2,584,358 2,338,836 1,908,167
------------------------------- ----------- ----------- -----------
Loss from operations (115,836) (121,931) (73,620)
Interest income, net 20,307 22,315 26,095
Other income (expense):
Gain on sale of subsidiary
stock -- 9,418 22,422
Arbitration award -- 21,618 --
Equity in loss of affiliates -- -- (4,425)
Investment and other income
(expense), net 66,196 16,767 (15,327)
------------------------------- ----------- ----------- -----------
Loss before minority interests
and income taxes (29,333) (51,813) (44,855)
Minority interests (2,583) (34,317) (43,035)
(Provision for) benefit from
income taxes (11,898) 27,219 70,373
------------------------------- ----------- ----------- -----------
------------------------------- ----------- ----------- -----------
NET LOSS $ (43,814) $ (58,911) $ (17,517)
------------------------------- ----------- ----------- -----------
Earnings per share:
Net loss:
Basic $ (0.45) $ (0.67) $ (0.22)

Diluted $ (0.45) $ (0.67) $ (0.22)
Weighted-average number of
shares used in calculation of
earnings per share:
Basic 97,049 87,920 80,176
Diluted 97,049 87,920 80,176

IDT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data) Q4 2005 Q4 2004
------------------------------------------------ --------- ---------
REVENUES $623,253 $611,213
COSTS AND EXPENSES:
Direct cost of revenues (exclusive of
depreciation and amortization) 472,089 460,159
Selling, general and administrative 145,086 137,483
Depreciation and amortization 28,999 27,284

Non-cash compensation (all of which is
attributable to selling, general and
administrative) 13,447 2,117
Restructuring and impairment charges 19,220 13,137
------------------------------------------------ --------- ---------
TOTAL COSTS AND EXPENSES 678,841 640,180
------------------------------------------------ --------- ---------
Loss from operations (55,588) (28,967)
Interest income, net 4,072 5,829
Investment and other income (expense), net 51,714 1,648
------------------------------------------------ --------- ---------
Income (loss) before minority interests and
income taxes 198 (21,490)
Minority interests 546 (3,658)
(Provision for) benefit from income taxes (767) 1,836
------------------------------------------------ --------- ---------
------------------------------------------------ --------- ---------
NET LOSS $ (23) $(23,312)
------------------------------------------------ --------- ---------
Earnings per share:
Net loss:
Basic $ (0.00) $ (0.25)

Diluted $ (0.00) $ (0.25)
Weighted-average number of shares used in
calculation of earnings per share:
Basic 99,636 94,043
Diluted 99,636 94,043

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

July 31 (in thousands, except share data) 2005 2004
-------------------------------------------- ----------- -----------
ASSETS (Restated)
CURRENT ASSETS:
Cash and cash equivalents $ 171,959 $ 142,177
Marketable securities 761,045 897,130
Trade accounts receivable, net of
allowance for doubtful accounts of
$64,870 at July 31, 2005 and $57,384 at
July 31, 2004 194,707 166,357
Other current assets 135,799 94,928
-------------------------------------------- ----------- -----------
TOTAL CURRENT ASSETS 1,263,510 1,300,592
Property, plant and equipment, net 370,157 273,479
Goodwill 110,966 89,534
Licenses and other intangibles, net 32,591 32,928
Investments 50,941 66,870
Restricted cash and marketable securities 19,380 22,620
Other assets 130,045 70,125
-------------------------------------------- ----------- -----------
TOTAL ASSETS $1,977,590 $1,856,148
-------------------------------------------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 115,999 $ 122,528
Accrued expenses 231,416 213,116
Deferred revenue 144,248 140,314
Capital lease obligations -- current
portion 32,728 21,793
Other current liabilities 26,009 9,404
-------------------------------------------- ----------- -----------
TOTAL CURRENT LIABILITIES 550,400 507,155
Deferred tax liabilities, net 108,237 108,237
Capital lease obligations -- long-term
portion 42,370 31,810
Notes payable - long-term portion 121,470 9,174
Other liabilities 27,025 39,044
-------------------------------------------- ----------- -----------
TOTAL LIABILITIES 849,502 695,420
Minority interests 89,891 132,695
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
shares -- 10,000,000; no shares issued -- --
Common stock, $.01 par value; authorized
shares -- 100,000,000; 25,074,860 shares
issued at July 31, 2005 and 2004;
18,014,723 and 19,140,933 shares
outstanding at July 31, 2005 and 2004,
respectively 251 251
Class A common stock, $.01 par value;
authorized shares -- 35,000,000; 9,816,988
shares issued and outstanding at July 31,
2005 and 2004 98 98
Class B common stock, $.01 par value;
authorized shares -- 100,000,000;
75,917,516 and 68,727,201 shares issued and
73,550,857 and 67,118,911 shares
outstanding at July 31, 2005 and 2004,
respectively 759 687
Additional paid-in capital 907,223 800,618
Treasury stock, at cost, consisting of
7,060,137 and 5,933,927 shares of common
stock and 2,366,659 and 1,608,290 shares of
Class B common stock at July 31, 2005 and
2004, respectively (147,690) (122,044)
Deferred compensation (19,043) (13,795)
Accumulated other comprehensive income
(loss) (1,896) 19,909
Retained earnings 295,095 342,309
-------------------------------------------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,038,197 1,028,033
-------------------------------------------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,977,590 $1,856,148
-------------------------------------------- ----------- -----------

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended July 31 (in
thousands) 2005 2004 2003
----------------------------- ------------- ------------- ------------
(Restated)
OPERATING ACTIVITIES
Net loss $(43,814) $(58,911) $(17,517)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating
activities:
Depreciation and
amortization 111,894 99,868 89,309
Restructuring and
impairment charges 19,975 52,366 12,666
Minority interests 2,583 34,317 (43,035)
Price guarantee of Class B
common stock -- (2,680) (470)
Settlement of litigation -- 14,300 (38,929)
Gain on buyout of minority
interests by Net2Phone -- (12,182) --
Deferred tax liabilities (59) (35,305) (69,627)
Provision for doubtful
accounts and sales
returns 35,526 34,324 24,606
Net realized (gains)
losses from sales of
marketable securities and
investments (38,917) (1,906) 15,798
Equity in loss of
affiliates 1,085 -- 4,425
Write-off of investments 11,922 -- --
Non-cash compensation 31,549 9,492 32,286
Gain on sale of subsidiary
stock -- (9,418) (22,422)
Change in assets and
liabilities:
Trade accounts receivable (58,089) (69,930) (20,889)
Prepaid royalties, film
licenses and acquired
rights (12,178) (16,262) --
Film costs (35,870) (2,207) (4,809)
Other assets (42,228) 13,703 (2,614)
Trade accounts payable,
accrued expenses and
other liabilities 17,678 32,678 (17,568)
Deferred revenue (4,877) (5,494) 9,814
----------------------------- ------------- ------------- ------------
Net cash provided by (used
in) operating activities (3,820) 76,753 37,094
INVESTING ACTIVITIES
Capital expenditures (112,265) (89,334) (63,157)
Collection (Issuance) of
notes receivable (14,042) 15,234 (20,712)
Investments and acquisitions,
net of cash acquired 1,697 (91,330) (16,595)
Proceeds from sales and
maturities of marketable
securities 5,711,187 3,944,007 1,487,726
Purchases of marketable
securities (5,584,102) (3,877,070) (1,722,160)
----------------------------- ------------- ------------- ------------
Net cash provided by (used
in) investing activities 2,475 (98,493) (334,898)

FINANCING ACTIVITIES
Distributions to minority
shareholders of subsidiaries (27,865) (27,335) (21,994)
Proceeds from exercise of
stock options 3,940 53,862 24,504
Proceeds from employee stock
purchase plan 1,976 877 --
Proceeds from exercise of
stock options of Net2Phone 53 5,436 1,055
Proceeds from offering of
common stock by Net2Phone -- 53,019 --
Proceeds from borrowings 45,680 -- --
Proceeds from sale lease back
transactions on capital
leases 39,226 6,999 16,505
Repayment of capital lease
obligations (19,966) (31,442) (43,317)
Repayment of borrowings (707) -- --
Proceeds from sale of
subsidiary stock -- -- 25,000
Cash and marketable
securities restricted
against letters of credit 3,241 444 (23,064)
Repurchases of common stock
and Class B common stock (14,660) -- --
------------- ------------- ------------
Net cash provided by (used
in) financing activities 30,918 61,860 (21,311)
Effect of exchange rate
changes on cash and cash
equivalents 209 3,011 2,697
Net increase (decrease) in
cash and cash equivalents 29,782 43,131 (316,418)
Cash and cash equivalents at
beginning of year 142,177 99,046 415,464
----------------------------- ------------- ------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $171,959 $142,177 $99,046
----------------------------- ------------- ------------- ------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash payments made for
interest $4,518 $4,162 $4,583
----------------------------- ------------- ------------- ------------
Cash payments made for
income taxes $5,099 $12,566 $10,876
----------------------------- ------------- ------------- ------------
SUPPLEMENTAL SCHEDULE OF NON-
CASH INVESTING AND FINANCING
ACTIVITIES
Purchases of property,
plant and equipment
through capital lease
obligations $2,230 $1,349 $8,041
----------------------------- ------------- ------------- ------------
Issuance of Class B common
stock for acquisitions and
exchanges $59,835 $89,248 $ --
----------------------------- ------------- ------------- ------------
Issuance of Class B common
stock for purchase of
property $ -- $4,131 $ --
----------------------------- ------------- ------------- ------------
Non-cash proceeds received
from exercise of stock
options $ -- $27,500 $ --
----------------------------- ------------- ============= ============
Purchase of leasehold
interests and property
through debt $68,334 $ -- $ --
----------------------------- ------------- ============= ============
Issuance of debt for
acquisitions $3,850 $ -- $ --
----------------------------- ------------- ------------- ------------

IDT CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
THREE MONTHS ENDED JULY 31, 2005
(Segment data is shown net of effect of inter-segment transactions)
----------------------------------------------------------------------
Total IDT Retail Wholesale IDT
(In thousands) Corporation Telecom Telecom Entertainment
----------- --------------------------------
STATEMENT OF OPERATIONS
DATA

Revenues 623,253 $402,356 $143,831 $39,772

Costs and expenses:
Direct cost of revenues
(exclusive of
depreciation and
amortization) 472,089 290,266 130,574 27,322
Selling, general and
administrative 145,086 80,193 11,637 11,134
Depreciation and
amortization 28,999 15,845 5,563 3,194
Non-cash compensation
(all of which
is attributable to
selling, general and
administrative) 13,447 3,071 571 308
Restructuring and
impairment charges 19,220 33 - -
----------- --------------------------------
Total costs and expenses 678,841 389,407 148,346 41,957
----------- --------------------------------
Income (loss) from
operations (55,588) $12,949 $(4,515) $(2,185)

--------------------------------
Interest income, net 4,072
Investment and other
income, net 51,714
-----------
Income before minority
interests and income
taxes 198
Minority interests 546
Provision for income taxes (767)
-----------
Net loss $(23)
===========

-----------

------------------------------------
Voice IDT IDT
(In thousands) Over IP Capital Solutions Corporate
------------------------------------
STATEMENT OF OPERATIONS DATA

Revenues $20,331 $14,810 $2,152 $-

Costs and expenses:
Direct cost of revenues
(exclusive of depreciation and
amortization) 11,469 10,005 2,454 -
Selling, general and
administrative 14,764 5,207 3,804 18,346
Depreciation and amortization 2,369 1,463 1 564
Non-cash compensation (all of
which is attributable to
selling, general and
administrative) 1,098 822 26 7,552
Restructuring and impairment
charges 16,068 1,848 1,271 -
------------------------------------
Total costs and expenses 45,768 19,345 7,556 26,463
------------------------------------
Income (loss) from operations $(25,437)$(4,535) $(5,403)$(26,463)

------------------------------------
Interest income, net
Investment and other income, net
Income before minority interests
and income taxes
Minority interests
Provision for income taxes
Net loss

IDT CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
FISCAL YEAR ENDED JULY 31, 2005
(Segment data is shown net of effect of inter-segment transactions)

----------- ----------------------------------
Total IDT Retail Wholesale IDT
(In thousands) Corporation Telecom Telecom Entertainment
----------- ----------------------------------
STATEMENT OF OPERATIONS
DATA

Revenues 2,468,522 $1,616,628 $541,683 $187,233

Costs and expenses:
Direct cost of
revenues (exclusive
of depreciation and
amortization) 1,843,088 1,152,392 489,991 122,600
Selling, general and
administrative 563,615 325,645 46,600 43,831
Depreciation and
amortization 111,894 60,674 21,526 12,078
Non-cash compensation
(all of which is
attributable to
selling, general and
administrative) 31,549 9,934 2,074 1,221
Restructuring and
impairment charges 34,212 33 -
----------- ----------------------------------
Total costs and expenses 2,584,358 1,548,679 560,192 179,730
----------- ----------------------------------
Income (loss) from
operations (115,826) $67,949 $(18,509) $7,503

----------------------------------
Interest income, net 20,307
Investment and other
income, net 66,196
-----------
Loss before minority
interests and income
taxes (29,333)
Minority interests (2,583)
Provision for income
taxes (11,898)
-----------
Net loss ($43,814)
===========

--------------------------------------
Voice IDT IDT
(In thousands) Over IP Capital Solutions Corporate
--------------------------------------
STATEMENT OF OPERATIONS DATA

Revenues $73,623 $39,719 $9,636 $-

Costs and expenses:
Direct cost of revenues
(exclusive of depreciation
and amortization) 41,300 21,910 14,894 -
Selling, general and
administrative 54,782 24,980 16,159 51,617
Depreciation and amortization 8,717 4,137 2,607 2,155
Non-cash compensation (all of
which is attributable to
selling, general and
administrative) 4,126 1,097 167 12,929
Restructuring and impairment
charges 18,160 1,834 14,184 -
--------------------------------------
Total costs and expenses 127,086 53,959 48,011 66,701
--------------------------------------
Income (loss) from operations $(53,454) $(14,239) $(38,375)$(66,701)

--------------------------------------
Interest income, net
Investment and other income, net
Loss before minority interests
and income taxes
Minority interests
Provision for income taxes
Net loss