NEWARK, N.J. - October 14, 2004 - IDT Corporation (NYSE: IDT, IDT.C) today reported record annual revenues of $2.217 billion for fiscal 2004, up 20.8% from fiscal 2003's $1.835 billion of revenues, and record quarterly revenues of $611.2 million for the fourth quarter of its fiscal 2004, the three months ended July 31, 2004. Fourth quarter revenues increased 8.1% over the prior quarter's $565.7 million and 25.8% versus the fourth quarter of fiscal 2003's revenues of $485.7 million.

Fourth quarter of fiscal 2004's net loss was $23.3 million, or ($0.25) per share, as compared to a net loss of $76.8 million, or ($0.84) per share, in the third quarter of fiscal 2004 and to net income of $8.3 million, or $0.10 per diluted share, in the fourth quarter of fiscal 2003. For fiscal 2004, IDT recorded a net loss of $95.7 million, or ($1.09) per share, compared with a net loss of $17.5 million, or ($0.22) per share, in fiscal 2003.

Cash, cash equivalents and marketable securities stood at $1.062 billion, including $132.8 million held by Net2Phone, as of the close of fiscal 2004.

Loss from operations for the fourth quarter was $29.0 million, compared to losses from operations of $58.4 million and $29.4 million for the third quarter of fiscal 2004 and the fourth quarter of fiscal 2003, respectively.

"Records are meant to be broken," said Jim Courter, CEO. "And I am happy to report that IDT Telecom earned record operating profits in fiscal 2004. Our performance stands in marked contrast to that of many of our larger telecommunications competitors. Our second largest business, IDT Entertainment, is also destined for records, we think, and I look forward to reporting its exciting developments in the future."

IDT Telecom generated record revenues and operating profits in fiscal 2004. For the year, IDT Telecom revenues increased 18.3%, to $1.938 billion, compared to fiscal 2003's revenues of $1.639 billion, while annual operating profits rose by 23.8%, to $78.4 million, from $63.4 million in fiscal 2003. The fourth quarter was the twelfth consecutive quarter during which IDT Telecom produced sequential revenue growth and positive operating income. Revenues for the fourth quarter of fiscal 2004 increased 24.1% year-over-year and 12.2% sequentially. Management anticipates continued double-digit percentage revenue growth for IDT Telecom in fiscal 2005.

IDT Telecom income from operations in the fourth quarter was $16.7 million, a 16.8% year-over-year decline and an 8.0% drop from the third quarter of fiscal 2004. However, gross margins were 23.4%, a 100 basis point improvement over last year's fourth quarter, and 20 basis points lower than the prior quarter. The sequential decrease in operating earnings is due primarily to higher selling, general and administrative (SG&A) expenses, mostly resulting from increased advertising expenditures related to our consumer phone services businesses in the United States and the United Kingdom, and increased headcount, resulting primarily from ongoing geographic expansion. Employees located outside the United States continued to account for an increasing proportion of IDT Telecom's overall workforce during fiscal 2004, with nearly 40% of employees now based outside the United States, reflecting the increasingly global nature of our business. We anticipate that quarterly SG&A expenses will remain near the fourth quarter fiscal 2004 levels throughout fiscal 2005, as we continue to invest marketing dollars into our consumer phone services businesses.

IDT Telecom minutes of use for the fourth quarter of fiscal 2004 increased 31.4% year-over-year to 5.849 billion minutes from 4.450 billion minutes, and increased 18.1% from fiscal third quarter 2004's 4.952 billion minutes, with most of the gain attributable to growth within our U.S. calling card business. The company recorded its first ever two-billion-minute month in July 2004. For fiscal 2004, minutes of use increased 24.3% to 20.456 billion minutes from 16.460 billion minutes. Retail minutes of use rose for fiscal 2004 by 24.0%, to 15.627 billion, while wholesale minutes of use advanced 25.3%, to 4.829 billion.

Retail Telecom revenues for the fourth quarter increased 29.3% year-over-year to $411.7 million, and 19.9% from the third quarter of fiscal 2004. Income from operations for the fourth quarter was $21.6 million, a 13.2% decline year-over-year and a 4.5% decline from the third quarter.

?Calling card revenues were $333.2 million in the fourth quarter of fiscal 2004, a 19.9% increase as compared with the $277.9 million of revenue recorded in the third quarter and an 18.9% increase from the $280.2 million of revenue generated in the fourth quarter of fiscal 2003. The revenue increase was driven primarily by strong gains in the United States, where several new, aggressively priced cards, which were launched during the third quarter, sold well during the fourth quarter. This also resulted in a narrowing of calling card gross margins, which declined 30 basis points to 22.4% from their year-ago level of 22.7%, and 80 basis points from their third quarter level of 23.2%. However, due to the higher revenues, calling card gross profits increased to $74.7 million, reflecting 15.7% and 17.5% increases, respectively, from the preceding and year-ago quarters. In fiscal 2005, we anticipate that calling card revenues will remain stable at or near the current levels, with some sequential gross margin improvement over the next two quarters. For the full fiscal 2005, we expect some additional revenue growth in calling cards as compared to full fiscal 2004, mostly from our operations in Europe, South America and Asia. We project gross margins of 22.0% to 23.0% for the full fiscal 2005 in our calling card business.

?Consumer phone services generated revenues of $78.5 million in the fourth quarter of fiscal 2004, up 20.0% from the $65.4 million in the third quarter of fiscal 2004 and more than double the $38.1 million of revenues recorded in the year-ago period. 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, grew to approximately 280,000 by the end of fiscal 2004. The service is now offered in 13 states. In addition, we had approximately 407,000 long distance-only customers at the end of the fiscal year. Consumer phone services recorded gross margins for the fourth quarter of 49.3%, compared to margins of 51.8% in the third quarter, and 55.3% in last year?s fourth quarter. The decline in gross margins reflects the continued shift in customer mix toward lower-gross margin bundled local and long distance customers. However, these customers are generally more profitable, in absolute gross profit dollar terms, as they generate higher average revenue than long distance-only customers. We expect this shift in customer mix to continue for the foreseeable future.

Retail Telecom gross margins for the fourth quarter of fiscal 2004 declined 110 basis points sequentially to 27.6% and improved 100 basis points from last year's fiscal fourth quarter's 26.6%. Fiscal 2004 gross margins for Retail Telecom increased to 27.5%, a 100 basis point increase from last year's 26.5% gross margins. The improvement in gross margins was partly due to higher calling card gross margins for the full fiscal year, when compared to fiscal 2003, reflecting the strong gross margins witnessed during the fiscal second quarter. Additionally, the increased percentage of consumer phone services in the overall Retail Telecom product mix contributed to the margin improvement year-over-year. The sequential quarterly decline was due to the decline in margins in both calling cards and consumer phone services, as a result of the significant fourth quarter calling card revenue growth and continued shift in consumer phone services customer mix described above. Because of the strong growth in calling card revenues in the fourth quarter, the revenue mix within Retail Telecom remained unchanged from the third quarter, with calling cards accounting for 80.9% of total Retail Telecom revenues in both periods.

Retail Telecom SG&A quarterly expenses increased 25.2% sequentially and 57.5% year-over-year, largely due to advertising expenses for the America Unlimited calling plan as well as consumer phone service in the United Kingdom, which is being marketed under the "Toucan" brand, and had over 40,000 active customers as of July 31, 2004.

Fiscal 2004 saw IDT Wholesale Telecom produce its best financial results since fiscal 2000 by generating $524.5 million in revenues, a 29.3% increase from fiscal 2003?s revenues of $405.5 million, and posting a loss from operations of $17.6 million, a 36.3% decrease from fiscal 2003?s loss from operations of $27.6 million. Revenue growth (in dollar terms) in fiscal 2004 was nearly evenly divided between U.S. and internationally originated wholesale business. Domestic and international revenue growth was driven by increased business with established Tier 1 customers and an increase in the number of customers. Wholesale Telecom will continue to focus on servicing these Tier 1 customers in fiscal 2005, during which we expect nearly all of Wholesale Telecom revenue growth to be generated by our international operations.

During the fourth quarter of fiscal 2004, Wholesale Telecom achieved revenues of $128.9 million, 9.9% higher than the year-ago quarter's $117.3 million, and a 6.9% decline from the record $138.5 million of revenues generated in the third quarter of fiscal 2004. With the volume of minutes remaining virtually unchanged from the third quarter, the sequential quarterly revenue decline was largely attributable to lower per-minute price realizations, owing to both a shift in destination mix toward lower-revenue destinations, as well as intensified levels of price competition to some locations.

Wholesale Telecom gross margins were 10.3% in the fourth quarter, down from 11.0% in the third quarter, and 10.9% in last year's fourth quarter. The reduction in margins was the result of the decline in per-minute price realizations. For fiscal 2005, we expect some sequential improvement in gross margins, with full fiscal year gross margins anticipated to be 10.5% to 11.0%, consistent with the gross margin performance of the past two fiscal years.

IDT Telecom's international operations continue to account for a growing portion of overall revenues, with non-U.S. revenues representing 22.9% of total revenues in fiscal 2004, up from 19.4% in fiscal 2003. During the fourth quarter, revenues from international operations accounted for 22.6% of total IDT Telecom revenues, compared to 24.7% in the third quarter and 21.4% in the fourth quarter of fiscal 2003. The sequential decline in international revenues as a percentage of overall IDT Telecom revenues was due largely to the strong growth in the U.S.-based calling card business, which accounted for the bulk of the gain in IDT Telecom's overall revenues during the fourth quarter.

IDT Telecom experienced growth in all of its major international divisions, including Western Europe, Russia, Latin America and Asia-Pacific, and expects that international revenues will continue to account for a growing proportion of overall IDT Telecom revenues in fiscal 2005. IDT Telecom recently completed the build-out of its Asia-Pacific gateway switching facility in Hong Kong, giving us the network infrastructure necessary to pursue our expansion plans in the region, which involve both wholesale carrier and retail calling card operations in several countries. We anticipate that our Asia-Pacific operations will be a key revenue driver of growth in fiscal 2005 and beyond. We currently market our calling cards in Hong Kong and Singapore, with retail expansion into China, Japan and Taiwan expected during fiscal 2005. We are also currently interconnected with 40 carriers in the region, allowing us to provide wholesale carrier services for traffic terminating both within and outside of Asia.

IDT Entertainment's revenues were $106.7 million in fiscal 2004, compared with $5.0 million in fiscal 2003. Most of the increase in revenues was a direct result of several acquisitions, particularly the December 2003 acquisition of Anchor Bay Entertainment and the fourth quarter of fiscal 2003 acquisition of Film Roman. In fiscal 2004, loss from operations was $0.6 million, compared to a loss from operations of $2.4 million in fiscal 2003. The improvement in operating performance was primarily due to the operating profits generated by Anchor Bay and Film Roman during fiscal 2004.

IDT Entertainment revenues were $30.7 million for the fourth quarter of fiscal 2004, compared to $40.7 million in the third quarter and $4.4 million in the fourth quarter of fiscal 2003. The 24.6% fourth quarter versus third quarter revenue decline was primarily due to seasonal factors in our video distribution business. Generally, our fiscal first and third quarters are the strongest for our video distribution business due to holiday and other seasonal factors. Our fiscal first quarter, August 1 through October 31, has traditionally generated significant revenues for Anchor Bay Entertainment on the strength of its horror film catalogue during the Halloween holiday and an additional impact from the load-in for the December holiday season. Our fiscal third quarter, February 1 through April 30, has also benefited from the important Passover/Easter holiday season, and is typically a time when more new video and DVD releases are brought to market. In addition, the revenue decline in our fiscal fourth quarter was exacerbated by the anticipated temporary operational disruptions in our video distribution business caused by the transfer of certain of our fulfillment and logistical functions to a new strategic outside provider, Fox Home Entertainment. These functions had previously been performed through a combination of in-house and external resources. The shift in providers was concluded during the first quarter of fiscal 2005.

IDT Entertainment's loss from operations was $1.2 million in the fourth quarter of fiscal 2004, compared to income from operations of $2.4 million in the third quarter of fiscal 2004 and an operating loss of $0.6 million in the year-ago period. Gross margins in the fourth quarter improved 290 basis points to 37.7%, compared to the prior quarter's 34.8%. The improvement was largely due to a lower in royalty expenses resulting from changes in the mix of video and DVD titles sold by Anchor Bay during the quarter. During the fourth quarter, SG&A expenses were essentially flat in dollar terms compared to the third quarter, but increased from 20.4% as a percentage of revenues in the third quarter to 27.2% because of the lower fourth quarter revenue base.

IDT Entertainment's strategy for growth is twofold: production of proprietary CG animated films to be released theatrically, and continued investment in film properties including original productions and new video licenses for retail distribution.

Although IDT Entertainment expects to derive significant benefits from equity stakes in some of its productions, revenues in the near term will be primarily generated by its licensing and video distribution businesses, which market such sought-after titles as Highlander, Thomas the Tank Engine, Xena, and Ghost in the Shell and by production service contract work including the Emmy award winning shows The Simpsons and King of the Hill and other well-known properties like Barbie and Inspector Gadget.

In May 2004, IDT Entertainment acquired Manga Entertainment, which distributes "anime" programming from its extensive library of licensed titles, including the award-winning Ghost in the Shell property. Anime is one of the fastest growing genres in the rapidly-expanding home video marketplace and Manga Entertainment is one of the largest distributors of such product in the United States and Europe. Manga Entertainment works closely with Anchor Bay, utilizing its infrastructure and achieving economies of scale. Manga is able to take advantage of Anchor Bay?s logistical distribution agreement with Fox Home Entertainment, making Manga?s properties available to a much broader base of customers through the mass market and other retailers to whom Anchor Bay distributes, such as Wal-Mart, Target and Blockbuster Video.

During the fourth quarter of fiscal 2004, IDT Entertainment also announced several exciting new investments and joint ventures, including partnerships with Stan Lee and Todd McFarlane that now give IDT Entertainment significant rights and content development opportunities. In addition, IDT Entertainment is currently working on several new fee-for-service production contracts, which continue to be an important part of our animation business. Projects include a Weebles animated movie for Hasbro, an Inspector Gadget direct-to-video feature for DIC Entertainment, the Veggie Tales series for Classic Media, and Shoe Box Zoo TV series for Shoe Box Productions that airs on the BBC in the United Kingdom and on CBC in Canada.

IDT Entertainment has also formed New Arc Entertainment, a film production company producing live action and animated movies in the supernatural/thriller/action genre. New Arc plans to produce nineteen live action features, four animated films and one animated series within its first fifteen months. New Arc's current film slate, with the first being The Fallen Ones starring Robert Wagner and Casper Van Dien, will be distributed direct-to-DVD through IDT Entertainment's Anchor Bay subsidiary.

We expect that fiscal 2005 will continue to show significant revenue growth. Revenues for fiscal 2005 will likely approach $200 million, as many of IDT Entertainment?s acquisitions will be consolidated for a full fiscal year for the first time. Since the first proprietary property of IDT Entertainment is not scheduled for theatrical release until 2006, operating results for fiscal 2005 will largely be derived from our licensing and distribution businesses, which are anticipated to contribute about 70% of IDT Entertainment's revenues, and from our production services businesses. We also plan to invest $75 to $85 in fiscal 2005 million in our proprietary film productions and new video licenses. We intend to finance the majority of these investments with bank facilities that will be non-recourse to IDT Corporation.

In fiscal 2006, IDT Entertainment expects to bring several productions based on its own content to market, including the theatrical release of IDT Entertainment's first internally developed CG animated feature film Yankee Irving, the last feature film directed by Christopher Reeve prior to his untimely death. Beginning in fiscal 2007 and beyond, we intend to theatrically release two to three CG animated films per year.

As previously announced in May, we are restructuring our IDT Solutions division and we no longer market retail switched communications services to commercial customers using the assets we bought from Winstar. As of September 30th, substantially all of IDT Solutions? commercial customers, representing approximately 95% of total IDT Solutions revenues, have found replacement services and are no longer on the Winstar network. IDT Solutions currently provides service only to select governmental customers in 14 markets.

IDT Solutions revenues were $13.7 million in the fourth quarter of fiscal 2004, compared to revenues of $17.2 million in the third quarter and revenues of $21.6 million in the fourth quarter of fiscal 2003. Operating losses in the fourth quarter of fiscal 2004 were $21.6 million (including an $8.7 million restructuring and impairment charge), versus $55.4 million in the third quarter (which included a $28.1 million restructuring and impairment charge) and $21.3 million in the year-ago period. For fiscal 2004, IDT Solutions recorded revenues of $71.6 million, down 18.2% from the $87.6 million reported in fiscal 2003. Operating losses were $112.5 million in fiscal 2004, compared to an operating losses of $88.8 million in fiscal 2003.

We estimate that total IDT Solutions' net loss in fiscal 2005 and beyond, as a result of the ongoing restructuring and business service discontinuation activities, will be approximately $25 - $30 million. We also estimate that total net cash outlays in fiscal 2005 and beyond to fund the operating losses and to satisfy all remaining liabilities and contractual obligations of IDT Solutions will be approximately $45 - $50 million.

IDT's Voice over IP business segment reflects mostly the operations of Net2Phone, which is a separate publicly held corporation whose common stock is quoted on the NASDAQ National Market under the symbol "NTOP." Net2Phone is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. Net2Phone issued a press release with respect to its results for the fourth quarter and fiscal 2004 ended July 31, 2004, on October 13, 2004. Set forth below is a brief description of Net2Phone's results as they are consolidated into IDT's results. Primarily because of the elimination of intercompany transactions in IDT's consolidated results, Net2Phone's independently reported results of operations differ from those reported in IDT's consolidation. For further information with respect to Net2Phone, please refer to the above-referenced press release and other Net2Phone press releases, Net2Phone's Annual Report on Form 10-K, and prior and subsequent reports and other information filed by Net2Phone from time to time with the Securities and Exchange Commission. None of such releases, reports or information is incorporated into this release and such releases, reports and information do not form a part of this release.

Voice over IP loss from operations was $6.5 million on revenues of $19.7 million in the fourth quarter of fiscal 2004, compared to a loss from operations of $16.0 million on revenues of $17.4 million in the fourth quarter of fiscal 2003 and income from operations of $0.9 million on revenues of $20.8 million recorded in the third quarter of fiscal 2004. Key developments were:

- Surpassing the 7,000 subscriber mark, achieving a 2% penetration of Liberty Cablevision's homes passed in Puerto Rico, less than five months after franchise-wide launch;

- Selection by the NCTC, a consortium of more than 1,000 domestic cable operators, as platinum vendor of cable telephony; and

IDT's net loss for the fourth quarter of fiscal 2004 includes only its approximately 17.6% percent ownership stake in Net2Phone during the quarter. An adjustment to record the share of Net2Phone's net loss attributable to the other shareholders of Net2Phone has been made in 'minority interests.'

IDT CONFERENCE CALL INFORMATION

In connection with this release of quarterly results, IDT will be hosting a conference call today, October 14, 2004, for analysts, investors and the general public, at 8:00 AM Eastern Time.

To access the call from the U.S., dial 1-866-594-2183. For international callers, the dial-in number is 1-973-935-8583. No passcode is required. A replay of the teleconference will be available for one week after the conference call at 1-877-519-4471, passcode #5260630 for domestic callers, or 1-973-341-3080, passcode #5260630 for international callers.

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

A copy of this press release and additional financial and statistical information presented during the conference call (including a reconciliation of non-GAAP financial measures that may be discussed during the conference to the most comparable GAAP measure) will be available on IDT's website at www.idt.net in the Investor Relations section's News Library, Presentations and Financial sections.