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IDT Reports Results for Third Quarter of Fiscal 2002.

Business Editors

NEWARK, N.J.--(BUSINESS WIRE)--June 6, 2002

IDT Corporation (NYSE: IDT.B, IDT):
- Adding radio talent, such as renowned broadcaster Mort Crim, and over 800 new
affiliate stations to Talk America. This more than doubled our number of
affiliates. Talk America revenues started from a small base. In Q3 they
increased 35% from the Q2 level, and we anticipate strong growth for the next
several years as we generate advertising from these and future additions.

- Penetrating one of the nation's top 10 broadcast markets with our first
station acquisition (subject to FCC approval), WMET in Washington, D.C. We have
moved aggressively to capitalize on the premiere position of this station,
securing the exclusive rights to broadcast the Bill O'Reilly program in the
Washington DC market.

- As announced earlier today, our Digital Productions Solutions Unit's landing
a 26-episode animation production contract for Monster by Mistake, a cartoon
popular in Canada and Europe. The contract includes an equity stake in the
venture, allowing us to benefit from video and retail distribution. Several
other contracts are in advanced stages of negotiation.


IDT Corporation (NYSE: IDT.B, IDT) today reported record revenues of $401.7 million for the third quarter of its Fiscal Year 2002, the three months ended April 30, 2002.

Revenues for the third quarter were up 7.4% from the second quarter, and increased 19.6% over the revenues recorded during the third quarter of Fiscal Year 2001. IDT Telcom recorded EBITDA of $25.6 million, its most successful quarter ever.

The net loss for the quarter was $49.6 million, or $0.64 per share. This compares with a net loss of $17.2 million, or $0.23 per share, in the second quarter of Fiscal Year 2002, and a net loss of $48.3 million, or $0.73 per share, in last year's third quarter.

Our pro-forma results exclude the following three items, accounting for a loss of $55.3 million after tax:


- Adding radio talent, such as renowned broadcaster Mort Crim, and over 800 new
affiliate stations to Talk America. This more than doubled our number of
affiliates. Talk America revenues started from a small base. In Q3 they
increased 35% from the Q2 level, and we anticipate strong growth for the next
several years as we generate advertising from these and future additions.

- Penetrating one of the nation's top 10 broadcast markets with our first
station acquisition (subject to FCC approval), WMET in Washington, D.C. We have
moved aggressively to capitalize on the premiere position of this station,
securing the exclusive rights to broadcast the Bill O'Reilly program in the
Washington DC market.

- As announced earlier today, our Digital Productions Solutions Unit's landing
a 26-episode animation production contract for Monster by Mistake, a cartoon
popular in Canada and Europe. The contract includes an equity stake in the
venture, allowing us to benefit from video and retail distribution. Several
other contracts are in advanced stages of negotiation.


Excluding these items we would have reported net income of $5.7 million, or $0.07 per share.

"This is the seventh consecutive quarter in which we have reported a balance sheet featuring over $1 billion in cash and marketable securities," said Jim Courter, Vice Chairman and CEO of IDT Corporation. "Since reporting that first billion dollar balance sheet we have increased revenues by 45%. We are pleased to be reporting record Telecom EBITDA as well this quarter. Our strategy is providing stability and value in a market whose turbulence plays to our advantage."

RESULTS OF OPERATIONS

IDT recorded a loss from operations for the third quarter of Fiscal 2002 of $42.8 million, compared to an operating loss of $27.8 million in the second quarter of Fiscal 2002, and a loss of $55.6 million in the third quarter of Fiscal 2001. Excluding the operations of the company's Winstar division, acquired during Q2, we had an operating income of $1.0 million, compared with a loss of $8.6 million in Q2 on that basis.

EBITDA (Earnings Before Interest, Taxes and Depreciation and Amortization, and excluding minority interests and impairment charges) in the third quarter of Fiscal 2002 amounted to a loss of $26.1 million, versus a loss of $12.9 million in the second quarter of 2002 and a loss of $36.8 million in Q3 2001. Excluding the company's Winstar division, acquired during Q2 2002, EBITDA was $14.8 million. EBITDA excluding the Winstar division was $5.9 million in Q2 2002.

Telecommunications

IDT's core telecommunications business reported record revenues of $364.4 million for the third quarter of Fiscal 2002, representing an increase of 4.4% from the revenues recorded in the second quarter of Fiscal 2002, and up 10.0% from the same period last year. Gross margins for the Company's core telecommunications business amounted to 24.2%, up from 21.8% in Q2 2002 (or 23.1% excluding an unusual charge related to the early termination of a bandwidth contract) and 10.4% in the prior year period. This is the highest overall gross margin reported by the Telecom division since the first quarter of Fiscal 1999. The continued improvement in Telecom gross margins reflects higher gross margins across all business lines, due to economies of scale and improved operating efficiency.

EBITDA in the quarter for the telecommunications business was $25.6 million, versus $17.0 million in the second quarter of 2002 ($21.5 million excluding the unusual charge) and a loss of $16.0 million in Q3 2001. The EBITDA margin improved from 4.9% in Q2 (or 6.2% excluding the unusual charge) to 7.0% in Q3. This was a record high in EBITDA dollars for Telecom, and the highest EBITDA margin percentage reported since Q3 of Fiscal 1999.

"During the third quarter of Fiscal 2002, we built upon our previous successes to deliver a third consecutive quarter of profits," stated Motti Lichtenstein, CEO of IDT Telecom. "However, this is just the beginning. As we head toward Fiscal 2003, we will sharpen our competitive edge, as we seek to establish IDT Telecom as a leader in the Telecom industry's post-apocalyptic era."

RETAIL

IDT's retail division posted $285.4 million in revenues for the third quarter, up 3.9% from the previous quarter, and 20.1% more than the retail revenues recorded during the same quarter last year.

Calling Cards

Calling card revenues amounted to $255.3 million for the third quarter, up 3.0% from the previous quarter, and 20.4% more than the calling card revenues of the third quarter of Fiscal 2001. The growth in calling card revenues was fueled by the introduction of several new calling cards in the U.S., as well as the continued expansion of both the scale and the scope of European calling card operations. IDT Europe's calling card operations witnessed growth in its core United Kingdom market, as well as in relatively new areas of penetration, such as Spain, Germany and the Netherlands.

Gross margins for calling cards were 24.1%, up from 21.6% in the second quarter of Fiscal 2002, and 11.6% in Fiscal 2001's third quarter. Margins, which have now improved in four consecutive quarters, continued to benefit from increased scale, network efficiency improvements and reduced termination costs to our highest-volume calling destinations. The gross margin performance for calling cards during the third quarter was the highest since the first quarter of Fiscal 1999.

Looking ahead, we anticipate additional growth in both the U.S. and Europe, with European growth to be driven by increased penetration of our newer prepaid calling card markets, including Germany and Spain. We also anticipate the full launch of calling card operations in France and Belgium during the fourth quarter. Growth in the U.S. will be fueled by the introduction of new cards, featuring attractive rates to popular calling destinations, in an attempt to capture market share from weakened competitors. Over the next few quarters, we also expect to significantly ramp-up our early-stage South America prepaid calling card operations.

We expect that margins will remain at or near their current levels, with some margin slippage possible as a result of aggressive pricing on both new cards as well as on some existing cards. We expect that this factor will be partially offset by continued efficiency gains and an improved cost structure.

Consumer Long Distance

Consumer long distance revenues for the quarter were up 12.7% from the previous quarter, and more than doubled from the levels recorded during the same quarter in Fiscal 2001, due to the continued aggressive growth of our $0.05 per minute long distance plan. We currently have approximately 475,000 active long distance customers. Gross margins for the consumer long distance business were 55.8%, up from 54.7% in the second quarter of Fiscal 2002, as we continue to benefit from increased scale.

We anticipate that the consumer long distance business will continue on its growth track into Fiscal 2003. We anticipate an increase in our marketing expenditures, with an eye towards maintaining our cost-per-added-customer at or near current levels. In addition, by spending a relatively fixed percentage of revenues on advertising, we will effectively "re-invest" a portion of our profits into the business, allowing for an increase in advertising dollars. This will allow IDT to continue to take market share from its competitors. Consumer long distance revenues are expected to grow at a double-digit rate in each of the next two quarters, and we anticipate that the current margin levels will be maintained.

WHOLESALE

IDT's wholesale carrier business reported revenues of $79.0 million, an increase of 6.2% from the second quarter of Fiscal 2002, and 15.8% lower than those recorded during the third quarter of Fiscal 2001. Wholesale carrier revenues have now increased for two consecutive quarters, after five consecutive quarters of declines.

Gross profit margins climbed to 12.8%, up from the second quarter's 10.6% and the year-ago period's 4.4%. Gross margins, which have now increased in each of the past six quarters, benefited from improved operating efficiencies. The third quarter's gross margin performance was the highest for the wholesale carrier business since Q3 2000.

With the right-sizing of our wholesale customer base now largely complete, we expect to experience further revenue growth in this division during the fourth quarter of Fiscal 2002 and through Fiscal 2003. However, revenue growth will be tempered somewhat by our strict credit policies, which have led us to curtail or cease entirely our sales to financially unstable carriers. Therefore, we expect that revenue gains will be driven primarily by increased sales to Tier 1 telecom carriers, both in the U.S. and in Europe. We anticipate that gross margins will remain stable at the current significantly improved levels.

Winstar Division

The Winstar Division recorded an operating loss of $43.9 million on revenues of $33.1 million in the third quarter. This compares to a $19.1 million operating loss on revenues of $19.2 million in the second quarter of Fiscal 2002. IDT Corporation acquired its Winstar Division in December 2001, mid way through fiscal Q2. The increase in Winstar's operating loss in Q3 was primarily due to operating the division for the whole quarter.

We remain excited about Winstar's potential. In March, we announced the Winstar turnaround plan which, as of May, was beginning to yield the expected results. In April we purchased the five percent (5.0%) block of units of Winstar Holdings, LLC we did not already own from WCI Capital Corp. in exchange for 792,079 shares of IDT Class B Common Stock. We announced in early May that Winstar had reduced its cash burn rate from about $16 million per month to under $10 million.

By the end of the fourth quarter, due to steps we have identified and only partly implemented to date, we anticipate a cash burn rate of about $5 million a month. The next phase of our strategic plan, which has recently gained the lion's share of Winstar management's time and attention, is revenue growth. We already have several initiatives well under way:


- Adding radio talent, such as renowned broadcaster Mort Crim, and over 800 new
affiliate stations to Talk America. This more than doubled our number of
affiliates. Talk America revenues started from a small base. In Q3 they
increased 35% from the Q2 level, and we anticipate strong growth for the next
several years as we generate advertising from these and future additions.

- Penetrating one of the nation's top 10 broadcast markets with our first
station acquisition (subject to FCC approval), WMET in Washington, D.C. We have
moved aggressively to capitalize on the premiere position of this station,
securing the exclusive rights to broadcast the Bill O'Reilly program in the
Washington DC market.

- As announced earlier today, our Digital Productions Solutions Unit's landing
a 26-episode animation production contract for Monster by Mistake, a cartoon
popular in Canada and Europe. The contract includes an equity stake in the
venture, allowing us to benefit from video and retail distribution. Several
other contracts are in advanced stages of negotiation.


"Now that we've rationalized our business and created an infrastructure to build upon," said Brian Finkelstein, CEO of Winstar, "the focus has to shift from an emphasis on cost reduction to an emphasis on revenue growth. Our plan calls for solid profitability by mid to late 2003."

IDT Media

IDT Media recorded an operating loss of $5 million on revenues of $4.2 million in the third quarter. This compares to a $5.7 million operating loss on revenues of $5.7 million in the second quarter of Fiscal 2002.

The most prominent Q3 achievements of IDT Media's businesses were:


- Adding radio talent, such as renowned broadcaster Mort Crim, and over 800 new
affiliate stations to Talk America. This more than doubled our number of
affiliates. Talk America revenues started from a small base. In Q3 they
increased 35% from the Q2 level, and we anticipate strong growth for the next
several years as we generate advertising from these and future additions.

- Penetrating one of the nation's top 10 broadcast markets with our first
station acquisition (subject to FCC approval), WMET in Washington, D.C. We have
moved aggressively to capitalize on the premiere position of this station,
securing the exclusive rights to broadcast the Bill O'Reilly program in the
Washington DC market.

- As announced earlier today, our Digital Productions Solutions Unit's landing
a 26-episode animation production contract for Monster by Mistake, a cartoon
popular in Canada and Europe. The contract includes an equity stake in the
venture, allowing us to benefit from video and retail distribution. Several
other contracts are in advanced stages of negotiation.


"We're all delighted with the pace of IDT Media's development," said IDT Media CEO Mitch Burg. "We're putting the building blocks in place for a broad portfolio of stable, profitable businesses. We expect to have many significant developments to report in the near future."

GUIDANCE ON FUTURE OPERATIONS

Looking to the remainder of Fiscal 2002, we anticipate that Telecom revenues will increase again in the fourth quarter, to approximately $375 million - $385 million, with gains seen in all major lines of business. We anticipate sustaining gross margins at their current, significantly improved levels for our major Telecom lines of business, and we expect that Telecom EBITDA for the fourth quarter will be higher than that of the current quarter, in the $26 million - $28 million range.

For our Winstar division, we expect the monthly cash burn to be reduced to about $5 million by July 2002. Within our Media division, we anticipate increasing revenues, and hope to achieve profitability within three quarters.

CONFERENCE CALL INFORMATION

In connection with this release of quarterly and annual results, the Company will be hosting a conference call today for analysts, investors and the general public, at 4:30 PM EST.

To access the call from the U.S., dial 1-800-775-2298. For international callers, the dial-in number is 1-706-679-3357. No passcode is required. A replay of the teleconference will be available for one week after the conference call at 1-800-642-1687, passcode #4347834 for domestic callers, or 1-706-645-9291, passcode #4347834 for international callers.

Alternatively, interested participants may access a webcast of the conference call by visiting the IDT Corp. website, at HYPERLINK "http://www.idt.net/". A direct link to the call will be found on the website. Listening to the webcast of the call will require Real Audio 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 Audio Archives.

IDT CORPORATION

IDT, through its IDT Telecom subsidiary, is a leading facilities-based, multinational carrier that provides a broad range of telecommunications services to its retail and wholesale customers worldwide. Through its own national telecommunications backbone and fiber optic network infrastructure, IDT Telecom provides its customers with integrated and competitively priced international and domestic long distance telephony and prepaid calling cards. IDT Media is the IDT subsidiary principally responsible for the Company's initiatives in media, new video technologies and print media. Through its various subsidiaries, IDT has interests in several telecom, Internet-related and media companies. IDT recently acquired Winstar Communications, which operates a fixed wireless voice and data business in 22 U.S. cities. IDT Corporation common shares trade on the New York Stock Exchange under the ticker symbols IDT.B and IDT. As of April 30, 2002, there were 52.8 million shares of Class B common stock (IDT.B) outstanding, and 24.8 million shares of common stock (IDT). Of these, 4.0 million shares of Class B common stock and 5.4 million shares of common stock were held by units of IDT Corporation.

This press release 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. Such forward-looking statements include, among other things, our plans to implement our growth strategy, improve our financial performance, expand our infrastructure, develop new products and services, expand our sales force, expand our customer base and enter international markets, and the possible outcome of our litigation. Such forward-looking statements also include our expectations concerning factors affecting the markets for our products, such as changes in the U.S. and the international regulatory environment and the demand for long-distance telecommunications. 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 statements. These risks and uncertainties include, but are not limited to, those risks discussed in this report. In addition to the factors specifically noted in the forward-looking statements, other important factors that could result in those differences include (a) general economic conditions in the telecommunications and Internet markets, including inflation, recession, interest rates, and other economic factors; (b) casualty to or other disruption of our facilities and operations; (c) those discussed in our Annual Report on Form 10K for the year ended July 31, 2001; and (d) other factors that generally affect the business of telecommunications, Internet and other communications companies. 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 herein and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the year ended July 31, 2001 and Quarterly Report on Form 10-Q for the six months ended January 31, 2002.

IDT CORPORATION
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

 NINE MONTHS ENDED THREE MONTHS ENDED
 APRIL 30, APRIL 30,
 2002 2001 2002 2001
 ---- ---- ---- ----
 (in thousands, except (in thousands, except
 per share data) per share data)

STATEMENT OF OPERATIONS DATA:
Revenues $1,114,887 $ 899,916 $ 401,653 $ 335,722

Costs and expenses:
 Direct cost of
 revenues 879,607 789,058 319,002 298,286
 Selling, general and
 administrative 268,827 226,908 108,735 74,238
 Depreciation and
 amortization 46,840 42,890 16,745 13,613
 Impairment charges 2,781 5,156 - 5,156
 ---------- ---------- ---------- ----------
Total costs and
 expenses 1,198,055 1,064,012 444,482 391,293
 ---------- ---------- ---------- ----------
Income (Loss) from
 operations (83,168) (164,096) (42,829) (55,571)

Interest income
 (expense) 15,496 42,492 3,947 12,901
Gain on sale of
 subsidiary stock - 1,037,726 - -
Other income (expense) (50,109) 110,402 (27,628) (42,899)
Income (loss) before
 income taxes, minority
 interest and cumulative
 effect of accounting
 change (117,781) 1,026,524 (66,510) (85,569)

Provision for (benefit
 from) income taxes (55,173) 316,094 (21,233) (39,953)
Minority interest
 expense 15,529 6,243 4,316 2,661
 ---------- ---------- ---------- ----------
Income (loss) before
 cumulative effect of
 accounting change (78,137) 704,187 (49,593) (48,277)
Cumulative effect of
 accounting change,
 net of income taxes (146,983) - - -
 ---------- ---------- ---------- ----------
Net income (loss) ($225,120) $ 704,187 ($49,593) ($48,277)
 ========== ========== ========== ==========
EBITDA ($33,547) ($116,050) ($26,084) ($36,802)

Net income (loss)
 before cumulative
 effect of accounting
 change:
 Basic ($1.06) $10.43 ($0.64) ($0.73)
 Diluted ($1.06) $9.46 ($0.64) ($0.73)

Cumulative effect of
 accounting change,
 net of income taxes:
 Basic ($2.00) - - -
 Diluted ($2.00) - - -

Net income (loss):
 Basic ($3.06) $10.43 ($0.64) ($0.73)
 Diluted ($3.06) $9.46 ($0.64) ($0.73)

Weighted-average number
 of shares used in
 calculation of net
 income (loss) per
 share:
 Basic 73,592 67,517 76,938 66,471
 Diluted 73,592 74,444 76,938 66,471
 ---------- ---------- ---------- ----------

 THREE MONTHS ENDED
 APRIL 30,
 2002 Pro-forma (*)
 ----------------------
 (in thousands, except
 per share data)

STATEMENT OF OPERATIONS
Revenues $ 368,558

Costs and expenses:
 Direct cost of
 revenues 276,861
 Selling, general and
 administrative 76,849
 Depreciation and
 amortization 13,814
 Impairment charges -
 ----------
Total costs and
 expenses 367,524
 ----------
Income (Loss) from
 operations 1,034

Interest income
 (expense) 3,621
Gain on sale of
 subsidiary stock -
Other income (expense) 1,526
 ----------
Income (loss) before
 income taxes, minority
 interest and cumulative
 effect of accounting
 change 6,181

Provision for (benefit
 from) income taxes (3,818)
Minority interest
 expense 4,316
 ----------
Income (loss) before
 cumulative effect of
 accounting change 5,683
Cumulative effect of
 accounting change,
 net of income taxes -
 ----------
Net income (loss) $ 5,683
 ==========

EBITDA $ 14,848

Net income (loss)
 before cumulative
 effect of accounting
 change:
 Basic $0.07
 Diluted $0.07

Cumulative effect of
 accounting change,
 net of income taxes:
 Basic -
 Diluted -

Net income (loss) :
 Basic $0.07
 Diluted $0.07

Weighted-average number
 of shares used in
 calculation of net
 income (loss) per
 share:
 Basic 76,938
 Diluted 84,077


BALANCE SHEET DATA:
 April 30, 2002 January 31, 2002
 ------------- ----------------
Cash, cash equivalents
 and marketable
 securities $1,021,533 $1,054,719
Property, plant and
 equipment (net) 262,488 257,326
Total assets 1,725,109 1,765,048
Total stockholders'
 equity 928,392 940,542

 (*) Pro-forma results exclude the following three items:

 1) The results of our newly-acquired Winstar business.

 2) A loss of $31.4 million attributable to IDT's noncash
 share of losses at Net2Phone and its subsidiaries.

 3) A gain of $2.2 million relating to the formation of an
 LLC with AT&T Corp. and Liberty Media Corp. to
 purchase a controlling interest in Net2Phone, Inc.
COPYRIGHT 2002 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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