IDT (IDT)

Investing Activities

In the six months ended January 31, 2009 and 2008, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $99.3 million and $243.9 million, respectively.

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Our capital expenditures were $5.7 million in the six months ended January 31, 2009 compared to $12.6 million in the six months ended January 31, 2008. We currently anticipate that total capital expenditures for all of our divisions for the year ending January 31, 2010 will be in the $7.5 million to $12.5 million range. We continue to streamline our global network through the migration from dedicated capacity time-division multiplexing (TDM) circuits to burstable Internet protocol circuits, which utilize connectivity capacity more efficiently and results in lower overall cost. Our U.S. network migration towards Internet protocol is expected to be mostly completed by the end of fiscal 2009, and our European network migration is expected to be completed by the end of calendar 2009. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we may also finance a portion of our capital expenditures through capital leases.

In the six months ended January 31, 2009 and 2008, cash used for investments and acquisitions was $1.0 million and $17.9 million, respectively. The fiscal 2009 amount was used for a short-term certificate of deposit. The fiscal 2008 amount included cash used for our investment in AMSO LLC of $3.5 million and additional investments in pooled investment vehicles including hedge funds of $14.1 million. We received $24.3 million in the six months ended January 31, 2009 from the redemption of certain of our investments in pooled investment vehicles. We sold one of our investments in the six months ended January 31, 2008 for $3.4 million and recorded a gain of $1.7 million from the sale.

Restricted cash and cash equivalents increased $49.2 million in the six months ended January 31, 2009 and decreased $0.8 million in the six months ended January 31, 2008. Restricted cash and cash equivalents serve as collateral for letters of credit for IDT Energy’s purchases of natural gas and electric capacity, energy and ancillary services, as well as to secure mortgage repayments on various buildings.

We sold a building in Newark, New Jersey in the six months ended January 31, 2008 and received cash of $4.9 million from the sale. We recorded a $4.1 million gain on the sale of the building in the six months ended January 31, 2008.

Investing Activities

In the three months ended October 31, 2008 and 2007, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $32.4 million and $126.0 million, respectively.

Our capital expenditures were $2.9 million in the three months ended October 31, 2008 compared to $9.2 million in the three months ended October 31, 2007. We currently anticipate that total capital expenditures for all of our divisions in fiscal 2009 will be in the $10 million to $15 million range. Our near-term focus has been on streamlining our global network through the migration from dedicated capacity time-division multiplexing (TDM) circuits to burstable Internet protocol circuits, which utilize connectivity capacity more efficiently and results in lower overall cost. Our U.S. network migration towards Internet protocol is expected to be mostly completed by the end of fiscal 2009, and our European network migration is expected to be completed by the end of calendar 2009. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we may also finance a portion of our capital expenditures through capital leases.

In the three months ended October 31, 2007, cash used for investments and acquisitions was $11.9 million, which included cash used for additional investments in pooled investment vehicles including hedge funds of $11.0 million. There were no additional investments or acquisitions in the three months ended October 31, 2008. We received $5.0 million in the three months ended October 31, 2008 from the redemption of certain of our investments in pooled investment vehicles.

Restricted cash and cash equivalents increased $18.0 million in the three months ended October 31, 2008 and decreased $0.2 million in the three months ended October 31, 2007. Restricted cash and cash equivalents serves as collateral for letters of credit for IDT Energy’s purchases of natural gas and electric capacity, energy and ancillary services, as well as to secure mortgage repayments on various buildings.

We sold a building in Newark, New Jersey in the three months ended October 31, 2007 and received cash of $5.4 million from the sale. We recorded a $4.1 million gain on the sale of the building in the three months ended October 31, 2007.

In the three months ended October 31, 2007, IDT Carmel Portfolio Management purchased debt portfolios for $36.9 million. In the three months ended October 31, 2008 and 2007, IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $3.6 million and $6.9 million, respectively. IDT Carmel has not purchased any debt portfolios since the second quarter of fiscal 2008.

Investing Activities

During fiscal 2008, fiscal 2007 and fiscal 2006, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $252.8 million, $12.8 million and $314.5 million, respectively.

Our capital expenditures were $20.3 million in fiscal 2008, $36.3 million in fiscal 2007 and $53.5 million in fiscal 2006. We currently anticipate that total capital expenditures for all of our divisions in fiscal 2009 will be in the $10 million to $15 million range. Our near-term focus has been on streamlining our global network through the hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we will also finance a portion of our capital expenditures through capital leases.

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We purchased our headquarters office building in February 2008 for $24.8 million in cash plus the assumption of the remainder of the existing mortgage on the building in the amount of $26.9 million. In addition, an affiliate of the seller repaid its $16.9 million note payable to us that was secured by an interest in the building. The mortgage secures a promissory note that bears interest at the rate of 8.9% per annum and is payable in monthly installments of $0.3 million consisting of principal and interest. The maturity date of the note is April 1, 2020.

In fiscal 2008, fiscal 2007 and fiscal 2006, cash used for investments and acquisitions, net of cash acquired, was $21.9 million, $49.2 million and $103.4 million, respectively. Cash used for investments and acquisitions in fiscal 2008 included cash used for our acquisition of AMSO LLC of $5.5 million. We have committed to a minimum total investment of $11.0 million in AMSO LLC, of which $4.1 million was transferred to AMSO LLC and $3.5 million has been utilized through July 31, 2008. Cash used for investments and acquisitions in fiscal 2008 also included cash used for additional investments in pooled investment vehicles including hedge funds of $15.9 million. In the second quarter of fiscal 2007, we acquired Zedge.net for cash of $2.1 million and an aggregate of $1.3 million to be paid in equal installments in December 2007 and December 2008. In the fourth quarter of fiscal 2007, we acquired a controlling interest in IDW Publishing for cash of $2.5 million, net of cash acquired of $1.6 million. In addition, we used $44.2 million in fiscal 2007 for additional investments in pooled investment vehicles including hedge funds. In fiscal 2006, we purchased a total of 46.7 million shares of Net2Phone for a total purchase price of $97.2 million. In March 2006, Ethnic Grocery Brands acquired the assets of Vitarroz for $5.2 million. Also in fiscal 2006, we made some other smaller acquisitions, including a purchaser of charged-off consumer debt.

We sold certain of our investments in fiscal 2008 for $70.1 million and recorded an aggregate gain of $5.7 million from the sales.

We sold a building in Newark, New Jersey in the first quarter of fiscal 2008 and received cash of $4.9 million from the sale. We recorded a $4.1 million gain on the sale of the building in fiscal 2008.

In fiscal 2008 and fiscal 2007, IDT Carmel Portfolio Management purchased debt portfolios for $67.3 million and $78.4 million, respectively, and IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $23.7 million and $28.1 million, respectively. IDT Carmel did not purchase additional debt portfolios in the second half of fiscal 2008 to wait out the market uncertainty that is currently impacting this industry. IDT Carmel currently anticipates that it will begin purchasing debt portfolios in the first quarter of fiscal 2009.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $220.0 million in cash, net of certain working capital adjustments, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to us and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. We recognized a gain of $205.2 million in fiscal 2007 and a loss of $4.9 million in fiscal 2008 in connection with the sale.

In the first quarter of fiscal 2007, we sold our United Kingdom-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of intercompany obligations owed to us and our subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recognized a gain of $44.7 million in fiscal 2007 in connection with the sale.

In March 2006, we consummated the sale of our Russian telecom business, Corbina, to a Moscow-based consortium of private equity investors, for net proceeds of $129.3 million in cash after banking and other transaction related costs.

Investing Activities

FACE="Times New Roman" SIZE="2">During fiscal 2008, fiscal 2007 and fiscal 2006, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $252.8 million, $12.8 million and $314.5 million,
respectively.

Our capital expenditures were $20.3 million in fiscal 2008,
$36.3 million in fiscal 2007 and $53.5 million in fiscal 2006. We currently anticipate that total capital expenditures for all of our divisions in fiscal 2009 will be in the $10 million to $15 million range. Our near-term focus has been on
streamlining our global network through the hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we will also finance a
portion of our capital expenditures through capital leases.

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We purchased our headquarters office
building in February 2008 for $24.8 million in cash plus the assumption of the remainder of the existing mortgage on the building in the amount of $26.9 million. In addition, an affiliate of the seller repaid its $16.9 million note payable to us
that was secured by an interest in the building. The mortgage secures a promissory note that bears interest at the rate of 8.9% per annum and is payable in monthly installments of $0.3 million consisting of principal and interest. The maturity
date of the note is April 1, 2020.

In fiscal 2008, fiscal 2007 and fiscal
2006, cash used for investments and acquisitions, net of cash acquired, was $21.9 million, $49.2 million and $103.4 million, respectively. Cash used for investments and acquisitions in fiscal 2008 included cash used for our acquisition of AMSO LLC
of $5.5 million. We have committed to a minimum total investment of $11.0 million in AMSO LLC, of which $4.1 million was transferred to AMSO LLC and $3.5 million has been utilized through July 31, 2008. Cash used for investments and
acquisitions in fiscal 2008 also included cash used for additional investments in pooled investment vehicles including hedge funds of $15.9 million. In the second quarter of fiscal 2007, we acquired Zedge.net for cash of $2.1 million and an
aggregate of $1.3 million to be paid in equal installments in December 2007 and December 2008. In the fourth quarter of fiscal 2007, we acquired a controlling interest in IDW Publishing for cash of $2.5 million, net of cash acquired of $1.6 million.
In addition, we used $44.2 million in fiscal 2007 for additional investments in pooled investment vehicles including hedge funds. In fiscal 2006, we purchased a total of 46.7 million shares of Net2Phone for a total purchase price of $97.2
million. In March 2006, Ethnic Grocery Brands acquired the assets of Vitarroz for $5.2 million. Also in fiscal 2006, we made some other smaller acquisitions, including a purchaser of charged-off consumer debt.

Investing Activities

In the nine months ended April 30, 2008 and 2007, proceeds from sales and maturities of marketable securities net of purchases of marketable securities was $231.2 million and $6.7 million, respectively.

Our capital expenditures were $15.1 million in the nine months ended April 30, 2008 compared to $26.4 million in the nine months ended April 30, 2007. We currently anticipate that total capital expenditures for all of our divisions in the fourth quarter of fiscal 2008 will be in the $3.5 million to $5.5 million range. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we may also finance a portion of our capital expenditures through capital leases.

We purchased our headquarters office building in February 2008 for $24.8 million in cash plus the assumption of the remainder of the existing mortgage on the building in the amount of $26.9 million. In addition, an affiliate of the seller repaid its $16.9 million note payable to us that was secured by an interest in the building. The mortgage secures a promissory note that bears interest at the rate of 8.9% per annum and is payable in monthly installments of $0.3 million consisting of principal and interest. The maturity date of the note is April 1, 2020.

In the nine months ended April 30, 2008 and 2007, cash used for investments and acquisitions was $21.8 million and $4.1 million, respectively. Cash used for investments and acquisitions in the nine months ended April 30, 2008 included cash used for our investment in E.G.L. Oil Shale, L.L.C. of $5.5 million. We have committed to a minimum total investment of $11.0 million in EGL, which includes $2.5 million used for our original purchase of the 75% interest in EGL. Cash used for investments and acquisitions in the nine months ended April 30, 2008 also included cash used for additional investments in pooled investment vehicles including hedge funds of $15.9 million.

We sold certain of our investments in the nine months ended April 30, 2008 for $10.9 million and recorded an aggregate gain of $3.0 million from the sales.

We sold a building in Newark, New Jersey in the first quarter of fiscal 2008 and received cash of $4.9 million from the sale. We recorded a $4.1 million gain on the sale of the building in the nine months ended April 30, 2008.

In the nine months ended April 30, 2008 and 2007, IDT Carmel Portfolio Management purchased debt portfolios for $67.3 million and $47.3 million, respectively, and IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $20.4 million and $14.4 million, respectively. Also, IDT Carmel did not add to its debt portfolio this quarter to wait out the market uncertainty that is currently impacting this industry.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $220.0 million in cash, net of certain working capital adjustments, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to us and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. In addition, we would have to pay Liberty Media up to $3.5 million if the net equity value of IDT Entertainment over the five-year period following the closing of the transaction or a shorter period under specified circumstances does not exceed $439 million. We recognized a gain of $205.2 million in fiscal 2007 in connection with the sale, of which $198.2 million was recognized in the first quarter of fiscal 2007.

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In the first quarter of fiscal 2007, we sold our U.K.-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of intercompany obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recognized a gain of $44.7 million in fiscal 2007 in connection with the sale.

Investing Activities

In the six months ended January 31, 2008, proceeds from sales and maturities of marketable securities net of purchases of marketable securities was $243.9 million. In the six months ended January 31, 2007, purchases of marketable securities net of proceeds from sales and maturities of marketable securities was $22.3 million.

Our capital expenditures were $13.6 million in the six months ended January 31, 2008 compared to $16.6 million in the six months ended January 31, 2007. We currently anticipate that total capital expenditures for all of our divisions for the remainder of fiscal 2008, excluding the purchase of our headquarters office building, will be in the $9 million to $11 million range. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we may also finance a portion of our capital expenditures through capital leases.

On February 7, 2008, we completed the acquisition of our headquarters office building in exchange for $23.1 million in cash and the assumption of the remainder of the existing mortgage on the building in the amount of $26.9 million for a total purchase price of $50.0 million. In addition, an affiliate of the seller repaid its $16.9 million note payable to us that was secured by an interest in the building.

In the six months ended January 31, 2008 and 2007, IDT Carmel Portfolio Management purchased debt portfolios for $67.3 million and $19.2 million, respectively, and IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $12.1 million and $6.3 million, respectively.

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In the six months ended January 31, 2008 and 2007, cash used for investments and acquisitions was $18.0 million and $3.6 million, respectively. Cash used for investments and acquisitions in the six months ended January 31, 2008 includes cash used for our investment in E.G.L. Oil Shale, L.L.C. of $3.5 million and additional investments in pooled investment vehicles including hedge funds of $14.1 million.

We sold one of our investments in the second quarter of fiscal 2008 for $3.4 million and recorded a gain of $1.7 million from the sale. We sold a building in Newark, New Jersey in the first quarter of fiscal 2008 and received cash of $4.9 million from the sale. We recorded a $4.1 million gain on the sale of the building in the six months ended January 31, 2008.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $220.0 million in cash, net of certain working capital adjustments, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to us and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. In addition, we would have to pay Liberty Media up to $3.5 million if the net equity value of IDT Entertainment over the five-year period following the closing of the transaction or a shorter period under specified circumstances does not exceed $439 million. We recognized a gain of $205.2 million in fiscal 2007 in connection with the sale, of which $198.2 million was recognized in the first quarter of fiscal 2007.

In the first quarter of fiscal 2007, we sold our U.K.-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of intercompany obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recognized a gain of $44.7 million in fiscal 2007 in connection with the sale.

Investing Activities

In the three months ended October 31, 2007, proceeds from sales and maturities of marketable securities net of purchases of marketable securities was $126.0 million. In the three months ended October 31, 2006, purchases of marketable securities net of proceeds from sales and maturities of marketable securities was $103.5 million.

Our capital expenditures were $9.2 million in the three months ended October 31, 2007 compared to $10.1 million in the three months ended October 31, 2006. We currently anticipate that total capital expenditures for all of our divisions for the remainder of fiscal 2008, excluding the purchase of our main office building, will be in the $15 million to $20 million range. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we may also finance a portion of our capital expenditures through capital leases.

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On September 19, 2007, we entered into an agreement for the purchase of our main office building in exchange for approximately $22.8 million in cash and the assumption of the remainder of the existing mortgage on the building in the approximate amount of $27.2 million for a total purchase price of $50.0 million. The purchase is subject to certain customary conditions and contingencies. We expect the closing to occur during the second or third quarter of fiscal 2008.

In the three months ended October 31, 2007 and 2006, IDT Carmel Portfolio Management purchased debt portfolios for $36.9 million and $6.4 million, respectively, and IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $6.9 million and $4.1 million, respectively. Our total investment in debt portfolios through FFPM Carmel Holdings I, LLC will depend on the size of the portfolios provided by the selling bank, to a maximum commitment of $125 million for the 12-monthly portfolios. As of October 31, 2007, FFPM Carmel Holdings I, LLC’s maximum remaining outstanding commitment was $20.1 million.

In the three months ended October 31, 2007 and 2006, cash used for investments and acquisitions was $11.9 million and $0.4 million, respectively. Cash used for investments and acquisitions includes cash used for additional investments in pooled investment vehicles including hedge funds of $11.0 million in the three months ended October 31, 2007.

We sold a building in Newark, New Jersey in the three months ended October 31, 2007 and received cash of $5.4 million from the sale. We recorded a $4.1 million gain on the sale of the building in the three months ended October 31, 2007.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $220.0 million in cash, net of certain working capital adjustments, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to IDT and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. In addition, we would have to pay Liberty Media up to $3.5 million if the net equity value of IDT Entertainment over the five-year period following the closing of the transaction or a shorter period under specified circumstances does not exceed $439 million. We recognized a gain of $205.2 million in fiscal 2007 in connection with the sale, of which $198.2 million was recognized in the three months ended October 31, 2006.

In the first quarter of fiscal 2007, we sold our United Kingdom-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of intercompany obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recognized a gain of $44.7 million in fiscal 2007 in connection with the sale, of which $41.8 million was recognized in the three months ended October 31, 2006.

Investing Activities

During fiscal 2007 and 2006, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $12.8 million and $314.5 million, respectively. Our capital expenditures were $36.3 million in fiscal 2007 compared to $53.5 million in fiscal 2006. These expenditures were mostly to support our international and domestic telecommunications network infrastructure.

We currently anticipate that total capital expenditures for all our divisions for fiscal 2008 will be in the $20 million to $30 million range. Our near-term focus is on streamlining our global network through the hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we will also finance a portion of our capital expenditures through capital leases.

In fiscal 2007, IDT Carmel Portfolio Management purchased debt portfolios for $78.4 million, including $57.3 million of credit card debt through FFPM Carmel Holdings I, LLC, and IDT Carmel’s principal collections and proceeds from resale of debt portfolios totaled $28.1 million. Our total investment through FFPM Carmel Holdings I, LLC, will depend on the size of the portfolios provided by the selling bank, to a maximum commitment of $125 million for the 12-monthly portfolios. As of July 31, 2007, our maximum remaining outstanding commitment was $52 million.

In fiscal 2007 and 2006, cash used for investments and acquisitions, net of cash acquired, was $49.2 million and $103.4 million, respectively. In the second quarter of fiscal 2007, we acquired Zedge.net for cash of $2.1 million and an aggregate of $1.3 million to be paid in equal installments in December 2007 and December 2008. In the fourth quarter of fiscal 2007, we acquired a controlling interest in IDW Publishing for cash of $2.5 million, net of cash acquired of $1.6 million. In addition, we used $44.2 million in fiscal 2007 for additional investments in hedge funds. In fiscal 2006, we purchased a total of 46.7 million shares of Net2Phone for a total purchase price of $97.2 million. In March 2006, Ethnic Grocery Brands acquired the assets of Vitarroz for $5.2 million. Also in fiscal 2006, we made some other smaller acquisitions, including a purchaser of charged-off consumer debt.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $229.5 million in cash, subject to certain working capital adjustments, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to IDT and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. We agreed to repay Liberty Media $9.5 million for working capital adjustments, of which $1.0 million was paid in fiscal 2007 and the remaining $8.5 million was paid in the first quarter of fiscal 2008. In addition, we would have to pay Liberty Media up to $3.5 million if the net equity value of IDT Entertainment over the five-year period following the closing of the transaction or a shorter period under specified circumstances does not exceed $439 million. We recorded a gain of $205.2 million on the sale of IDT Entertainment.

In the first quarter of fiscal 2007, we sold our United Kingdom-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of intercompany obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recorded a gain of $44.7 million on the sale of Toucan.

In March 2006, we consummated the sale of our Russian telecom business, Corbina, to a Moscow-based consortium of private equity investors, for net proceeds of $129.3 million in cash after banking and other transaction related costs.

Investing Activities

During the nine months ended April 30, 2007 and 2006, proceeds from sales and maturities of marketable securities net of purchases of marketable securities were $6.7 million and $160.1 million, respectively. Our capital expenditures were $26.4 million in the nine months ended April 30, 2007, compared to $43.8 million in the nine months ended April 30, 2006. These expenditures were mostly to support our international and domestic telecommunications network infrastructure.

We currently anticipate that total capital expenditures for all our divisions for fiscal 2007 will be approximately $35 million. Our near term focus is on streamlining our global network through the hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our cash, cash equivalents and marketable securities on hand. From time to time, we will also finance a portion of our capital expenditures through capital leases.

In the nine months ended April 30, 2007, we purchased $47.3 million of debt portfolios, including $32.5 million of credit card debt through FFPM Carmel Holdings I, and principal collections and proceeds from resale of debt portfolios totaled $14.4 million. Our total investment through FFPM Carmel Holdings I will depend on the size of the portfolios provided by the selling bank, to a maximum commitment of $125 million for the 12-monthly portfolios.

In the second quarter of fiscal 2007, we announced the formation of our Internet Mobile Group and the acquisition of the mobile Internet community Zedge.net for $2.1 million.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $229.5 million in cash, subject to certain working capital adjustments, for which we have accrued a liability of $19 million as of April 30, 2007, pending final settlement, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany indebtedness payable to IDT and (iv) the assumption, by Liberty Media, of all of IDT Entertainment’s indebtedness. We recorded a gain of $198.2 million on the sale of IDT Entertainment.

In the first quarter of fiscal 2007, we also sold our United Kingdom-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of inter-company obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recorded a gain of $44.7 million on the sale of Toucan.

During the nine months ended April 30, 2006, we purchased a total of 46.7 million shares of Net2Phone for a total purchase price of $97.2 million.

On March 2, 2006, we consummated the sale of our Russian telecom business, Corbina, to a Moscow based consortium of private equity investors, for net proceeds of $129.3 million in cash after banking and other transaction related costs.

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Investing Activities

During the first half of fiscal 2007, we purchased marketable securities, net of sales and maturities, in the amount of $22.3 million, compared to net sales and maturities proceeds of $134.2 million during the first half of fiscal 2006. Our capital expenditures were $16.6 million in the first half of fiscal 2007, compared to $28.3 million in the first half of fiscal 2006. These expenditures were mostly to support our international and domestic telecommunications network infrastructure.

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We currently anticipate that total capital expenditures for all our divisions for fiscal 2007 will be in the $35 million to $40 million range. This estimate is contingent upon several factors, including, but not limited to, the specific timing of our site build-outs, the specific timing of integration of the IDT network with the Net2Phone network (which may allow for a reduction in traditional circuit-switched capacity requirements) and market prices for telecommunications equipment. Whereas we have generally adopted a strategy of investing in network expansion as the need arises, our near term focus is on streamlining our global network through the integration and hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our operating cash flows and cash, cash equivalents and marketable securities balances. From time to time, we will also finance a portion of our capital expenditures through capital leases.

In the first half of fiscal 2007, we purchased $19.2 million of debt portfolios, including $8.4 million of credit card debt through FFPM Carmel Holdings I, and principal collections and proceeds from resale of debt portfolios totaled $6.3 million. Our total investment through FFPM Carmel Holdings I will depend on the size of the portfolios provided by the selling bank, to a maximum commitment of $125 million for the 12-monthly portfolios.

In the second quarter of fiscal 2007, we announced the formation of our Internet Mobile Group and the acquisition of the mobile Internet community Zedge.net.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $229.5 million in cash, subject to certain working capital adjustments, for which we have accrued $20 million as a payable, pending final settlement, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany payable to IDT and (iv) the assumption, by Liberty Media, of all of IDT Entertainment’s indebtedness. We recorded a gain of $198.2 million on the sale of IDT Entertainment.

In the first quarter of fiscal 2007, we also sold our United Kingdom-based consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of inter-company obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recorded a gain of $44.7 million on the sale of Toucan.

During the second quarter of fiscal 2006, we purchased 33.2 million shares of Net2Phone for a total purchase price of $68.3 million.

Investing Activities

During the first quarter of fiscal 2007, we purchased marketable securities, net of sales and maturities, in the amount of $103.5 million, compared to net sales and maturities proceeds of $53.7 million during the first quarter of fiscal 2006. Our capital expenditures were $10.1 million in the first quarter of fiscal 2007, compared to $15.3 million in the first quarter of fiscal 2006. These expenditures were mostly to support our international and domestic telecommunications network infrastructure.

We currently anticipate that total capital expenditures for all our divisions for fiscal 2007 will be in the $40 million to $50 million range. This estimate is contingent upon several factors, including, but not limited to, the specific timing of our site build-outs, the specific timing of integration of the IDT network with the Net2Phone network (which may allow for a reduction in traditional circuit-switched capacity requirements), market prices for telecommunications equipment and the availability of such equipment in the distressed asset market. Whereas we have generally adopted a strategy of investing in network expansion as the need arises, our near term focus is on streamlining our global network through the integration and hybridization of the Net2Phone and IDT networks. We expect to fund our capital expenditures with our operating cash flows and cash, cash equivalents and marketable securities balances. From time to time, we will also finance a portion of our capital expenditures through capital leases.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $229.5 million in cash, subject to certain working capital adjustments, for which we accrued $20 million as a payable, pending final settlement (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany payable to IDT and (iv) the assumption, by Liberty Media, of all of IDT Entertainment’s indebtedness. We recorded a gain of $198.2 million on the sale of IDT Entertainment.

In the first quarter of fiscal 2007, we also sold our United Kingdom consumer phone services business, Toucan, to Pipex Communications plc for $38.4 million in cash (including the assumption of inter-company obligations owed to IDT and its subsidiaries) and 43.2 million Pipex ordinary shares, which were subsequently sold for $7.9 million. We recorded a gain of $41.8 million on the sale of Toucan.

Investing Activities

During fiscal 2006, we received $314.5 million in cash from the net sales and maturities of marketable securities, compared to $173.7 million during fiscal 2005. Our capital expenditures were $53.5 million in fiscal 2006, compared to $91.2 million in fiscal 2005. During fiscal 2006, we continued to build and expand our international and domestic telecommunications network infrastructure.

We have historically made significant expenditures designed to expand our global telecommunications network, including the recent purchase of Net2Phone, which greatly expanded the VoIP capabilities of our network. We now operate a total of six international gateway switches, four in the United States and two in the United Kingdom, and one domestic switch in the United States. In addition, we have extensive softswitching capacity in the United States, United Kingdom, Argentina, Peru, Brazil, and Hong Kong. We also maintain points-of-presence (“POPs”) in various international locations, providing interconnect capabilities in numerous countries. We currently anticipate that total capital expenditures for all our divisions for fiscal 2007 will be in the $45 million to $55 million range. This estimate is contingent upon several factors, including, but not limited to, the specific timing of our site build-outs, the specific timing of integration of the IDT network with the Net2Phone network (which may allow for a reduction in traditional circuit-switched capacity requirements), market prices for telecommunications equipment and the availability of such equipment in the distressed asset market. Whereas we have generally adopted a strategy of investing in network expansion as the need arises, our near term focus will be on streamlining our global network through the integration and hybridization of the Net2Phone network and the IDT network. Therefore, the timing of any network expansion, and the coincident purchases of property, plant and equipment, is highly dependent upon the timing and magnitude of growth in our telecommunications minutes of use as well as the integration of the Net2Phone network and the IDT network. We expect to fund our capital expenditures with our operating cash flows and with our cash, cash equivalents and marketable securities balances. From time to time, we will also finance a portion of our capital expenditures through capital leases.

During fiscal 2006, we purchased a total of 46.6 million shares of Net2Phone, which were validly tendered in the tender offer and in connection with the merger transaction, for a total purchase price of $97.1 million.

In March 2006, we consummated the sale of our Russian telecom business, Corbina Telecom, to a Moscow-based consortium of private equity investors, for net proceeds of $129.3 million in cash after banking and other transaction related costs.

In March 2006, Ethnic Grocery Brands, which is 90% owned by our 5% owned subsidiary, UTA, acquired the assets of Vitarroz Corp. for $5.2 million. Also in fiscal 2006, we made some other smaller acquisitions, including a purchaser of charged-off consumer debt.

In the first quarter of fiscal 2007, we completed the sale of IDT Entertainment to Liberty Media Corporation for (i) 14.9 million shares of our Class B common stock and Liberty Media’s approximate 4.8% interest in IDT Telecom, (ii) $229.5 million in cash, (iii) the repayment of $58.7 million of IDT Entertainment’s intercompany payable to IDT and (iv) the assumption of all of IDT Entertainment’s existing indebtedness. We expect to record a gain in the range of $175 million to $195 million on the sale of IDT Entertainment in the first quarter of fiscal 2007.

Historically, the operations of IDT Entertainment required significant funding, which was provided by IDT as well as through credit facilities. In fiscal 2006, 2005 and 2004, we funded the operations of IDT Entertainment in the amount of $82.6 million, $79.0 million and $101.0 million, respectively. Going forward, we expect to experience significant improvements in our cash flows as a result of the sale of IDT Entertainment, as compared to our cash flows prior to the sale. Moreover, the cash proceeds from the sale of IDT Entertainment have contributed significantly to our cash position in the first quarter of Fiscal 2007.

In the first quarter of fiscal 2007, we sold our United Kingdom consumer phone services business, Toucan, to Pipex Communications for $37.4 million in cash (including the assumption of inter-company obligations owing to IDT and its subsidiaries) and Pipex ordinary shares valued at $8.1 million. We expect to recognize a gain in the range of $40 million to $50 million in connection with the sale of Toucan in the first quarter of fiscal 2007.

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Investing Activities

During the nine months ended April 30, 2006, we received $200.0 million in cash from the net sales and maturities of marketable securities, while receiving $147.3 million of cash from the net sales and maturities of marketable securities during the nine months ended April 30, 2005. Our capital expenditures were $49.8 million in the nine months ended April 30, 2006, compared to $68.8 million in the nine months ended April 30, 2005. During the nine months ended April 30, 2006, we continued to build and expand our international and domestic telecommunications network infrastructure.

We have made significant expenditures designed to expand our global telecommunications network. We operate a total of six international gateway switches, four in the United States and two in the United Kingdom, and one domestic switch in the United States. In addition, we have extensive softswitching capacity in the United States, United Kingdom, Argentina, Peru and Hong Kong. We currently anticipate that total capital expenditures for fiscal 2006 will be in the $70 million to $80 million range. This estimate is contingent upon several factors, including, but not limited to, the specific timing of our site build-outs, market prices for telecommunications equipment and the availability of such equipment in the distressed asset market. We have generally adopted a strategy of investing in network expansion only as the need arises, as dictated by our telecommunications traffic volumes. Therefore, the timing of any network expansion, and the coincident purchases of property, plant and equipment, is highly dependent upon the timing and magnitude of growth in our telecommunications minutes of use. We expect to fund our capital expenditures with our operating cash flows and with our cash, cash equivalents and marketable securities balances. From time to time, we will also finance a portion of our capital expenditures through capital leases. IDT Spectrum has recently engaged in discussions with lenders and/or investors to secure debt or equity financings to support its infrastructure and fixed wireless network build-out. We cannot determine at this point whether such discussions will ultimately result in any funding proceeds to IDT Spectrum.

During the nine months ended April 30, 2006, we purchased a total of 46.7 million shares of Net2Phone, which were validly tendered in the tender offer and in connection with the merger transaction for a total purchase price of $97.2 million.

On March 2, 2006, we consummated the sale of our Russian telecom business, Corbina, to a Moscow based consortium of private equity investors, for net proceeds of $129.9 million in cash after banking and other transaction related costs.

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Investing Activities

During the six months ended January 31, 2006, we received $134.3 million in cash from the net sales and maturities of marketable securities, while receiving $98.8 million of cash from the net sales and maturities of marketable securities during the six months ended January 31, 2005. Our capital expenditures were $29.4 million in the six months ended January 31, 2006, compared to $35.5 million in the six months ended January 31, 2005. During the six months ended January 31, 2006, we continued to expand our international and domestic telecommunications network infrastructure and Net2Phone continued to build its infrastructure and deploy equipment related to existing and potential contract obligations with cable and broadband operators.

We have made significant expenditures designed to expand our global telecommunications network. We operate a total of six international gateway switches, four in the United States and two in the United Kingdom, and one domestic switch in the United States. In addition, we have extensive softswitching capacity in the United States, United Kingdom, Argentina, Peru and Hong Kong. Currently, we plan to expand the infrastructure necessary to support the expanded operations of our business segments. We currently anticipate that total capital expenditures for fiscal 2006 will be in the $60 million to $70 million range, and that investments in proprietary film productions, film licenses and DVD and videocassette mastering for fiscal 2006 will be in the $110 million to $120 million range. These estimates are contingent upon several factors, including, but not limited to, the specific timing of our site build-outs, market prices for telecommunications equipment and film licenses, the availability of such equipment in the distressed asset market, the availability of film licenses that meet our return on investment criteria, the specific timing of our IDT Spectrum network expansion projects and of our IDT Entertainment proprietary film productions, the rate of new DVD title introductions, and Net2Phone’s

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deployment of equipment related to existing and potential contract obligations with cable and broadband operators. We have generally adopted a strategy of investing in network expansion only as the need arises, as dictated by our telecommunications traffic volumes. Therefore, the timing of our network expansion, and the coincident purchases of property, plant and equipment, is highly dependent upon the timing and magnitude of the growth in our telecommunications minutes of use. We expect to fund our capital expenditures with our operating cash flows and with our cash, cash equivalents and marketable securities balances. From time to time, we will also finance a portion of our capital expenditures through capital leases. We also expect to fund all or part of our investments in proprietary film productions, film licenses, and DVD and videocassette mastering with bank facilities or equity financing entered into by IDT Entertainment or its subsidiaries that are developing or licensing the property. In addition, IDT Spectrum is currently in preliminary discussions with lenders and investors to secure debt or equity financings. To support its infrastructure and fixed wireless network build-out. However, we cannot determine at this point whether such discussions will ultimately result in any funding proceeds to IDT Spectrum.

During the second quarter of fiscal 2006, we purchased 33.2 million shares of Net2Phone, which were validly tendered in the tender offer for a total purchase price of $68.3 million.

On March 2, 2006, we consummated the sale of our Russian telecom business, Corbina, to a Moscow based consortium of private equity investors, for $145.7 million in cash.