XFN Xfone Common Stock

Profitable Growth Continues; Reiterates 2006 Revenue Guidance of US$36-$38 Million JACKSON, Miss., May 15 /PRNewswire-FirstCall/ -- XFONE, Inc. (AMEX:XFN) ("XFONE" or "the Company"), a provider of international voice and data communications services, announces its first quarter results for the three months ended March 31, 2006. Financial Highlights for the Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005: - Revenues increased 36% to 4,501,289 pounds(US$7,841,245) from 3,312,934 pounds (US$6,228,317). - Gross profit margins improved, rising to 36.3% from 31.4%. - Operating profits jumped 647% to 85,296 pounds (US$148,585) from 11,415 pounds (US$21,461). - Net income rose 47% to 63,889 pounds(US$111,295) from 43,497 pounds (US$81,774). - Basic earnings per share were 0.008 pounds(US$0.014) compared to 0.007 pounds (US$0.012). - As of March 31, 2006, the Company had approximately 5.0 million pounds (US$8.7 million) in cash and accounts receivables and stockholders' equity of approximately 8.5 million pounds (US$14.7 million). - The Company's Israeli "start up" subsidiary, XFONE 018 Ltd., achieved a breakeven EBITDA. Revenues in XFONE 018 Ltd increased 228% to 650,069 pounds (US$1,132,420) for the quarter ended March 31, 2006 compared to 198,211 pounds (US$372,637) for the first quarter of 2005. Operational Highlights for the First Quarter 2006: - In January 2006, XFONE USA completed the acquisition of the assets of EBI Comm, Inc. and Canufly.net, Inc., both Internet Service Providers serving customers throughout the Mississippi. Collectively, both acquisitions are expected to contribute over US$1 million in revenues to XFONE in 2006. - On March 31, 2006, the Company completed the mergers of I-55 Internet Services, Inc. and I-55 Telecommunications, LLC, with and into its wholly owned subsidiary XFONE USA, Inc. - Guy Nissenson, President and CEO of XFONE, Inc., issued formal annual revenue guidance, forecasting $36-$38 million for 2006. "2006 is off to a very strong start in all regards," stated Nissenson. "We continue to enjoy double and triple digit growth across all key metrics and are highly confident that this trend will continue as we progress through the year. Each of our geographical operations, Israel, the U.K. and the U.S., have delivered strong performance in the first quarter and appear to be gaining momentum. Fueling this momentum is successful execution of our growth-through-acquisition strategy -- a strategy that we intend to perpetuate in key global markets through the balance of the year." Nissenson added, "We remain firmly on pace and believe that we will achieve our stated revenue guidance for the year. Currently tracking at an annualized revenue run-rate of nearly US$32 million, and after factoring the anticipated impact and timing of enhanced organic growth initiatives and targeted acquisitions, our forecasted objective of $36-$38 million appears to be right in line." XFONE will also host a teleconference tomorrow, Tuesday, May 16, 2006, beginning at 9:15 AM Eastern, and invites all interested parties to join management in a discussion regarding the Company's financials, corporate progression and other meaningful developments. The conference call can be accessed in the U.S. by dialing toll-free 1-800-240-4186. International callers can access the call by dialing 303-262-2125. For those unable to participate at that time, a replay of the teleconference can be accessed domestically by dialing 1-800-405-2236 and enter the pass-code 11059904#. International callers may dial 303-590-3000 and enter the pass-code 11059904#. The replay will be available for 30 days. XFONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Three Months Ended Ended March 31, March 31, 2006 2005 2006 pounds pounds US$ Revenues 4,501,289 3,312,934 $7,841,245 Cost of revenues (2,868,452) (2,274,071) (4,996,843) Gross profit 1,632,837 1,038,863 2,844,402 Operating Expenses: Research and development (5,625) (5,000) (9,799) Marketing and selling (390,213) (384,190) (679,751) General and administrative (1,151,703) (638,258) (2,006,267) Total operating expenses (1,547,541) (1,027,448) (2,695,817) Operating profit 85,296 11,415 148,585 Financing expenses - net (78,471) (14,808) (136,696) Equity in income of affiliated company 51,416 33,088 89,567 Loss from a change of holding of affiliated company (29,848) - (51,995) Other income 6,179 2,332 10,764 Income before minority interest and taxes 34,572 32,027 60,225 Minority interest 11,706 30,920 20,392 Income before taxes 46,278 62,947 80,617 Taxes on income 17,611 (19,450) 30,678 Net income 63,889 43,497 $111,295 Earnings Per Share: Basic 0.008 0.007 $0.014 Diluted 0.007 0.004 $0.013 About XFONE, Inc. A U.S.-domiciled corporation, XFONE, Inc. is a voice, video and data communications services provider with operations in the United Kingdom, the United States and Israel that offers a wide range of services, which include: local, long distance and international telephone services; prepaid and postpaid calling cards; cellular services; reselling opportunities; and email and fax broadcasting services. The Company serves customers across Europe, Asia, North America, South America, Australia and Africa. This press release contains forward-looking statements. The words or phrases "should," "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." The Company's financial results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this press release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, and license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the Securities and Exchange Commission. For More Information, Please Contact: At XFONE, Inc. Alon Mualem, Chief Financial Officer, 011-972-39254446 or via email at Or Elite Financial Communications Group Dodi Handy, 407-585-1080 or via email at DATASOURCE: XFONE, Inc. CONTACT: Alon Mualem, Chief Financial Officer of XFONE, Inc., 011-972-39254446, or ; or Dodi Handy of Elite Financial Communications Group, +1-407-585-1080, or Web site: http://www.xfone.com/

Copyright