ANNOUNCES SECOND QUARTER 2005 RESULTS
Company Reports Strong Revenue Growth and Profitability
August 12, 2005
LONDON – (PR NEWSWIRE) – August 12, 2005 – XFONE,
Inc. (AMEX:XFN) (“XFONE” or “the Company”), an international
diversified communications services company, today reported
its second quarter financial results for the three and
six months ended June 30, 2005.
Financial Highlights for the Three Months Ended
June 30, 2005 Compared to the
Three Months Ended June 30, 2004 Reflected in British
Pounds
(convenience translation into U.S Dollars):
-
Revenues increased 46% to £3,255,552 (US$5,833,950) from £2,232,495 (US$4,000,631).
- Gross profit margins on revenues increased to 34.4% compared to 27.6%.
- Net income decreased 16% to £59,837 (US$107,229) from £70,859 (US$126,979), primarily due to continued investment in the build-up of the Company’s ‘XFONE 018’ international long distance operations in Israel, launched in mid-December 2004.
- Net income, excluding the Israeli "start up" losses, increased to approximately £125,505 ($224,905).
- Diluted earnings per share were £0.009 (US$0.016) compared to £0.010 (US$0.018
Financial Highlights for the Six Months Ended
June 30, 2005 Compared to the
Six Months Ended June 30, 2004 Reflected in British Pounds
(convenience translation into U.S Dollars):
-
Revenues rose 43% to £6,493,332 (US$11,636,050) from £4,539,710 (US$8,135,160).
- Gross profit margin on revenues improved to 33.2% compared to 30.0%.
- Net income decreased 41% to £103,334 (US$185,175) from £173,928 (US$311,679), due to the aforementioned continued investment in the build-up of the Company’s XFONE 018 Israeli-based international long distance carrier business.
- Net income, excluding the Israeli "start up" losses, increased to approximately £257,005 ($460,552).
- Diluted earnings per share were £0.016 (US$0.028) compared to £0.02 (US$0.036).
Commenting on the second quarter results, Guy Nissenson, Chief Executive Officer of XFONE, stated, “We are very pleased with the rate at which we continue to achieve strong, profitable revenue growth on a consistent quarter over quarter basis. We believe that during the year 2005, our new subsidiaries in the United States and Israel will generate a greater part of our revenues and will be major contributors to our expected growth. We are very confident that the second half of 2005 will prove to be a very exciting growth period for XFONE, Inc.”
Continuing, Mr. Nissenson added, “Now that our Israeli-based operations appear to be on much stronger footing towards self-sustaining growth, we are turning our attention to exploiting our established foothold in the U.S. market to aggressively expand XFONE USA over the next 12 months."
XFONE, Inc. will also host a teleconference Monday, August 15, 2005 beginning at 4:15 PM Eastern and invites all interested parties to join management in a discussion regarding the Company’s financials, corporate progression and other meaningful developments. The conference call can be accessed in the U.S. by dialing toll free 800-240-2430. International callers can access the call by dialing 303-262-2137. For those unable to participate at that time, a replay of the teleconference can be accessed domestically by dialing 800-405-2236 and entering the pass-code 11037334#; international callers should dial 303-590-3000 and enter the pass-code 11037334#. The replay will be available for 30 days.
| XFONE,
Inc. and Subsidiaries |
| CONSOLIDATED
BALANCE SHEET |
| |
Unaudited
|
Audited
|
Convenience
Translation into U.S.$ |
June
30,
|
December
31,
|
June
30, |
| 2005 |
2004 |
2005 |
| Current assets |
| Cash |
£474,386 |
£797,097 |
$850,100 |
| Accounts receivable, net |
3,016,916 |
2,271,448 |
5,406,313 |
| Prepaid expenses and other receivables |
649,954 |
693,524 |
1,164,718 |
| Loan to shareholder |
123,965 |
123,965 |
222,145 |
| Total Current Assets |
£4,265,221 |
£3,886,034 |
$7,643,276 |
| Loan to shareholder |
123,966 |
123,966 |
222,147 |
| Investments |
68,417 |
20,885 |
122,603 |
| Total fixed assets, net |
1,938,530 |
1,255,293 |
3,473,845 |
| Other Assets, net |
2,398,267 |
57,106 |
4,297,694 |
| Total assets |
£8,794,401 |
£5,343,284 |
$15,759,565 |
| |
| Current liabilities |
| Dividend payable |
£ - |
£ - |
$ - |
| Notes payable - current portion |
£515,876 |
£72,041 |
$924,450 |
| Trade payables |
2,275,958 |
2,035,368 |
4,078,519 |
| Other liabilities and accrued expenses |
882,310 |
224,032 |
1,581,100 |
Obligations under capital leases -
current portion |
151,787 |
147,988 |
272,002 |
| Total current liabilities |
£3,825,931 |
£2,479,429 |
$6,856,071 |
| |
| Deferred taxes |
311 |
52 |
557 |
| Notes payable |
575,022 |
509,867 |
1,030,439 |
| Severance Pay |
2,770 |
- |
4,964 |
| Obligations under capital lease |
93,668 |
141,944 |
167,853 |
| Total liabilities |
£4,497,702 |
£3,131,292 |
$8,059,884 |
| |
| Minority Interest |
- |
£ 0 |
$ 0 |
| Guarantees, Commitments & Liens |
|
|
|
| Shareholders' equity |
|
|
|
Common stock:
25,000,000 shares authorized,
£.000677 par value;
6,884,521 issued and outstanding |
4,660 |
4,290 |
8,351 |
| Foreign currency translation adjustment |
97,908 |
1,210 |
184,990 |
| Contributions in excess of shares |
3,257,861 |
1,373,556 |
5,828,552 |
| |
| Retained earnings |
936,270 |
832,936 |
1,677,792 |
| |
| Total shareholders' equity |
4,296,699 |
2,211,992 |
7,699,685 |
| |
| Total liabilities and shareholders' equity |
£
8,794,401 |
£5,343,284 |
$15,759,569 |
| |
|
|
|
XFONE, Inc. and
Subsidiaries
|
STATEMENTS OF OPERATIONS
|
| |
Three
Months Ended |
Three
Months Ended |
Six
Months Ended |
Six
Months Ended |
Three
Months Ended |
Six
Months Ended |
| |
June 30, 2005 |
June 30, 2004 |
June 30, 2005 |
June 30, 2004 |
June 30, 2005 |
June 30, 2005 |
| |
Unaudited |
Unaudited |
Unaudited |
Unaudited |
Unaudited |
Unaudited |
| Revenues |
£3,255,552 |
£2,232,495 |
£6,493,332 |
£4,539,710 |
$5,833,950 |
$11,636,050 |
| Cost of revenues |
(2,136,612) |
(1,615,797) |
(4,335,529) |
(3,177,036) |
(3,828,809) |
(7,769,267) |
| Gross profit |
1,118,940 |
616,698 |
2,157,803 |
1,362,674 |
2,005,141 |
3,866,783 |
| |
| Operating expenses: |
|
|
|
|
|
|
| Research and development |
(5,000) |
(10,000) |
(10,000) |
(20,000) |
(8,960) |
(17,920) |
| Marketing and selling |
(272,870) |
(319,591) |
(657,060) |
(686,798) |
(488,983) |
(1,177,452) |
| General and administrative |
(781,321) |
(187,480) |
(1,419,579) |
(421,648) |
(1,400,127) |
(2,543,886) |
| |
| Total operating expenses |
(1,059,191)
|
(517,071) |
(2,086,639)
|
(1,128,446)
|
(1,898,070) |
(3,739,257) |
| |
| Operating profit |
59,749 |
99,627 |
71,164 |
234,228 |
107,071 |
127,526 |
| Financing income (expenses) - net |
(26,467) |
18,073 |
(41,275) |
7,228 |
(47,429) |
(73,965) |
| Equity in income of affiliated company |
14,444 |
- |
47,532 |
- |
25,884 |
85,177 |
| Other income |
10,808
|
1,709
|
13,140
|
7,022
|
19,368
|
23,547 |
| |
| Income before minority interest and taxes |
58,534 |
119,409 |
90,561 |
248,478 |
104,894 |
162,285 |
| |
| Minority Interest |
23,072 |
- |
53,992 |
- |
41,345 |
96,754 |
| |
| Income Before taxes |
81,606 |
119,409 |
144,553 |
248,478 |
146,239 |
259,039 |
| |
| Taxes on income |
(21,769)
|
(48,550)
|
(41,219)
|
(74,550)
|
(39,010)
|
(73,864) |
| |
| Net income |
£59,837
|
£70,859
|
£103,334
|
£173,928
|
$107,229
|
$185,175 |
| |
| Earnings Per
Share: |
|
|
|
|
|
| Basic |
£0.009
|
£0.010
|
£0.016
|
£0.030
|
$0.016
|
$0.028
|
| Diluted |
£0.009
|
£0.010
|
£0.016
|
£0.020
|
$0.016
|
$0.028 |
About XFONE, Inc.
A U.S.-domiciled corporation, XFONE, Inc. is an international 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 telephony services; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities. The Company serves customers across Europe, Asia, North, Central and 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: |
 |
| U.S.
IR Contact |
John Nesbett/Jennifer Beloeau
Institutional Marketing Services (IMS)
Phone: 1.203.972.9200.
E-mail: jnesbett@institutionalms.com |
|
| Xfone Contact |
|
Niv Krikov
Chief Financial Officer
Phone: + 972.39254446 (Israel)
E-mail: E-mail: niv@xfone.com |
|
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