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XFONE, INC. YEAR END
LETTER TO SHAREHOLDERS
April 27, 2007
JACKSON, Mississippi – April 27, 2007 -- The following is
a letter to shareholders
of XFONE, Inc. (AMEX: XFN)(TASE: XFN):
Dear Shareholders, Partners and Friends,
I am pleased to write to discuss XFONE’s 2006 year end results and
some of the achievements and innovations that we believe contributed
to our very successful year.
Diverse Revenue Streams Contribute to Strong Growth and Margin
Improvement
For the year, XFONE reported a 37% increase in revenues to $38
million, the high end of our projected revenue range. While I am
proud of that figure, I am equally proud of the favorable
composition of our revenues. XFONE’s business is geographically
diverse, more than most companies our size. I was gratified to see
that each of our three geographic regions contributed to our growth.
Also, a sizable portion of our growth was organic, stemming from the
$5 million we spent in 2006 on sales and marketing. Acquisitions
will continue to be an important part of our growth strategy as we
look to grow XFONE to a multi-hundred million dollar company, but
our team is dedicated to driving organic growth and this focus is
paying off.
Revenue contributions from each of our divisions during the year
were as follows:
-
XFONE USA was 41% of our total revenues,
contributing $15.5 million, an increase of 75% over 2005. We
made acquisitions in the beginning of the year and also saw
organic growth in the second half of the year.
-
XFONE’s U.K. operations represent 45% of total
revenues, contributing $16.95 million, an increase of 6% over
2005.
-
Revenues from XFONE 018, our Israel-based
subsidiary, accounted for 14% of total revenues, contributing
$5.5 million compared to $2.5 million in 2005. All of this
growth was organic.
Operating profit grew to $1,035,022
from a loss of $78,913 in the previous year and EBITDA for the year
increased to $2,127,107 from $346,201 last year. Net income
increased to $660,696 or $0.065 earnings per basic share compared to
$44,983 or $0.007 earnings per basic share in 2005.
Our balance sheet remains strong, with approximately $8.8 million in
cash and accounts receivable and total shareholders’ equity of $19.5
million as of December 31, 2006.
Strong Year For Each of Our Three Geographic Subsidiaries
United States
XFONE USA experienced steady revenue growth and improved margins.
For the past few years, we’ve focused on strategic alliances and
acquisitions in this division. During 2006 we completed the
integration of I-55, canufly and EBI networks which included the
centralization of our switch operations to create uniformity in
processes and improve productivity. Additionally, with the goal of
driving organic growth, we introduced a new business product in the
U.S., “Solution 15” that compliments our existing XNET Total
Solutions for Business service. Geared to the small business owner,
"Solution 15" guarantees a 15% savings compared to existing ILEC
expenditures.
United Kingdom
During 2006, the UK business completed a build out which resulted in
a 40% increase in network capacity and launched a new Calls & Line
Rental product. The division also saw substantial increases in
minutes and revenues particularly from “Text & Talk”, Number
Translation and Mobile Services. Looking forward, the U.K. will
focus on continuing to keep costs low and developing new product
offerings.
Israel
XFONE 018, our operation in Israel, reached a milestone by achieving
profitability in the final quarter of 2006, just two and a half
years after receiving a license to provide international telecom
services in Israel. This is especially notable because when we
received the license, unlike our competitors, we had not yet
established any technology or sales infrastructure. This business
has been built from the ground up in a very short period of time.
Our competitive positioning continues to improve and I am confident
that we will be able to drive significant profitability in Israel
through 2007 and beyond.
2006 was an outstanding year in which we made great strides toward
becoming one of the very best companies in our industry. We remain
dedicated to providing cutting edge and cost effective services to
meet all the communications needs of our customers while enhancing
shareholder value and ensuring the profitable growth of our company.
Thank you for your continued support of XFONE.
Sincerely,
Guy Nissenson
President and Chief Executive Officer
XFONE, Inc.
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 worldwide. For the Company’s website, please visit: www.xfone.com
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 U.S. Securities and Exchange Commission.
| For More Information,
Please Contact: |
| U.S. IR Contact |
Israel IR Contact |
Xfone Contact |
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone: 1-203-972-9200
E-mail: jnesbett@institutionalms.com
|
Zvi Rabin
Kwan Communications
Tel: (Israel) +972 50 560 0140
E-mail: zvi@kwan.co.il |
Niv Krikov
Chief Financial Officer
Phone: + 972.39254446 (Israel)
E-mail: niv@xfone.com |
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