LUBBOCK, Texas--(BUSINESS WIRE)--XFONE, Inc. (NYSE Amex and TASE: XFN) (“XFONE” or “the Company”) announced results for the three and nine months ended September 30, 2009.

Guy Nissenson, President and CEO, commented, “Given the challenging economic environment of the past year, we’re pleased to have maintained essentially stable revenues for the past three quarters, with sequentially improving EBITDA and operational cash flow for the nine month period of $5.1 million. Furthermore, in the third quarter, we reported over $1.1 million in operating profitability before the non-cash financing expense of $2.5 million largely related to currency fluctuation.”

Financial highlights for the three months ended September 30, 2009:

• Total revenues were $21.3 million, a decrease of 17.8% compared to $25.9 million for the three months ended September 30, 2008.
• EBITDA (earnings before interest, taxes, depreciation and amortization) was $2.3 million compared to $3.2 million for the three months ended September 30, 2008.
• Operating income was $1.1 million, compared to $1.8 million for the three months ended September 30, 2008.
• Net financing expense increased to $2.5 million, compared to $1.0 million for the three months ended September 30, 2008, primarily attributed to the effect of fluctuations in the exchange rate of the New Israeli Shekel (NIS) on the Company’s Bonds which are stated in NIS and linked to the Israeli Consumer Price Index (CPI).
• The Company reported a net loss of $1.7 million, or $0.092 per share, assuming 18,376,075 fully diluted shares outstanding at September 30, 2009, compared to net income of $0.6 million, or $0.035 per share, assuming 18,390,518 fully diluted shares outstanding at September 30, 2008.

Financial highlights for the nine months ended September 30, 2009:

• Total revenues decreased 5% to $64.2 million compared to $67.6 million for the nine months ended September 30, 2008.
• EBITDA (earnings before interest, taxes, depreciation and amortization and non-recurring loss) was $6.3 million compared to $8.0 million for the nine months ended September 30, 2008.
• Operating income was $2.7 million, compared to $4.8 million for the nine months ended September 30, 2008.
• Net financing expenses decreased to $3.7 million, compared to a net financing expense of $5.0 million for the nine months ended September 30, 2008, primarily attributed to the effect of fluctuations in the exchange rate of the New Israeli Shekel (NIS) on the Company’s Bonds which are stated in NIS and linked to the Israeli Consumer Price Index (CPI).
• The Company reported a net loss of $1.2 million, or $0.067 per share, assuming 18,376,075 fully diluted shares outstanding at September 30, 2009, compared to a net loss of $0.2 million, or $0.014 per share, assuming 17,371,811 fully diluted shares outstanding at September 30, 2008.

Mr. Nissenson continued, “Our U.S. division contributed approximately $15.4 million or 72.4% of total revenues, a decrease of 15% from the third quarter of 2008, but flat when compared to its contribution in the second quarter of 2009. The decrease compared to last year’s revenues was due to the attrition of residential customers from our legacy non-FTTP business and sales to other carriers. Revenues from our fiber-to-the premise (FTTP) network increased during the quarter, providing additional stability and profitability to our business and progress continues on the build out of our FTTP network in Levelland, Texas. We are particularly encouraged by our subscription rate in Levelland, where in the four weeks since we connected the network, we have signed on approximately 20% of the homes passed. With regard to our pursuit of additional RUS broadband funding, the NTIA and RUS have extended the review process for the first round of funding until mid-December. We remain optimistic that our past experience working with the federal government and the acceptance rate of our FTTP network positions us well to access a portion of the federal funding currently being made available for the construction of advanced broadband networks in select rural areas of the United States.”

Mr. Nissenson concluded, “Our FTTP network is the primary growth driver of our business and we remain focused on leveraging our state-of–the-art FTTP technology for continued growth in Texas and other underserved markets in the Southeast. We are encouraged by our ability to maintain revenues and margin performance despite the difficult market conditions that have prevailed throughout 2009 and we believe that Xfone is well positioned for long term growth.”

Conference Call:

The Company will host a conference call today, November 17, at 10:00 a.m. Eastern Time to discuss its financial results. The conference call may be accessed in the U.S. and Canada by dialing toll-free 1-877-407-8035. International callers may access the call by dialing 1-201-689-8035.

A replay of the teleconference will be available for 30 days after the call and may be accessed domestically by dialing 1-877-660-6853 and international callers may dial 1-201-612-7415. Callers must enter account number 286 and conference number 337426.

To access the live webcast, log onto the XFONE website at http://www.xfone.com. The webcast can also be accessed at http://www.InvestorCalendar.com. An online replay will be available shortly after the call.

About XFONE, Inc.

A U.S.-domiciled corporation, XFONE is a holding and managing company with operations in the United States, the United Kingdom and Israel, that offers a wide range of communications services which include: local, long distance and international telephony services; video; 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.

This press release contains forward-looking statements. The words or phrases "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." XFONE's financial and operational 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 news 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, 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.

Xfone, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenues		$	64,228,176			$	67,608,521			$	21,333,468			$	25,962,701
Cost of revenues			34,189,233				34,536,276				11,125,135				13,519,015
Non-recurring loss from distribution of calling cards in Israel			506,176				-				-				-
Gross profit			29,532,767				33,072,245				10,208,333				12,443,686
Operating expenses:
Research and development			36,995				47,519				13,158				14,939
Marketing and selling			8,004,161				9,517,132				2,562,071				3,378,328
General and administrative			18,783,993				18,506,824				6,502,945				7,091,436
Non- recurring loss			-				189,610				-				189,610
Total operating expenses			26,825,149				28,261,085				9,078,174				10,674,313
Operating profit			2,707,618				4,811,160				1,130,159				1,769,373
Financing expenses, net			(3,676,813	)			(5,031,403	)			(2,478,365	)			(1,035,823	)
Other expenses			(330,488	)			(279,499	)			(133,862	)			(123,694	)
Income (loss) before taxes			(1,299,683	)			(499,742	)			(1,482,068	)			609,856
Tax (expense) benefit			(14,042	)			450,113				(167,679	)			43,684
Net income (loss)		$	(1,313,725	)		$	(49,629	)		$	(1,649,747	)		$	653,540
Less: Net income (loss) attributable to non- controlling interest			(81,318	)			194,960				37,844				15,901
Net income (loss) attributed to shareholders		$	(1,232,407	)		$	(244,589	)		$	(1,687,591	)		$	637,639
Earnings (loss) per share:
Basic		$	(0.067	)		$	(0.014	)		$	(0.092	)		$	0.035
Diluted		$	(0.067	)		$	(0.014	)		$	(0.092	)		$	0.035
Weighted average shares outstanding:
Basic			18,376,075				17,371,811				18,376,075				18,376,075
Diluted			18,376,075				17,371,811				18,376,075				18,390,518

Reconciliation of Non-GAAP Financial Measures*
		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
Net income (loss) attributed shareholders		$	(1,232,407	)		$	(244,589	)		$	(1,687,591	)		$	637,639
Non-recurring loss			506,176				189,610				-				189,610
Depreciation and amortization			3,085,605				3,004,635				1,163,521				1,257,083
Financing expenses, net			3,676,813				5,031,403				2,478,365				1,035,823
Other expenses			330,488				279,499				133,862				123,694
Net income (loss) attributable to non- controlling interest			(81,318	)			194,960				37,844				15,901
Tax (expense) benefit			14,042				(450,113	)			167,679				(43,684	)
EBITDA*			6,299,399				8,005,405				2,293,680				3,216,066

US IR:
Institutional Marketing Services (IMS)
John G. Nesbett/Jennifer Belodeau
1-203-972-9200
jnesbett@institutionalms.com
or
XFONE, Inc.
Niv Krikov, CFO, 1-806-771-1181
niv@xfone.com