SOURCE: MIND CTI Ltd.

October 30, 2006 16:00 ET

MIND CTI Reports EPS of 3 Cents for the Third Quarter of 2006

Cash Flow From Operating Activities of $1.05 Million

YOQNEAM, ISRAEL -- (MARKET WIRE) -- October 30, 2006 -- MIND CTI Ltd. (NASDAQ: MNDO), a leading provider of convergent end-to-end billing and customer care product based solutions for tier 2 and tier 3 carriers worldwide, today announced results for the third quarter 2006.

Monica Eisinger, Chairperson and CEO, commented: "The telecom industry is in a transition phase, fueled by the mobile devices wide penetration and by the expansion of IP infrastructure. The pursuit for return on investment in the service-provider space led to the need to increase revenue from existing subscribers. This subsequently created the need for convergence of services at all levels of carriers.

"MIND is also experiencing a transition phase. We have invested heavily in the enhancement of our solutions, while focusing on building our business for the long term, with larger deals and long-term contracts. The third quarter results are a result of our focus on larger deals that require longer sales-cycles and longer revenue spread. At the same time our visibility increased and with careful planning we maintained profitability. The long-term relationships with our customers enable us to build future revenue streams and this quarter we saw significant recurrent revenue from our customer base, with three customer upgrades.

"The convergence that drives the telecom space has created an ideal opportunity for us. What differentiates us is that we bring to the tier 2 operators a convergent product based end-to-end solution as well as services that help them execute their convergence plans in a more efficient way and serve their customers better."

Financial Highlights of Q3 2006

--  Revenues of $4.66 million, a 15% increase over the third quarter of
    2005.
--  Operating income, excluding amortization of intangible assets and
    equity-based compensation expense of $677 thousand.
--  Net income, excluding amortization of intangible assets and equity-
    based compensation expense, of $972 thousand or $0.05 per share.
--  GAAP net income of $710 thousand or $0.03 per share.
--  Cash flow from operating activities in Q3 2006 was $1.05 million.
--  Strong cash position of approximately $37 million on September 30,
    2006.
    
Dividend Policy and Dividend Distribution

In July 2003, the Board of Directors had adopted our dividend policy. We have since distributed dividends four times and we intend to continue to distribute cash dividends based on factors that include our cash position and our activities.

Today, the Board of Directors resolved that the Company should seek the court approval formally required in order to enable a distribution for the year 2006 of approximately $4 million, which is similar to previous years' average. Under Israeli law, a company with insufficient retained earnings is required to obtain approval from the court for such a distribution in order to ensure that the Company's creditors are not harmed by the action. In view of the strong cash position of approximately $37 million, the Company expects to obtain such court approval within eight to twelve weeks, although there is no guarantee that such approval will not be delayed or denied.

Prior to paying any dividend, which is still subject to specific Board approval, the Company will issue a press release announcing the exact dividend amount, record date and distribution date.

"Given our strong cash position and our positive operating cash flow, we believe that our dividend policy enhances shareholders value," stated Monica. "We are well positioned and have the required resources to respond to potentially increasing market needs and at the same time we are focused on targeting potential acquisitions that could benefit the company growth."

Conference Call Information

MIND will host a conference call on October 31, 2006 at 8:30 a.m., Eastern Standard Time, to discuss the Company's third quarter 2006 results and other financial and business information. The call will be carried live on the Internet via www.fulldisclosure.com and the MIND website, www.mindcti.com. For those unable to listen to the live web cast, a replay will be available.

About MIND

MIND CTI Ltd. is a leading provider of convergent prepaid and postpaid end-to-end billing and customer care solutions for VoIP, Mobile, Wireline and Quad-play carriers worldwide. Since 1997, MIND has been a pioneer in enabling the VoIP technology for emerging and incumbent service providers. In August 2005, MIND acquired Sentori, Inc., a US based provider of customer care and billing solutions to wireless carriers and mobile virtual network operators (MVNOs). Sentori, Inc. brings over ten years of wireless experience staff and seven years of a wireless operational solution to carriers. A global company, MIND operates from offices in Europe, Israel and the United States. MIND employs over 300 IT professionals and serves customers in more than 40 countries around the world. For financial information, reports and presentations, please visit the Investor Relations site: http://www.mindcti.com/ir

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: All statements other than historical facts included in the foregoing press release regarding the Company's business strategy are "forward-looking statements." These statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements are not guarantees of future performance, and actual results may materially differ. The forward-looking statements involve risks, uncertainties, and assumptions, including the risks discussed in the Company's filings with the United States Securities Exchange Commission. The Company does not undertake to update any forward-looking information.


                               MIND C.T.I. LTD.
                    CONDENSED CONSOLIDATED BALANCE SHEETS



                                           September 30
                                     ------------------------ December 31,
                                         2006         2005         2005
                                     -----------  -----------  -----------
                                           (Unaudited)          (Audited)
                                     ------------------------  -----------
                                              U.S. $ in thousands
                                     -------------------------------------

           A  s  s  e  t  s
CURRENT ASSETS:
  Cash and cash equivalents          $    26,647  $    10,984  $    10,174
  Accounts receivable:
    Trade                                  4,862        3,694        3,389
    Other                                    931          716          739
  Inventories                                 30           18           30
                                     -----------  -----------  -----------
      T o t a l  current assets           32,470       15,412       14,332
LONG-TERM BANK DEPOSITS                   10,000       30,000       30,000
OTHER LONG-TERM ASSETS                       554          437          480
PROPERTY AND EQUIPMENT, net of
  accumulated depreciation and
  amortization                             1,790        2,057        1,957
INTANGIBLE ASSETS, net of
 accumulated amortization                    980      * 1,834        1,660
GOODWILL                                   6,966      * 6,966        6,966
                                     -----------  -----------  -----------
      T o t a l  assets              $    52,760  $    56,706  $    55,395
                                     ===========  ===========  ===========

    Liabilities and shareholders' equity
CURRENT LIABILITIES:
  Accounts payable and accruals:
    Trade                            $       594  $       809  $       686
    Other                                  1,497      * 2,009        1,741
  Deferred revenues                        1,580      * 1,899        1,644
  Advances from customers, net               171      * 2,715          790
                                     -----------  -----------  -----------
      T o t a l  current
       liabilities                         3,842        7,432        4,861
EMPLOYEE RIGHTS UPON RETIREMENT            1,215        1,098        1,049
                                     -----------  -----------  -----------
      T o t a l liabilities                5,057        8,530        5,910
                                     -----------  -----------  -----------
SHAREHOLDERS' EQUITY:
  Share capital                               53           53           53
  Additional paid-in capital              59,510       59,399       59,399
  Compensation in respect of
   options granted to employees              244
  Accumulated deficit                    (12,104)     (11,276)      (9,967)
                                     -----------  -----------  -----------
      T o t a l  shareholders'
       equity                             47,703       48,176       49,485
                                     -----------  -----------  -----------
      T o t a l  liabilities and
       shareholders' equity          $    52,760  $    56,706  $    55,395
                                     ===========  ===========  ===========

                                 * Reclassified.




                              MIND C.T.I. LTD.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                              Nine months        Three months    Year ended
                          ended September 30  ended September 30  December
                          ------------------  ------------------     31,
                            2006      2005      2006      2005      2005
                          --------  --------  --------  --------  --------
                              (Unaudited)         (Unaudited)     (Audited)
                          ------------------  ------------------  --------
                                        U.S. $ in thousands
                          ------------------------------------------------

REVENUES                $ 14,985  $  10,562 $   4,659 $   4,058 $    15,601
COST OF REVENUES           4,482      2,691     1,392     1,084       4,015
                        --------  --------- --------- --------- -----------
GROSS PROFIT              10,503      7,871     3,267     2,974      11,586
RESEARCH AND
 DEVELOPMENT
  EXPENSES                 4,715      3,561     1,389     1,452       5,086
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES:
  Selling                  2,735      1,566       868       546       2,148
  General and
   administrative          1,353      1,143       595       390       1,507
                        --------  --------- --------- --------- -----------
OPERATING INCOME           1,700      1,601       415       586       2,845
FINANCIAL INCOME
 (EXPENSES) - net         * (749)     1,186       304       165       1,260
                        --------  --------- --------- --------- -----------
INCOME BEFORE TAXES ON
 INCOME                      951      2,787       719       751       4,105
TAXES ON INCOME               79         34         9         9          43
                        --------  --------- --------- --------- -----------
NET INCOME              $    872  $   2,753 $     710 $     742 $     4,062
                        ========  ========= ========= ========= ===========

EARNING PER SHARE-
  Basic and diluted     $   0.04  $    0.13 $    0.03 $    0.03 $      0.19
                        ========  ========= ========= ========= ===========
WEIGHTED AVERAGE NUMBER
 OF ORDINARY SHARES USED
 IN COMPUTATION OF
 EARNINGS PER ORDINARY
 SHARE - IN THOUSANDS:
  Basic                   21,510     21,438    21,528    21,477      21,431
                        ========  ========= ========= ========= ===========
  Diluted                 21,555     21,579    21,551    21,582      21,619
                        ========  ========= ========= ========= ===========


   *  Financial expenses for the 9 months period ended September 30, 2006
      include a loss from a premature withdrawal of long-term deposits in
      the amount of  $1,330,000.




                             MIND C.T.I. LTD.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                              Nine months        Three months    Year ended
                          ended September 30  ended September 30  December
                          ------------------  ------------------     31,
                            2006      2005      2006      2005      2005
                          --------  --------  --------  --------  --------
                              (Unaudited)         (Unaudited)     (Audited)
                          ------------------  ------------------  --------
                                        U.S. $ in thousands
                          ------------------------------------------------
CASH FLOWS FROM OPERATING
 ACTIVITIES:

  Net Income              $    872  $  2,753  $    710  $    742  $  4,062
  Adjustments to
   reconcile net income
   to net cash provided
   by or used in
   operating activities:
    Depreciation and
     amortization            1,149       668       334       330       987
    Accrued severance pay      166        (8)       72       (20)     (151)
    Capital gain on sale
     of property and
     equipment - net            (9)      (39)       (1)       (9)      (38)
    Loss from withdrawal
     of long term
     deposits                1,330
    Compensation in
     respect of options
     granted to employees      244                  83
    Changes in operating
     asset and liability
     items:
      Decrease (increase)
       in accounts
       receivable:
        Trade               (1,473)     (109)       20    (1,009)      196
        Interest accrued
         on long-term
         bank deposits                   242                  29       242
        Other                 (192)       71        25        24        48
      Decrease in
       accounts payable
       and accruals:
        Trade                  (92)     (574)     (105)     (446)     (697)
        Other                 (244)   (1,240)      (87)     (837)   (1,510)
      Decrease (increase)
       in inventories                                          1       (12)
      Increase (decrease)
       in deferred
       revenues                (64)      (86)      168        79      (799)
      Decrease in
       advances from
       customers, net         (619)               (171)             (1,467)
                          --------  --------  --------  --------  --------
Net cash provided by
 (used in) operating
 activities                  1,068     1,678     1,048    (1,116)      861
                          --------  --------  --------  --------  --------
CASH FLOWS FROM INVESTING
 ACTIVITIES:
  Purchase of property
   and equipment              (339)     (543)      (43)     (122)     (589)
  Acquisition of
   subsidiary (a)                     (4,233)             (4,233)   (4,233)
  Amounts withdrawal
   (funded) in respect of
   accrued severance pay       (74)       43       (62)        2        94
  Investments in
   long-term bank
   deposits                          (10,000)                      (10,000)
  Withdrawal of long-term
   bank deposits            18,670    10,000              10,000    10,000
  Proceeds from sale of
   property and equipment       46       175        10        57       175
                          --------  --------  --------  --------  --------
Net cash provided by
 (used in) investing
 activities                 18,303    (4,558)      (95)    5,704    (4,553)
                          --------  --------  --------  --------  --------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
  Employee stock options
   exercised and paid          111       320                  42       322
  Dividend paid             (3,009)   (5,143)                       (5,143)
                          --------  --------  --------  --------  --------
Net cash provided by
 (used in) financing
 activities                 (2,898)   (4,823)                 42    (4,821)
                          --------  --------  --------  --------  --------
INCREASE (DECREASE) IN
 CASH AND CASH
 EQUIVALENTS                16,473    (7,703)      953     4,630    (8,513)
BALANCE OF CASH AND CASH
 EQUIVALENTS AT BEGINNING
 OF PERIOD                  10,174    18,687    25,694     6,354    18,687
                          --------  --------  --------  --------  --------
BALANCE OF CASH AND CASH
 EQUIVALENTS AT END OF
 PERIOD                   $ 26,647  $ 10,984  $ 26,647  $ 10,984  $ 10,174
                          ========  ========  ========  ========  ========




                             MIND C.T.I. LTD.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                         U.S. $ in
                                                         thousands
                                                       -------------
  (a) Acquisition of subsidiary:
        Assets and liabilities of the subsidiary upon
         acquisition:
        Working capital (excluding cash and cash
         equivalents)                                  $      (4,881)
        Property and equipment                                   277
        Intangible assets                                      1,871
        Goodwill                                               6,966
                                                       -------------
        Cash paid - net                                $       4,233
                                                       =============

Contact Information

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