SOURCE: MIND CTI Ltd.

July 19, 2005 16:00 ET

MIND CTI Reports 20% Operating Income and EPS of 5 Cents in Q2 2005

11% Sequential Revenue Growth

YOQNEAM, ISRAEL -- (MARKET WIRE) -- July 19, 2005 -- MIND C.T.I. LTD. (NASDAQ: MNDO), a leading global provider of Real-time mediation, rating, billing and customer care solutions for pre-paid and post-paid voice, data and content, today announced results for the second quarter ended June 30, 2005.

Key Highlights of Q2 2005

--  Revenues were $3.42 million, an 11% increase from $3.08 million in the
    previous quarter and a 21% decrease from $4.3 million in the second quarter
    of 2004.
--  Operating income was $687 thousand, a 110% increase over the previous
    quarter and a 9% decrease over the second quarter of 2004
--  Net income for the second quarter was $980 thousand or $0.05 per
    diluted share, compared with a net income of $1.59 million or $0.07 per
    diluted share in the second quarter of 2004.
--  Multiple customer upgrades (both license and services upgrades)
    
Monica Eisinger, MIND chairperson and chief executive officer, commented: "In the second quarter of 2005 we succeeded to grow both revenues and operating income, primarily credited to recurrent sales to existing customers. As previously estimated the financial income was lower this quarter due to a decrease in interest gained on our cash and the change in the Euro exchange rates.

"We believe that the demand for our solutions continues and in order to address future needs of both existing customers and new opportunities we continue to invest significantly in enhancing our product offering. At the same time we continue to build the organization and add experienced people to our team.

"We have a large and stable customer base and we expect the trend of customer license and services additions and upgrades to continue and add to the revenue increase in the long term."

Revenue Distribution for Q2 2005

The geographic revenue breakdown, as a percentage of total revenues, was as follows: sales in Europe represented 41%, the Americas represented 25%, Africa represented 20%, APAC represented 8% and Israel represented 6%.

Revenue from our customer care and billing software totaled $2.88 million, while revenue from our enterprise call management software was $547 thousand. The revenue breakdown from our business lines of products was $1.72 million, or 50%, from licenses, $1.11 million, or 33%, from maintenance and $582 thousand, or 17%, from services.

New Executive Addition

In the second half of 2004 we initiated a process of organizing the company for future growth. For the last three quarters we added each quarter executives with experience in our field and background from larger organizations. In July 2005 Yossi Shoval joined our company as VP Strategic Business Alliances. Prior to joining our company, he was Director at Amdocs with responsibility for strategic alliances. Prior to that he served at Comverse as AVP with responsibility for the Comverse partnership program. Yossi holds an MBA from Heriot-Watt University in Scotland and a BA in Economics form Tel Aviv University.

As of June 30, 2005, we had 257 employees in our offices in Israel, Romania, the United States and China.

Conference Call Information

MIND will host a conference call on July 20, at 8:30 a.m., Eastern Time, to discuss the Company's second quarter results and other financial and business information, including trends and guidance for the near future. 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. (http://www.mindcti.com) is a leading global provider of real-time billing and customer care solutions for pre-paid and post-paid voice, data and video. Since 1997 MIND has been a pioneer in enabling the VoIP technology for emerging and incumbent service providers. MIND solutions include "best-in-class" solutions for Service Enabling of IP services in the wireless arena, end-to-end convergent billing solutions and internal billing for large enterprises. MIND operates from offices in Europe, Israel, the United States and China.

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

                                            June 30,          December 31,
                                        2005       2004           2004
                                     ----------  ----------    ----------
                                          (Unaudited)          (Audited)
                                     ----------  ----------    ----------
                                             U.S. $ in thousands

Assets
CURRENT ASSETS:
    Cash and cash equivalents        $    6,354  $    8,181    $   18,687
    Accounts receivable:
      Trade                               2,518       2,351         3,418
      Interest accrued on long-term
       bank deposits                         29         483           242
      Other                                 726         827           773
    Inventories                              19          11            18
                                     ----------  ----------    ----------
        Total current assets              9,646      11,853        23,138
LONG-TERM BANK DEPOSITS                  40,000      47,400        30,000

PROPERTY AND EQUIPMENT, net of
 accumulated depreciation and
 amortization                             1,885       1,623         1,790
OTHER ASSETS, net of accumulated
 amortization                               553         804           788
                                     ----------  ----------    ----------
        Total assets                 $   52,084  $   61,680    $   55,716
                                     ==========  ==========    ==========

Liabilities and shareholders' equity
CURRENT LIABILITIES:
    Accounts payable and accruals:
      Trade                          $      338  $    1,321    $      466
      Deferred revenues                   1,515       1,973         1,680
      Other                               1,721       1,470         2,124
                                     ----------  ----------    ----------
        Total current liabilities         3,574       4,764         4,270
BANK LOANS                                           10,000
EMPLOYEE RIGHTS UPON RETIREMENT           1,118       1,061         1,200
                                     ----------  ----------    ----------
        Total liabilities                 4,692      15,825         5,470
                                     ----------  ----------    ----------
SHAREHOLDERS' EQUITY:
    Share capital                            53          53            53
    Additional paid-in capital           59,357      58,634        59,079
    Accumulated deficit                 (12,018)    (12,832)       (8,886)
                                     ----------  ----------    ----------
        Total shareholders' equity       47,392      45,855        50,246
                                     ----------  ----------    ----------
    Total liabilities and
     shareholders' equity            $   52,084  $   61,680    $   55,716
                                     ==========  ==========    ==========


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

                               Six months        Three months    Year ended
                             ended June 30,      ended June 30,    Dec. 31,
                             2005      2004      2005      2004      2004
                           -------   -------   -------   -------   -------
                               (Unaudited)         (Unaudited)    (Audited)
                              U.S. $ in thousands (except per share data)

REVENUES                   $ 6,504   $ 8,324   $ 3,422   $ 4,319   $17,806
COST OF REVENUES             1,607     2,087       803     1,086     4,394
                           -------   -------   -------   -------   -------
GROSS PROFIT                 4,897     6,237     2,619     3,233    13,412
RESEARCH AND DEVELOPMENT
  EXPENSES - net             2,109     1,846     1,110       845     3,833
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES:
   Selling                   1,020     2,330       428     1,263     4,517
   General and
    administrative             753       706       394       372     1,864
                           -------   -------   -------   -------   -------
OPERATING INCOME             1,015     1,355       687       753     3,198
FINANCIAL AND OTHER
 INCOME - net                1,021     1,653       303       863     3,841
                           -------   -------   -------   -------   -------
INCOME BEFORE TAXES
 ON INCOME                   2,036     3,008       990     1,616     7,039
TAXES ON INCOME                 25        77        10        26       162
                           -------   -------   -------   -------   -------
NET INCOME                 $ 2,011   $ 2,931   $   980   $ 1,590   $ 6,877
                           =======   =======   =======   =======   =======
EARNING PER SHARE:
   Basic                   $  0.09   $  0.14   $  0.05   $  0.08   $  0.33
                           =======   =======   =======   =======   =======
   Diluted                 $  0.09   $  0.14   $  0.05   $  0.07   $  0.32
                           =======   =======   =======   =======   =======
WEIGHTED AVERAGE NUMBER OF
 ORDINARY SHARES USED IN
 COMPUTATION OF EARNINGS
 PER ORDINARY SHARE
 - IN THOUSANDS:
   Basic                    21,417    21,040    21,453    21,064    21,089
                           =======   =======   =======   =======   =======
   Diluted                  21,574    21,538    21,558    21,535    21,468
                           =======   =======   =======   =======   =======


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

                               Six months        Three months    Year ended
                             ended June 30,      ended June 30,    Dec. 31,
                             2005      2004      2005      2004      2004
                           -------   -------   -------   -------   -------
                               (Unaudited)         (Unaudited)    (Audited)
                                         U.S. $ in thousands

CASH FLOWS FROM OPERATING
 ACTIVITIES:
   Net Income              $ 2,011   $ 2,931   $   980   $ 1,590   $ 6,877
   Adjustments to
    reconcile net income
    to net cash provided
    by or used in operating
    activities:
      Depreciation and
       amortization            338       348       158       161       680
      Accrued severance
       pay - net                12        57        73        40       202
      Capital loss (gain)
       on sale of property
       and equipment - net     (30)        6        (7)                 (7)
      Changes in operating
       asset and liability
       items:
        Decrease (increase) in
         accounts receivable:
          Trade                900      (170)     (738)     (391)   (1,237)
          Interest accrued
           on long-term
           bank deposits       213        (1)      804       744       240
          Other                 47        37      (271)       68        93
        Increase (decrease)
         in accounts
         payable and accruals:
          Trade               (128)      603       (25)      791      (252)
          Other               (568)      722      (233)     (160)    1,081
          Increase in
           Inventories          (1)                                     (7)
                           -------   -------   -------   -------   -------
   Net cash provided by
    operating activities     2,794     4,533       741     2,843     7,670
                           -------   -------   -------   -------   -------
CASH FLOWS FROM INVESTING
 ACTIVITIES:
   Purchase of property
    and equipment             (421)     (702)     (205)     (232)   (1,226)
   Amounts withdrawal
    (funded) in respect of
    accrued severance pay       41       (30)      (53)      (24)     (120)
   Investments in long-
    term bank deposits     (10,000)  (10,400)            (10,400)  (40,000)
   Withdrawal of long-
    term bank deposits                 3,000                        50,000
   Proceeds from sale of
    property and equipment     118         7        29         6       145
                           -------   -------   -------   -------   -------
Net cash provided by
 (used in) investing
 activities                (10,262)   (8,125)     (229)  (10,650)    8,799
                           -------   -------   -------   -------   -------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
   Bank loans received                10,000              10,000
   Employee stock options
    exercised and paid         278       118        14        43       563
   Dividend paid            (5,143)   (2,736)                       (2,736)
                           -------   -------   -------   -------   -------
Net cash provided by
 (used in) financing
 activities                 (4,865)    7,382        14    10,043    (2,173)
                           -------   -------   -------   -------   -------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS               (12,333)    3,790       526     2,236    14,296
BALANCE OF CASH AND CASH
 EQUIVALENTS AT BEGINNING
 OF PERIOD                  18,687     4,391     5,828     5,945     4,391
                           -------   -------   -------   -------   -------
BALANCE OF CASH AND CASH
 EQUIVALENTS AT END OF
 PERIOD                    $ 6,354   $ 8,181   $ 6,354   $ 8,181   $18,687
                           =======   =======   =======   =======   =======

Contact Information

  • For more information please contact:
    Andrea Dray
    MIND CTI Ltd.
    Tel: +972-4-993-6666
    Email Contact