Date: October 31, 2006
| MIND C.T.I. LTD. | |
|
By: /s/ Monica Eisinger Name: Monica Eisinger =================== Title: Chairperson of the Board of Directors, President and Chief Executive Officer |
EXHIBIT INDEX
| Exhibit Number | Description of Exhibit |
| 1. | Press Release: MIND CTI Reports EPS of 3 Cents for the Third Quarter of 2006, Dated October 30, 2006. |
Yoqneam, Israel, October 30, 2006 - MIND CTI Ltd. (NasdaqNM: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
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.
For more information please contact:
Andrea Dray
MIND CTI Ltd.
Tel: +972-4-993-6666
investor@mindcti.com
MIND C.T.I. LTD.
(An Israeli Corporation)
INTERIM REPORT
(Unaudited)
AS OF SEPTEMBER 30, 2006
TABLE OF CONTENTS
| Page | |
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
| Balance sheets | 2 |
| Statements of operations | 3 |
| Statements of cash flows | 4-5 |
| 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. |
| Nine months ended September 30 | Three months ended September 30 | Year ended December 31, | |||
| 2006 | 2005 | 2006 | 2005 | 2005 | |
| (Unaudited) | (Unaudited) | (Audited) | |||
| U.S. $ in thousands (except per share data) | |||||
| 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. |
| Nine months ended September 30 | Three months ended September 30 | Year ended 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 | |
| U.S. $ in thousands | |
| (a) Acquisiiton 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 |