-- Revenues of $4.03 million, compared with $4.66 million in the third
quarter of 2006.
-- Operating income, excluding amortization of intangible assets and
equity-based compensation expense, of $550 thousand.
-- Net income, excluding amortization of intangible assets and equity-
based compensation expense, of $1.11 million or $0.05 per share.
-- GAAP net income of $955 thousand or $0.04 per share.
-- Cash flow from operating activities of $2.04 million.
-- Strong cash position of approximately $37.4 million on September 30,
2007.
Dividend Distribution
In July 2003, the Board of Directors adopted our current dividend policy.
We have since distributed dividends five 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 take the
necessary steps (including if required a court approval) in order to enable
a distribution for the year 2007 of approximately $0.20 per share, 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. 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."
Accounting Treatment of Auction Rate Securities
On November 5, 2007, the Board of Directors, after discussions with the
Company's independent registered public accounting firm, concluded that the
balance sheets and statements of cash flows included in the Company's Form
20-F for the fiscal year ended December 31, 2006 should be amended in order
to correct the classification of auction rate securities on the balance
sheets and in the statements of cash flows of the Company. Auction rate
securities are long-term bonds that provide liquidity through a Dutch
auction process that resets the applicable interest rate at pre-determined
calendar intervals, generally every 28 days. This mechanism allows existing
investors either to roll over their holdings, whereby they will continue to
own their respective securities, or liquidate their holding by selling such
securities at par. Given the liquid nature of such securities, they had
previously been classified as cash equivalents on both the balance sheets
and in the statements of cash flows. However, given that such auction rate
securities have long-term stated maturities and that the issuers of such
auction rate securities are under no obligation to redeem them prior to
their stated maturities, the Company has determined that its investments in
such securities, consisting of $22.8 million as of December 31, 2006,
should have been classified as short-term investments, rather than as cash
equivalents.
This amendment will have no impact on previously reported results of
operations, cash flow from operating activities, total current assets,
total assets or stockholders' equity.
Investors or other interested parties should refer to the Company's amended
Annual Report on Form 20-F/A for the fiscal year ended December 31, 2006,
expected to be filed with the SEC within the next 30 days, for additional
information.
The recent uncertainties in the credit markets have affected the liquidity
of our holdings in auction rate securities, as auctions have been
unsuccessful, but at the same time we continue to receive interest every 28
days. While our investments are of high credit quality (AAA/Aaa), at this
time we are uncertain as to whether or when the liquidity issues relating
to these investments will worsen or improve. We do not believe that it is
necessary at this time to adjust the fair value of our portfolio of auction
rate securities, but we have decided to classify them as long-term
marketable securities on our balance sheet commencing in the third quarter
of 2007. As of September 30, 2007, we have a total of $20.3 million
invested in auction rate securities.
Conference Call Information
MIND will host a conference call on November 6, 2007 at 8:30 a.m., Eastern
Time, to discuss the Company's third quarter 2007 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 Wireless, Wireline, VoIP
and Quad-play carriers worldwide. A global company, with over ten years of
experience in providing solutions to carriers, MIND operates from offices
in Europe, Israel and the United States, serving customers in more than 40
countries around the world. For more information, visit MIND at:
www.mindcti.com.
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,
2007 2006 2006
-------- -------- --------
(Unaudited) (Audited)
------------------ --------
U.S. $ in thousands
----------------------------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents (1) $ 7,138 $ 4,247 $ 4,771
Short-term investments (1) 22,400 22,800
Accounts receivable:
Trade 3,798 4,862 5,385
Other 630 923 231
Deferred income taxes 133 8 154
Inventories 35 30 35
-------- -------- --------
T o t a l current assets 11,734 32,470 33,376
INVESTMENTS AND OTHER NON CURRENT
ASSETS:
Marketable debentures 10,000 10,000
Marketable securities (1) 20,300
Long term bank deposit 10,000
Other 958 834 1,003
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 1,342 1,790 1,558
INTANGIBLE ASSETS, net of accumulated
amortization 580 980 888
GOODWILL 6,966 6,966 6,966
-------- -------- --------
T o t a l assets $ 51,880 $ 53,040 $ 53,791
======== ======== ========
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable and accruals:
Trade $ 495 $ 594 $ 464
Other 1,596 1,497 2,509
Deferred revenues 1,486 1,580 1,236
Advances from customers 365 171 241
-------- -------- --------
T o t a l current liabilities 3,942 3,842 4,450
EMPLOYEE RIGHTS UPON RETIREMENT 1,488 1,495 1,482
-------- -------- --------
T o t a l liabilities 5,430 5,337 5,932
-------- -------- --------
SHAREHOLDERS' EQUITY:
Share capital 54 53 54
Additional paid-in capital 59,642 59,510 59,547
Capital surplus 525 244 325
Accumulated deficit (13,771) (12,104) (12,067)
-------- -------- --------
T o t a l shareholders' equity 46,450 47,703 47,859
-------- -------- --------
T o t a l liabilities and
shareholders' equity $ 51,880 $ 53,040 $ 53,791
======== ======== ========
(1) See "Accounting Treatment of Auction Rate Securities" above
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months Three months Year ended
ended September 30 ended September 30 December
------------------ ------------------ 31,
2007 2006 2007 2006 2006
-------- -------- -------- --------- ---------
(Unaudited) (Unaudited) (Audited)
------------------------------------- ---------
U.S. $ in thousands (except per share data)
-----------------------------------------------
REVENUES $ 12,884 $ 14,985 $ 4,028 $ 4,659 $ 20,060
COST OF REVENUES 3,659 4,482 1,039 1,392 5,675
-------- -------- -------- --------- ---------
GROSS PROFIT 9,225 10,503 2,989 3,267 14,385
RESEARCH AND DEVELOPMENT
EXPENSES 4,053 4,715 1,271 1,389 6,118
SELLING AND MARKETING
EXPENSES 2,802 2,735 880 868 3,628
GENERAL AND ADMINISTRATIVE
EXPENSES 1,269 1,353 447 595 2,135
-------- -------- -------- --------- ---------
OPERATING INCOME 1,101 1,700 391 415 2,504
FINANCIAL INCOME (EXPENSES)
- net 1,574 * (749) 586 304 * (222)
-------- -------- -------- --------- ---------
INCOME BEFORE TAXES ON
INCOME 2,675 951 977 719 2,282
TAXES ON INCOME 61 79 22 9 1,373
-------- -------- -------- --------- ---------
NET INCOME $ 2,614 $ 872 $ 955 $ 710 $ 909
======== ======== ======== ========= =========
EARNING PER SHARE:
Basic and diluted $ 0.12 $ 0.04 $ 0.04 $ 0.03 $ 0.04
======== ======== ======== ========= =========
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES USED IN
COMPUTATION OF EARNINGS
PER ORDINARY SHARE - IN
THOUSANDS:
Basic 21,583 21,510 21,593 21,528 21,515
======== ======== ======== ========= =========
Diluted 21,595 21,555 21,602 21,551 21,546
======== ======== ======== ========= =========
* Financial expenses for the 9 months period ended September 30, 2006 and
for the year ended December 31, 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,
2007 2006 2007 2006 2006
-------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Audited)
-------------------------------------- --------
U.S. $ in thousands
------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 2,614 $ 872 $ 955 $ 710 $ 909
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 650 1,149 186 334 1,391
Deferred income taxes,
net 76 8 (293)
Accrued severance pay 6 166 22 72 176
Capital loss (gain) on
sale of property and
equipment - net 10 (9) 2 (1) (3)
Employees share based
compensation expenses 200 244 69 83 325
Changes in operating asset
and liability items:
Decrease (increase)
in accounts receivable:
Trade 1,587 (1,473) 874 20 (1,996)
Interest accrued on
marketable
debentures (131) (133) (37)
Other (268) (192) (129) 25 537
Increase in Inventories (5)
Increase (decrease)
in accounts payable
and accruals:
Trade 31 (92) 55 (105) (222)
Other (913) (244) (15) (87) 768
Increase (decrease)
in deferred revenues 250 (64) 147 168 (408)
Increase (decrease)
in advances from
customers, net 124 (619) (1) (171) (549)
-------- -------- -------- -------- --------
Net cash provided by
(used in) operating
activities 4,236 (262) 2,040 1,048 593
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Decrease (increase) in
short-term investments
(1) 2,500 (22,400) (300) (150) (22,800)
Purchase of property and
equipment (256) (339) (89) (43) (379)
Amounts funded in
respect of accrued
severance pay (10) (74) (43) (62) (119)
Acquisition of
marketable debentures
held-to-maturity (10,000)
Withdrawal of long-term
bank deposits 20,000 30,000
Proceeds from sale of
property and Equipment 120 46 42 10 162
-------- -------- -------- -------- --------
Net cash provided by (used
in) investing activities 2,354 (2,767) (390) (245) (3,136)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Employee stock options
exercised and paid 95 111 4 149
Dividend paid (4,318) (3,009) (3,009)
-------- -------- -------- --------
Net cash provided by (used
in) financing activities (4,223) (2,898) 4 (2,860)
-------- -------- -------- --------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 2,367 (5,927) 1,654 803 (5,403)
BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING
OF PERIOD (1) 4,771 10,174 5,484 3,444 10,174
-------- -------- -------- -------- --------
BALANCE OF CASH AND CASH
EQUIVALENTS AT END OF
PERIOD (1) $ 7,138 $ 4,247 $ 7,138 $ 4,247 $ 4,771
======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW AND NON
CASH ACTIVITIES
Cash paid during the
year for income tax $ 867 $ 31 $ 14 $ 9 $ 39
======== ======== ======== ======== ========
(1) See "Accounting Treatment of Auction Rate Securities" above
Contact Information: For more information please contact: Andrea Dray MIND CTI Ltd. Tel: +972-4-993-6666