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MIND C.T.I. 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 fourth quarter and year ended December 31, 2006.

Monica Eisinger, Chairperson and CEO, commented: "I am extremely pleased with reaching record revenue in 2006 and with improved operating income in the last quarter. In 2006 we changed our business model and achieved higher average deal size and better long-term visibility. We successfully completed deployments for some existing customers and had new wins and follow-on orders each quarter. In 2007 we intend to focus on internal growth and to increase our investment in sales and marketing. We estimate that in the long term we will benefit from the increased need for convergent billing solutions that we encounter in today's markets."

Financial Highlights of Q4 2006

• Revenues were $5.08 million, similar to the fourth quarter of 2005, representing a 9% increase over the third quarter of 2006.
• Operating income, excluding amortization of intangible assets of $93 thousand and equity-based compensation expense of $81 thousand, was $978 thousand, or 19% of revenue.
• GAAP operating income was $804 thousand, or 16% of revenue.
• Net income, excluding amortization of intangible assets of $93 thousand, equity-based compensation expense of $81 thousand and a one-time tax expense of $1.24 million, was $1.45 million or $0.07 per share.
• GAAP net income was $37 thousand, or $0.00 per share, mainly due to the one-time tax expense of $1.24 million.
• Cash flow from operating activities in Q4 2006 was $832 thousand.
• Strong cash position of approximately $38 million on December 31, 2006.

Year 2006 Financial Highlights

• Revenues were $20.06 million, a 29% increase over 2005.
• Operating income, excluding amortization of intangible assets of $773 thousand and equity-based compensation expense of $323 thousand, was $3.6 million, representing a 9% increase over 2005.
• GAAP operating income was $2.5 million, compared with $2.85 million in 2005.
• Net income, excluding amortization of intangible assets of $773 thousand, equity-based compensation expense of $323 thousand, a one-time loss from withdrawal of long-term bank deposits of $1.33 million and a one-time tax expense of $1.24 million, was $4.57 million, or $0.21 per share, similar to 2005.
• GAAP net income was $909 thousand or $0.04 per diluted share, compared with $4.06 million, or $0.19 per diluted share in 2005.

Taxes on Income
Recently we went through a tax assessment process, which included disputes with the Israeli Tax Authorities on issues related to the approved enterprise regime. On February 20, 2007, the Company finalized its tax assessment for tax years 2003 to 2005, which resulted in an additional tax expense in the amount of $1.24 million. Of this amount, approximately $800 thousand will affect the Company's cash flow (in 2007).

Revenue Distribution for Q4 2006
Sales in the Americas represented 48% and sales in Europe represented 42% of total revenue. Revenue from our customer care and billing software totaled $4.17 million, while revenue from our enterprise call management software was $ 910 thousand. The revenue breakdown from our business lines of products was $2.09 million, or 41% from licenses, $1.60 million, or 32% from maintenance and $1.39 million, or 27% from services.

Revenue Distribution for Full Year 2006
Sales in the Americas represented 48% and sales in Europe represented 38% of total revenue. Revenue from our customer care and billing software totaled $17.18 million, while revenue from our enterprise call management software was $2.88 million. The revenue breakdown from our business lines of products was $8.47 million, or 42% from licenses, $6.04 million, or 30% from maintenance and $5.55 million, or 28% from services.

Dividend Distribution
On October 30, 2006 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, in an amount similar to previous years. 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. Following the receipt of approval from the District Court of Haifa, on February 20, 2007 the Board declared a cash dividend of $0.20 per share before withholding tax. The Company expects to receive shortly a pre-ruling from the Israeli Income Tax Authorities regarding the applicable rate of withholding tax. The withholding rate, as well as the record date for the distribution of the dividend and the payment date will be announced promptly after we receive the formal ruling.

Conference Call Information
MIND will host a conference call on February 21, at 10:00 a.m., Eastern Standard Time, to discuss the Company's fourth quarter and 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.

• Andrea Dray
  MIND CTI Ltd.
  Tel: +972-4-993-6666
  investor@mindcti.com
  
  
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