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| Press Release - October 22, 2002 |
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Yoqneam, Israel, October 22, 2002 MIND CTI Reports Return to Profitability in Third Quarter Conference Call Scheduled for Tuesday, October 22, 2002 at 9:00 a.m. ET (15:00 Israel) 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 third quarter ended September 30, 2002. Revenue for the third quarter of 2002 was $2.5 million compared with $2.2 million for the third quarter of 2001, an increase of 15%. Net profit for the quarter ended September 30, 2002 was $182 thousand or $0.01 per share, compared with a net loss of $823 thousand, or $0.04 loss per share in the third quarter of 2001. During the third quarter of 2002, MIND’s cash position increased by $962 thousand and on September 30, 2002 MIND’s cash position was $ 41.1 million. Monica Eisinger, MIND’s President and CEO, commented: “Like many of the companies in our market space, prior to the economic downturn of 2001 we were focused on growing in order to meet what we believed would be the expanding telecom markets of 2001 and beyond. While we did not anticipate the downturn, we believe that once it began we recognized its severity and length and gradually reduced costs in order to adjust to market conditions. We are pleased that we returned to profitability during the third quarter of 2002, with the help of financial income. We anticipate that in the current market environment we will maintain our current revenue levels and break-even from operations commencing with the first quarter of 2003.” Eisinger continued, “Improving our bottom line while ensuring that we maintain our service levels and technological edge is only one part of the story at MIND. The other part is our ongoing business accomplishments, such as the successful implementation at our previously announced major win, H3G Italy, and winning five new customers around the world this quarter. We remain focused on exploiting the business opportunities that arise during the current slow market while positioning the company to take advantage of the market recovery when it occurs.” During the third quarter of 2002, MIND had changes in its board of directors, following the share purchase agreement between Polar Communications Ltd. and ADC Telecommunications Israel Ltd. that resulted in Polar holding approximately 24.9% of MIND’s outstanding shares. At a shareholders meeting held during the third quarter of 2002, Mr. Rimon Ben-Shaoul was appointed to serve as a director until the Company’s annual general meeting of shareholders to be held in 2005. Mr. Ben-Shaoul serves as the President of Koonras Technologies Ltd., an investment company controlled by Polar Investments Ltd. In addition, Mr. Ben-Shaoul serves on the boards of directors of a number of publicly traded technology companies. Mr. Ilan Rosen, who served on the Company’s board of directors since 1997, resigned during the third quarter of 2002 as a result of the agreement between Polar and ADC. MIND and Monica Eisinger personally express their profound gratitude and appreciation to Mr. Rosen for his invaluable assistance to the company. Conference Call MIND will be hosting a conference call on Tuesday, October 22, 2002 at 9:00 a.m. ET. To participate in the conference call, local and international callers should call at least five minutes before the scheduled time and dial either +1-972-512-0694 (international callers) or 800-556-3831 (accessible from the US & Canada). The passcode number is 00373. A replay of the call will be made available on MIND’s website. About MIND MIND is a leading global provider of real-time mediation, rating, billing and customer care solutions for pre-paid and post-paid voice, data and content. Our customers include worldwide leading carriers servicing millions of subscribers, using our end-to-end solutions for the deployment of new services. MIND operates from offices in the United States, Europe, China and Israeli headquarters. For information about MIND and its products visit the company Web site: http://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 future results may differ materially. They involve uncertainties, assumptions, and risks, including worsening of the global economy and the telecom market, and the risks discussed in the Company's filings with the United States Securities Exchange Commission.
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31,
2002 2001 2001
-------------------------
(Unaudited) (Audited)
-------------------------
U.S. $ in thousands
-------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 10,300 39,251 39,723
Accounts receivable:
Trade 2,629 5,021 2,914
Other 754 818 948
Inventories 28 19 26
-----------------------
Total current assets 13,711 45,109 43,611
-----------------------
INVESTMENTS:
Long term bank deposits 30,824
Investment in a company 93
-----------------------
30,824 93
-----------------------
PROPERTY AND EQUIPMENT:
Cost 3,429 3,214 3,363
Less - accumulated depreciation and
amortization 1,955 1,208 1,373
-----------------------
1,474 2,006 1,990
-----------------------
OTHER ASSETS, net of accumulated amortization 986 1,332 1,133
-----------------------
Total assets 46,995 48,540 46,734
=======================
Liabilities and shareholders' equity
CURRENT LIABILITIES -
accounts payable and accruals:
Trade 473 522 485
Other 2,252 1,478 1,486
-----------------------
Total current
liabilities 2,725 2,000 1,971
ACCRUED SEVERANCE PAY 763 969 772
-----------------------
Total liabilities 3,488 2,969 2,743
-----------------------
MINORITY INTEREST 89
-----------------------
SHAREHOLDERS' EQUITY
Share capital 52 51 52
Additional paid-in capital 61,078 61,258 61,078
Deferred stock compensation (31) (373) (145)
Accumulated deficit (17,592)(15,454) (16,994)
-----------------------
Total shareholders'
equity 43,507 45,482 43,991
-----------------------
Total liabilities and
shareholders' equity 46,995 48,540 46,734
=======================
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year
Nine months Three months ended
ended September ended September December
30 30 31,
2002 2001 2002 2001 2001
------------------------------------------
(Unaudited) (Unaudited) (Audited)
------------------------------------------
U.S. $ in thousands (except per share data)
------------------------------------------
REVENUES $7,447 $8,056 $2,527 $2,204 $10,469
COST OF REVENUES 1,873 1,535 589 458 2,242
----------------------------------------
GROSS PROFIT 5,574 6,521 1,938 1,746 8,227
RESEARCH AND DEVELOPMENT
EXPENSES - net 2,903 3,306 949 1,005 4,423
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES:
Selling 3,396 5,028 1,028 1,609 6,767
General and
administrative 994 2,528 353 305 3,099
----------------------------------------
OPERATING LOSS (1,719) (4,341) (392) (1,173) (6,062)
FINANCIAL AND OTHER INCOME -
net 1,121 1,491 574 350 1,590
----------------------------------------
INCOME (LOSS) BEFORE TAXES
ON INCOME (598) (2,850) 182 (823) (4,472)
TAXES ON INCOME 7
----------------------------------------
INCOME (LOSS) BEFORE
MINORITY INTEREST (598) (2,850) 182 (823) (4,479)
MINORITY INTEREST IN LOSSES
OF A SUBSIDIARY 89
----------------------------------------
NET INCOME (LOSS) $(598)$(2,850) $182 $(823) $(4,390)
========================================
EARNINGS (LOSS) PER ORDINARY
SHARE - basic and diluted $(0.03) $(0.14) $0.01 $(0.04) $(0.21)
========================================
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES USED IN
COMPUTATION OF EARNINGS
(LOSS) PER ORDINARY
SHARE - IN THOUSANDS:
Basic 20,666 20,604 20,666 20,604 20,654
========================================
Diluted 20,666 20,604 20,730 20,604 20,654
========================================
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Retained
Additional Deferred earnings
Share paid-in Stock (accumulated
capital Capital Compensation deficit) Total
-------------------------------------------------
U.S. $ in thousands
-------------------------------------------------
BALANCE AT JANUARY 1,
2002 (audited) 52 61,078 (145) (16,994) 43,991
CHANGES DURING THE
NINE MONTHS
ENDED SEPTEMBER
30, 2002
(unaudited):
Net loss (598) (598)
Employee stock
options exercised
and paid (a) 7 7
Write-off of
deferred
compensation
related to employee
stock option grants
as a result
of forfeiting
of options (7) 7 -,-
Amortization of
deferred
compensation
related to employee
stock option granted 107 107
---------------------------------------------
BALANCE AT SEPTEMBER
30, 2002 (unaudited) 52 61,078 (31) (17,592) 43,507
=============================================
BALANCE AT JANUARY 1,
2001 (audited) 51 61,233 (453) (12,604) 48,227
CHANGES DURING THE
NINE MONTHS
ENDED SEPTEMBER 30, 2001
(unaudited):
Net loss (2,850) (2,850)
Employee stock
options
exercised and
paid (a) 25 25
Amortization of
deferred
compensation
related to
employee stock
option
granted 80 80
---------------------------------------------
BALANCE AT SEPTEMBER
30, 2001 (unaudited) 51 61,258 (373) (15,454) 45,482
=============================================
BALANCE AT JULY 1, 2002
(unaudited) 52 61,080 (64) (17,774) 43,294
CHANGES DURING THE THREE
MONTHS
ENDED SEPTEMBER 30, 2002
(unaudited):
Net income 182 182
Write-off of deferred
compensation related
to employee stock
option grants as a
result of forfeiting of
options (2) 2 -,-
Amortization of deferred
compensation
related to employee
stock option granted 31 31
---------------------------------------------
BALANCE AT SEPTEMBER 30,
2002 (unaudited) 52 61,078 (31) (17,592) 43,507
=============================================
BALANCE AT JULY 1, 2001
(unaudited) 51 61,233 (410) (14,631) 46,243
CHANGES DURING THE THREE
MONTHS
ENDED SEPTEMBER 30, 2001
(unaudited):
Net loss (823) (823)
Employee stock options
exercised and
paid (a) 25 25
Amortization of
deferred compensation
related to employee
stock option grants 37 37
---------------------------------------------
BALANCE AT SEPTEMBER 30,
2001 (unaudited) 51 61,258 (373) (15,454) 45,482
=============================================
(a) Represents an amount less than $1,000
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