<PAGE>
APPROVED BY: Monica Eisinger
President and CEO
For Immediate Release
---------------------
CONTACT: MIND C.T.I. Ltd.
Michelle Melamed
Tel: 201-288-3900
Morgen-Walke Associates, Inc.
Michele Katz/Cathy Dawson
Press: Brian Maddox
Tel: 212-850-5600
MIND CTI REPORTS 115% RISE IN NET INCOME
FOR SECOND QUARTER
* Total Revenue Increases 99%
Yoqneam, Israel, September 5, 2000--MIND C.T.I. Ltd. (Nasdaq: MNDO) a developer,
manufacturer and marketer of real-time billing and customer care software for
Voice over IP service providers as well as other IP services, today announced
results for the second quarter ended June 30, 2000.
Revenues for the second quarter of 2000 increased 99% to $3.6 million from $1.8
million in the second quarter of 1999. Net income for the quarter ended June 30,
2000 rose 115% to $879,000 from $408,000 for the quarter ended June 30, 1999.
Including amortization of $5.4 million related to the beneficial conversion
feature of Mind's convertible preferred shares, the Company's net loss
applicable to ordinary shares was $4.5 million, or $0.32 per share during the
quarter ended June 30, 2000. These shares were converted into ordinary shares
upon consummation of MIND's initial public offering in August 2000. Earnings per
share, excluding amortization related to the beneficial conversion feature, were
$0.05 for the quarter ended June 30, 2000 compared to $0.03 for the quarter
ended June 30, 1999.
"Our second quarter results reflect the strength of our customer-oriented `pay
as you grow' business model," stated Monica Eisinger, President and CEO of MIND
C.T.I. "During the quarter, we continued to experience key customers expanding
the scale of the network supported by our software. Looking ahead, we see
continued growth in customer extensions in our key geographic regions in the
United States and Europe.
"Additionally, we continue to deepen our market penetration with new strategic
partnerships, extending our billing opportunities. Overall, the success of our
second quarter validates the strategy of our business model and we remain
confident in continuing this trend."
In August 2000, the Company sold 3,000,000 ordinary shares in an initial public
offering at $10.00 per share.
-more-
<PAGE>
MIND CTI PAGE 2
For the six months ended June 30, 2000, revenue increased 99% to $6.8 million
from $3.4 million in the prior year period. Net income increased 128% to $1.4
million from $597,000 for the six months ended June 30, 1999. Including the
accretion and amortization of beneficial conversion feature relating to the
Company's preferred shares, the net loss applicable to ordinary shares was $10.7
million, or $0.73 per share, for the six months ended June 30, 2000. Earnings
per share excluding the accretion and amortization of the beneficial conversion
feature, were $0.09 for the six months ended June 30, 2000 compared to $0.04 for
the six months ended June 30, 1999.
Second Quarter Highlights
-------------------------
Availability of MEIPS (MIND Enterprise IP System) Accounting Solution for Cisco
CallManager. The integration provides mutual customers with a best of class call
accounting solution for a new communication framework. Cisco's call processing
platform keeps track of all IP generated phone calls and provides an open
interface for integrating data in the MEIPS Accounting solution. MEIPS has the
ability to customize reports from call detail records within the call processing
platform and easily distribute the reports across the same IP infrastructure
that the calls were generated on.
Collaboration with Open Port to provide integrated billing solution. The two
companies are working together to offer service providers an integrated pre-and
post-paid billing and provisioning interface for enhanced Internet messaging
services. The solution will offer service provider customers reduced integration
costs and faster deployment. Rollout is slated for two phases, with a post-paid
billing and provisioning interface being piloted with service providers and
integrators in May 2000, and pre-paid interoperability expected to be rolled out
in the fourth quarter of 2000. Open Port and MIND are also jointly working on
marketing, selling and interoperability testing.
Strategic Alliance with TMNG.com to provide leading IP telephony solutions.
Working together on a non-exclusive basis with mutual clients, the two
companies will provide IP-based back-office infrastructure solutions that
empower service providers to seize new revenue opportunities. They will also
collaborate to further expand TMNG's e-Lexicon toolset, using the functionality
of MIND's leading-edge IP telephony billing and customer care solution, MIND-
iPhonEX(R).
As a reminder, MIND CTI will be hosting a conference call to discuss earnings
Wednesday, September 6, 2000, at 10:00 a.m. US EST.
-more-
<PAGE>
MIND CTI PAGE 3
About MIND
MIND is a leading provider of Billing & Customer Care, Accounting and Management
solutions for multiple IP services including Voice, Data, Content and Unified
Messaging. MIND's IP Telephony billing and customer care solutions are installed
at over 100 customers worldwide. MIND's convergent IP services billing system
provides ISPs, ITSPs and telcos with a real time solution for billing diverse IP
services. MIND operates from its Israeli headquarters and provides sales and
support services to its worldwide customer base from offices in the United
States and China. For more information, please visit the Company's Web site 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.
They involve risks, uncertainties, and assumptions, including the risks
discussed in the Company's filings with the United States Securities Exchange
Commission. The Company's actual results and stockholder values may differ
materially from those anticipated or expressed in these forward looking
statements.
###
(tables to follow)
<PAGE>
MIND C.T.I. LTD.
Condensed Consolidated Statement of Income (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 3,630 $ 1,821 $ 6,801 $ 3,406
Cost of revenues 506 338 929 626
-------- -------- -------- --------
Gross Profit 3,124 1,483 5,872 2,780
-------- -------- -------- --------
Research and Development Expenses-net 847 370 1,741 787
Selling, General and Administrative Expenses:
Selling 1,070 404 1,972 833
General and administrative 386 211 656 430
Non-Cash Compensation 71 - 149 -
-------- -------- -------- --------
Operating income 750 498 1,354 730
Financial income - net 151 20 172 35
-------- -------- -------- --------
Income before income taxes 901 518 1,526 765
Taxes on income 22 110 166 168
-------- -------- -------- --------
Net Income 879 408 1,360 597
-------- -------- -------- --------
Accretion of mandatorily redeemable, convertible A
Preferred shares to mandatory redemption value - - (6,672) -
Amortization of beneficial conversion feature of
Redeemable convertible preferred shares (5,417) - (5,417) -
-------- -------- -------- --------
Net income (loss) applicable to ordinary shares $ (4,538) $ 408 $(10,729) $ 597
======== ======== ======== ========
Earnings (loss) per ordinary share
Basic $ (0.32) $ 0.03 $ (0.73) $ 0.04
Diluted $ (0.32) $ 0.03 $ (0.73) $ 0.04
Weighted average number of ordinary shares used in
Computation of earnings (loss) per ordinary share -
In thousands:
Basic 14,337 14,892 14,664 14,451
Diluted 14,337 15,097 14,664 14,649
</TABLE>
(table to follow)
<PAGE>
MIND C.T.I. LTD.
Consolidated Balance Sheets (in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
-------------------------------
2000 1999
---------- ----------
(Unaudited)
-------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 13,409 $ -
Short-term investments 98 754
Accounts receivable:
Trade 4,408 2,577
Other 326 250
Inventories 36 37
---------- ----------
Total current assets 18,277 6,264
Property and equipment
Cost 1,778 1,392
Less - accumulated depreciation and
amortization 562 421
---------- ----------
1,216 971
---------- ----------
Other Assets 284 258
---------- ----------
Total assets $ 19,777 $ 7,493
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
(NET OF CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable and accruals:
Trade $ 929 $ 201
Other 2,413 1,648
Total current liabilities 3,342 1,849
Accrued Severence Pay 613 424
---------- ----------
Total current liabilities 3,955 2,273
---------- ----------
Mandatorily Redeemable Convertible Preferred Shares 20,778 -
---------- ----------
SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY):
Share capital 36 36
Additional paid-in capital 6,781 3,680
Deferred stock compensation (809) (274)
Retained earnings (accumulated deficit) (10,964) 1,778
---------- ----------
Total shareholders' equity (capital deficiency) (4,956) 5,220
---------- ----------
Total liabilities and shareholders' equity
(net of capital deficiency) 19,777 7,493
========== ==========
</TABLE>
###
