-- Revenues were $5.6 million, representing a 10% increase over the
fourth quarter of 2006, and 38% increase over the third quarter of 2007.
-- Operating income, excluding amortization of intangible assets and
equity-based compensation expense, was $395 thousand, or 7% of revenue.
-- GAAP operating income was $157 thousand, or 3% of revenue.
Year 2007 Operating Highlights
-- Revenues were $18.4 million, compared with $20.1 million in 2006.
-- Operating income, excluding amortization of intangible assets and
equity-based compensation expense, was $2 million.
-- GAAP operating income was $1.3 million, compared with $2.5 million in
2006.
-- Cash flow from operating activities was $4.7 million.
Revenue Distribution for Q4 2007
Sales in the Americas represented 36% and sales in Europe represented 52%
of total revenue.
Revenue from our customer care and billing software totaled $4.7 million,
while revenue from our enterprise call management software was $852
thousand. The revenue breakdown from our business lines of products was
$1.6 million, or 28% from licenses and $4.0 million, or 72% from
maintenance and additional services.
Revenue Distribution for Full Year 2007
Sales in the Americas represented 42% and sales in Europe represented 43%
of total revenue.
Revenue from our customer care and billing software totaled $15.4 million,
while revenue from our enterprise call management software was $3 million.
The revenue breakdown from our business lines of products was $5.9 million,
or 32% from licenses and $12.5 million, or 68% from maintenance and
additional services.
Two New Wins
MIND has been selected by a wireless communications service provider in the
US to support its unique model for mobile solutions thanks to its product
flexibility and openness in managing innovative needs. This is a five-year
agreement for managed services (extended maintenance and enhanced support
services that include performing day-to-day operational billing tasks).
The MIND solution that will be deployed includes consolidated billing,
customer care, order management, inventory, provisioning and mediation.
The second win is with a provider of both wireless and wireline services in
the US. As a first phase MIND was chosen to perform billing and customer
care for the new offering of the wireless services. This new win is for the
fix line operation, where the consolidated MIND billing, customer care,
order management and inventory platform will be deployed to replace legacy
systems for voice, data and corporate services. The MIND platform, once
fully rolled out, should provide a unified view of all customers and
services across all offerings.
Monica Eisinger, Chairperson and CEO, commented: "We are pleased to
announce these two new important wins. These wins reflect our strengthening
presence in the US market, both in the mobile and the wireline industry. We
believe that our innovative solutions and reputation of on-time successful
implementations will help us win additional contracts in the near future."
Auction Rate Investments
As has been widely described in the world financial press, recent
uncertainties in the credit markets have adversely affected the liquidity
of auction rate securities as potential buyers have been unwilling to
purchase these securities, many of which are guaranteed by insurers
adversely affected by the existing conditions in the mortgage securities
market. While the liquidity of these investments has been significantly
impacted by these conditions, we continue to receive interest payments
every 28 days. We are not able to predict whether conditions in the market
for these securities will worsen or improve. As of December 31, 2007, we
have a total of $20.3 million invested in asset backed auction rate
securities and $12.4 million in cash and cash equivalents. As a result of
the conditions summarized above, we have been unable to obtain third-party
valuations for these securities in a cost-effective and timely manner. The
complexity of the valuation is derived by the fact that this security is
collateralized by 126 structured finance transactions. We plan to complete
an independent valuation in the second quarter, prior to the publication of
our audited financial statements. Such valuation may require a charge to
earnings for Q4 2007 and 2007 to reflect a material impairment of our
long-term investments. However, we believe we have sufficient cash
resources to withstand the likely effects of the illiquidity of our auction
rate securities on our operations.
On February 20, 2008, we filed a Statement of Claim with the Financial
Industry Regulatory Authority and commenced an arbitration against the
international bank and certain employees thereof that invested these funds
on behalf of the Company. The claim alleges, among other things, that the
bank was supposed to invest the funds in highly liquid, highly safe, 28-day
auction-rate securities, but -- without the Company's authorization --
invested the funds in collateralized debt obligations (CDOs). In
particular, the claim alleges that the bank invested the funds in a
security called "Mantoloking CDO" without telling the Company that this was
a CDO investment until after the purchase had already occurred. The claim
also describes how, after the fact, the bank advised that the security,
which has a stated maturity date in the year 2046, had been rolled "due to
failed auction."
The Company's claim includes causes of action for fraud, violation of
various NASD rules (including the NASD's suitability rule), violation of
Section 10(b) of the U.S. Securities Exchange Act and SEC Rule 10b-5,
negligent misrepresentation, breach of fiduciary duty, conversion,
misappropriation and breach of contract. The claim seeks, among other
things, damages and other relief from all of the respondents, including
return of all the funds plus compensatory and punitive damages. We intend
to pursue the arbitration vigorously. The arbitration, however, has just
begun and no predictions of possible outcomes can be made at this time.
Dividend Distribution
On November 5, 2007 the Board of Directors resolved that the Company should
seek the court approval formally required in order to enable a distribution
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 26, 2008 the Board declared a
cash dividend of $0.20 per share before withholding tax. According to the
pre-ruling from the Israeli Tax Authority, tax will be withheld at a rate
of 20%. This pre-ruling applies only to this particular dividend and not to
future dividends, if any.
The record date for the dividend will be March 18, 2008 and the payment
date will be April 2, 2008.
Appointment of New CFO
MIND also announced today the appointment of Rafi Wiesler, 56, as the
Company's new Chief Financial Officer (CFO). Mr. Wiesler replaces Oren
Bryan who served at MIND since 2005 and as CFO since mid 2006 and who now
intends to pursue other business opportunities. Rafi held a number of key
positions, including CFO of VocalTec Ltd. (Contact Information: For more information please contact: Andrea Dray MIND CTI Ltd. Tel: +972-4-993-6666