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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001119083-04-000029.txt : 20041028
<SEC-HEADER>0001119083-04-000029.hdr.sgml : 20041028
<ACCEPTANCE-DATETIME>20041028082817
ACCESSION NUMBER:		0001119083-04-000029
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20041025
FILED AS OF DATE:		20041028
DATE AS OF CHANGE:		20041028

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MIND CTI LTD
		CENTRAL INDEX KEY:			0001119083
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-31215
		FILM NUMBER:		041100962

	BUSINESS ADDRESS:	
		STREET 1:		INDUSTRIAL PARK BUILDING 7
		CITY:			YOQNEAM ILIT ISRAEL
		STATE:			L3
		ZIP:			20692
		BUSINESS PHONE:		97249936666

	MAIL ADDRESS:	
		STREET 1:		PO BOX 144
		CITY:			YOQNEAM ILIT ISRAEL
		ZIP:			20692
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>mindcti6k.htm
<TEXT>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">

<html>
<head>
	<title>MIND CTI </title>
</head>
<body bgcolor="#ffffff" text="#000000" link="#0000ff" vlink="#0000ff" alink="#ff0000">
<a name="top"></a>
<center>
	<h1>MIND CTI Reports 170% Rise in Operating Income for Third Quarter</h1>
	<h2>* $4.7 Million Nine Months Net Income<br>
		* Revenue for Third Quarter increases 37%
	</h2>
</center>

<b>Key Highlights</b><br>
<ul>
	<li>Revenues were $4.6 million, a 37% increase over the third quarter of 2003.
	<li>Net income of $0.08 per diluted share, exceeding guidance of $0.07.
	<li>Sequential quarterly revenue growth of 7 %.
	<li>10th consecutive quarter of revenue growth and improved profitability of operations.
	<li>Five new customers and four license upgrades around the world.
	<li>Guidance: Expected revenue growth of 37% for full year 2004 and 20% operating margins in Q4 2004.
</ul>

<p>
	<b>Yoqneam, Israel, October 25, 2004</b>- MIND C.T.I. LTD. (NASDAQ: MNDO), a leading global provider of real-time mediation, provisioning, rating, billing and customer care solutions for pre-paid and post-paid voice, data and video, today announced results for the third quarter ended September 30, 2004.
</p><p>
	Monica Eisinger, President and CEO, commented: "Our conservative approach in building our business continues to prove itself as ideal for the existing environment. We believe that MIND gained market share during the last two years and continues to do so. Our product-based approach and our customer-oriented business model enabled us to grow revenues for the tenth consecutive quarter. At the same time, the lasting challenging global environment created acquisition targets at reasonable valuations and we strive to locate the right addition that will enable us to significantly further enlarge the company.
</p><p>
	MIND's know-how in the IP space enables us to successfully deploy "best-in-class" solutions for Service Enabling of IP services in the wireless arena and convergent billing for carriers that provide both traditional and IP services. We expect that our cost structure and our high gross margins will enable us to reach over 20% operating margins in the near future."
</p><p>
	<b>New Executive Addition</b><br>
	We are in a continuous process of gradually increasing the company size and continue to add experienced people to further support the growth and strengthen our management team. Our new CTO, Mr. Doron Segal, brings vast experience with design and implementation of complex telco-grade systems. Recently Mr. Segal was AVP at Comverse, with responsibility for technical requirements and system level design for most Comverse products and customer projects. As the company CTO he will be responsible for the system architecture, product design and maintaining MIND's technological leadership.
</p><p>
	As of September 30, 2004, we had 243 employees in our offices in Israel, Romania, the United States and China.
</p><p>
	<b>Financial Highlights of Q3 2004</b>
	<ul>
		<li>Revenues were $4.6 million, a 37% increase over the third quarter of 2003.
		<li>Operating income was $809 thousand, a 170% increase over the third quarter of 2003 and interest income was $1.04 million.
		<li>Net income was $1.81 million or $0.08 per diluted share, compared with a net income of $915 thousand or $0.04 per share in the third quarter of 2003.
	</ul>
</p><p>
	<b>Sales Highlights</b><br>
	During the third quarter, our bookings included five new customer wins, as well as four license upgrades:
	<ul>
		<li>MIND was chosen by a large VoIP carrier to implement an end-to-end mediation, billing and customer care solution for the carrier's prepaid traffic. The implementation will start in Q4 and includes milestones over the following 12 months.
		<li>MIND was chosen by three additional VoIP carriers, one in Asia, and two in the Americas to support their plan to offer IP voice services.
		<li>A major European carrier selected our Service Enabling solution for IP services over wireless networks for one location in Europe. This solution includes active mediation for IP equipment.
		<li>We have been awarded four license upgrades: two at European customers, one in US and one in Africa.
	</ul>
</p><p>
	<b>Revenue Distribution for Q3 2004</b><br>
	Revenue from our customer care and billing software totaled $4.01 million, while revenue from our enterprise call management software was $597 thousand. The revenue breakdown from our business lines of products was $2.9 million, or 64%, from licenses, $1.2 million, or 25%, from maintenance and $506 thousand, or 11%, from services.
</p><p>
	<b>Conference Call Information </b><br>
	MIND will host a conference call on October 26, at 8:30 a.m., Eastern Standard Time, to discuss the Company's third quarter and 2004 results as well as 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.
</p><p>
	<b>About MIND</b><br>
	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 Europe, the United States, China and Israeli headquarters.
</p><p>
	For financial information, reports and presentations, please visit the Investor Relations site: http://www.mindcti.com/ir
</p><p>
	<font size="-1">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.</font>
</p><p>
	<b>For more information please contact:</b><br>
	Andrea Dray <br>
	MIND CTI Ltd. <br>
	Tel: +972-4-993-6666 <br>
	investor@mindcti.com
</p>

<center>(tables to follow)</center>
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<p>
<hr width="100%">

<a name="table"></a>
<a href="#top"><font size="1"><b>Back to top</b></font></a>

<center><h2>CONDENSED CONSOLIDATED BALANCE SHEETS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr>
	<td></td>
	<td colspan="2" align="center"><b><font size="2">September 30</font></b></td>
	<td align="right"><b><font size="2">December 31</font></b></td></tr>
<tr>
	<td></td>
	<td align="center"><font size="2"><b>2004</b></font></td>
	<td align="center"><font size="2"><b>2003</b></font></td>
	<td align="center"><font size="2"><b>2003</b></font></td></tr>
<tr>
	<td></td>
	<td align="center"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center"><font size="2"><b>(Audited)</b></font></td></tr>
<tr>
	<td></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr>
	<td></td>
	<td colspan="3" align="center"><font size="2">U.S. $ in thousands</font></td></tr>
<tr>
	<td></td>
	<td colspan="3" align="center"><HR WIDTH="100%" SIZE="1" NOSHADE></td></tr>
</tr>
<tr BGCOLOR="#CCEEFF"><td colspan="4"><b>A s s e t s</b></td></tr>
<tr><td><b>CURRENT ASSETS:</b>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Cash and cash equivalents</td><td align="right"><font size="2">$7,870</font></td><td align="right"><font size="2">$6,085</font></td><td align="right"><font size="2">$4,391</font></td></tr>
<tr><td><p style="margin-left:20px">	Accounts receivable:
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">	Trade	</td><td align="right"><font size="2">	3,071	</font></td><td align="right"><font size="2">	1,476 	</font></td><td align="right"><font size="2">	2,181 	</font></td></tr>
<tr><td><p style="margin-left:40px">	Interest accrued on long-term bank deposits	</td><td align="right"><font size="2">	1,511	</font></td><td align="right"><font size="2">	*958 	</font></td><td align="right"><font size="2">	*482 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">	Other	</td><td align="right"><font size="2">	800	</font></td><td align="right"><font size="2">	848 	</font></td><td align="right"><font size="2">	*864 	</font></td></tr>
<tr><td><p style="margin-left:20px">	Inventories	</td><td align="right"><font size="2">	11	</font></td><td align="right"><font size="2">	14 	</font></td><td align="right"><font size="2">	11 	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr><td><p style="margin-left:40px">T o t a l current assets	</td><td align="right"><font size="2">	13,263	</font></td><td align="right"><font size="2">	8,423 	</font></td><td align="right"><font size="2">	7,929 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	LONG-TERM BANK DEPOSITS	</td><td align="right"><font size="2">	47,000	</font></td><td align="right"><font size="2">	*40,000 	</font></td><td align="right"><font size="2">	*40,000 	</font></td></tr>
<tr><td>	<b>PROPERTY AND EQUIPMENT</b>, net ofaccumulated depreciation and amortization	</td><td align="right"><font size="2">	1,768	</font></td><td align="right"><font size="2">	1,230 	</font></td><td align="right"><font size="2">	1,182 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	<b>OTHER ASSETS,</b> net of accumulated amortization	</td><td align="right"><font size="2">	785	</font></td><td align="right"><font size="2">	886 	</font></td><td align="right"><font size="2">	868 	</font></td></tr>
<tr>
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">T o t a l assets	</td><td align="right"><font size="2">	$62,816 	</font></td><td align="right"><font size="2">	$51,497 	</font></td><td align="right"><font size="2">	$49,979 	</font></td></tr>
<tr>
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>

<tr BGCOLOR="#CCEEFF"><td colspan="4">	<b>Liabilities and shareholders' equity</b>	</td></tr>
<tr><td colspan="4">	<b>CURRENT LIABILITIES -</b>	</td></tr>
<tr BGCOLOR="#CCEEFF"><td colspan="4"><p style="margin-left:20px">Accounts payable and accruals:	</td></tr>
<tr><td><p style="margin-left:40px">Trade	</td><td align="right"><font size="2">	$322 	</font></td><td align="right"><font size="2">	$224 	</font></td><td align="right"><font size="2">	$718 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">Other	</td><td align="right"><font size="2">	3,619	</font></td><td align="right"><font size="2">	3,198 	</font></td><td align="right"><font size="2">	2,723 	</font></td></tr>
<tr>
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:60px">T o t a l current liabilities	</td><td align="right"><font size="2">	3,941	</font></td><td align="right"><font size="2">	3,422 	</font></td><td align="right"><font size="2">	3,441 	</font></td></tr>
<tr><td>	<b>BANK LOANS</b>	</td><td align="right"><font size="2">	10,000	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	<b>EMPLOYEE RIGHTS UPON RETIREMENT</b>	</td><td align="right"><font size="2">	1,117	</font></td><td align="right"><font size="2">	942 	</font></td><td align="right"><font size="2">	998 	</font></td></tr>
<tr>
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:60px">T o t a l liabilities	</td><td align="right"><font size="2">	15,058	</font></td><td align="right"><font size="2">	4,364 	</font></td><td align="right"><font size="2">	4,439 	</font></td></tr>
<tr>
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	<b>SHAREHOLDERS' EQUITY: </b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	  	</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:20px">Share capital	</td><td align="right"><font size="2">	53	</font></td><td align="right"><font size="2">	52 	</font></td><td align="right"><font size="2">	53 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Additional paid-in capital	</td><td align="right"><font size="2">	58,728	</font></td><td align="right"><font size="2">	61,187 	</font></td><td align="right"><font size="2">	58,514 	</font></td></tr>
<tr><td><p style="margin-left:20px">Accumulated deficit	</td><td align="right"><font size="2">	-11,023	</font></td><td align="right"><font size="2">	-14,106	</font></td><td align="right"><font size="2">	-13,027	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr><td><p style="margin-left:40px">T o t a l shareholders' equity 	</td><td align="right"><font size="2">	47,758	</font></td><td align="right"><font size="2">	47,133 	</font></td><td align="right"><font size="2">	45,540 	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr><td>	To t a l liabilities and shareholders' equity	</td><td align="right"><font size="2">	$62,816 	</font></td><td align="right"><font size="2">	$51,497 	</font></td><td align="right"><font size="2">	$49,979 	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
	<td></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="right"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
</table>
* Reclassified.
<p><center><font size="2">I</font></center>
<!-- _________________________________________________________________________________________________-->
<hr width="100%">
</p>

<a name="table2"></a>
<a href="#top"><font size="1"><b>Back to top</b></font></a>

<center><h2>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr>
	<td></td>
	<td align="center" colspan="2" width="200"><font size="2"><b>Nine months<Br>ended September 30</b></font></td>
	<td align="center" colspan="2" width="200"><font size="2"><b>Three months<br>ended September 30</b></font></td>
	<td align="center" width="100"><font size="2"><b>Year ended December 31,</b></font></td></tr>
<tr>
	<td></td><td align="right"><font size="2"><b>2004</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td>
	<td align="right"><font size="2"><b>2004</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td></tr>
<tr>
	<td></td>
	<td align="center" colspan="2"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center" colspan="2"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center"><font size="2"><b>(Audited)</b></font></td></tr>
<tr>
	<td></td>
	<td align="center" colspan="2"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center" colspan="2"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
<tr>
	<td></td>
	<td align="center" colspan="6"><font size="2"><b>U.S. $ in thousands (except per share data)</b></font></td></tr>
<tr>
	<td></td>
	<td align="center" colspan="6"><HR WIDTH="100%" SIZE="1" NOSHADE></td></tr>
	<tr BGCOLOR="#CCEEFF"><td>	<b>REVENUES</b>	</td><td align="right"><font size="2">	$12,926 	</font></td><td align="right"><font size="2">	$9,294 	</font></td><td align="right"><font size="2">	$4,602 	</font></td><td align="right"><font size="2">	$3,363 	</font></td><td align="right"><font size="2">	$12,936 	</font></td></tr>
	<tr><td>	<b>COST OF REVENUES</b>	</td><td align="right"><font size="2">	3,189	</font></td><td align="right"><font size="2">	2,306 	</font></td><td align="right"><font size="2">	1,102	</font></td><td align="right"><font size="2">	852 	</font></td><td align="right"><font size="2">	3,208 	</font></td></tr>
<tr>
	<td></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
	<tr BGCOLOR="#CCEEFF"><td>	<b>GROSS PROFIT</b>	</td><td align="right"><font size="2">	9,337	</font></td><td align="right"><font size="2">	6,988 	</font></td><td align="right"><font size="2">	3,500	</font></td><td align="right"><font size="2">	2,511 	</font></td><td align="right"><font size="2">	9,728 	</font></td></tr>
	<tr><td>	<b>RESEARCH AND DEVELOPMENT EXPENSES</b> - net	</td><td align="right"><font size="2">	2,870	</font></td><td align="right"><font size="2">	2,430 	</font></td><td align="right"><font size="2">	1,024	</font></td><td align="right"><font size="2">	848 	</font></td><td align="right"><font size="2">	3,319 	</font></td></tr>
	<tr BGCOLOR="#CCEEFF"><td>	<b>SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
	<tr><td><p style="margin-left:20px">Selling	</td><td align="right"><font size="2">	3,460	</font></td><td align="right"><font size="2">	2,945 	</font></td><td align="right"><font size="2">	1,130	</font></td><td align="right"><font size="2">	1,067 	</font></td><td align="right"><font size="2">	4,065 	</font></td></tr>
	<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">General and administrative	</td><td align="right"><font size="2">	1,243	</font></td><td align="right"><font size="2">	853 	</font></td><td align="right"><font size="2">	537	</font></td><td align="right"><font size="2">	296 	</font></td><td align="right"><font size="2">	1,149 	</font></td></tr>
<tr>
	<td></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td></tr>
	<tr BGCOLOR="#CCEEFF"><td>	<b>OPERATING INCOME</b> 	</td><td align="right"><font size="2">	2,164	</font></td><td align="right"><font size="2">	760 	</font></td><td align="right"><font size="2">	809	</font></td><td align="right"><font size="2">	300 	</font></td><td align="right"><font size="2">	1,195 	</font></td></tr>
	<tr><td>	<b>FINANCIAL AND OTHER INCOME</b> - net	</td><td align="right"><font size="2">	2,697	</font></td><td align="right"><font size="2">	1,869 	</font></td><td align="right"><font size="2">	1,044	</font></td><td align="right"><font size="2">	618 	</font></td><td align="right"><font size="2">	2,607 	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
	<td></td>
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	<tr><td>	<b>INCOME BEFORE TAXES ON INCOME</b>	</td><td align="right"><font size="2">	4,861	</font></td><td align="right"><font size="2">	2,629 	</font></td><td align="right"><font size="2">	1,853	</font></td><td align="right"><font size="2">	918 	</font></td><td align="right"><font size="2">	3,802 	</font></td></tr>
	<tr BGCOLOR="#CCEEFF"><td>	<b>TAXES ON INCOME</b>	</td><td align="right"><font size="2">	121	</font></td><td align="right"><font size="2">	75 	</font></td><td align="right"><font size="2">	44	</font></td><td align="right"><font size="2">	3 	</font></td><td align="right"><font size="2">	169 	</font></td></tr>
<tr>
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	<td align="center" colspan="2"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
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	<tr BGCOLOR="#CCEEFF"><td>	<b>NET INCOME</b> 	</td><td align="right"><font size="2">	$4,740 	</font></td><td align="right"><font size="2">	$2,554 	</font></td><td align="right"><font size="2">	$1,809 	</font></td><td align="right"><font size="2">	$915 	</font></td><td align="right"><font size="2">	$3,633 	</font></td></tr>
<tr>
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<tr><td>	<b>EARNING PER SHARE:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	Basic	</td><td align="right"><font size="2">	$0.23 	</font></td><td align="right"><font size="2">	$0.12 	</font></td><td align="right"><font size="2">	$0.09 	</font></td><td align="right"><font size="2">	$0.04 	</font></td><td align="right"><font size="2">	$0.18 	</font></td></tr>
<tr>
	<td></td>
	<td align="center"><HR WIDTH="90%" SIZE="1" NOSHADE></td>
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<tr BGCOLOR="#CCEEFF"><td>	Diluted	</td><td align="right"><font size="2">	$0.22 	</font></td><td align="right"><font size="2">	$0.12 	</font></td><td align="right"><font size="2">	$0.08 	</font></td><td align="right"><font size="2">	$0.04 	</font></td><td align="right"><font size="2">	$0.17 	</font></td></tr>
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<tr BGCOLOR="#CCEEFF"><td>	<b>WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN COMPUTATION OF EARNINGS PER ORDINARY SHARE - IN THOUSANDS:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td>	Basic	</td><td align="right"><font size="2">	21,056	</font></td><td align="right"><font size="2">	20,690 	</font></td><td align="right"><font size="2">	21,089	</font></td><td align="right"><font size="2">	20,703 	</font></td><td align="right"><font size="2">	20,732 	</font></td></tr>
<tr BGCOLOR="#CCEEFF">
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<tr><td>	Diluted	</td><td align="right"><font size="2">	21,511	</font></td><td align="right"><font size="2">	21,173 	</font></td><td align="right"><font size="2">	21,486	</font></td><td align="right"><font size="2">	21,183 	</font></td><td align="right"><font size="2">	21,143 	</font></td></tr>
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</table>

<p><center><font size="2">II</font></center>
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<a name="table3"></a>
<a href="#toc"><font size="1"><b>Back to top</b></font></a>

<center><h2>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr>
	<td></td>
	<td align="center" colspan="2" width="200"><font size="2"><b>Nine months<Br>ended September 30</b></font></td>
	<td align="center" colspan="2" width="200"><font size="2"><b>Three months<br>ended September 30</b></font></td>
	<td align="center" width="100"><font size="2"><b>Year ended December 31,</b></font></td></tr>
<tr>
	<td></td><td align="right"><font size="2"><b>2004</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td>
	<td align="right"><font size="2"><b>2004</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td>
	<td align="right"><font size="2"><b>2003</b></font></td></tr>
<tr>
	<td></td>
	<td align="center" colspan="2"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center" colspan="2"><font size="2"><b>(Unaudited)</b></font></td>
	<td align="center"><font size="2"><b>(Audited)</b></font></td></tr>
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	<td></td>
	<td align="center" colspan="6"><font size="2"><b>U.S. $ in thousands</b></font></td></tr>

<tr BGCOLOR="#CCEEFF"><td>	<b>CASH FLOWS FROM OPERATING ACTIVITIES:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	  	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:20px">Net Income 	</td><td align="right"><font size="2">	$4,740 	</font></td><td align="right"><font size="2">	$2,554 	</font></td><td align="right"><font size="2">	$1,809 	</font></td><td align="right"><font size="2">	$915 	</font></td><td align="right"><font size="2">	$3,633 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Adjustments to reconcile net income to net cash provided by or used in operating activities:	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:40px">Depreciation and amortization	</td><td align="right"><font size="2">	520	</font></td><td align="right"><font size="2">	617 	</font></td><td align="right"><font size="2">	172	</font></td><td align="right"><font size="2">	199 	</font></td><td align="right"><font size="2">	806 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">Accrued severance pay - net	</td><td align="right"><font size="2">	119	</font></td><td align="right"><font size="2">	*133 	</font></td><td align="right"><font size="2">	62	</font></td><td align="right"><font size="2">	*9 	</font></td><td align="right"><font size="2">	189 	</font></td></tr>
<tr><td><p style="margin-left:40px">Capital gain on sale of property and equipment - net	</td><td align="right"><font size="2">	-12	</font></td><td align="right"><font size="2">	-11	</font></td><td align="right"><font size="2">	-18	</font></td><td align="right"><font size="2">	-7	</font></td><td align="right"><font size="2">	-35	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">Changes in operating asset and liability items:	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:40px">Decrease (increase) in accounts receivable:	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:60px">Trade	</td><td align="right"><font size="2">	-890	</font></td><td align="right"><font size="2">	550 	</font></td><td align="right"><font size="2">	-720	</font></td><td align="right"><font size="2">	152 	</font></td><td align="right"><font size="2">	-155	</font></td></tr>
<tr><td><p style="margin-left:60px">Interest accrued on long-term bankdeposits	</td><td align="right"><font size="2">	-1,029	</font></td><td align="right"><font size="2">	-1,502	</font></td><td align="right"><font size="2">	-628	</font></td><td align="right"><font size="2">	-578	</font></td><td align="right"><font size="2">	1,149	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:60px">Other	</td><td align="right"><font size="2">	64	</font></td><td align="right"><font size="2">	-190	</font></td><td align="right"><font size="2">	27	</font></td><td align="right"><font size="2">	-114	</font></td><td align="right"><font size="2">	  (206) 	</font></td></tr>
<tr><td><p style="margin-left:40px">Decrease in Inventories	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	  	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	3  	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:40px">Increase (decrease) in accounts 	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	  	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:40px">payable and accruals:	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:60px">Trade	</td><td align="right"><font size="2">	-396	</font></td><td align="right"><font size="2">	57 	</font></td><td align="right"><font size="2">	-999	</font></td><td align="right"><font size="2">	-360	</font></td><td align="right"><font size="2">	551  	</font></td></tr>
<tr><td><p style="margin-left:60px">Other	</td><td align="right"><font size="2">	896	</font></td><td align="right"><font size="2">	689 	</font></td><td align="right"><font size="2">	176	</font></td><td align="right"><font size="2">	536 	</font></td><td align="right"><font size="2">	214  	</font></td></tr>
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<tr><td><p style="margin-left:20px">Net cash provided by (used in) operating activities	</td><td align="right"><font size="2">	4,012	</font></td><td align="right"><font size="2">	2,897	</font></td><td align="right"><font size="2">	-119	</font></td><td align="right"><font size="2">	752	</font></td><td align="right"><font size="2">	6,149	</font></td></tr>
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<tr><td>	<b>CASH FLOWS FROM INVESTING ACTIVITIES:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Purchase of property and equipment	</td><td align="right"><font size="2">	-1,030	</font></td><td align="right"><font size="2">	-382	</font></td><td align="right"><font size="2">	-328	</font></td><td align="right"><font size="2">	-90	</font></td><td align="right"><font size="2">	-499	</font></td></tr>
<tr><td><p style="margin-left:20px">Amounts withdrawal (funded) in respect of accrued severance pay	</td><td align="right"><font size="2">	-67	</font></td><td align="right"><font size="2">	*(73)	</font></td><td align="right"><font size="2">	-37	</font></td><td align="right"><font size="2">	*2 	</font></td><td align="right"><font size="2">	-105	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Investments in long-term bank deposits 	</td><td align="right"><font size="2">	-10,000	</font></td><td align="right"><font size="2">	-40,000	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	-3,000	</font></td><td align="right"><font size="2">	-77,000	</font></td></tr>
<tr><td><p style="margin-left:20px">Withdrawal of long-term bank deposits 	</td><td align="right"><font size="2">	3,000	</font></td><td align="right"><font size="2">	32,175 	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	67,000 	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Proceeds from sale of property and equipment	</td><td align="right"><font size="2">	86	</font></td><td align="right"><font size="2">	59 	</font></td><td align="right"><font size="2">	79	</font></td><td align="right"><font size="2">	19 	</font></td><td align="right"><font size="2">	109 	</font></td></tr>
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<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Net cash used in investing activities	</td><td align="right"><font size="2">	-8,011	</font></td><td align="right"><font size="2">	-8,221	</font></td><td align="right"><font size="2">	-286	</font></td><td align="right"><font size="2">	-3,069	</font></td><td align="right"><font size="2">	-10,495	</font></td></tr>
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<tr BGCOLOR="#CCEEFF"><td>	<b>CASH FLOWS FROM FINANCING ACTIVITIES:</b>	</td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr><td><p style="margin-left:20px">Bank loans received	</td><td align="right"><font size="2">	10,000	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td><p style="margin-left:20px">Employee stock options exercised and paid	</td><td align="right"><font size="2">	214	</font></td><td align="right"><font size="2">	97 	</font></td><td align="right"><font size="2">	94	</font></td><td align="right"><font size="2">	97 	</font></td><td align="right"><font size="2">	354 	</font></td></tr>
<tr><td><p style="margin-left:20px">Dividend paid 	</td><td align="right"><font size="2">	-2,736	</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">		</font></td><td align="right"><font size="2">	-2,929	</font></td></tr>
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<tr><td><p style="margin-left:20px">Net cash provided by (used in) financing activities	</td><td align="right"><font size="2">	7,478	</font></td><td align="right"><font size="2">	97 	</font></td><td align="right"><font size="2">	94	</font></td><td align="right"><font size="2">	97 	</font></td><td align="right"><font size="2">	-2,575	</font></td></tr>
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<tr><td>	<b>NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</b>	</td><td align="right"><font size="2">	3,479	</font></td><td align="right"><font size="2">	-5,227	</font></td><td align="right"><font size="2">	-311	</font></td><td align="right"><font size="2">	-2,220	</font></td><td align="right"><font size="2">	-6,921	</font></td></tr>
<tr BGCOLOR="#CCEEFF"><td>	<b>BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</b>	</td><td align="right"><font size="2">	4,391	</font></td><td align="right"><font size="2">	11,312 	</font></td><td align="right"><font size="2">	8,181	</font></td><td align="right"><font size="2">	8,305 	</font></td><td align="right"><font size="2">	11,312 	</font></td></tr>
<tr><td>	<b>BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD</b>	</td><td align="right"><font size="2">	$7,870 	</font></td><td align="right"><font size="2">	$6,085 	</font></td><td align="right"><font size="2">	$7,870 	</font></td><td align="right"><font size="2">	$6,085 	</font></td><td align="right"><font size="2">	$4,391 	</font></td></tr>
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<p><center><font size="2">III</font></center>
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