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<SEC-DOCUMENT>0001119083-07-000002.txt : 20070221
<SEC-HEADER>0001119083-07-000002.hdr.sgml : 20070221
<ACCEPTANCE-DATETIME>20070221105900
ACCESSION NUMBER:		0001119083-07-000002
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20061231
FILED AS OF DATE:		20070221
DATE AS OF CHANGE:		20070221

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:		07637790

	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">
<P ALIGN="CENTER"><strong>FORM 6-K</strong></P>
<CENTER>
  <P ALIGN="CENTER"><STRONG>SECURITIES AND EXCHANGE COMMISSION</STRONG></P>
  <P ALIGN="CENTER"><STRONG>Washington D.C. 20549</STRONG></P>
  <P><STRONG>Report of Foreign Private Issuer</STRONG></P>
  <P ALIGN="CENTER"> <STRONG>Pursuant to Rule 13a-16 or 15d-16</STRONG></P>
  <P ALIGN="CENTER"><STRONG>of the Securities Exchange Act of 1934</STRONG></P>
  <P align="center"><b>For the month of February, 2007</b></P>
  <P align="center"><b>Commission File Number: 000-31215</b></P>
  <P></P>
  <P><STRONG>MIND C.T.I. LTD.</STRONG></P>
  <P>(Translation of registrant's name into English)</P>
  <P><STRONG>&nbsp;</STRONG></P>
  <P><STRONG>Industrial Park, Building 7, Yokneam 20692 , Israel</STRONG></P>
  <P>(Address of principal executive offices)</P>
</CENTER>
<P align="center">Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:</P>
<P ALIGN="CENTER">Form 20-F [X]&nbsp;&nbsp;&nbsp; Form 40-F_______</P>
<center>
<P>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): N/A</P>
<P>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): N/A</P>
<P>Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:</P>

<P ALIGN="CENTER"> Yes _______ &nbsp;&nbsp;&nbsp;&nbsp;No [X] </P>
<P>If &quot;Yes&quot; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A</P>
</center>
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<p></p>
<hr width="100%">
<BR>
<P ALIGN="CENTER"><STRONG>INCORPORATION BY REFERENCE</STRONG></P>
<p ALIGN="CENTER">The financial statements included in the press release attached as Exhibit 1 to this Report on Form 6-K are hereby incorporated by reference into: (i) the Registrant's Registration Statement on Form S-8, Registration No. 333-117054; (ii) the Registrant's Registration Statement on Form S-8, Registration No. 333-100804; and (iii) the Registrant's Registration Statement on Form S-8, Registration No. 333-54632.</P>
<P ALIGN="CENTER"> <STRONG>CONTENTS</STRONG> </P>
<P ALIGN="CENTER">This report on Form 6-K of the registrant consists of the following document, which is attached hereto and incorporated by reference herein:</P>
<OL>
  <LI>Press Release: MIND CTI Reports Record Revenue of $20 Million in 2006, a 29% Increase Over 2005.<br>
    Dated February 21, 2007.</LI>
</OL>
<P ALIGN="CENTER"> <STRONG> SIGNATURES </STRONG> </P>
<P>&nbsp;</P>
<P ALIGN="CENTER"> Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. </P>
<P> Date: February 21, 2007</P>
<table width="100%" cellpadding="0" cellspacing="0">
	<tr>
	<td valign="bottom" width="50%"></td>
	<td>MIND C.T.I. LTD. <BR><BR></td></tr><tr><td></td><td>
	By: /s/ Monica Eisinger<br>
	Name: Monica Eisinger<br>
	===================<br>
     	Title: Chairperson of the Board of
	Directors, President and Chief Executive Officer
	</td>
	</tr>
</table>
<BR>
<P ALIGN="CENTER"><STRONG>EXHIBIT INDEX</STRONG></P>
<table cellpadding="2">
  <tr>
    <td width="150">Exhibit Number</td>
    <td>Description of Exhibit</td>
  </tr>
  <tr>
    <td align="right" valign="top">1.</td>
    <td>Press Release: MIND CTI Reports Record Revenue of $20 Million in 2006, a 29% Increase Over 2005, <br>
      Dated February 21, 2007.</td>
  </tr>
</table>
<center>
  <h1>MIND CTI Reports Record Revenue of $20 Million in 2006, a 29% Increase Over 2005</h1>
  <h2>16% GAAP Operating Income in Q4 2006</h2>
</center>
<p>
<b>Yoqneam, Israel, February 21, 2007</b>-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.
</p><p>
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."
<p>
	<b>Financial Highlights of Q4 2006</b><br>
</p>
<ul>
	<li>Revenues were $5.08 million, similar to the fourth quarter of 2005, representing a 9% increase over the third quarter of 2006.</li>
	<li>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.</li>
	<li>GAAP operating income was $804 thousand, or 16% of revenue.</li>
	<li>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.</li>
	<li>GAAP net income was $37 thousand, or $0.00 per share, mainly due to the one-time tax expense of $1.24 million. </li>
	<li>Cash flow from operating activities in Q4 2006 was $832 thousand.</li>
	<li>Strong cash position of approximately $38 million on December 31, 2006.</li>
</ul>
<p>
	<b>Year 2006 Financial Highlights</b><br>
</p>
<ul>
	<li>Revenues were $20.06 million, a 29% increase over 2005.</li>
	<li>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.</li>
	<li>GAAP operating income was $2.5 million, compared with $2.85 million in 2005.</li>
	<li>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.</li>
	<li>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.</li>
</ul>
</P><p>
<b>Taxes on Income</b><br>
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).
</P><p>
<b>Revenue Distribution for Q4 2006</b><br>
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.
</P><p>
<b>Revenue Distribution for Full Year 2006</b><br>
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.
</P><p>
<b>Dividend Distribution</b><br>
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.
</P><p>
<b>Conference Call Information</b><br>
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.
</P><p>
	<b>About MIND</b><br>
	MIND CTI Ltd. is a leading provider of convergent prepaid and postpaid end-to-end billing and customer care solutions for VoIP, Mobile, Wireline and Quad-play carriers worldwide. Since 1997 MIND has been a pioneer in enabling the VoIP technology for emerging and incumbent service providers. In August 2005 MIND acquired Sentori, Inc., a US based provider of customer care and billing solutions to wireless carriers and mobile virtual network operators (MVNOs). Sentori, Inc. brings over ten years of wireless experience and seven years of a wireless operational solution to carriers. A global company, MIND operates from offices in Europe, Israel and the United States. MIND employs over 300 IT professionals and serves customers in more than 40 countries around the world. For financial information, reports and presentations, please visit the Investor Relations site: http://www.mindcti.com/ir </p>
<p>
	<font size="2">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><b>MIND C.T.I. LTD.</b></h2>
  <h3>CONDENSED CONSOLIDATED BALANCE SHEETS</h3>
</center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
  <tr>
    <td></td>
    <td align="center" colspan="2"><font size="2"><b>December 31</b></font></td>
    <td align="center"><font size="2"><b>September 30</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" width="150"><font size="2"><b>2006</b></font></td>
    <td align="center" width="150"><font size="2"><b>2005</b></font></td>
    <td align="center" width="150"><font size="2"><b>2006</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    </td>
    <td align="center" colspan="3"><font size="2"><b>U.S. $ in thousands</font></td>
  </tr>
  <tr>
    <td></td>
    </td>
    <td align="center" colspan="3"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td align="center"><font size="2"><b>A  s  s  e  t  s</b></font></td>
    <td></td>
	<td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>CURRENT ASSETS:</b></font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Cash and cash equivalents</font></td>
    <td align="right"><font size="2">$27,571</font></td>
    <td align="right"><font size="2">$10,174</font></td>
    <td align="right"><font size="2">$26,647</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Accounts receivable:</font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Trade</font></td>
    <td align="right"><font size="2">5,385</font></td>
    <td align="right"><font size="2">3,389</font></td>
    <td align="right"><font size="2">4,862</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Other</font></td>
    <td align="right"><font size="2">231</font></td>
    <td align="right"><font size="2">731</font></td>
    <td align="right"><font size="2">923</font></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Deferred income taxes</font></td>
    <td align="right"><font size="2">154</font></td>
    <td align="right"><font size="2">8</font></td>
    <td align="right"><font size="2">8</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Inventories</font></td>
    <td align="right"><font size="2">35</font></td>
    <td align="right"><font size="2">30</font></td>
    <td align="right"><font size="2">30</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">T o t a l  current assets</font></td>
    <td align="right"><font size="2">33,376</font></td>
    <td align="right"><font size="2">14,332</font></td>
    <td align="right"><font size="2">32,470</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>INVESTMENTS AND OTHER NON CURRENT ASSETS:</b></font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Marketable debentures</font></td>
    <td align="right"><font size="2">10,000</font></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Long term bank deposits </font></td>
    <td></td>
    <td align="right"><font size="2">30,000</font></td>
    <td align="right"><font size="2">10,000</font></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Other</font></td>
    <td align="right"><font size="2">1,003</font></td>
    <td align="right"><font size="2">737</font></td>
    <td align="right"><font size="2">834</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>PROPERTY AND EQUIPMENT, net of accumulated depreciation</b></font></td>
    <td align="right"><font size="2">1,558</font></td>
    <td align="right"><font size="2">1,957</font></td>
    <td align="right"><font size="2">1,790</font></td>
  </tr>
  <tr>
    <td><font size="2"><b>INTANGIBLE ASSETS, net of accumulated amortization</b></font></td>
    <td align="right"><font size="2">888</font></td>
    <td align="right"><font size="2">1,660</font></td>
    <td align="right"><font size="2">980</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>GOODWILL</b></font></td>
    <td align="right"><font size="2">6,966</font></td>
    <td align="right"><font size="2">6,966</font></td>
    <td align="right"><font size="2">6,966</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">T o t a l  assets</font></td>
    <td align="right"><font size="2">$53,791</font></td>
    <td align="right"><font size="2">$55,652</font></td>
    <td align="right"><font size="2">$53,040</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td align="center"><font size="2"><b>Liabilities and shareholders' equity</b></font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>CURRENT LIABILITIES:</b></font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Accounts payable and accruals:</font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Trade</font></td>
    <td align="right"><font size="2">$464 </font></td>
    <td align="right"><font size="2">$686 </font></td>
    <td align="right"><font size="2">$594 </font></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Other</font></td>
    <td align="right"><font size="2">2,509</font></td>
    <td align="right"><font size="2">1,741 </font></td>
    <td align="right"><font size="2">1,497</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Deferred revenues </font></td>
    <td align="right"><font size="2">1,236</font></td>
    <td align="right"><font size="2">1,644 </font></td>
    <td align="right"><font size="2">1,580</font></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Advances from customers</font></td>
    <td align="right"><font size="2">241</font></td>
    <td align="right"><font size="2">790 </font></td>
    <td align="right"><font size="2">171</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td style="padding-left:60px"><font size="2">T o t a l  current liabilities</font></td>
    <td align="right"><font size="2">4,450</font></td>
    <td align="right"><font size="2">4,861 </font></td>
    <td align="right"><font size="2">3,842</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>EMPLOYEE RIGHTS UPON RETIREMENT</b></font></td>
    <td align="right"><font size="2">1,482</font></td>
    <td align="right"><font size="2">1,306 </font></td>
    <td align="right"><font size="2">1,495</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td style="padding-left:60px"><font size="2">T o t a l  liabilities</font></td>
    <td align="right"><font size="2">5,932</font></td>
    <td align="right"><font size="2">6,167 </font></td>
    <td align="right"><font size="2">5,337</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>SHAREHOLDERS' EQUITY:</b></font></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Share capital</font></td>
    <td align="right"><font size="2">54</font></td>
    <td align="right"><font size="2">53 </font></td>
    <td align="right"><font size="2">53</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Additional paid-in capital</font></td>
    <td align="right"><font size="2">59,547</font></td>
    <td align="right"><font size="2">59,399 </font></td>
    <td align="right"><font size="2">59,510</font></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Capital surplus </font></td>
    <td align="right"><font size="2">325</font></td>
    <td></td>
    <td align="right"><font size="2">244</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Accumulated deficit</font></td>
    <td align="right"><font size="2">(12,067)</font></td>
    <td align="right"><font size="2">(9,967)</font></td>
    <td align="right"><font size="2">(12,104)</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">T o t a l  shareholders' equity </font></td>
    <td align="right"><font size="2">47,859</font></td>
    <td align="right"><font size="2">49,485 </font></td>
    <td align="right"><font size="2">47,703</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">T o t a l  liabilities and shareholders' equity</font></td>
    <td align="right"><font size="2">$53,791 </font></td>
    <td align="right"><font size="2">$55,652 </font></td>
    <td align="right"><font size="2">$53,040 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
</table>
<p>
  <center>
    <font size="2">I</font>
  </center>
  <!-- <div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div>
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  -->
<hr width="100%">
</p>
<a name="table2"></a> <a href="#top"><font size="1"><b>Back to top</b></font></a>
<center>
  <h2><b>MIND C.T.I. LTD.</b></h2>
  <h3>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</h3>
</center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
  <tr>
    <td></td>
    <td align="center" colspan="2"><font size="2"><b>Years ended December 31</b></font></td>
    <td align="center" colspan="2"><font size="2"><b>Three months ended December 31</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><font size="2"><b>2006</b></font></td>
    <td align="center"><font size="2"><b>2005</b></font></td>
    <td align="center"><font size="2"><b>2006</b></font></td>
    <td align="center"><font size="2"><b>2005</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="4"><font size="2"><b>U.S. $ in thousands (except per share data) </b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="4"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>REVENUES</b></font></td>
    <td align="right"><font size="2">$20,060 </font></td>
    <td align="right"><font size="2">$15,601 </font></td>
    <td align="right"><font size="2">$5,075 </font></td>
    <td align="right"><font size="2">$5,039 </font></td>
  </tr>
  <tr>
    <td><font size="2"><b>COST OF REVENUES</b></font></td>
    <td align="right"><font size="2">5,675</font></td>
    <td align="right"><font size="2">4,015</font></td>
    <td align="right"><font size="2">1,193</font></td>
    <td align="right"><font size="2">1,324</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>GROSS PROFIT</b></font></td>
    <td align="right"><font size="2">14,385</font></td>
    <td align="right"><font size="2">11,586</font></td>
    <td align="right"><font size="2">3,882</font></td>
    <td align="right"><font size="2">3,715</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>RESEARCH AND DEVELOPMENT EXPENSES</b></font></td>
    <td align="right"><font size="2">6,118</font></td>
    <td align="right"><font size="2">5,086</font></td>
    <td align="right"><font size="2">1,403</font></td>
    <td align="right"><font size="2">1,525</font></td>
  </tr>
  <tr>
    <td><font size="2"><b>SELLING AND MARKETING EXPENSES</b></font></td>
    <td align="right"><font size="2">3,628</font></td>
    <td align="right"><font size="2">2,148</font></td>
    <td align="right"><font size="2">893</font></td>
    <td align="right"><font size="2">582</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>GENERAL AND ADMINISTRATIVE EXPENSES</b></font></td>
    <td align="right"><font size="2">2,135</font></td>
    <td align="right"><font size="2">1,507</font></td>
    <td align="right"><font size="2">782</font></td>
    <td align="right"><font size="2">402</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>OPERATING INCOME </b></font></td>
    <td align="right"><font size="2">2,504</font></td>
    <td align="right"><font size="2">2,845</font></td>
    <td align="right"><font size="2">804</font></td>
    <td align="right"><font size="2">1,206</font></td>
  </tr>
  <tr>
    <td><font size="2"><b>FINANCIAL INCOME (EXPENSES) - net</b></font></td>
    <td align="right"><font size="2">*(222)</font></td>
    <td align="right"><font size="2">1,260</font></td>
    <td align="right"><font size="2">527</font></td>
    <td align="right"><font size="2">112</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>INCOME BEFORE TAXES ON INCOME</b></font></td>
    <td align="right"><font size="2">2,282</font></td>
    <td align="right"><font size="2">4,105</font></td>
    <td align="right"><font size="2">1,331</font></td>
    <td align="right"><font size="2">1,318</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>TAXES ON INCOME</b></font></td>
    <td align="right"><font size="2">1,373 </font></td>
    <td align="right"><font size="2">43 </font></td>
    <td align="right"><font size="2">1,294 </font></td>
    <td align="right"><font size="2">9 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>NET INCOME </b></font></td>
    <td align="right"><font size="2">$909 </font></td>
    <td align="right"><font size="2">$4,062 </font></td>
    <td align="right"><font size="2">$37 </font></td>
    <td align="right"><font size="2">$1,309 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td colspan="5"><font size="2"><b>EARNINGS PER ORDINARY SHARE</b></font></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2"> Basic and diluted</font></td>
    <td align="right"><font size="2">$0.04 </font></td>
    <td align="right"><font size="2">$0.19 </font></td>
    <td align="right"><font size="2">$0.00 </font></td>
    <td align="right"><font size="2">$0.06 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN COMPUTATION OF EARNINGS PER ORDINARY SHARE - IN THOUSANDS:</b></font></td>
    <td align="right"></td>
    <td align="right"></td>
    <td align="right"></td>
    <td align="right"></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Basic</font></td>
    <td align="right"><font size="2">21,515</font></td>
    <td align="right"><font size="2">21,431</font></td>
    <td align="right"><font size="2">21,532</font></td>
    <td align="right"><font size="2">21,463</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Diluted</font></td>
    <td align="right"><font size="2">21,546</font></td>
    <td align="right"><font size="2">21,619</font></td>
    <td align="right"><font size="2">21,552</font></td>
    <td align="right"><font size="2">21,513</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
</table>
<table>
	<tr><td valign="top"><b>*</b></td><td><b> Financial expenses for the year ended December 31, 2006 include a loss from a premature withdrawal of long-term deposits in the amount of $1,330,000.</b></td></tr>
</table>

<p>
  <center>
    <font size="2">II</font>
  </center>
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</p>
<a name="table3"></a> <a href="#top"><font size="1"><b>Back to top</b></font></a>
<center>
  <h2><b>MIND C.T.I. LTD.</b></h2>
  <h3>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</h3>
</center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
  <tr>
    <td></td>
    <td align="center" colspan="2"><font size="2"><b>Years ended  December 31</b></font>
    <td align="center" colspan="2"><font size="2"><b>Three months ended December 31</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><font size="2"><b>2006</b></font></td>
    <td align="center"><font size="2"><b>2005</b></font></td>
    <td align="center"><font size="2"><b>2006</b></font></td>
    <td align="center"><font size="2"><b>2005</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="4"><font size="2"><b>U.S. $ in thousands</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center" colspan="4"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td colspan="5"><font size="2"><b>CASH FLOWS FROM OPERATING ACTIVITIES:</b></font></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Net income</font></td>
    <td align="right"><font size="2">$909 </font></td>
    <td align="right"><font size="2">$4,062 </font></td>
    <td align="right"><font size="2">$37 </font></td>
    <td align="right"><font size="2">$1,309 </font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Adjustments to reconcile net income to net cash provided by (used in) operating activities:</font></td>
    <td></td>
    <td align="right"></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Depreciation and amortization</font></td>
    <td align="right"><font size="2">1,391 </font></td>
    <td align="right"><font size="2">987 </font></td>
    <td align="right"><font size="2">242 </font></td>
    <td align="right"><font size="2">319 </font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Deferred income taxes, net</font></td>
    <td align="right"><font size="2">(293)</font></td>
    <td align="right"></td>
    <td align="right"><font size="2">(293)</font></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Accrued severance pay </font></td>
    <td align="right"><font size="2">176 </font></td>
    <td align="right"><font size="2">(151)</font></td>
    <td align="right"><font size="2">(13)</font></td>
    <td align="right"><font size="2">(140)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Capital loss (gain) on sale of property and equipment - net</font></td>
    <td align="right"><font size="2">(3)</font></td>
    <td align="right"><font size="2">(38)</font></td>
    <td align="right"><font size="2">6 </font></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Employees share based compensation expenses</font></td>
    <td align="right"><font size="2">325 </font></td>
    <td></td>
    <td align="right"><font size="2">81 </font></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Changes in operating asset and liability items:</font></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:60px"><font size="2">Decrease (increase) in accounts receivable:</font></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:80px"><font size="2">Trade</font></td>
    <td align="right"><font size="2">(1,996)</font></td>
    <td align="right"><font size="2">196 </font></td>
    <td align="right"><font size="2">(523)</font></td>
    <td align="right"><font size="2">305 </font></td>
  </tr>
  <tr>
    <td style="padding-left:80px"><font size="2">Interest accrued on long-term bank deposits and marketable debentures</font></td>
    <td align="right" valign="bottom"><font size="2">(37)</font></td>
    <td align="right" valign="bottom"><font size="2">242 </font></td>
    <td align="right" valign="bottom"><font size="2">(37)</font></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:80px"><font size="2">Other</font></td>
    <td align="right"><font size="2">537 </font></td>
    <td align="right"><font size="2">48 </font></td>
    <td align="right"><font size="2">729 </font></td>
    <td align="right"><font size="2">(23)</font></td>
  </tr>
  <tr>
    <td style="padding-left:60px"><font size="2">Increase in inventories</font></td>
    <td align="right"><font size="2">(5)</font></td>
    <td align="right"><font size="2">(12)</font></td>
    <td align="right"><font size="2">(5)</font></td>
    <td align="right"><font size="2">(12)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">Increase (decrease) in accounts payable and accruals:</font></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:80px"><font size="2">Trade</font></td>
    <td align="right"><font size="2">(222)</font></td>
    <td align="right"><font size="2">(697)</font></td>
    <td align="right"><font size="2">(130)</font></td>
    <td align="right"><font size="2">(123)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:80px"><font size="2">Other</font></td>
    <td align="right"><font size="2">768 </font></td>
    <td align="right"><font size="2">(1,510)</font></td>
    <td align="right"><font size="2">1,012 </font></td>
    <td align="right"><font size="2">(39)</font></td>
  </tr>
  <tr>
    <td style="padding-left:60px"><font size="2">Decrease in deferred revenues</font></td>
    <td align="right"><font size="2">(408)</font></td>
    <td align="right"><font size="2">(799)</font></td>
    <td align="right"><font size="2">(344)</font></td>
    <td align="right"><font size="2">(255)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:60px"><font size="2">Increase (decrease) in advances from customers </font></td>
    <td align="right"><font size="2">(549)</font></td>
    <td align="right"><font size="2">(1,467)</font></td>
    <td align="right"><font size="2">70 </font></td>
    <td align="right"><font size="2">(1,925)</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Net cash provided by (used in) operating activities</font></td>
    <td align="right"><font size="2">*593</font></td>
    <td align="right"><font size="2">861 </font></td>
    <td align="right"><font size="2">832 </font></td>
    <td align="right"><font size="2">(584)</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2" colspan="5"><b>CASH FLOWS FROM INVESTING ACTIVITIES:</b></font></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Purchase of property and equipment</font></td>
    <td align="right"><font size="2">(379)</font></td>
    <td align="right"><font size="2">(589)</font></td>
    <td align="right"><font size="2">(40)</font></td>
    <td align="right"><font size="2">(46)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Acquisition of a subsidiary, net of cash acquired</font></td>
    <td align="right"></td>
    <td align="right"><font size="2">(a)(4,233)</font></td>
    <td></td>
    <td align="right"><font size="2">(231)</font></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Amounts funded in respect of accrued severance pay </font></td>
    <td align="right"><font size="2">(119)</font></td>
    <td align="right"><font size="2">94 </font></td>
    <td align="right"><font size="2">(22)</font></td>
    <td align="right"><font size="2">51 </font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Investment in long-term bank deposits </font></td>
    <td align="right"></td>
    <td align="right"><font size="2">(10,000)</font></td>
    <td></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Acquisition of marketable debentures held-to-maturity</font></td>
    <td align="right"><font size="2">(10,000)</font></td>
    <td></td>
    <td align="right"><font size="2">(10,000)</font></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2">Withdrawal of long-term bank deposits</font></td>
    <td align="right"><font size="2">30,000 </font></td>
    <td align="right"><font size="2">10,000 </font></td>
    <td align="right"><font size="2">10,000 </font></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Proceeds from sale of property and equipment</font></td>
    <td align="right"><font size="2">162 </font></td>
    <td align="right"><font size="2">175 </font></td>
    <td align="right"><font size="2">116 </font></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Net cash  provided by (used in) investing activities</font></td>
    <td align="right"><font size="2">19,664 </font></td>
    <td align="right"><font size="2">(4,553)</font></td>
    <td align="right"><font size="2">54 </font></td>
    <td align="right"><font size="2">(226)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>CASH FLOWS FROM FINANCING ACTIVITIES:</b></font></td>
    <td align="right"></td>
    <td align="right"></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:20px"><font size="2"> Employee stock options exercised and paid</font></td>
    <td align="right"><font size="2">149 </font></td>
    <td align="right"><font size="2">322 </font></td>
    <td align="right"><font size="2">38 </font></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2"> Dividend paid</font></td>
    <td align="right"><font size="2">(3,009)</font></td>
    <td align="right"><font size="2">(5,143)</font></td>
    <td></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Net cash provided by (used in) financing activities</font></td>
    <td align="right"><font size="2">(2,860)</font></td>
    <td align="right"><font size="2">(4,821)</font></td>
    <td align="right"><font size="2">38 </font></td>
    <td align="right"><font size="2">-,- </font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td><font size="2"><b>INCREASE (DECREASE) IN CASH AND  CASH EQUIVALENTS</b></font></td>
    <td align="right"><font size="2">17,397 </font></td>
    <td align="right"><font size="2">(8,513)</font></td>
    <td align="right"><font size="2">924 </font></td>
    <td align="right"><font size="2">(810)</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>BALANCE OF CASH AND CASH  EQUIVALENTS AT BEGINNING OF PERIOD</b></font></td>
    <td align="right" valign="bottom"><font size="2">10,174 </font></td>
    <td align="right" valign="bottom"><font size="2">18,687 </font></td>
    <td align="right" valign="bottom"><font size="2">26,647 </font></td>
    <td align="right" valign="bottom"><font size="2">10,984 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD</b></font></td>
    <td align="right"><font size="2">$27,571 </font></td>
    <td align="right"><font size="2">$10,174 </font></td>
    <td align="right"><font size="2">$27,571 </font></td>
    <td align="right"><font size="2">$10,174 </font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
</table>
<table>
<tr><td valign="top"><b>*</b></td><td><b>Cash flow from operating activities for the year ended December 31, 2006 includes a loss from a premature withdrawal of long-term deposits in the amount of $1,330,000.</b></td></tr>
</table>

<p>
  <center>
    <font size="2">III</font>
  </center>
  <!-- <div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div>
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<hr width="100%">
</p>
<a name="table4"></a> <a href="#toc"><font size="1"><b>Back to top</b></font></a>
<center>
  <h2><b>MIND C.T.I. LTD.</b></h2>
  <h3>CONSOLIDATED STATEMENTS OF CASH FLOWS </h3>
</center>
<table cellpadding="0" cellspacing="0" border="0" width="50%" align="center">
  <tr>
    <td></td>
    <td align="center"><font size="2"><b>Year ended December 31, 2005</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><font size="2"><b>U.S. $ in thousands</b></font></td>
  </tr>
  <tr>
    <td></td>
    <td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td><font size="2"><b>(a) Acquisition of a subsidiary:</b></font></td>
    <td></td>
  </tr>
  <tr>
    <td style="padding-left:20px"><font size="2">Assets and liabilities of the subsidiary upon acquisition:</font></td>
    <td></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Working capital (excluding cash and cash equivalents)</font></td>
    <td align="right"><font size="2">$(4,881)</font></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Property and equipment</font></td>
    <td align="right"><font size="2">277</font></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Intangible assets</font></td>
    <td align="right"><font size="2">1,871</font></td>
  </tr>
  <tr>
    <td style="padding-left:40px"><font size="2">Goodwill</font></td>
    <td align="right"><font size="2">6,966</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr BGCOLOR="#CCEEFF">
    <td style="padding-left:40px"><font size="2">Cash paid - net</font></td>
    <td align="right"><font size="2">$4,233</font></td>
  </tr>
  <tr>
    <td></td>
    <td align="right" ><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
  <tr>
    <td></td>
    <td align="right" ><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
  </tr>
</table>
<p>
  <center>
    <font size="2">IV</font>
  </center>
  <!-- <div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black">_______-->
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<center>
  <font size="2">- end of file -</font>
</center>
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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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