MTSL MER Telemanagement Solutions Ltd

- Q4 Revenues Rise 17% Year-Over-Year; Full Year Revenues Rise 23% Year-Over-Year - RA'ANANA, Israel, Feb. 9 /PRNewswire-FirstCall/ -- MTS - Mer Telemanagement Solutions Ltd. (NASDAQ:MTSL), a global provider of Business Support Systems (BSS) for comprehensive Telecommunication Management and Customer Care & Billing solutions, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2005. Revenues for the fourth quarter were $3.0 million, compared to $2.58 million reported in the fourth quarter of 2004, an increase of 17%. Net loss for the quarter was $335,000 ($0.06 basic and diluted net loss per ordinary share), compared to a net loss of $2.29 million ($0.49 basic and diluted net loss per ordinary share) for the fourth quarter of 2004. The quarterly net loss continued to narrow on a sequential basis, as the Company reported a net loss of $698,000 in the third quarter of 2005. Eytan Bar, President and Chief Executive Officer, commented, "During 2005, MTS made significant progress in improving its fundamental position by delivering state-of-the-art products and technologies and instituting disciplined cost and expense management. We ended the year with a solid performance in the fourth quarter, demonstrating year-over-year improvement in revenues and on the bottom line. "We continued to capitalize on opportunities in the enterprise market, and now have an installed base of more than 100 customers using our new, enhanced solutions. We also made progress in the service provider market, as the value of our late 2004 acquisition of TeleKnowledge continued to provide an effective launching pad for us to penetrate this new vertical market. Our superior and robust end-to-end solutions uniquely designed to meet service providers' needs and specifications have received positive reaction and are generating strong interest from prospects, as they prove beneficial to existing customers and channel partners. Mr. Bar concluded, "MTS' targeted market segments -- enterprises and service providers -- continue to represent significant growth opportunities, driven in large part by our customers' need to reduce telecommunications expenses and improve efficiency. The work we did in the past year to enhance and introduce superior products, as well as the partner relationships we have cultivated over the years with OEMs and worldwide distributors and resellers convince us that we are well positioned to capture significant opportunities in the market." Gross profit for the fourth quarter rose 47% to $2.2 million, which compares to gross profit of $1.5 million reported in the fourth quarter of 2004 and a 10% sequential improvement over the $2.0 million reported in the third quarter of 2005. The year-over-year improvement in gross profit is the result of both the increased revenues from products and services and a decline of direct expenses. Total operating expenses for the quarter were $2.4 million, which represents a 33% decline year-over-year. The improvement is primarily the result of MTS' commitment to disciplined cost and expense management. Research and development expenses rose 13% to $953,000 compared to the $845,000 reported in the fourth quarter of 2004, but declined 15% sequentially from the $1.12 million reported in the third quarter 2005. The continued year- over-year increase relates primarily to MTS' continued investment in product development. R&D expenses for the fourth quarter are net of $130,000 grants from the Israeli' Office of Chief Scientist that were approved during the fourth quarter of 2005. Selling and marketing expenses were $916,000 in the fourth quarter, reflecting a 54% decline year-over-year, compared to $2.0 million reported in the fourth quarter of 2004, and a 7% decline sequentially. The further reduction in selling and marketing expenses is the result of MTS' focus on investing in growth markets and targeted geographic areas, as well as the Company's ability to form partnerships with leading OEMs and vendors for various initiatives. MTS ended the fourth quarter with a healthy, accumulated backlog of orders of approximately $2.6 million. The backlog represents orders booked by the Company but not yet recognized as revenue through the end of 2005. MTS' cash and cash equivalents, including marketable securities, were $3.32 million as of December 31, 2005. Shlomi Hagai, Corporate COO & CFO, stated, "MTS has delivered improved top line performance for the past six quarters and improved the bottom line for the past three quarters. As a result of these top-line gains, we were able to maintain our aggressive investment in new product development projects and still improve bottom line performance. The cash we raised in the third quarter will allow us to further execute our growth strategy and to fund expanding activities in R&D and sales and marketing. We expect these investments to produce increased sales and ultimately improved operating results in 2006." Full Year 2005 Results Revenues for the full year were $11.56 million, compared to $9.41 million for the full year 2004. Net loss for the full year was $4.2 million ($0.83 basic and diluted net loss per ordinary share), compared to a net loss of $4.13 million ($0.89 basic and diluted net loss per ordinary share) for the full year 2004. Conference Call Information MTS will conduct a teleconference to discuss the fourth quarter and fiscal year 2005 results on, Thursday February 9, at 11:00 AM Eastern Time (18:00 Israel Time). To access the call, please dial 1-877-270-4109 from the US or Canada (toll free), 1-809-457-877 from Israel (toll free), or 1-706-679-0560 from other locations approximately 5-10 minutes prior to the starting time. A replay of the call also will be available from 2:00 PM ET on Thursday, February 9, 2006, until 11:59 PM ET on Thursday, February 16. To access the replay please, dial 1-800-642-1687 from the US or Canada (toll free), 1-809- 458-731 from Israel (toll free), or 1-706-645-9291 from other locations and enter conference ID #5040984. About MTS Mer Telemanagement Solutions Ltd. (MTS) is a global provider of business support systems for comprehensive telecommunication management and customer care & billing solutions. MTS' business support system is a full-featured customized solution for telecommunications management, Interconnect and customer care & billing. Its telecommunications expense management solution is used by corporations and organizations to improve the efficiency and performance of all telecommunication and information technology operations, and to significantly reduce associated costs. Its service providers and carriers solutions are used to support sophisticated billing, web-based self- provisioning, partners management and interconnect billing. Headquartered in Israel, MTS markets through wholly owned subsidiaries in the United States, Hong Kong, Holland, and Brazil, and through OEM partnerships with Siemens, Phillips, NEC and other vendors. MTS' shares are traded on the NASDAQ Capital Market (symbol MTSL). For more information please visit the MTS web site: http://www.mtsint.com/ Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, government regulations, dependence on third parties to manufacture products, general economic conditions and other risk factors detailed in the Company's filings with the United States Securities and Exchange Commission. Contacts: Company Investor Relations: Shlomi Hagai Kathy Price Corporate COO & CFO Managing Director MTS - MER Telemanagement Solutions The Global Consulting Group Tel: +972-9762-1733 Tel: +1 646-284-9430 Email: Email: Mer Telemanagement Solutions Ltd. and Its Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Three months ended Year ended December 31, December 31, 2005 2004 2005 2004 Unaudited Audited Revenues from products and services $3,012 $2,577 $11,563 $9,413 Cost of revenues from products and services 848 1,093 3,802 2,814 Gross profit 2,164 1,484 7,761 6,599 Operating expenses: Research and development, net 953 845 4,395 2,362 Selling and marketing 916 2,016 4,797 6,300 General and administrative 520 682 2,830 2,101 Total operating expenses 2,389 3,543 12,022 10,763 Operating loss (225) (2,059) (4,261) (4,164) Financial income (expenses), net (49) 32 (28) 78 Other income (expenses), net 6 15 81 - Loss before taxes on income (268) (2,012) (4,208) (4,086) Taxes on income 10 263 10 266 (278) (2,275) (4,218) (4,352) Equity in earnings of affiliate (57) (10) 2 225 Net loss ($335) ($2,285) ($4,216) ($4,127) Net loss per share: Basic and diluted net loss per Ordinary share ($0.06) ($0.49) ($0.83) ($0.89) Weighted average number of Ordinary shares used in computing basic and dilute loss per share 5,724,504 4,638,004 5,092,117 4,634,413 Mer Telemanagement Solutions Ltd. and Its Subsidiaries CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31 2005 2004 Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $3,191 $3,814 Marketable securities 132 1,057 Trade receivables (net of allowance for doubtful accounts of $370 and $402 at December 31, 2004 and 2005, respectively) 1,999 1,348 Other accounts receivable and prepaid expenses 491 391 Inventories 181 178 Total current assets 5,994 6,788 LONG-TERM INVESTMENTS: Investment in an affiliate 1,615 2,119 Long-term loans, net of current maturities 3 45 Severance pay fund 478 535 Other investments 347 373 Total long-term investments 2,443 3,072 PROPERTY AND EQUIPMENT, NET 571 581 OTHER ASSETS: Goodwill 3,700 3,415 Other intangible assets, net 993 1,394 Deferred income taxes 115 73 Total other assets 4,808 4,882 Total assets $13,816 $15,323 Mer Telemanagement Solutions Ltd. and Its Subsidiaries CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data) December 31 2005 2004 Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term bank credit $ 47 $ - Trade payables 735 719 Accrued expenses and other liabilities 2,259 2,042 Deferred revenues 888 1,254 Total current liabilities 3,929 4,015 LONG-TERM LIABILITIES: Accrued severance pay 713 651 Total long-term liabilities 713 651 SHAREHOLDERS' EQUITY: Share capital - Ordinary shares of NIS 0.01 par value - Authorized: 12,000,000 shares at December 31, 2004 and 2005; Issued: 4,648,804 and 5,744,304 shares at December 31, 2004 and 2005, respectively; Outstanding: 4,638,004 and 5,733,504 shares at December 31, 2004 and 2005, respectively 17 14 Additional paid-in capital 15,966 12,879 Treasury shares (10,800 and 10,800 shares at December 31, 2004 and 2005, respectively) (29) (29) Deferred stock compensation (142) (208) Accumulated other comprehensive income (loss) (75) 348 Accumulated deficit (6,563) (2,347) Total shareholders' equity 9,174 10,657 Total liabilities and shareholders' equity $13,816 $15,323 DATASOURCE: MTS - Mer Telemanagement Solutions Ltd. CONTACT: Shlomi Hagai, Corporate COO & CFO of MTS - MER Telemanagement Solutions, +972-9762-1733, ; or Investor Relations - Kathy Price, Managing Director, of The Global Consulting Group, +1-646-284- 9430, Web site: http://www.mtsint.com/

Copyright