TTIL Tti Team Telecom International Ltd. (MM)

TTI Team Telecom International Ltd. (NASDAQ: TTIL), (�the Company�), a global supplier of Operations Support Systems (OSS) to communications service providers, today announced results for the first quarter ended March 31, 2007. Total revenues for the first quarter were $10.7 million, compared with $12.5 million for the first quarter of fiscal 2006. Total operating expenses were $5.7 million, compared to $6.1 million in the first quarter of 2006 and $7.1 million in the fourth quarter of 2006. Operating loss for the quarter was $0.4 million compared with operating income of $0.7 million for the same quarter last year. Net loss was $42,000, or $0.00 per diluted share, compared to net income of $0.8 million, or $0.04 per diluted share for the first quarter of 2006. As of March 31, 2007, the Company had approximately $30.2 million in cash and liquid investments. Commenting on the results, Meir Lipshes, Chairman and CEO of TTI Telecom, stated, �We are pleased with our results for the first quarter, which showed a slight top-line improvement over the fourth quarter of 2006. Additionally, we saw success in our fourth quarter expense reduction initiative, through which operating expenses declined by nearly 18%. We reached breakeven compared to losses of approximately $3 million. With a leaner, more efficient organizational structure and strong balance sheet, we believe that TTI is well positioned to capitalize on new growth opportunities as they arise.� Lipshes concluded, �We are committed to building upon this recent progress, and are working to carry this momentum into the second quarter and beyond.� Conference Call Information: A conference call has been scheduled for 9:00am ET today, May 14, 2007, during which management will discuss the Company�s performance for the quarter. The call can be accessed via live webcast through the Investor Relations portion of the TTI Telecom web site, www.tti-telecom.com and at www.kcsa.com. A telephone replay of the call will also be available starting two hours after the completion of the call until 11:59pm ET on May 18, 2007. To access the replay, please dial +1.877-519-4471 (International dialers can call +1.973-341-3080), participant code 8794593. The webcast of the conference call will be archived on the TTI Telecom and KCSA web sites for 90 days. About TTI Telecom: TTI Team Telecom International Ltd. (�TTI Telecom�) is a leading provider of next generation Operations Support Systems (OSS) to communications service providers worldwide. The company�s Netrac portfolio delivers an automated, proactive and customer-centric approach to service assurance and network management. Anchored by market-leading service assurance solutions � Fault Management (FaM) and Performance Management (PMM) � that give customers an end-to-end view of their network, TTI Telecom�s Netrac enables service providers to reduce operating costs, enhance profitability and launch new, revenue-generating services more rapidly. Netrac is compatible with multiple technologies and industry standards, and is uniquely positioned to bridge legacy, next-generation, convergent, and IMS Networks. TTI Telecom�s customer base consists of tier-one and tier-two service providers globally, including large incumbents in the Americas, Europe and Asia-Pacific. Forward looking statements in this release involve a number of risks and uncertainties including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company�s accounting policies as well as certain other risk factors which are detailed in the Company�s SEC filings. TTI TEAM TELECOM INTERNATIONAL LTD. STATEMENTS OF INCOME (in thousands of U.S. dollars) � Three months EndedMarch 31, 2007� 2006� Revenues: Unaudited Product $5,781� $7,948� Services 4,926� 4,547� � Total revenues 10,707� 12,495� � Cost of revenues: Product 3,007� 3,748� Services 2,372� 1,932� � Total cost of revenues 5,379� 5,680� � Gross profit: 5,328� 6,815� � Operating expenses: Research and development, net 2,199� 2,105� Sales and marketing, net 1,735� 2,535� General and administrative 1,811� 1,456� � Total operating expenses 5,745� 6,096� � Operating income (loss) (417) 719� Financial income, net 581� 96� � Income before taxes on income 164� 815� Taxes on income 206� 12� � Net income (loss) (42) 803� � � Net basic income (loss) per share attributable to Ordinary shareholders basic and diluted $0.00� $0.04� � Weighted average number of shares used for computing diluted net income (loss) per share to ordinary shareholders 16,000,431� 14,575,138� � Weighted average number of shares used for computing basic net income (loss) per share to ordinary shareholders 16,000,431� 14,159,809� TTI TEAM TELECOM INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEET (in thousands of U.S. dollars) March 31,2007 December 31,2006 Unaudited ASSETS � CURRENT ASSETS: Cash and cash equivalents 27,321� 31,410� Short term deposits 2,779� 984� Trade receivables 6,558� 4,664� Unbilled receivables 1,246� 2,834� Related parties 379� 373� Other accounts receivable and prepaid expenses 2,112� 2,265� � Total current assets 40,395� 42,530� � LONG-TERM INVESTMENTS: Long term deposits 97� 97� Investment in affiliate 165� 165� Severance pay fund 3,395� 3,627� Long-term receivables 3,314� 3,324� � Total long-term investments 6,971� 7,213� � PROPERTY AND EQUIPMENT: Cost 23,461� 23,612� Less - accumulated depreciation 19,836� 19,770� � Property and equipment, net 3,625� 3,842� � Total Assets 50,991� 53,585� � LIABILITIES AND SHAREHOLDERS' EQUITY � CURRENT LIABILITIES: � Trade payables 1,643� 2,508� Related parties 318� 40� Deferred revenues 6,730� 8,333� Other accounts payable and accrued expenses 7,060� 7,187� � Total current liabilities 15,751� 18,068� � ACCRUED SEVERANCE PAY 4,803� 5,022� � SHAREHOLDERS' EQUITY: Share capital: 2,594� 2,594� Additional paid-in capital 74,944� 74,919� Retained earnings (Accumulated deficit) (47,101) (47,018) � Total shareholders' equity 30,437� 30,495� � Total liabilities and shareholders� equity 50,991� 53,585� TTI TELECOM INTERNATIONAL LTD. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands of U.S. Dollars) Number of Share Capital Ordinary Shares PreferredA Shares Ordinary Shares Preferred A Shares Additional Paid - in Capital Accumulated other comprehensive loss net Retained Earnings/ (Accumulated loss) � Total Shareholders' Equity Audited � Balance as of December 31, 2005 13,872,941� 4,636,391� $2,022� $526� $73,446� $(336) $(43,215) $32,443� � Exercise of warrants 427,490� -� 46� 0� 1,022� -� -� 1,068� Conversion of Convertible Preferred A shares 1,700,000� (1,700,000) 192� (192) -� -� -� -� Share-based compensation 0� 0� 0� 0� 451� 0� 0� 451� Comprehensive loss: Other comprehensive loss - unrealized losses on available-for-sale marketable securities, net of impairment -� -� -� -� -� 336� -� 336� � Net Loss -� -� -� -� -� -� (3,803) (3,803) � Balance as of December 31, 2006 16,000,431� 2,936,391� 2,260� 334� 74,919� -� (47,018) 30,495� � Unaudited � Exercise of warrants -� -� -� -� -� -� -� -� Conversion of shares -� -� -� -� -� -� -� -� Share-based compensation -� -� -� -� 25� -� -� 25� Comprehensive loss: Other comprehensive loss - unrealized losses on available-for-sale marketable securities, net of impairment -� -� -� -� -� -� -� -� Accumulated effect of Fin 48 adoption -� -� -� -� -� -� (41) (41) Net Loss -� -� -� -� -� -� � (42) � (42) � Balance as of March 31, 2007 16,000,431� 2,936,391� 2,260� 334� 74,944� -� (47,101) 30,437� � Unaudited � Balance as of December 31, 2005 13,872,941� 4,636,391� 2,022� 526� 73,446� (336) (43,215) 32,443� � Exercise of warrants 354,545� -� 38� -� 848� -� -� 886� Conversion of shares 181,818� (181,818) 21� (21) -� -� -� -� Share-based compensation -� -� -� -� 115� -� -� 115� Comprehensive loss: Other comprehensive loss - unrealized losses on available-for-sale marketable securities, net of impairment -� -� -� -� -� 107� -� 107� Net income -� -� -� -� -� -� 803� � 803� � Balance as of March 31, 2006 14,409,304� 4,454,573� 2,081� 505� $74,409� $(229) $(42,412) $34,354� TTI TELECOM INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) Three months ended Year ended March 31, Dec 31, 2007� 2006� 2006� Unaudited � Cash flows from operating activities: � Net income (loss) $(42) $803� $(3,803) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: � Depreciation and amortization 523� 482� 2,589� Gain from sale of property and equipment (116) (21) (73) Accrued interest on short - term bank deposits (4) (3) (23) Severance pay, net 13� 174� 513� Decrease (increase) in trade receivables (865) 121� (764) Decrease (increase) in unbilled receivables 1,588� (755) (1,870) Decrease in long term trade and unbilled receivables 10� 917� 613� Decrease (increase) in other accounts receivable and prepaid expenses 153� 154� (47) Increase (decrease) in trade payables (1,894) 347� 641� Increase in related parties 272� 1,140� 34� Decrease in deferred revenues (1,603) (1,505) (1,893) Decrease in other accounts payable and accrued expenses (168) (1,255) (276) Amortization of stock base compensation 25� 115� 451� Amortization of premium and accretion of accrued interest on available for sale marketable securities 0� 299� 1,305� Net cash provided by (used in) operating activities (2,108) 1,013� (2,603) � Cash flows from investing activities: � Investment in short-term and long-term bank deposits` (2,000) 0� (188) Investment in available-for-sale marketable securities 0� (3,196) 0� Proceeds from sale and redemption of available-for-sale marketable securities 0� 8,700� 14,744� Proceeds from short-term and long-term bank deposits 209� 437� 1,984� Proceeds from sale of property and equipment 122� 33� 117� Purchase of property and equipment (312) (540) (1,746) Net cash provided by (used in) investing activities (1,981) 5,434� 14,911� � Cash flows from financing activities: � Proceeds from issuance of preferred / regular shares, net -� 886� 1,068� � Net cash provided by financing activities -� 886� 1,068� � Increase (decrease) in cash and cash equivalents (4,089) 7,333� 13,376� � Cash and cash equivalents at the beginning of the period $31,410� 18,034� 18,034� � Cash and cash equivalents at the end of the period $27,321� $25,367� $31,410�