RA'ANANA, Israel, August 8 /PRNewswire-FirstCall/ -- MTS - Mer Telemanagement Solutions Ltd. (Nasdaq Capital Market: MTSL), a global provider of business support systems (BSS) for comprehensive telecommunication management and customer care & billing (CC&B) solutions, today announced its financial results for the second quarter of 2007. Revenues for the second quarter of 2007 were $2.5 million, compared with revenues of $2.7 million in the second quarter of 2006. Operating loss for the second quarter of 2007 was $2.7 million compared with an operating loss of $471,000 in the second quarter of 2006. The increase was due to a $2.3 million impairment of goodwill and other intangible assets in accordance with FAS 142 -"Goodwill and other Intangible Assets" with respect to the Company's investment in Teleknowledge Ltd.. Net loss for the second quarter was $2.8 million or ($0.49) per diluted share, compared with a net loss of $448,000 or ($0.08) per diluted share in the second quarter of 2006. MTS ended the second quarter with approximately $1.6 million in cash and cash equivalents, including marketable securities. The company is continuing to monitor its cash expenditures and is seeking to improve its working capital by year end. Additionally, MTS ended the quarter with an accumulated backlog of orders exceeding $1.0 million. The backlog represents orders booked but not yet recognized as revenue (excluding deferred maintenance revenues) as of June 30, 2007. Mr. Eytan Bar, President and CEO of MTS said, "Our acquisition of Telsoft in 2006 is paying off. Telsoft showed very good results this quarter, and has exceeded its target expectations as it sold its traditional Telsoft Call Accounting products as well as the new MTS offerings and solutions to its customer base." "In the area of Telecommunications Expense Management (TEM), we concluded a successful showing of our solution at the TEM show in San Francisco with very good responses and interest in our solution. We will follow-up on these leads which were indeed most promising." "During the second quarter of 2007, we also consolidated our two offices on the West Coast, and our operations extend from our offices on both coasts. We will continue to leverage our solutions and explore new market opportunities," concluded Mr. Bar. Conference Call Information MTS will conduct a teleconference to discuss the second quarter results on Wednesday, August 8 at 11:00 a.m Eastern Time/6:00 p.m Israel time. To access the conference call, please dial +1-800-860-2442 (U.S.), +1-412-858-4600 (international), at least 10 minutes prior to commencement of the call. Reference the MTS conference call or conference ID #408733. A replay of the call will be available from August 8 through 11:59 p.m. EST on August 15. To access the replay, please dial +1-877-344-7529. 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. Financials Tables Follow CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December June 30, 31, 2006 2006 2007 Audited Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,474 $ 1,635 $ 1,432 Short-term bank deposits 100 - - Marketable securities 159 142 160 Trade receivables, net 2,484 2,280 1,955 Unbilled receivables 51 448 59 Other accounts receivable and prepaid expenses 763 690 630 Inventories 138 152 138 Total current assets 5,169 5,347 4,374 LONG- TERM INVESTMENTS: Investment in an affiliate 1,598 1,777 1,468 Severance pay fund 673 607 726 Other investments 366 365 369 Deferred income taxes 112 115 105 Total long-term investments 2,749 2,864 2,668 PROPERTY AND EQUIPMENT, NET 439 500 332 OTHER ASSETS: Goodwill 4,058 3,877 2,635 Other intangible assets, net 1,639 817 933 Total other assets 5,697 4,694 3,568 Total assets $ 14,054 $ 13,405 $ 10,942 CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data) December 31, June 30, 2006 2006 2007 Audited Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term bank credit and current maturities of bank loan $ 421 $ - $ 920 Trade payables 510 605 531 Accrued expenses and other liabilities 2,507 2,395 2,770 Deferred revenues 1,545 891 1,253 Total current liabilities 4,983 3,891 5,474 LONG-TERM LIABILITIES: Long-term bank loan 583 - 83 Long-term loan from related party - - 134 Accrued severance pay 946 876 1,002 Total long-term liabilities 1,529 876 1,219 SHAREHOLDERS' EQUITY: Share capital - Ordinary shares of NIS 0.01 par value - Authorized: 12,000,000 shares at December 31, 2006 and June 30, 2006 and 2007; Issued: 5,784,645, 5,774,645 and 5,784,645 shares at December 31, 2006 and June 30, 2006 and 2007, respectively; Outstanding: 5,773,845, 5,763,845 and 5,773,845 shares at December 31, 2006 and June 30, 2006 and 2007, respectively 17 17 17 Additional paid-in capital 16,109 16,016 16,163 Treasury shares (10,800 Ordinary shares) (29) (29) (29) Accumulated other comprehensive income 254 130 294 Accumulated deficit (8,809) (7,496) (12,196) Total shareholders' equity 7,542 8,638 4,249 Total liabilities and shareholders' equity $ 14,054 $ 13,405 $ 10,942 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Year ended Three months ended Six months ended December 31, June 30, June 30, 2006 2006 2007 2006 2007 Audited Unaudited Revenues $ 10,484 $ 2,704 $ 2,505 $ 5,518 $ 4,951 Cost of revenues (X) 3,355 (XX) 894 (XX) 753 (X) 1,828 (X) 1,381 Gross profit 7,129 1,810 1,752 3,690 3,570 Operating expenses: Research and development, net (X) 3,633 (XX) 898 (XX) 562 (X) 1,958 (X) 1,448 Selling and marketing (X) 3,078 (XX) 753 (XX) 803 (X) 1,583 (X) 1,639 General and administrative (X) 2,651 (XX) 630 (XX) 821 (X) 1,208 (X) 1,519 Impairment of goodwill and other intangible assets - - 2,312 - 2,312 Total operating expenses 9,362 2,281 4,498 4,749 6,918 Operating loss (2,233) (471) (2,746) (1,059) (3,348) Financial income (expenses), net (54) (26) 2 11 (13) Loss before taxes on income (2,287) (497) (2,744) (1,048) (3,361) Taxes on income 118 - - 3 - Loss before equity in earnings of affiliate (2,405) (497) (2,744) (1,051) (3,361) Equity in earnings of affiliate 159 49 (58) 118 (26) Net loss $ (2,246) $ (448) $ (2,802) $ (933) $ (3,387) Net loss per share: Basic and diluted net loss per Ordinary share $ (0.39) $ (0.08) $ (0.49) $ (0.16) $ (0.59) Weighted average number of Ordinary shares used in computing basic and diluted net loss per share 5,762,311 5,763,845 5,773,845 5,754,186 5,773,845 (X) Including stock-based employee compensation in the amounts of $ 8, $ 21, $ 7 and $ 18 (December 31, 2006 - $ 21, $ 101, $ 17 and $ 71 and six months ended June 30, 2006 - $ 15, $ 60, $ 10 and $ 46) in cost of revenues, research and development, selling and marketing and general and administrative, respectively. (XX) Including stock-based employee compensation in the amounts of $ 4, $ 14, $ 4 and $ 8 (three months ended June 30, 2006 - $ 5, $ 45, $ (3) and $ 21 in cost of revenues, research and development, selling and marketing and general and administrative, respectively. Contacts: Company: Shlomi Hagai Corporate COO & CFO Tel: +972-9-762-1733 Email: DATASOURCE: MTS-MER Telemanagement Solutions Ltd CONTACT: Contacts: Company: Shlomi Hagai, Corporate COO & CFO, Tel: +972-9-762-1733, Email:

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