MTS Announces Full Year and Fourth Quarter 2013 Financial Results

Ra’anana, Israel –March 6, 2014 – MTS – Mer Telemanagement Solutions Ltd. (NASDAQ Capital Market: MTSL), a global provider of Telecommunications Expense Management (TEM) and Enterprise Mobility Management (EMM) solutions and Mobile Virtual Network Enabler (MVNE) services, today announced its financial results for the fourth quarter and the year ended December 31, 2013.

Revenues for the year ended December 31, 2013 were $12.5 million, compared with revenues of $13.1 million in 2012. Revenues for the fourth quarter of 2013 were $3.1 million, compared with revenues of $3.5 million in the fourth quarter of 2012.

The Company’s operating profit was $1.7 million for the year ended December 31, 2013 compared with operating profit of $2.0 million for the same period last year. Net income for the year ended December 31, 2013 was $1.4 million or $0.30 per diluted share, compared with net income of $1.4 million or $0.30 per diluted share in 2012. Net income for the year ended December 31, 2012 was negatively affected by a non-recurring tax charge of approximately $1.05 million as a result of the Israeli court tax ruling with respect to the 1997 to 1999 period.

The Company’s operating profit was $519,000 in the fourth quarter of 2013 compared to an operating profit of $548,000 for the fourth quarter of 2012. Net income for the fourth quarter was $479,000 or $0.10 per diluted share, compared with net income of $351,000 or $0.08 per diluted share in the fourth quarter of 2012. Net income for the fourth quarter of 2012 was negatively affected by the non-recurring tax charge of approximately $604,000 as a result of the Israeli court tax ruling with respect to the 1997 to 1999 period.

As previously announced, the Company’s agreement with Simple Mobile, now part of TracFone, to provide hosted billing services for minimum monthly payments of $300,000 ended at December 31, 2013.

As of December 31, 2013, the Company had cash and cash equivalents of $6.4 million as compared to $4.2 million as at December 31, 2012. During the twelve month period ended December 31, 2013 the Company had operating cash flow of $2.1 million compared with operating cash flow of $807,000 during the twelve month period ended December 31, 2012.

"Our fourth quarter results were in line with our expectations. We are continuing to see opportunities in the TEM, MVNE and Mobile Money markets, both directly and through partners, and are working diligently to convert these opportunities into new contracts. In parallel, we are also exploring M&A transactions as part of our strategy to enhance our business and increase shareholder value." said Eytan Bar, CEO of MTS.

About MTS

Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of innovative products and services for Telecom Expense Management (TEM), Enterprise Mobility Management (EMM), Mobile Virtual Network Operators and Enablers (MVNO/MVNE) and Mobile Money services and solutions used by mobile service providers.

The MTS TEM Suite solution enables enterprises to gain visibility and control of strategic fixed and mobile telecom assets, services and IT security policies that drive key business processes and crucial competitive advantage. The MTS cloud, consulting and managed services solutions — including integrated management of invoices, assets, wireless, optimization, usage, mobile device management, procurement, help desk and bill payment, along with dashboards and reporting tools — provide professionals at every level of the organization with rapid access to concise, actionable data.

MTS’s solutions for telecommunication service providers are used worldwide by wireless and wireline service providers for interconnect billing, partner revenue management and for charging and invoicing their customers. MTS provides MVNE services to allow the quick launch of new MVNO initiatives in a pay as you grow and revenue share models. In addition, MTS has pre-configured solutions to support emerging carriers of focused solutions (e.g. IPTV, VoIP, WiMAX, MVNO) to rapidly install a full-featured and scalable solution.

Headquartered in Israel, MTS markets its solutions through wholly owned subsidiaries in the United States and Hong Kong and through distribution channels. MTS shares are traded on the NASDAQ Capital Market (symbol MTSL). For more information please visit the MTS web site: 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:

Alon Mualem

CFO

Tel: +972-9-7777-540

Email: Alon.Mualem@mtsint.com

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	December 31,		December 31,
	2013		2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,369	$	4,190
Restricted cash		63		38
Restricted marketable securities		153		139
Trade receivables, net		943		1,066
Deferred income tax		-		371
Other accounts receivable and prepaid expenses		147		175
Total current assets		7,675		5,979
LONG-TERM ASSETS:
Severance pay fund		725		658
Other investments		-		4
Total long-term assets		725		662
PROPERTY AND EQUIPMENT, NET		183		245
OTHER ASSETS:
Goodwill		3,479		3,479
Other intangible assets, net		567		759
Total other assets		4,046		4,238
Total assets	$	12,629	$	11,124

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	December 31,			December 31,
	2013			2012
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	254		$	279
Accrued expenses and other liabilities		2,200			2,393
Deferred revenues		1,766			1,648
Liabilities of discontinued operations		362			435
Total current liabilities		4,582			4,755
LONG-TERM LIABILITIES -
Accrued severance pay		857			800
Deferred tax liability		29			-
Total long-term assets		886			800
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital		13			13
Additional paid-in capital		20,317			20,120
Treasury shares		(29	)		(29	)
Accumulated other comprehensive income		(6	)		5
Accumulated deficit		(13,134	)		(14,540	)
Total shareholders' equity		7,161			5,569
Total liabilities and shareholders' equity	$	12,629		$	11,124

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

	Year ended December 31,				Three months ended December 31,
	2013		2012		2013			2012
Revenues:
Services	$	10,396	$	9,461	$	2,550		$	2,435
Product sales		2,076		3,665		565			1,043
Total revenues		12,472		13,126		3,115			3,478
Cost of revenues:
Services		3,254		3,340		626			882
Product sales		770		1,154		171			267
Total cost of revenues		4,024		4,494		797			1,149
Gross profit		8,448		8,632		2,318			2,329
Operating expenses:
Research and development, net of grants from the OCS		1,389		1,329		370			326
Selling and marketing		2,164		2,457		588			857
General and administrative		3,188		2,804		841			598
Total operating expenses		6,741		6,590		1,799			1,781
Operating profit		1,707		2,042		519			548
Financial income (expenses), net		61		60		(7	)		80
Income before taxes on income		1,768		2,102		512			628
Tax on income		435		736		106			277
Net income from continuing operations	$	1,333	$	1,366	$	406		$	351
Net income from discontinued operations		73		-		73			-
Net income	$	1,406	$	1,366	$	479		$	351
Basic and diluted net income per Ordinary share	$	0.30	$	0.30	$	0.10		$	0.08
Weighted average number of Ordinary shares used in computing basic net income per share		4,659,230		4,478,677		4,665,557			4,539,323
Weighted average number of Ordinary shares used in computing diluted net income per share		4,720,966		4,531,384		4,701,968			4,669,887