MTS Announces Full Year and Fourth Quarter 2012 Financial Results

      MTS Announces Full Year and Fourth Quarter 2012 Financial Results

Year over Year Operating Income Increased 410%; Simple Mobile has Notified the
Company that it Intends to Migrate Our Hosted Billing Services to their Own
Platform and the Company does Not Expect the Contract to be Renewed after
Year-End 2013

PR Newswire

RA'ANANA, Israel, March 19, 2013

RA'ANANA, Israel, March 19, 2013 /PRNewswire/ --

MTS-MER Telemanagement Solutions Ltd. (NASDAQCapital Market: MTSL),a
global provider of Mobile Virtual Network Enabler (MVNE), Mobile Money and
telecommunications expense management (TEM) solutions and services, today
announced its financial results for the fourth quarter and the year ended
December 31, 2012.

Revenues for the year ended December 31, 2012 were $13.1 million, compared
with revenues of $12.0 million in 2011. Revenues for the fourth quarter of
2012 were $3.5 million, compared with revenues of $3.2 million in the fourth
quarter of 2011.

The Company's operating profit was $2.0 million for the year ended December
31, 2012 compared with an operating profit of $401,000 for the same period
last year. Net income for the year ended December 31, 2012 was $1.4 million or
$0.30 per diluted share, compared with net income of $387,000 or $0.09 per
diluted share in 2011. On a non-GAAP basis, excluding a non-recurring tax
charge related to an Israeli court ruling related to the 1997 to 1999 tax
years, net income for the year ended December 31, 2012 was $2.4 million or
$0.54 per diluted share, compared with net income of $387,000 or $0.09 per
diluted share in 2011. 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. Net income for the year ended December 31, 2011 was negatively
affected by legal expenses and settlement costs of approximately $640,000
relating to an alleged patent infringement claim.

The Company's operating profit was $548,000 in the fourth quarter of 2012
compared to an operating loss of $38,000 for the fourth quarter of 2011. Net
income for the fourth quarter, after the $604,000 non-recurring tax charge,
was $351,000 or $0.08 per diluted share, compared with a net loss of $201,000
or ($0.05) per diluted share in the fourth quarter of 2011. On a non-GAAP
basis, excluding the non-recurring tax charge related to the court ruling, net
income for the fourth quarter of 2012 was $955,000 or $0.20 per diluted share,
compared with net loss of $201,000 or ($0.05) per diluted share in the fourth
quarter of 2011.

As previously announced in October 2012, we entered into a one-year renewal of
our agreement with Simple Mobile, now part of TracFone, to provide hosted
billing services for minimum monthly payments of $300,000 during the year
ending December 31, 2013. Recently, we were advised that TracFone intends to
migrate the hosted billing services into their own platform. It is unlikely
that we will receive significant revenues from TracFone in 2014.

"Our fourth quarter results showed continued improvements in our financial
results and indicators as a result of the increase in our Mobile Virtual
Network Enabler (MVNE) activity and the Telecom Expense Management
opportunities through partners, new customer acquisitions and expanding
customer base," said Eytan Bar, CEO of MTS.

"As we previously announced, we completed the first deployments of our Mobile
Money solution for a customer in Africa and recently we were able to sign up a
new MVNO customer in the U.S. for our MVNE managed services model with a
minimum total value of approximately $500,000 over three year period. We are
seeing other opportunities in the TEM, MVNE and Mobile Money markets and are
working diligently to convert these opportunities into new contracts,"
concluded Mr. Bar.

About MTS

Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of Telecom
Expense Management (TEM) and 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 (MDM), 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 service to allow 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, Hong Kong and distribution channels. 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.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

                                                      December 31,    December 31,
                                                          2012            2011
                                                      ____________    ____________
    ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                             $ 4,190         $ 3,269
    Restricted cash                                            38              45
    Restricted marketable securities                          139             127
    Trade receivables, net                                  1,066             854
    Deferred income tax                                       371               -
    Other accounts receivable and prepaid expenses            175              93
                                                          _______         _______
    Total current assets                                    5,979           4,388

    LONG-TERM ASSETS:
    Severance pay fund                                        658             619
    Other investments                                           4               6
    Deferred income taxes                                       -              31
                                                          _______         _______
    Total long-term assets                                    662             656
                                                          _______         _______
    PROPERTY AND EQUIPMENT, NET                               245             161
                                                          _______         _______
    OTHER ASSETS:
    Goodwill                                                3,479           3,479
    Other intangible assets, net                              759           1,050
                                                          _______         _______
    Total other assets                                      4,238           4,529
                                                          _______         _______
    Total assets                                         $ 11,124         $ 9,734
                                                          =======         =======

CONSOLIDATED BALANCE SHEETS

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

                                                       December 31,    December 31,
                                                         2012             2011
                                                      _____________   ____________
    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Trade payables                                          $ 279           $ 326
    Accrued expenses and other liabilities                  2,393           2,354
    Deferred revenues                                       1,648           2,025
    Liabilities of discontinued operations                    435             435
                                                           ______          ______
    Total current liabilities                               4,755           5,140
                                                           ______          ______
    LONG-TERM LIABILITIES -
    Accrued severance pay                                     800             762
                                                           ______          ______
    COMMITMENTS AND CONTINGENT LIABILITIES

    SHAREHOLDERS' EQUITY:
    Share capital                                              13              13
    Additional paid-in capital                             20,120          19,773
    Treasury shares                                           (29)            (29)
    Accumulated other comprehensive income                      5             (19)
    Accumulated deficit                                   (14,540)        (15,906)
                                                           ______          ______
    Total shareholders' equity                              5,569           3,832
                                                           ______          ______
    Total liabilities and shareholders'
    equity                                               $ 11,124         $ 9,734
                                                           ======          ======

CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                           Year ended         Three months ended
                                          December 31,            December 31,
                                      2012          2011       2012          2011
                                    _______        ______     ______       ______
    Revenues:
    Product sales                   $ 3,665       $ 3,828    $ 1,043        $ 895
    Services                          9,461         8,175      2,435        2,264
                                     ______        ______     ______       ______
    Total revenues                   13,126        12,003      3,478        3,159
                                     ______        ______     ______       ______
    Cost of revenues:
    Product sales                     1,154         1,105        267          269
    Services                          3,340         2,836        882          854
                                     ______        ______     ______       ______
    Total cost of
    revenues                          4,494         3,941      1,149        1,123
                                     ______        ______     ______       ______
    Gross profit                      8,632         8,062      2,329        2,036
                                     ______        ______     ______       ______
    Operating expenses:
    Research and
    development, net of
    grants from the OCS               1,329         1,909        326          464
    Selling and marketing             2,457         1,905        857          440
    General and
    administrative                    2,804         3,847        598         1170
                                     ______        ______     ______       ______
    Total operating
    expenses                          6,590         7,661      1,781        2,074
                                     ______        ______     ______       ______
    Operating profit
    (loss)                            2,042           401        548          (38)
    Financial income
    (expenses), net                      60             2         80          (77)
    Capital gain on sale
    of investment in
    affiliate                             -            78          -            -
                                     ______        ______     ______       ______
    Income (loss) before
    taxes on income                   2,102           481        628         (115)
    Tax on income                       736            10        277            2

    Net income (loss)
    from continuing
    operations                      $ 1,366         $ 471      $ 351       $ (117)
    Net loss from                   =======        ======     ======       ======
    discontinued
    operations                            -           (84)         -          (84)
    Net income (loss)               $ 1,366         $ 387      $ 351       $ (201)
                                    =======        ======     ======       ======
    Basic and diluted net
    income (loss) per
    Ordinary share                   $ 0.30        $ 0.09     $ 0.08      $ (0.05)
                                    =======        ======     ======       ======
    Weighted average
    number of Ordinary
    shares used in
    computing basic net
    income (loss) per
    share                         4,478,677     4,459,057  4,539,323    4,459,057
                                  =========     =========  =========    =========
    Weighted average
    number of Ordinary
    shares used in
    computing diluted net
    income (loss) per
    share                         4,531,384     4,459,057  4,669,887    4,459,057
                                  =========     =========  =========    =========

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

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

                                          Year ended            Three months ended
                                         December 31,              December 31,
                                      2012          2011        2012         2011
                                    _______       ______      ______        ______
 
    GAAP Net Income                   1,366          387         351         (201)
    Tax charge related to
    court ruling                      1,050            -         604            -
                                    _______       ______      ______        ______

    Non-GAAP Net income             $ 2,416        $ 387       $ 955       $ (201)
                                    =======       ======      ======       =======
    Net Income per share:

    GAAP diluted net
    income per Ordinary
    share                            $ 0.30       $ 0.09      $ 0.08      $ (0.05)
    Non-GAAP diluted net            =======       ======      ======       =======
    income per Ordinary
    share                            $ 0.54       $ 0.09      $ 0.20      $ (0.05)
    Weighted average                =======       ======      ======       =======
    number of Ordinary
    shares used in

    computing GAAP and
    Non-GAAP diluted net
    income per share              4,531,384    4,459,057   4,669,887    4,459,057
                                  =========    =========   =========    =========

Contacts:
Alon Mualem
CFO
Tel: +972-9-7777-540
Email: Alon.Mualem@mtsint.com

SOURCE MTS-MER Telemanagement Solutions Ltd