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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2005
MER TELEMANAGEMENT SOLUTIONS LTD.
(Name of Registrant)
22 Zarhin Street, Ra'anana 43662, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-___________
This Form 6-K is being incorporated by reference into the Registrant's Form S-8
Registration Statement File No. 333-12014.
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MER Telemangement Solutions Ltd.
6-K Items
1. Press Release re MTS Reports 3% Revenue Increase for Fourth Quarter 2004
dated February 9, 2005.
ITEM 1
Press Release Source: Mer Telemanagement Solutions Ltd.
MTS Reports 3% Revenue Increase for Fourth Quarter 2004
Wednesday February 9, 8:30 am ET
NEC Partnership and Teleknowledge Acquisition Position Company for Future Growth
RA'ANANA, Israel, Feb. 9 /PRNewswire-FirstCall/ -- MTS -- Mer Telemanagement
Solutions Ltd. (Nasdaq: MTSL - News), a global provider of Operations Support
Systems (OSS) for comprehensive Telecommunication Management and Customer
Care & Billing solutions, today reported its financial results for fourth
quarter and fiscal 2004.
Revenues for the fourth quarter increased 3% to $2.58 million compared with
$2.51 million for the fourth quarter of 2003. Revenues for fiscal 2004 were
$9.41 million compared to $9.23 million for the prior year's period.
Eytan Bar, MTS President and Chief Executive Officer commented, "Our growth
strategy is gaining traction and we are maintaining the sales momentum achieved
in the third quarter. Furthermore, we negotiated several new agreements with
customers in the U.S. and the Far East for both telecommunications management
and customer care and billing solutions."
In November, the Company announced a product integration agreement with NEC
Unified Solutions, Inc. (NEC), the market leader in converged and pure IP
communications systems. NEC will integrate MTS' cutting-edge application suite
with its state-of-the-art MA4000 communications management solution.
"MTS continues its plan to expand marketing channels through partnerships with
market leading telecommunications solutions providers and integrators," stated
Mr. Bar. "We look forward to launching these products with NEC in the global
markets."
In December 2004, MTS completed the acquisition of certain assets and
liabilities of TeleKnowledge, a leading provider of carrier-class billing &
rating solutions. The integration of TeleKnowledge's superior and robust billing
solution enables MTS to offer an end-to-end customer care and billing solution
including Pre/Post paid billing, Web Self-care, Assets Management, Partner
Management (Interconnect), Help Desk and Order Management modules.
"This acquisition builds upon the successful OEM relationship we had with
TeleKnowledge and will enable MTS to further capitalize on opportunities in the
service and content provider markets," said Mr. Bar.
Gross profit for the fourth quarter was $1.5 million compared to $2.1 million
for the same period last year. Fiscal 2004 gross profit was $6.6 million
compared to $7.4 million in 2003. The reduction in gross profit was a result of
the costs associated with the integration of billing technologies into our first
few VOIP billing implementations.
Fourth quarter research and development expenses were $0.8 million compared to
$0.6 million in the fourth quarter of 2003. Research and development expenses
for the year were $2.4 million (after $0.4 million R&D capitalization) compared
to $1.8 million in 2003.
Selling and marketing expenses for the quarter increased to $2.0 million from
$1.0 million in last year's period. 2004 selling and marketing expenses were
$6.3 million compared to $3.9 million for the prior year.
Net loss for the quarter was $2.3 million compared to net income of $80,000 for
the fourth quarter of 2003. Net loss for the fiscal year was $4.1 million or
$(0.89) per share compared to net income of $87,000 or $0.02 per share for 2003.
"Our investments in product development and sales and marketing are yielding a
sustainable sales trend," continued Mr. Bar. "In 2004, we added 27 people
globally across our sales and newly established professional services division.
We believe we now have the necessary infrastructure in place to drive market
penetration. Our goal is to level off spending in line with revenue expansion."
MTS ended the quarter with approximately $4.9 million in cash and cash
equivalents, including marketable securities.
"We believe MTS has a solid base for future growth," concluded Mr. Bar. "We have
a robust product offering that is further complemented by the Teleknowledge
acquisition. The increasing sales of our new product offering to the existing
MTS installed base are very encouraging and we hope to further develop these
customers. We will continue to expand our partner network and sales channels, as
well. We look forward to leveraging these strengths in 2005 to deliver enhanced
shareholder value."
The Company will conduct a teleconference to discuss results today, Wednesday,
February 9, at 11:00 AM Eastern Time (18:00 Israel Time). To participate please
dial 1-800-792-0846 from the US or Canada (toll free), 1-800-945-7877 from
Israel (toll free), or 1-706-634-1485 from other locations approximately 5-10
minutes prior to the starting time. A replay of the call will be available from
2:00 PM ET on Wednesday, February 9, 2005, until 11:59 PM ET on Wednesday,
February 16. To access the replay please dial 1-800-642-1687 from the US or
Canada (toll free), 1-800-945-8731 from Israel (toll free), or 1-706-645-9291
from other locations and enter conference ID#3755458.
About MTS
Mer Telemanagement Solutions Ltd. is a global provider of operations support
systems (OSS) for comprehensive telecommunication management and customer care &
billing solutions. MTS' OSS is a full-featured customized solution for
telecommunications management and customer care & billing. Its
telecommunications enterprise resource planning (ERP) application suite is used
by corporations and organizations to improve the efficiency and performance of
all telecommunication and information technology (IT) operations, and to
significantly reduce associated costs. Its affordable customer care and billing
(CC&B) solutions are used by service providers and operators to support
sophisticated billing, web-based self-provisioning and other revenue-generating
applications.
Headquartered in Israel, MTS markets through wholly owned subsidiaries in the
U.S., Hong Kong, Holland, and Brazil, and through OEM partnerships with Siemens,
Phillips, and other PABX vendors. Its legacy call accounting solutions have been
installed by over 60,000 customers in 60 countries. MTS' shares are traded on
the Nasdaq SmallCap 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:
Ori Shachar, Corporate COO & CFO Rachel Levine
MTS - MER Telemanagement Solutions, Ltd. The Anne McBride Company, Inc.
Tel: +972-9-762-1733 Tel : 212-983-1702 ext. 207
Email: Ori.Shachar@mtsint.com E-mail: rlevine@annemcbride.com
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2003 2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $8,684 $3,814
Marketable securities 1,644 1,057
Trade receivables (net of allowance for doubtful
accounts of $350 and $370 as of December 31,
2003 and 2004, respectively) 1,391 1,348
Other accounts receivable and prepaid expenses 566 391
Inventories 193 178
Total current assets 12,478 6,788
LONG-TERM INVESTMENTS:
Investments in an affiliate 1,859 2,119
Long-term loans, net of current maturities 95 45
Severance pay fund 564 535
Other investments 368 373
Total long-term investments 2,886 3,072
PROPERTY AND EQUIPMENT, NET 482 581
OTHER ASSETS:
Goodwill 2,025 3,415
Other intangible assets, net 206 1,394
Deferred income taxes 105 73
Total other assets 2,336 4,882
Total assets $18,182 $15,323
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
December 31,
2003 2004
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans $ 8 $ -
Trade payables 393 719
Accrued expenses and other liabilities 1,421 2,042
Deferred revenues 1,219 1,254
Total current liabilities 3,041 4,015
LONG-TERM LIABILITIES:
Accrued severance pay 677 651
Total long-term liabilities 677 651
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares of NIS 0.01 par value -
Authorized: 12,000,000 shares as of
December 31, 2003 and 2004; Issued:
4,631,471 and 4,648,804 shares as of
December 31, 2003 and 2004, respectively;
Outstanding: 4,624,471 and 4,638,004
shares as of December 31, 2003 and 2004,
respectively 14 14
Additional paid-in capital 12,603 12,671
Treasury shares (7,000 and 10,800 shares as of
December 31, 2003 and 2004, respectively) (20) (29)
Accumulated other comprehensive income 87 348
Retained earnings (Accumulated deficit) 1,780 (2,347)
Total shareholders' equity 14,464 10,657
Total liabilities and shareholders' equity $18,182 $15,323
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year ended December 31,
2002 2003 2004
Revenues $9,787 $9,230 $9,413
Cost of revenues 1,896 1,849 2,814
Gross profit 7,891 7,381 6,599
Operating expenses:
Research and development, net 2,127 1,825 2,362
Selling and marketing 3,954 3,916 6,300
General and administrative 1,858 1,830 2,101
Total operating expenses 7,939 7,571 10,763
Operating loss (48) (190) (4,164)
Financial income, net 134 124 78
Other income (expenses), net (140) 6 -
Loss before taxes on income (54) (60) (4,086)
Taxes on income 52 198 266
(106) (258) (4,352)
Equity in earnings of affiliate 236 345 225
Net income (loss) $130 $87 $(4,127)
Net earnings (loss) per share:
Basic net earnings (loss) per ordinary
share $0.03 $0.02 $(0.89)
Diluted net earnings (loss) per
ordinary share $0.03 $0.02 $(0.89)
Weighted average number of ordinary
shares used in computing basic net
earnings (loss) per share 4,709,796 4,617,099 4,634,413
Weighted average number of ordinary
shares used in computing diluted net
earnings (loss) per share 4,709,796 4,628,249 4,634,413
The accompanying notes are an integral part of the consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANT EVENTS
NOTE 1:- TAX AUTHORITIES DEMAND
In April 2000, the tax authorities in Israel issued to the Company
a demand for a tax payment, for the period of 1997 - 1999, in the
amount of approximately NIS 6,000 thousand ($ 1,350 thousand).
The Company has appealed to the Israeli district court in respect
of the abovementioned tax demand. Based on the opinion of its tax
counsel, the Company believes that certain defenses can be raised
against the demand of the tax authorities. The Company believes
that the outcome of this matter will not have a material adverse
effect on its financial position or results of operations and, the
company provided a provision in the amount of $464 thousand, based
on the current evidence and on the basis of the said opinion of
its tax consultants, which in the opinion of company is an
adequate provision.
NOTE 2:- TELEKNOWLEDGE ACQUISITION
On December 30, 2004, the Company and Teleknowledge Group Ltd.
("Teleknowledge") consummated an Assets Purchase Agreement (the
"Agreement"). Under the terms of the Agreement, the Company agreed
to acquire certain assets and liabilities of Teleknowledge for the
following consideration:
1. An initial consideration of $2,374 thousand in cash (including
adjustment to the initial consideration in the amount of
Teleknowledge's account receivables net of deferred revenues, as
of December 29, 2004).
2. Additional contingent consideration of up to an amount of $3,650
thousand based on post acquisition revenue performance (calculated
as 10% of renewal maintenance fees and 20% of all other
Teleknowledge revenues), over a period of 3 years. In addition,
the Company incurred costs totaling $71 thousand.
The acquisition was accounted for under the purchase method of
accounting ("FASB 141"). Accordingly, the purchase price has been
allocated to the assets acquired and the liabilities assumed based
on the estimated fair value at the date of acquisition. The excess
of the purchase price over the estimated fair value of the net
assets acquired has been recorded as goodwill.
Based upon a valuation of tangible and intangible assets acquired,
the Company has allocated the total cost of the acquisition to
assets, as follows:
U.S. dollars in thousands
Trade receivables $100
Property and equipment, net 40
Intangible assets:
Developed technology (four-year useful life) 690
Customer base (six-year useful life) 300
Goodwill 1,391
Total assets acquired 2,521
Liabilities assumed:
Deferred revenues (76)
Total liabilities assumed (76)
Net assets acquired $2,445
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MER TELEMANAGEMENT SOLUTIONS LTD.
(Registrant)
By: /s/Eytan Bar
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Eytan Bar
President and
Chief Executive Officer
Date: February 9, 2005