TTI Telecom Reports Second Quarter 2007 Financial Results

Q2 Net Income $856,000


PETACH TIKVA, Israel, Aug. 15, 2007 (PRIME NEWSWIRE) -- 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 second quarter and six months ended June 30, 2007.

Total revenues for the second quarter were $11.3 million, compared with $10.7 million in the first quarter of 2007, and $12.6 million for the second quarter of fiscal 2006. Total operating expenses were $6.3 million, compared to $5.7 million in the first quarter and $6.3 million in the second quarter of 2006.

Operating income for the quarter was $42,000 compared with an operating loss of $0.4 million in the first quarter and operating income of $0.2 million for the second quarter last year. Net income was $856,000, or $0.05 per basic and $0.04 per diluted share, compared to net loss of $42,000, or $0.00 per basic and diluted share for the first quarter of 2007 and net income of $166,000, or $0.01 per basic and diluted share in the second quarter of 2006.

Total Revenues for the six months ended June 30, 2007 were $22.0 million, compared to $25.0 million in the six months ended June 30, 2006. Total operating expenses for the period were $12.1 million, compared to $12.4 million in the first six months of 2006.

Operating loss for the period was $0.4 million compared with operating income of $0.9 million in the comparable period in 2006. Net income was $814,000, or $0.04 per basic and diluted share, compared to net income of $969,000, or $0.05 per basic and diluted share for the first six months of 2006.

As of June 30, 2007, the Company had approximately $30.2 million in cash and liquid investments.

After the end of the second quarter, the Company received payment of 1.7 million British Pounds from H3G U.K., as full settlement of a legal dispute relating to the termination of a contract accrued in the end of 2002. As is customary in such cases, the settlement was reached without admission of fault on either side.

Commenting on the results, Meir Lipshes, Chairman and CEO of TTI Telecom, stated, "We are pleased with our second quarter results, which reflect the continued resurgence of the Company. While we saw modest sequential revenue growth, our increased organizational efficiencies and leaner overall cost structure contributed to a substantial improvement in net income, both sequentially and compared to the second quarter of last year."

Lipshes added, "We are encouraged by the progress we have seen since bottoming in the fourth quarter of 2006, when we lost $3 million, and are working to continue building upon this growth as the year progresses. Looking ahead, we expect to see further benefit from the organizational changes made at the end of 2006 and believe that we can further leverage the improved infrastructure that exists at TTI. We are confident in our ability to expand our business as the markets we serve continue to recover."

Conference Call Information:

A conference call has been scheduled for 9:00am ET today, August 15, 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 August 22, 2007. To access the replay, please dial +1.877-519-4471 (International dialers can call +1.973-341-3080), participant code 9123600. 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 Ended        Six Months Ended
                                June 30,                June 30,
                        ----------------------  ----------------------
                           2007        2006        2007        2006
                        ----------------------  ----------------------
                               Unaudited               Unaudited
                               ---------               ---------
 Revenues:
 Product                $    6,570  $    7,791  $   12,351  $   15,739
 Services                    4,705       4,760       9,631       9,307
                        ----------  ----------  ----------  ----------

 Total revenues             11,275      12,551      21,982      25,046
                        ----------  ----------  ----------  ----------

 Cost of revenues:
 Product                     2,918       3,394       5,925       7,142
 Services                    1,971       2,652       4,343       4,584
                        ----------  ----------  ----------  ----------

 Total cost of revenues      4,889       6,046      10,268      11,726
                        ----------  ----------  ----------  ----------

 Gross profit                6,386       6,505      11,714      13,320
                        ----------  ----------  ----------  ----------

 Operating expenses:
 Research and
  development                2,146       2,276       4,345       4,381
 Sales and marketing         1,768       2,535       3,503       5,070
 General and
  administrative             2,430       1,492       4,241       2,948
                        ----------  ----------  ----------  ----------

 Total operating
  expenses                   6,344       6,303      12,089      12,399
                        ----------  ----------  ----------  ----------

 Operating income
  (loss)                        42         202        (375)        921
 Financial income
  (expenses), net              438         (35)      1,019          61
 Other Income                   33          --          33          --
                        ----------  ----------  ----------  ----------

 Income before taxes
  on income                    513         167         677         982
 Taxes on income              (343)          1        (137)         13
                        ----------  ----------  ----------  ----------
 Net income             $      856  $      166  $      814  $      969
                        ==========  ==========  ==========  ==========
 Net income attributed
  to preferred shares   $      133  $       31  $      126  $      180
                        ==========  ==========  ==========  ==========
 Net income available
  to ordinary shares    $      723  $      135  $      688  $      789
                        ==========  ==========  ==========  ==========

 Net basic income per
  share attributed to
  Ordinary
  shareholders:
 Diluted                $     0.04  $     0.01  $     0.04  $     0.05
                        ==========  ==========  ==========  ==========
 Basic                  $     0.05  $     0.01  $     0.04  $     0.05
                        ==========  ==========  ==========  ==========
 Weighted average
  number of shares
  used for computing
  diluted net income
  per share to ordinary
  shareholders          16,158,882  16,460,074  16,102,663  15,515,822
                        ==========  ==========  ==========  ==========
 Weighted average
  number of shares
  used for computing
  basic net income per
  share to ordinary
  shareholders          16,000,431  15,128,385  16,000,431  14,640,846
                        ==========  ==========  ==========  ==========



                  TTI TEAM TELECOM INTERNATIONAL LTD.
                      CONSOLIDATED BALANCE SHEET
                     (in thousands of U.S dollars)

                                                 June 30,    Dec. 31,
                                                   2007        2006
                                                ----------  ----------
                                                Unaudited
                                                ---------
 ASSETS

 CURRENT ASSETS:
 Cash and cash equivalents                      $   27,877  $   31,410
 Short term deposits                                 2,215         984
 Trade receivables                                   5,403       4,664
 Unbilled receivables                                1,833       2,834
 Related parties                                       370         373
 Other accounts receivable and prepaid expenses      2,411       2,265
                                                ----------  ----------

 Total current assets                               40,109      42,530
                                                ----------  ----------

 LONG-TERM INVESTMENTS:
 Long term deposits                                     97          97
 Investment in affiliate                               165         165
 Severance pay fund                                  3,311       3,627
 Long-term receivables                               3,393       3,324
                                                ----------  ----------

 Total long-term investments                         6,966       7,213
                                                ----------  ----------

 PROPERTY AND EQUIPMENT:
 Cost                                               23,483      23,612
 Less - accumulated depreciation                    19,789      19,770
                                                ----------  ----------

 Property and equipment, net                         3,694       3,842
                                                ----------  ----------

 Total Assets                                   $   50,769  $   53,585
                                                ==========  ==========

 LIABILITIES AND SHAREHOLDERS' EQUITY

 CURRENT LIABILITIES:
 Trade payables                                 $    2,037  $    2,508
 Related parties                                       800          40
 Deferred revenues                                   5,104       8,333
 Other accounts payable and accrued expenses         6,670       7,187
                                                ----------  ----------

 Total current liabilities                          14,611      18,068
                                                ----------  ----------

 ACCRUED SEVERANCE PAY                               4,826       5,022
                                                ----------  ----------

 SHAREHOLDERS' EQUITY:
 Share capital:                                      2,594       2,594
 Additional paid-in capital                         74,982      74,919
 Accumulated deficit                               (46,244)    (47,018)
                                                ----------  ----------

 Total shareholders' equity                         31,332      30,495
                                                ----------  ----------

 Total liabilities and shareholders' equity     $   50,769  $   53,585
                                                ==========  ==========

                    TTI TELECOM INTERNATIONAL LTD.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                -------------------------------------
                    (in thousands of U.S. dollars)

                                                   Six months ended
                                                       June 30,
                                                  2007        2006
                                                --------    --------
                                                      Unaudited
                                                      ---------
 Cash flows from operating activities:

 Net income                                     $    814    $    969
 Adjustments to reconcile net income to net
  cash provided by (used in) operating 
  activities:
   Depreciation and amortization                     977       1,135
   Gain from sale of property and equipment         (226)        (42)
   Realized gain on available-for-sale
    marketable securities                             --         182
   Accrued interest on short-term bank
    deposits                                         (31)         (7)
   Severance pay, net                                120         196
   Increase in trade receivables                    (739)       (612)
   Decrease (increase) in unbilled receivables     1,001      (1,347)
   Decrease (increase) in long term trade and
    unbilled receivables                             (69)        831
   Increase in other accounts receivable and
    prepaid expenses                                (146)        (68)
   Increase (decrease) in trade payables            (471)        562
   Increase in related parties                       763       1,026
   Increase in deferred revenues                  (3,229)     (3,219)
   Decrease in other accounts payable and
    accrued expenses                                (557)       (293)
   Stock based compensation                           63         250
   Amortization of premium and accretion of
    accrued interest on available for sale
    marketable securities                             --         731
                                                --------    --------
 Net cash provided by (used in) operating
  activities                                      (1,730)        294

     Cash flows from investing activities:

   Investment in short-term and long-term
    bank deposits                                 (2,000)       (188)
   Proceeds from short-term and long-term
    bank deposits                                    800       1,041
   Investment in available-for-sale
    marketable securities                             --      (5,808)
   Proceeds from sale and redemption of
    available-for-sale marketable securities           0      11,384
   Proceeds from sale of property and equipment      272          64
   Purchase of property and equipment               (875)       (980)
                                                --------    --------
   Net cash provided by (used in) investing
    activities                                    (1,803)      5,513
  
     Cash flows from financing activities:

 Proceeds from exercise of warrants                 --         1,022
                                                --------    --------

 Net cash provided by financing activities            --       1,022
                                                --------    --------
 Increase (decrease) in cash and cash
  equivalents                                     (3,533)      6,829

 Cash and cash equivalents at the beginning
  of the period                                   31,410      18,034
                                                --------    --------
 Cash and cash equivalents at the end of
  the period                                    $ 27,877    $ 24,863
                                                --------    --------


            

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