CARTER LEDYARD & MILBURN LLP
Counselors at Law
2 Wall Street
New York, NY 10005-2072
570 Lexington Avenue o 1401 Eye Street, N.W.
New York, NY 10022 Tel (212) 732-3200 Washington, DC 20005
(212) 371-2720 Fax (212) 732-3232 (202) 898-1515
August 11, 2005
VIA EDGAR
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Mr. Larry Spirgel
Assistant Director
Division of Corporation Finance
Securities and Exchange Commission
100 F Street N.E.
Washington D.C. 20549
Re: Mer Telemanagement Solutions Ltd.
Form 20-F for the Fiscal Year Ended December 31, 2004
File No. 0-28950
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Dear Mr. Spirgel:
On behalf of our client, Mer Telemanagement Solutions Ltd. (the
"Company"), we are submitting this letter in response to the written comments of
the Staff of the Securities and Exchange Commission (the "Commission") in a
letter to Mr. Shlomi Hagai, Chief Financial Officer of the Company, dated August
2, 2005 (the "Comment Letter"), with respect to the Company's Annual Report on
Form 20-F for the fiscal year ended December 31, 2004. We have repeated the
comments and have provided a response to the comment.
Notes to the Consolidated Financial Statements
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Note 6:Investments in Affiliate, page F-23
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Question:
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It appears that your investment in Jusan S.A. may be significant as defined by
Rule 1-02(w) of regulation S-X for some or all of the periods presented. Please
tell us how you considered the provisions of Rule 3-09 of Regulation S-X in your
determination not to include separate financial statements of Jusan S.A. In your
response, please provide us with your calculations.
Mr. Larry Spirgel 2
Response:
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Fiscal Year Ended December 31, 2004
The Staff is hereby advised that in determining whether to include
separate financial statements of Jusan S.A ("Jusan"), an equity investment
accounted for under the equity method of accounting, in accordance with the
provisions of Rule 3-09 of Regulation S-X, the Company considered the income and
investment conditions set forth in Rule 1-02(w) of Regulation S-X under the
definition of a "significant subsidiary."
According to the Company's calculations, the investment in Jusan as of
December 31, 2004 represented approximately 13.8% of the Company's consolidated
total assets as of December 31, 2004 and the equity in Jusan's income from
continuing operations before income taxes represented approximately 5.5% of the
Company's consolidated losses before income taxes for the year ended December
31, 2004. Since none of the applicable conditions exceeded the 20% threshold, as
provided by Rule 3-09 of Regulation S-X, the Company reached the conclusion that
the Jusan did not meet the conditions set forth under the definition of
"significant subsidiary" for the year ended December 31, 2004 and therefore
separate financial statements of Jusan were not included.
The following table summarizes the Company's calculations for the year ended
December 31, 2004:
Jusan MTS
----- ---
(US dollars in thousands) %
---
Investment / Total assets................. $2,119 $15,323 13.8%
Equity in income / Loss before taxes
on income (1)........................... 225 (4,086) 5.5%
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(1) Absolute values were used.
Fiscal Years Ended December 31, 2003 and 2002
According to the Company's calculations, the investment in Jusan as of
December 31, 2003 and 2002, represented approximately 10.2% and 7.5% of its
consolidated total assets as of December 31, 2003 and 2002, respectively. The
Company's equity in Jusan's income from continuing operations before income
taxes represented approximately 575% and 437% of the consolidated losses before
income taxes for the years ended December 31, 2003 and 2002, respectively.
Accordingly, the Company reached the conclusion that the Jusan met the
conditions set forth under the definition of "significant subsidiary" for the
years ended December 31, 2003 and 2002 and therefore separate financial
statements of Jusan were included in the Company's annual reports on Form 20-F
for those years.
The following tables summarize the Company's calculations for the years ended
December 31, 2003 and 2002:
Mr. Larry Spirgel 3
December 31, 2003:
Jusan MTS
----- ---
(US dollars in thousands) %
---
Investment / Total assets.................. $1,859 $18,182 10.2%
Equity in income/ Loss before taxes
on income (1)............................ 345 (60) 575%
December 31, 2002:
Jusan MTS
----- ---
(US dollars in thousands) %
---
Investment / Total assets.................. $1,335 $17,707 7.5%
Equity in income/ Loss before taxes
on income (1)............................ 236 (54) 437%
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(1) Absolute values were used.
I have been authorized by the Company to acknowledge on its behalf that:
(i) the Company is responsible for the accuracy of the disclosure in its
filings; (ii) comments by the Staff, or changes to disclosure in response to
comments by the Staff, do not foreclose the Commission from taking any actions
with respect to the Company's filings; and (iii) the Company may not assert
Staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.
Please do not hesitate to contact me at (212)238-8605 with any
questions or comments you may have.
Very truly yours,
/s/Steven J. Glusband
Steven J. Glusband
SJG:tco
cc: Shlomi Hagai, Chief Financial Officer