Second Quarter 2008 Results

--  Revenue was a record $43.9 million, an increase of 9% from $40.4    million in the previous quarter and up 24% from $35.3 million in the second    quarter of 2007. This quarter's record revenue excludes $8.1 million net    proceeds from the sale of a patent, which has been reported as other    operating income.--  GAAP net income was a record $12.0 million or $0.26 per diluted share.    Excluding the patent sale, GAAP net income was $3.9 million or $0.09 per    diluted share, as compared to net income of $4.6 million or $0.11 per    diluted share in the previous quarter and a net loss of $6.1 million or    ($0.15) per diluted share in the second quarter of 2007.--  EBITDA (Earnings before Interest, Taxes, Depreciation and    Amortization, which includes Non-cash Stock-based Compensation) for the    quarter was a record $15.2 million or $0.33 per diluted share. This    compares to $8.4 million or $0.19 per diluted share in the previous    quarter, and $0.3 million or $0.01 per diluted share in the same year-ago    quarter. Excluding the gain from the patent sale, EBITDA for the second    quarter was $7.2 million or $0.16 per diluted share. (See important    discussion about the presentation of EBITDA, below.)    

"TeleCommunication Systems is beginning to realize substantial returns fromits long term investments in enabling convergent communications technologyand the relationships that have brought this technology to market," saidMaurice B. Tosé, chairman, president and CEO of TCS. "The value in ourwireless text messaging and E9-1-1 solutions, our secure deployable satcomkits, as well as our patent portfolio, all contributed to record resultsthis quarter.

"Large July awards and orders for our Swiftlink® deployable systems andrelated wireless point-to-point link systems, which have raised totalcompany backlog to about $450 million, demonstrate that TCS technology iswell on its way to becoming the de facto standard for man-portable securesatellite-based communication systems, representing one of the mostcritical needs of today's American military.

"Perhaps most important, our contract backlog and the positioning of oursatcom systems, along with the continuing growth in the use of textmessaging and location-based wireless services, provide much bettervisibility into our future revenues and profits. Multi-quarter arrangementsfor messaging software licenses, systems maintenance, and governmenttechnology outsource services; multi-year arrangements for E9-1-1 services;and new large volume multi-year military procurements of our Swiftlink andwireless point-to-point solutions, all support a strong outlook foryear-over-year growth in revenue and profitability.

"Finally, it is noteworthy that our company's stock was added to theRussell 2000 in June, reflecting another milestone of company progress."

Second Quarter 2008 Operating Highlights--  Commercial Segment:    --  Sold approximately $9 million in messaging and location software        and related systems, as compared to an average of about $4 million        per quarter in 2007.    --  Expanded services to MetroPCS to provide E9-1-1 services in major        north east markets. TCS will provide Hosted Mobile Positioning        Center (MPC) and Hosted Position Determining Entity (HPDE) services        for E9-1-1 to MetroPCS customers in Boston, New York City and        Philadelphia.    --  Partnered with Qualcomm to provide a new cell phone location-based        service to Tata Indicom in India. Deployment is expected in late        2008, and will use the TCS Xypoint Location Platform.--  Government segment:    --  Secured approximately $15.8 million in contracts to provide a broad        range of communication solutions and services primarily to federal        government customers across civilian agencies, Department of        Homeland Security, and Department of Defense (DoD). TCS was        contracted to provide solutions to include SwiftLink products,        satellite communications services, Continuity of Operations (COOP),        and Telecom Expense Management (TEM).    --  Awarded a three-year, $2.4 million contract to build and implement        an IP-based private satellite network to support U.S. Department of        Defense (DoD) personnel in Afghanistan.--  Intellectual property:    --  Sold wireless e-mail-related patent netting $8.1 million proceeds        to the company.    --  Issued two new patents during the quarter, one for sending text        messages to Web servers and another data transfer patent for        optimizing data transmission between data clients and applications.    --  The TCS patent portfolio now contains 58 patents and 194 patent        applications in the U.S. and abroad. The company continued efforts        to monetize its patents as well as use them to position the company        for competitive advantages.

Financial Highlights

Revenue and Gross Profit from continuing operations for the second quarterof 2008 as compared to the second quarter of 2007 (unaudited):

                                  Three months ended June 30                    ------------------------------------------------------                          2008              2007          Incr. (Decr.)                    ----------------- ----------------- -------------------                    Coml. Govt. Total Coml. Govt. Total Coml.  Govt.  Total                    ----- ----- ----- ----- ----- ----- ------ -----  -----Revenue ($millions)  Services          $16.5 $ 7.8 $24.3 $14.7 $ 8.0 $22.6 $  1.8 $(0.2) $ 1.6  Systems             9.1  10.5  19.6   1.3  11.4  12.7    7.8  (0.9)   6.9                    ----- ----- ----- ----- ----- ----- ------ -----  -----      Total revenue $25.6 $18.3 $43.9 $16.0 $19.4 $35.3 $  9.6 $(1.1) $ 8.5                    ===== ===== ===== ===== ===== ===== ====== =====  =====Gross profit ($millions)  Gross profit-   services         $ 8.6 $ 1.5 $10.1 $ 7.1 $ 1.9 $ 9.0 $  1.5 $(0.4) $ 1.1      As % of rev      52%   19%   42%   48%   24%   40%  Gross profit-   systems            6.3   2.8   9.1   0.1   1.6   1.7    6.2   1.2    7.4      As % of rev      69%   27%   46%    9%   14%   13%                    ----- ----- ----- ----- ----- ----- ------ -----  -----    Total Gross     Profit         $14.9 $ 4.3 $19.2 $ 7.2 $ 3.5 $10.7 $  7.7 $ 0.8  $ 8.5                    ===== ===== ===== ===== ===== ===== ====== =====  =====      As % of rev      58%   23%   44%   45%   18%   30%

(Gross Profit = revenue minus direct cost of revenue, includingamortization of software development costs and related non-cash stock-basedcompensation.)

Commercial Segment Revenue and Gross Profit

Commercial segment gross profit for the second quarter of 2008 was morethan double that of Q2 2007 on revenue of $25.6 million, up from $16.0million of revenue in Q2 2007. Average gross margins improved for bothservices and systems in the second quarter; systems margins for the samequarter last year were adversely affected by the absence of a messaginglicense capacity sale -- the only quarter in the last ten when such a saledid not occur. Profit improvement in the second quarter was driven by SMSlicense sales, including a large purchase under a six-quarter customercapacity increase arrangement which began in Q3 2007. The commercialsegment gross profit was 58% of revenue in the second quarter of 2008,versus 45% in the same year-ago period, reflecting a greater mix of highermargin systems license revenue in Q2 2008.

Government Revenue and Gross Profit

Gross profit from government customers in the second quarter of 2008 of$4.3 million was a 23% increase over the second quarter of 2007. Revenuefor the quarter was $18.3 million, down from $19.4 million or 6% from thesame year-ago quarter. The average gross margin on government revenue forthe quarter was 23%, which is an improvement from 18% from the same quarterlast year, as the margins on the system shipments in Q2 2008 were higherdue to an improved revenue mix and progress in attaining lower averagesystem component and assembly/integration costs.

Operating Costs and Expenses

Second quarter 2008 R&D expense was $3.9 million, down $0.2 million or 5%from the previous quarter. R&D emphasis in the second quarter was on Voiceover IP public safety technology, wireless location based servicetechnology, and continuing improvement of the company's messaging andsecure satcom deliverables.

Sales and marketing expense in Q2 2008 was $3.6 million, an increase of$0.5 million from the previous quarter, and general and administrativeexpenses in the second quarter of 2008 were $6.0 million, up $0.7 millionor 13% from the previous quarter. Increases in these expense categories inQ2 2008 were principally due to increased accruals for variablecompensation expense and increased legal expenses.

Total non-cash charges to operating profit were $3.0 million in the secondquarter, of which $2.1 million was depreciation and amortization and $0.9million was non-cash stock-based compensation expense.

Other Operating Income

In June 2008, the company sold a wireless e-mail-related patent for netproceeds of $8.1 million, after legal fees and other costs concluding thepreviously reported litigation involving the patent. TCS retains a limitedlicense in the patent for use in its own operations.

Operating Profit and Net Income

Income from operations was $12.2 million for the second quarter. Netinterest, financing expense and tax provision for the quarter was $0.2million.

Net income for the second quarter was a record $12.0 million, including aone-time payment of $8.1 million from the sale of a patent.

Liquidity and Capital Resources

At the end of the second quarter 2008, the company had $28.2 million ofcash and equivalents, up $9.7 million from $18.5 million at the beginningof the quarter. Total debt was $12.3 million, down from $16.1 million atthe beginning of the year. Funds were generated in the second quarter from$15.2 million in EBITDA, which includes $8.1 million patent sale proceeds,and $0.9 million from stock option exercises. Funds were used during thequarter for $1.4 million of capital expenditures (including softwaredevelopment), $1.1 million for debt repayment, $0.1 million for net cashinterest and about $3.8 million increase in working capital. Unusedavailability under credit facilities totaled $22.4 million at quarter end.

Litigation and Claims

TCS continues to pursue a patent litigation case against Sybase as part ofcontinuing efforts to monetize its intellectual property portfolio. A juryhas issued a verdict in favor of TCS for about $10 million for pastinfringement, subject to post-trial motions and settlement efforts. Whilesignificant legal expenses have been paid in connection with ongoing patentlitigation, no related revenue has been recorded pending the outcome ofappeals and possible settlement.

Backlog

                                                  New                                      3/31/2008 Orders   Revenue  6/30/2008                                      --------- -------  -------  ---------       Funded Contract Backlog ($mil)                          Commercial  $    89.9 $  14.2  $ (25.6) $    78.4                          Government  $    34.9 $  20.4  $ (18.3) $    37.0                                      --------- -------  -------  ---------      Total Funded Contract  Backlog  $   124.8 $  34.6  $ (43.9) $   115.4                    Customer Options  $   100.2 $  (9.4) $     -  $    90.8                                      --------- -------  -------  ---------                       Total Backlog  $   225.0 $  25.2  $ (43.9) $   206.2                                      ========= =======  =======  =========

Subsequent to quarter-end, TCS has been selected by the U.S. Army as thesole awardee of a contract with an initial order and options for up to $246million of deployable satcom system-related deliverables over the next 39months. This brings the company's total of funded and unfunded backlog toabout $450 million.

Funded contract backlog represents contracts for which fiscal year fundinghas been appropriated by TCS customers (mainly federal agencies), and forthe company's hosted services by multiplying the most recent month'srecurring revenue times the remaining months under existing long-termagreements, which the company believes is the best available informationfor anticipating revenue under those agreements. Total backlog, as istypically measured by government contractors, includes orders coveringoptional periods of service and/or deliverables, but which have not yetbeen incrementally funded.

About the Presentation of EBITDA

EBITDA (from continuing operations) is not a financial measure calculatedand presented in accordance with U.S. generally accepted accountingprinciples (GAAP) and should not be considered as an alternative to netincome, operating income or any other financial measures so calculated andpresented, nor as an alternative to cash flow from operating activities asa measure of our liquidity. The company defines EBITDA as net income/(loss)before depreciation; amortization of non-cash stock-based compensation;amortization of software development costs, property and equipment andother intangibles; and interest expense and other non-cash financing costs.Other companies (including our competitors) may define EBITDA differently.The company presents EBITDA because we believe it to be an importantsupplemental measure of our performance that is commonly used by securitiesanalysts, investors and other interested parties in the evaluation ofcompanies in our industry. Management also uses this informationinternally for forecasting and budgeting. It may not be indicative of thehistorical operating results of TCS nor is it intended to be predictive ofpotential future results. Investors should not consider EBITDA inisolation, or as a substitute for analysis of our results as reported underGAAP. See "GAAP to non-GAAP Reconciliation" below for further informationon our non-GAAP measure. Shares used in the calculation of GAAP dilutedearnings per share are the same as the shares used in the calculation ofdiluted adjusted operating income/(loss) per share except when the companyreports a GAAP loss.

                                                        Three months endedGAAP to non-GAAP Reconciliation                               June 30                                                        ------------------  (amounts in thousands)                                  2008      2007                                                        --------  --------Consolidated Statement of Operations Reconciliation         (unaudited)Net income on a GAAP basis                              $ 11,965  $ (6,138)  Depreciation and amortization of property and   equipment                                               1,506     1,556  Amortization of stock-based compensation                   923     1,133  Amortization of software development costs                 560       372  Amortization of acquired intangible assets                  37        37  Interest, financing, and other costs                        85       701  Write-off of unamortized debt discount and debt   issuance expenses                                           -     2,458  Provision for income taxes                                 152         -  Income (loss) from discontinued operations                   -      (145)                                                        --------  --------EBITDA from continuing operations including gain on sale of patent                                           15,228    (2,895)  Less gain from sale of patent                           (8,060)        -                                                        --------  --------EBITDA from continuing operations before gain on sale of patent                                              $  7,168  $ (2,895)                                                        ========  ========Consolidated Statement of Operations Reconciliation per Share-DilutedNet Income (loss) per share on a GAAP basis             $   0.26  $  (0.15)  Depreciation and amortization of property and   equipment                                                0.03      0.04  Amortization of stock-based compensation                  0.02      0.03  Amortization of software development costs                0.01      0.01  Amortization of acquired intangible assets                0.00      0.00  Interest, financing, and other costs                      0.00      0.02  Write-off of unamortized debt discount and debt   issuance expenses                                           -      0.06  Provision for income taxes                                0.00         -  Loss from discontinued operations                            -      0.00                                                        --------  --------EBITDA from cont. ops per share incl gain on sale of patent -Diluted                                            0.33      0.01  Less gain from sale of patent                            (0.18)        -                                                        --------  --------EBITDA from continuing operations before gain on sale of patent                                              $   0.16  $   0.01                                                        ========  ========Shares used in calculation - Diluted                      45,644    41,166                                                        ========  ========

Conference Call

TCS will hold a conference call later today (Thursday, July 31, 2008) todiscuss these second quarter 2008 financial results. The company'schairman, president and CEO, Maurice B. Tosé, and senior vice president andCFO, Tom Brandt, will host the call starting at 5:00 PM Eastern Time. Aquestion and answer session will follow management's presentation.

To participate in the call, dial the appropriate number 5-10 minutes priorto the start time, ask for the TeleCommunication Systems conference calland provide the conference ID:

Dial-In Number: 1-800-894-5910International: 1-785-424-1052Conference ID #: 7TELECOM

The conference call will be broadcasted simultaneously on the company's Website at www.telecomsys.com. For the webcast, please go to the web site atleast 15 minutes early to register, download, and install any necessaryaudio software. If you have any difficulty connecting with the conferencecall or webcast, please contact the Liolios Group at 949-574-3860.

A replay of the call will be available after 8:00 p.m. on the same day anduntil August 31, 2008:

Toll-free replay number: 1-800-688-7945International replay number: 1-402-220-1370(No password required)

About TeleCommunication Systems, Inc.

TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) produces wireless datacommunications technology solutions that require proven high levels ofreliability. TCS provides wireless and VoIP E9-1-1 network-based services,secure deployable communication systems, engineered satellite-basedservices, and commercial location applications, like traffic andnavigation, using the precise location of a wireless device. Customersinclude leading wireless, cable and VoIP carriers around the world andagencies of the U.S. Departments of Defense, State, and Homeland Security.For more information, visit www.telecomsys.com.

This announcement contains forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E ofthe Securities and Exchange Act of 1934, as amended. These statements arebased upon TCS' current expectations and assumptions that are subject to anumber of risks and uncertainties that would cause actual results to differmaterially from those anticipated. The words, "believe," "expect,''"intend," "anticipate,'' and variations of such words, and similarexpressions identify forward-looking statements, but their absence does notmean that the statement is not forward-looking. Statements in thisannouncement that are forward-looking include, but are not limited tostatements about (a) TCS technology being well on its way to becoming a defacto standard for man-portable secure satellite-based communicationsystems, (b) the positioning of our satcom systems and the growth in theuse of text messaging and location-based services providing us bettervisibility into future revenues and profits, (c) our outlook foryear-over-year growth in revenue and profitability, (d) the expecteddeployment of location-based services in India in 2008, and (e) our effortsto monetize the patent portfolio.

Additional risks and uncertainties are described in the Company's filingswith the Securities and Exchange Commission (SEC). These include withoutlimitation risks and uncertainties relating to the Company's financialresults and the ability of the Company to (i) sustain profitability, (ii)continue to rely on its customers and other third parties to provideadditional products and services that create a demand for its products andservices, (iii) conduct its business in foreign countries, (iv) developsoftware and provide services without any errors or defects, (vii) protectits intellectual property rights, and (viii) implement its sales andmarketing strategy. Existing and prospective investors are cautioned notto place undue reliance on these forward-looking statements, which speakonly as of the date hereof. The Company undertakes no obligation to updateor revise the information in this press release, whether as a result of newinformation, future events or circumstances, or otherwise.

                      TeleCommunication Systems, Inc.                  Consolidated Statements of Operations              (amounts in thousands, except per share data)                                 Three months ended     Six months ended                                      June 30,              June 30,                                --------------------  --------------------                                  2008       2007       2008       2007                                ---------  ---------  ---------  ---------                                    (unaudited)           (unaudited)Revenue  Services                      $  24,334  $  22,618  $  47,100  $  43,503  Systems                          19,577     12,718     37,224     25,952                                ---------  ---------  ---------  ---------      Total revenue                43,911     35,336     84,324     69,455Direct costs of revenue  Direct cost of services   revenue                         14,179     13,650     27,837     26,598  Direct cost of systems           10,520     11,005     17,711     17,881                                ---------  ---------  ---------  ---------      Total direct cost of       revenue                     24,699     24,655     45,548     44,479  Services gross profit            10,155      8,968     19,263     16,905    As a % of revenue                  42%        40%        41%        39%  Systems gross profit              9,057      1,713     19,513      8,071    As a % of revenue                  46%        13%        52%        31%                                ---------  ---------  ---------  ---------      Total gross profit           19,212     10,681     38,776     24,976        Total gross profit as a         % of revenue                  44%        30%        46%        36%Operating costs and expenses  Research and development   expense                          3,935      3,266      8,023      6,371  Sales and marketing expense       3,595      3,157      6,694      6,320  General and administrative   expense                          5,997      5,499     11,315     10,151  Depreciation and amortization   of property and equipment        1,506      1,556      2,996      3,224  Amortization of acquired   intangible assets                   37         37         74         74                                ---------  ---------  ---------  ---------    Total operating costs and     expenses                      15,070     13,515     29,102     26,140                                ---------  ---------  ---------  ---------Income from operations before gain on sale of patent             4,142     (2,834)     9,674     (1,164)  Gain on sale of patent            8,060          -      8,060          -                                ---------  ---------  ---------  ---------Income from operations             12,202     (2,834)    17,734     (1,164)Cash interest expense                (200)      (514)      (529)    (1,067)Amortization of debt discount and debt issuance expenses           (22)      (280)      (146)      (690)Write-off of unamortized debt discount and debt issuance expenses                               -     (2,458)         -     (2,458)Other income/(expense), net           137         93       (276)       153                                ---------  ---------  ---------  ---------Income from continuing operations before income taxes    12,117     (5,993)    16,783     (5,226)Provision for income taxes           (152)         -       (200)         -                                ---------  ---------  ---------  ---------Income from continuing operations                        11,965     (5,993)    16,583     (5,226)Loss from discontinued operations                             -       (145)         -       (269)                                ---------  ---------  ---------  ---------Net income (loss)               $  11,965  $  (6,138) $  16,583  $  (5,495)                                =========  =========  =========  =========Income/(loss) per share- basic  Income per share from   continuing operations        $    0.28  $   (0.15) $    0.39  $   (0.13)  Loss from discontinued   operations                           -      (0.00)         -      (0.01)                                ---------  ---------  ---------  ---------Net income/(loss) per share-basic                    $    0.28  $   (0.15) $    0.39  $   (0.14)                                =========  =========  =========  =========Income/(loss) per share- diluted  Income per share from   continuing operations        $    0.26  $   (0.15) $    0.37  $   (0.13)  Loss from discontinued   operations                           -      (0.00)         -      (0.01)                                ---------  ---------  ---------  ---------Net income/(loss) per share-diluted                  $    0.26  $   (0.15) $    0.37  $   (0.14)                                =========  =========  =========  =========Weighted average shares outstanding- basic                42,486     41,166     42,380     40,990                                =========  =========  =========  =========Weighted average shares outstanding- diluted              45,644     41,166     44,800     40,990                                =========  =========  =========  =========                      TeleCommunication Systems, Inc.                  Condensed Consolidated Balance Sheets                          (amounts in thousands)                                                    June 30,   December 31,                                                      2008         2007                                                  ------------ ------------                                                  (Unaudited)Assets   Current assets:      Cash and cash equivalents                   $     28,199 $     15,955      Accounts receivable, net                          31,982       20,424      Unbilled receivables                              11,400       15,229      Inventory                                          4,401        5,373      Deferred costs and other current assets            7,005        4,561      Note receivable from sale of discontinued       operations                                        1,000        1,000                                                  ------------ ------------            Total current assets                        83,987       62,542   Property and equipment, net                          11,818       11,209   Software development costs, net                       3,740        4,406   Acquired intangible assets, net                         635          709   Goodwill                                              1,813        1,813   Other assets                                          1,230        1,445                                                  ------------ ------------            Total assets                          $    103,223 $     82,124                                                  ============ ============Liabilities and stockholders' equity   Current liabilities:      Accounts payable and accrued expenses       $     21,023 $     17,374      Deferred revenue                                   6,135        4,685      Current portion of capital leases and notes       payable                                           3,770        5,444                                                  ------------ ------------            Total current liabilities                   30,928       27,503   Capital leases and notes payable, less current      portion and net of debt discount                   8,554       10,657   Total stockholders' equity                           63,741       43,964                                                  ------------ ------------            Total liabilities and stockholders'             equity                               $    103,223 $     82,124                                                  ============ ============