Fundtech Reports Financial Results for the Third Quarter of 2009

Posted on 11/02/09 at 8:01am by Benzinga Staff

-- GAAP EPS 10 Cents -- Non GAAP EPS 18 Cents -- Quarterly Revenues of $30.6 Millio

JERSEY CITY, N.J., Nov. 2, 2009 (GLOBE NEWSWIRE) -- Fundtech Ltd. (Nasdaq: FNDT), a leader in global transaction banking solutions, today announced financial results for the third quarter of 2009. Fundtech posted quarterly revenues of $30.6 million, a 3% decrease year-over-year, compared to third quarter revenues of $31.5 million in 2008, and an 8% increase compared to second quarter 2009 revenues of $28.3 million.

On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $1.6 million or $0.10 per diluted share, for the third quarter of 2009 compared with net income of $1.5 million, or $0.09 per diluted share, in the third quarter of 2008, and net income of $0.5 million, or $0.03 per diluted share, in the second quarter of 2009.

Excluding stock-based compensation and amortization of intangibles, Fundtech's adjusted net income for the third quarter of 2009 was $2.8 million, or $0.18 per diluted share, compared with $3.3 million, or $0.20 per diluted share, in the third quarter of 2008 (which also excluded Impairment of Marketable Securities in addition to excluding stock-based compensation and amortization of intangibles) and $1.8 million, or $0.11 per diluted share, in the second quarter of 2009 (See Schedule A attached to this news release -- Reconciliation to GAAP).

"In the third quarter we saw tangible evidence that large banks have resumed investment in their transaction banking business and in particular payment systems," said Fundtech CEO Reuven Ben Menachem. "We believe that in the post-financial crisis environment transaction banking is becoming a highly valued, high growth line of business for financial institutions -- both for its ability to generate highly profitable fee income as well as requiring substantially less capital relative to other banking products. I am also pleased that in the third quarter we exceeded our expectations as expressed in our guidance both in terms of revenues and profitability and we believe that we will continue to grow revenues in the fourth quarter."

Other highlights:

* During the third quarter (excluding Accountis and Synergy) Fundtech closed 116 new deals with banks and added 10 new bank customers. * During the third quarter Fundtech closed with banks 11 new system sales including 1 US Payments, 2 Global CASHplus, 2 FTS Payments and 5 at BBP. * Included in the new system sales for the third quarter noted above Fundtech closed the sale of Global PAYplus-SP to Bank of America Merrill Lynch. * Durng the third quarter one of our large Global PAYplus customers signed and started the implementation of Global PAYplus for Mass Payments and SEPA Direct Debits which will be rolled out in 11 European countries. * During the third quarter another of our large Global PAYplus customers signed and started the implementation of Global PAYplus in 4 countries in Asia Pacific. * During the quarter BBP added 4 new non-bank corporate customers that are using BBP's Swift hosting services. This brings BBP's total number of such non-bank customers to 26.

Reconciliation of GAAP results to non-GAAP results

Fundtech provides non-GAAP operating results as a supplement to its GAAP financial results. The presentation of this information should not be considered in isolation to, or as a substitute for, the financial results presented in accordance with GAAP. Management believes that non-GAAP financial measures are useful to investors because they allow for an evaluation of Fundtech with a focus on the performance of its core operations.

Fundtech's executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies.

Fundtech's non-GAAP results exclude stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, deferred taxes as well as other items that management deems as non recurring items.

A detailed reconciliation of GAAP net income to non-GAAP net income is included in the attached Schedule A.

Guidance

The financial guidance provided is current as of today only and Fundtech undertakes no obligation to update its estimates.

For the fourth quarter of 2009 we now expect revenues of between $31.5 million and $32.5 million, GAAP earnings per diluted share of between $0.10 and $ 0.14 and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.17 and $0.21.

Fundtech estimates that quarterly financial income for the fourth quarter will be approximately $100,000 and that tax expenses, excluding deferred taxes will be approximately $200,000.

Fundtech estimates that quarterly amortization expenses for the fourth quarter will be approximately $500,000 and that stock-based compensation expenses will be approximately $600,000.

Fundtech's guidance for the fourth quarter of 2009 does not include the impact of deferred taxes and also does not include the impact of any future impairment of intangible assets.

Company to Host Conference Call

The senior management of Fundtech will host a conference call at 8:30 a.m. (EST) today, Monday, November 2, to discuss the Company's third-quarter and results as well as financial guidance, and to answer questions from the investment community.

To participate, please call 1-888-215-6899 or 1-913-312-0835 and ask for the Fundtech call.

A replay of the conference call will be available for playback from 11:30am (EST) Monday November 2, until 11:59pm (EST) Monday November 23. The replay may be accessed by dialing 1-888- 203-1112 or 1-719-457-0820, pass code 8459081.

This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until November 30.

About Fundtech

Fundtech (Nasdaq: FNDT), was founded in 1993, and is a leading provider of software and services to banks of all sizes around the world. Payments systems include wire transfers, ACH origination, cross-border payments and remittance. Cash management systems are designed for large corporate through small business clients. Fundtech is a leader in SWIFT services, operating one of the world's largest SWIFT service bureaus in the world. We offer an extensive line of financial supply chain applications including electronic invoice presentment and supply trade financing. And we are the leading provider of CLS systems to the world's largest banks. More than 1,000 clients throughout the world rely on Fundtech solutions to improve operational efficiency and provide greater competitiveness through innovative business-to-business services. For more information, visit www.fundtech.com.

Forward Looking Statements:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, the expectations related to fourth quarter 2009 revenues, GAAP earnings per share and non-GAAP earnings per share. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated or projected. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the ongoing downturn in the financial services industry and the global economy; failure to obtain revenue as anticipated; and risks and other factors detailed from time to time in Fundtech's public filings, including its Annual Report on Form 20-F for the year ended December 31, 2008. Fundtech undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this Release or to reflect the occurrence of unanticipated events.

FUNDTECH LTD. AND ITS SUBSIDIARIES Condensed Consolidated Balance Sheets (In Thousands) Sept.30, Dec. 31, 2009 2008 --------- --------- ASSETS Current assets: Cash and cash equivalents $ 35,513 $ 29,642 Short term deposits 1,113 1,415 Marketable securities 5,064 9,563 Trade receivables, net 27,410 28,264 Deferred taxes 1,009 1,022 Other accounts receivable, prepaid expenses 7,211 5,055 --------- --------- Total current assets 77,320 74,961 Marketable securities 749 2,204 Severance pay fund 1,462 1,394 Long term deposits 1,110 1,003 Prepaid expenses 2,504 2,797 Property and equipment, net 14,190 15,898 Goodwill, net 38,166 34,520 Other assets, net 6,503 5,995 --------- --------- Total assets $ 142,004 $ 138,772 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade payables $ 1,646 $ 2,908 Deferred revenues 14,448 9,910 Employee and payroll accruals 7,190 6,807 Other accounts payable and accrued expenses 6,224 7,228 --------- --------- Total current liabilities 29,508 26,853 Accrued severance pay 2,151 1,734 Deferred taxes 1,108 970 Other long term liabilities 2,813 2,278 --------- --------- Total liabilities 35,580 31,835 --------- --------- Shareholders' equity: Share capital 49 49 Additional paid-in capital 158,257 155,976 Accumulated other comprehensive income 1,356 290 Accumulated deficit (44,205) (45,470) Treasury stock, at cost (9,033) (3,908) --------- --------- Total shareholders' equity 106,424 106,937 --------- --------- Total liabilities and shareholders' equity $ 142,004 $ 138,772 ========= =========

FUNDTECH LTD. AND ITS SUBSIDIARIES Consolidated Statements of Operations (In Thousands, Except Share and Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Revenues: Software license $ 3,497 $ 4,007 $ 7,305 $ 12,933 Software hosting 5,994 4,986 17,907 14,720 Maintenance 9,923 8,535 29,346 24,916 Services 11,149 14,017 30,353 38,654 ---------- ---------- ---------- ---------- Total revenues 30,563 31,545 84,911 91,223 ---------- ---------- ---------- ---------- Operating expenses: Software licenses costs 238 147 670 291 Amortization of other intangible assets 532 547 1,532 1,575 Maintenance, hosting and services costs(1) 13,419 13,352 38,425 40,944 Software development(1) 5,161 5,533 15,116 16,329 Selling and marketing(1) 4,436 5,008 12,946 15,002 General and administrative(1) 5,052 4,207 14,620 12,494 ---------- ---------- ---------- ---------- Total operating expenses 28,838 28,794 83,309 86,635 ---------- ---------- ---------- ---------- Operating income 1,725 2,751 1,602 4,588 Impairment on Marketable securities -- (600) -- (600) Financial income (expenses), net 133 (283) 311 554 Income taxes (251) (397) (648) (1,081) ---------- ---------- ---------- ---------- Net income $ 1,607 $ 1,471 $ 1,265 $ 3,461 ========== ========== ========== ========== Net income per share: Net income used in computing income per share $ 1,607 $ 1,471 $ 1,265 $ 3,461 Basic income per share $ 0.10 $ 0.09 $ 0.08 $ 0.22 Diluted income per share $ 0.10 $ 0.09 $ 0.08 $ 0.21 Shares used in computing: Basic income per share 15,440,589 15,795,501 15,376,388 15,737,603 Diluted income per share 15,956,831 16,951,081 15,733,223 16,825,455 Adjusted non-GAAP(2) net income per share: Adjusted non-GAAP(2) net income used in computing income per share $ 2,800 $ 3,344 $ 4,971 $ 7,897 Adjusted non-GAAP(2) net income per share $ 0.18 $ 0.20 $ 0.32 $ 0.47 Shares used in computing adjusted non-GAAP(2) net income per share 15,956,831 16,951,081 15,733,223 16,825,455 Reconciliation of net income to adjusted non-GAAP(2) net income: Net income $ 1,607 $ 1,471 $ 1,265 $ 3,461 Amortization 532 547 1,532 1,575 Impairment on Marketable securities -- 600 -- 600 Stock-based compensation 661 726 2,174 2,261 ---------- ---------- ---------- ---------- Adjusted non-GAAP(2) net income $ 2,800 $ 3,344 $ 4,971 $ 7,897 ========== ========== ========== ========== (1) Includes charges for stock-based compensation in 2009 and 2008 (2) See Reconciliation to GAAP

FUNDTECH LTD. AND ITS SUBSIDIARIES Consolidated Statement of Cash Flows (In Thousands) Nine Months Three Months Ended Ended Sept. 30, Sept. 30, ------------------ -------- 2009 2008 2009 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,265 $ 3,461 $ 1,607 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,389 5,963 2,077 Stock-based compensation 2,174 2,261 661 Decrease in accrued interest on marketable securities 217 82 168 Deferred income taxes 143 55 56 Impairment on Marketable securities -- 600 -- Changes in assets and liabilities Decrease (Increase) in trade receivables 1,235 (8,180) 33 Decrease (Increase) in prepaid expenses, other accounts receivable (1,112) (1,384) 175 Decrease in trade payables (1,270) (571) (565) Increase (Decrease) in deferred revenues 3,597 4,627 (7,455) Increase (Decrease) in employee and payroll accruals 477 (283) 1,334 Increase in other accounts payable and accrued expenses 518 917 259 Decrease in accrued restructuring expenses -- (62) -- Increase in accrued severance pay, net 136 40 34 -------- -------- -------- Net cash provided by (used in) by operations 13,769 7,526 (1,616) -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in held-to-maturity marketable securities (6,496) (4,980) (1,279) Realization of held-to-maturity marketable securities 12,233 11,875 7,714 Realization of short term deposits 425 1,731 792 Purchase of property and equipment (2,994) (4,644) (397) Net change in long term lease deposits and long term prepaid expense (109) (234) 175 Investments in subsidiaries (6,609) (12,451) (1,112) -------- -------- -------- Net cash provided by (used in) investing activities (3,550) (8,703) 5,893 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of share capital, exercise of stock options and warrants, net 107 1,382 34 Decrease in Long Term Liabilities (26) (32) (19) Investment in treasury stock, at cost (5,125) -- (35) -------- -------- -------- Net cash provided by (used in) financing activities (5,044) 1,350 (20) -------- -------- -------- Effect of exchange rate on cash and cash equivalents 696 (1,212) 253 -------- -------- -------- Increase (Decrease) in cash and cash equivalents 5,871 (1,039) 4,510 Cash and cash equivalents at the beginning of the period 29,642 31,612 31,003 -------- -------- -------- Cash and cash equivalents at the end of the period $ 35,513 $ 30,573 $ 35,513 ======== ======== ======== Appendix A Investment in Subsidiaries Working Capital $ (167) $ (815) $ -- Long term assets 1,804 5,555 -- Long term liabilities -- (39) -- Goodwill 4,972 7,750 1,112 -------- -------- -------- $ 6,609 $ 12,451 $ 1,112 ======== ======== ========

Schedule A to Press Release Reconciliation to GAAP (In Thousands, Except Share and Per Share Data) The following information sets forth Fundtech's calculation of adjusted non-GAAP net income as contained in the Company's press release: Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Reconciliation of net income to adjusted non-GAAP net income: Net income $1,607(1) $1,471(1) $1,265(1) $3,461(1) Amortization of other intangible assets 532 547 1,532 1,575 Impairment on Marketable securities -- 600 -- 600 Stock-based compensation charged as follows: Maintenance, hosting and services costs 121 129 393 441 Software development 41 56 147 202 Selling and marketing 166 165 574 476 General and administrative 333 376 1,060 1,142 ---------- ---------- ---------- ---------- Adjusted non-GAAP net income $ 2,800 $ 3,344 $ 4,971 $ 7,897 ========== ========== ========== ========== Adjusted non-GAAP net income per share $ 0.18 $ 0.20 $ 0.32 $ 0.47 ========== ========== ========== ========== Shares used in computing adjusted non-GAAP net income per share 15,956,831 16,951,081 15,733,223 16,825,455 ========== ========== ========== ========== (1) Net income per share (diluted) was approximately $0.11, $0.09 for the three months ended September 30, 2009 and 2008, respectively. Net income per share (diluted) was approximately 0.09, $0.21 for the Nine months ended September 30, 2009 and 2008, respectively.

CONTACT: Fundtech Ltd. Yoram Bibring 1-201-946-1100 yoram.bibring@fundtech.com

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