updated 2/16/2011 7:16:26 AM ET 2011-02-16T12:16:26

  • 4th Quarter revenue another record high of $37.8 million and year-over-year growth of 15%.
  • 4th Quarter GAAP EPS 37 Cents /4th Quarter Non GAAP EPS 29 Cents.
  • 2010 revenues of $141.9 million represent year over year growth of 20%.
  • Board approves 10 Cents quarterly dividend in 2011 subject to court approval.

JERSEY CITY, N.J., Feb. 16, 2011 (GLOBE NEWSWIRE) -- Fundtech Ltd. (Nasdaq:FNDT), a market leader in global transaction banking solutions, today announced financial results for the fourth quarter and full year ended December 31, 2010. Fundtech posted quarterly revenues of $37.8 million, a 15% increase year-over-year, compared to fourth quarter revenues of $32.8 million in 2009, and a 5% increase compared to third quarter 2010 revenues of $36.0 million.

On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $5.8 million, or $0.37 per diluted share, for the fourth quarter of 2010 compared with net income of $3.4 million, or $0.21 per diluted share, in the fourth quarter of 2009, and net income of $2.9 million, or $0.19 per diluted share, in the third quarter of 2010.

Excluding stock-based compensation, amortization of intangibles, and deferred taxes Fundtech's adjusted (non-GAAP) net income for the fourth quarter of 2010 was $4.6 million, or $0.29 per diluted share, compared with $3.3 million, or $0.21 per diluted share, in the fourth quarter of 2009 and $4.1 million, or $0.26 per diluted share, in the third quarter of 2010. (See Schedule A attached to this news release -- Reconciliation to GAAP).

For the year ended December 31, 2010, revenues increased 20% to $141.9 million from $117.8 million in 2009. GAAP net income in 2010 was $12.5 million, or $0.79 per diluted share, compared with net income of $4.7 million or $0.30 per diluted share, in 2009. Excluding stock-based compensation, amortization of intangibles, and deferred taxes Fundtech's adjusted non- GAAP net income for 2010 was $14.8 million, or $0.93 per diluted share, compared to $8.3 million, or $0.53 per diluted share, in 2009. (See Schedule A Attached to this Press Release -- Reconciliation to GAAP).

Commenting on the results, Fundtech Chairman of the Board, Avi Fischer said: "In 2010 we exceeded our expectations in terms of growth, profits and cash flows. During the year we completed a successful restructuring of our organization to emphasize our global product capabilities and activities.   We are now poised to expand our activities in new geographies like Latin America and China. I believe that we are well positioned to continue on the path of strong and steady growth in 2011 and beyond."

"The fourth quarter was another record revenue quarter for us and I am very pleased by our overall performance in the fourth quarter and the year as a whole." said Fundtech CEO Reuven BenMenachem. "For 2010 our organic revenue growth was 20%, operating income grew by 229% and Adjusted EBITDA grew year over-year 55% from $15.3 million to $23.7 million. We posted good growth across our segments with Cash Management growing 14% year over year, Messaging growing by 21% and Payments growing by 24% year over year. Coming out of this strong year and looking towards 2011, I expect organic growth to moderate but remain strong compared to the industry norms. I believe that our investments in next generation SOA- based products across our product line will allow us to maintain our competitive advantage in the years to come."   

Other Highlights:

  • During the fourth quarter of 2010 Fundtech closed 128 new deals and added 12 new bank customers.
  • During the fourth quarter of 2010 Fundtech closed 15 new system sales with banks, including 7 US Payments and 8 for BBP's products. 
  • During 2010 Fundtech implemented SEPA direct debit systems in 24 European banks including one of the world's largest banks.
  • During the fourth quarter of 2010 a European regional bank moved to production with GPP-SP.
  • During the fourth quarter of 2010 we recorded a deferred tax benefit of $2.3 million.
  • During the fourth quarter of 2010 Fundtech acquired 153,000 ordinary shares in consideration for $2.4 million as part of its share repurchase program.
  • For the year 2010 Fundtech acquired 658,000 ordinary shares in consideration for $9.0 million.

Fundtech also announced today that its board of directors approved the distribution of quarterly dividend of $0.10 per share in 2011. Under Israeli law Fundtech currently lacks sufficient retained earnings to distribute dividends and must obtain approval from the Israeli courts to permit any dividend distribution.

Fundtech is planning to shortly file a petition with the Israeli courts to permit the dividend distribution for the annual period subsequent to the approval. Fundtech believes that once the sum approved is fully exhausted, any further future dividend distributions will require additional approvals from the Israeli courts. 

"Our steady cash flows from operations, as well as free cash flows make a dividend distribution a good vehicle to return cash to our shareholders, in addition to the share repurchase program," said CFO Yoram Bibring, "We hope to obtain the necessary court approvals and make our first quarterly dividend during the second quarter of 2011."

Guidance

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

For the year 2011 Fundtech is providing its guidance as follows: 

  • Fundtech estimates that revenues for 2011 will be between $154 million and $159 million; that GAAP net income per diluted share will be between $0.73 and $0.83; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses and deferred taxes, will be between $1.00 and $1.10.
  • Fundtech estimates that financial income for the year 2011 will be zero and that tax expenses, excluding deferred taxes, will be approximately $2.5 million.
  • Fundtech estimates that annual amortization expenses for the year 2011 will be approximately $1.4 million and that stock-based compensation expenses will be approximately $3.0 million. 
  • Fundtech estimates that the number of shares used for the calculation of the annual net income per share will be 16 million shares.

For the first quarter of 2011 Fundtech is providing the following guidance:

  • Fundtech estimates that first quarter revenues will be between $36 million and $37 million; that GAAP net income per diluted share will be between $0.10 and $0.14; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, and deferred taxes, will be between $0.17 and $0.21.
  • Fundtech estimates that financial income for the first quarter will be zero and that tax expenses, excluding deferred taxes, will be approximately $0.6 million.
  • Fundtech estimates that quarterly amortization expenses for the first quarter of 2011 will be approximately $350,000 and that stock-based compensation expenses will be approximately $750,000. 
  • Fundtech estimates that the number of shares used for the calculation of quarterly net income per share will be 15.8 million shares.

Fundtech's guidance does not include the impact of deferred taxes and also does not include the impact of any future impairment of intangible assets, as these assets are periodically being evaluated by Fundtech's management under evolving accounting standards which are incapable of assessment in advance.

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.

We are presenting Fundtech's non-GAAP net income as well as Adjusted EBITDA. We define non-GAAP net income as net income plus stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes.   We define Adjusted EBITDA as net income plus stock-based compensation, depreciation and amortization expenses, impairment of marketable securities, deferred and current taxes, and interest expense (income).

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

Fundtech to Host Conference Call

The senior management of Fundtech will host a conference call at 8:30 AM (ET), Wednesday, February 16, to discuss Fundtech's fourth quarter and annual 2010 results and to answer questions from the investment community.

To participate, please call 1-877-303-7023 or +1-224-357-2223 and ask for the Fundtech call. Participants from Israel may dial toll free 1809-245917 and ask for the Fundtech call. 

A replay of the conference call will be available from 11:30 AM (ET) February 16, until 11:59 PM (ET) February 23. The replay may be accessed by dialing 1-800-642-1687 or 1+706-645-9291, conference ID: 39135679.

This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until March 31, 2011.

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 operates the world's largest SWIFT service bureau. We offer an extensive line of financial supply chain applications including electronic invoice presentment and supply chain 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 news release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for growth and future operations, competition and regulation. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this Release, the words, "estimates," "expects," "anticipates," "believes," "plans," "intends," and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. The factors that could cause actual results to differ materially from those discussed or identified from time to time in Fundtech's public filings, including its Annual Report on Form 20-F for the year ended December 31, 2009, including general economic and market conditions, changes in regulations and taxes and changes in competition in pricing environment. Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. 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)
     
  December 31,

2010
December 31,

2009
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 24,916  $ 20,903
Short term deposit 1,910  -- 
Marketable securities 26,419 21,248
Trade receivables, net 29,706 23,445
Deferred tax asset 4,552 2,334
Other accounts receivable and prepaid expenses 6,411 6,527
Total current assets 93,914 74,457
     
Marketable securities 753 774
Severance pay fund 1,953 1,508
Long term deposits 1,931 1,769
Long term prepaid expenses 2,289 2,574
Property and equipment, net 11,453 13,305
Goodwill, net 41,041 40,228
Other assets, net 4,126 5,737
Total assets  $ 157,460  $ 140,352
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Trade payables  $ 2,309  $ 2,035
Deferred revenues 11,541 9,141
Employee and payroll accruals 11,099 7,467
Other accounts payable and accrued expenses 8,573 6,287
Total current liabilities 33,522 24,930
     
Accrued severance pay 5,554 3,344
Deferred tax liability 1,190 1,119
Other long term liabilities 1,732 2,777
Total liabilities 41,998 32,170
     
Shareholders' equity:    
Share capital 50 49
Additional paid-in capital 163,254 159,558
Accumulated other comprehensive income 1,866 1,828
Accumulated deficit (28,265) (40,797)
Treasury stock, at cost (21,443) (12,456)
Total shareholders' equity 115,462 108,182
Total liabilities and shareholders' equity  $ 157,460  $ 140,352
 
FUNDTECH LTD. AND ITS SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
         
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
Revenues:        
Software license  $ 4,626  $ 4,253  $ 17,598  $ 11,558
Software hosting 7,882 6,181 29,662 24,088
Maintenance 11,103 10,185 42,670 39,531
Services 14,152 12,227 52,008 42,580
Total revenues 37,763 32,846 141,938 117,757
         
Operating expenses:        
Software licenses costs 4 78 329 748
Amortization of other intangible assets 419 496 1,666 2,028
Maintenance, hosting and services costs [1] 17,500 14,861 65,873 53,286
Software development [1] 5,497 5,306 21,882 20,422
Selling and marketing [1] 5,262 4,621 19,027 17,567
General and administrative [1] 5,197 5,042 19,903 19,662
Total operating expenses 33,879 30,404 128,680 113,713
         
Operating income 3,884 2,442 13,258 4,044
         
Financial income (expense), net 30 (79) (765) 232
Income taxes benefit 1,870 1,045 39 397
Net income  $ 5,784  $ 3,408  $ 12,532  $ 4,673
         
Net income per share:        
Net income used in computing income per share  $ 5,784  $ 3,408  $ 12,532  $ 4,673
Basic income per share  $ 0.38  $ 0.22  $ 0.82  $ 0.31
Diluted income per share  $ 0.37  $ 0.21  $ 0.79  $ 0.30
Shares used in computing:        
Basic income per share 15,070,375 15,242,436 15,208,862 15,145,625
Diluted income per share 15,732,124 16,005,115 15,917,944 15,617,110
         
Adjusted non-GAAP[2] net income per share:        
Adjusted non-GAAP[2] net income used in computing income per share  $ 4,615  $ 3,286  $ 14,815  $ 8,328
Adjusted non-GAAP[2] net income per share  $ 0.29  $ 0.21  $ 0.93  $ 0.53
Shares used in computing adjusted non-GAAP[2] net income per share 15,732,124 16,005,115 15,917,944 15,617,110
         
[1] Includes charges for stock-based compensation in 2010 and 2009        
[2] See Reconciliation from GAAP        
FUNDTECH LTD. AND ITS SUBSIDIARIES
Consolidated Statement of Cash Flows
(In Thousands)
         
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 5,784  $ 3,408  $ 12,532  $ 4,673
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation and amortization 1,887 2,047 7,649 8,436
Stock-based compensation 704 653 2,762 2,827
Accrued interest on marketable securities and accretion amortization 21 (154) 114 63
Deferred income taxes (2,292) (1,271) (2,145) (1,200)
Decrease (Increase) in trade receivables  (2,430) 4,015 (6,105) 5,251
Decrease (Increase) in prepaid expenses and other accounts receivable 302 59 803 (981)
Increase (Decrease) in trade payables (317) 386 219 (884)
Increase (Decrease) in deferred revenues (6,898) (5,355) 421 (1,758)
Increase in employee and payroll accruals 956 435 3,416 912
Increase (Decrease) in other accounts payable and accrued expenses 1,024 48 2,568 (264)
Increase in accrued severance pay, net 79 95 443 231
Net cash provided by (used in) operations (1,180) 4,366 22,677 17,306
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Investment in held-to-maturity marketable securities (8,556) (20,114) (41,510) (26,610)
Redemption of held-to-maturity marketable securities 14,916 4,059 36,246 16,292
Investment (Realization) of short term deposits (1,048) 1,113 (1,910) 1,538
Purchase of property and equipment (803) (617) (4,058) (3,612)
Net change in long term lease deposits and long term prepaid expenses  (54) (640) (151) (749)
Additional consideration in a business combination  --   --  (830) (5,779)
Net cash provided by (used in) investing activities 4,455 (16,199) (12,213) (18,920)
  -- -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from issuance of share capital and exercise of stock options and warrants, net 554 647 935 754
Decrease in long term Liabilities (11) (10) (52) (36)
Investment in treasury stock, at cost (2,382) (3,423) (8,987) (8,548)
Net cash used in financing activities (1,839) (2,786) (8,104) (7,830)
         
Effect of exchange rate on cash and cash equivalents 536 9 1,653 705
         
Increase (decrease) in cash and cash equivalents 1,972 (14,610) 4,013 (8,739)
Cash and cash equivalents at the beginning of the period 22,944 35,513 20,903 29,642
Cash and cash equivalents at the end of the period  $ 24,916  $ 20,903  $ 24,916  $ 20,903
         
Appendix A        
Additional consideration in a business combination        
Working Capital  $ --   $ --   $ --   $ (167)
Long term assets --  --  --  1,804
Long term liabilities --  --  --  --
Goodwill --  --  830 4,142
   $ --  $ --  $ 830  $ 5,779
Schedule A to Press Release    
         
Reconciliation from GAAP    
(In Thousands, Except Share and Per Share Data)    
         
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
         
Reconciliation of GAAP net income to adjusted EBITDA and to adjusted net income:      
         
 Net income [1]  $ 5,784  $ 3,408  $ 12,532  $ 4,673
         
Financial expense (income), net (30) 79 765 (232)
Income taxes 422 226 2,106 803
Deferred taxes benefit (2,292) (1,271) (2,145) (1,200)
Amortization 419 496 1,666 2,028
Depreciation 1,468 1,551 5,983 6,408
Stock based compensation [2] 704 653 2,762 2,827
Adjusted EBITDA  $ 6,475  $ 5,142  $ 23,669  $ 15,307
         
Financial income (expense), net 30 (79) (765) 232
Income taxes expense (422) (226) (2,106) (803)
Depreciation (1,468) (1,551) (5,983) (6,408)
Adjusted net income  $ 4,615  $ 3,286  $ 14,815  $ 8,328
         
Adjusted net income per share  $ 0.29  $ 0.21  $ 0.93  $ 0.53
         
Shares used in computing adjusted net income per share 15,732,124 16,005,115 15,917,944 15,617,110
         
[1] Net income per share (diluted) was approximately $0.37 and $0.21 for the three months ended December 31, 2010 and 2009, respectively
Net income per share (diluted) was approximately $0.79 and $0.30 for the twelve months ended December 31, 2010 and 2009, respectively
         
[2] Stock based compensation        
Maintenance, hosting and services costs  $ 92  $ 94  $ 351  $ 487
Software development 62 40 237 187
Selling and marketing 169 160 650 734
General and administrative 381 359 1,524 1,419
   $ 704  $ 653  $ 2,762  $ 2,827
CONTACT: Fundtech Contact:
         Yoram Bibring
         CFO - Fundtech Ltd.
         Tel: 1-201-946-1100
         yoram.bibring@fundtech.com

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