Quarterly Revenues Grow 1% Year-over-Year to $29.8 Million
GAAP EPS (14) Cents Loss
Non GAAP EPS 5 Cents
Full Year Revenues Increase 16% to $121.0 Million
Elects Chairman of the Board of Directors
JERSEY CITY, N.J., Feb. 18, 2009 (GLOBE NEWSWIRE) -- Fundtech Ltd. (Nasdaq:FNDT), a leading provider of global electronic payment, settlement and cash management solutions, today announced financial results for the fourth quarter and full year ended December 31, 2008. Fundtech posted quarterly revenues of $29.8 million, a 1% increase year-over-year, compared to fourth quarter revenues of $29.4 million in 2007, and a 5% decline compared to third quarter 2008 revenues of $31.5 million.
On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported a net loss of ($2.2) million or ($0.14) per diluted share, for the fourth quarter of 2008 compared with net income of $2.7 million, or $0.16 per diluted share, in the fourth quarter of 2007, and net income of $1.5 million, or $0.09 per diluted share, in the third quarter of 2008.
Excluding stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes Fundtech's adjusted net income for the fourth quarter of 2008 was $0.8 million, or $0.05 per diluted share, compared with $3.6 million, or $0.22 per diluted share, in the fourth quarter of 2007 and $3.3 million, or $0.20 per diluted share, in the third quarter of 2008 (See Schedule A attached to this news release -- Reconciliation to GAAP).
For the year ended December 31, 2008, revenues increased 16% to $121.0 million from $104.6 million in 2007. GAAP net income in 2008 was $1.2 million, or $0.08 per diluted share, compared with net income of $7.1 million or $0.43 per diluted share, in 2007. Excluding stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes Fundtech's non GAAP net income for 2008 was $8.9 million, or $0.54 per diluted share, compared to $11.5 million, or $0.69 per diluted share, in 2007. (See Schedule A Attached to this Press Release -- Reconciliation to GAAP).
"Despite the uncertain market conditions and the slow down in the fourth quarter we posted double digit revenue growth in 2008 and generated cash flow from operations of $13.7 million" said CEO Reuven Ben Menachem. "Looking towards 2009, we believe that the slow down will continue at least during the first six months of the year. Despite the weakness with the global banks we continue to have good success selling Global PAYplus to large regional banks. We have also taken steps to control costs and I believe that we are well positioned for renewed growth when market conditions improve."
Other highlights:
* During the fourth quarter excluding Accountis Fundtech closed 98 new deals and added 7 new bank customers. * During the fourth quarter Fundtech closed 10 new system sales including 6 U.S. Payments, 1 Global CASHplus, 1 CLS and 2 at BBP. * During the quarter Fundtech closed a sale of Global PAYplus system to a large European bank. * During the fourth quarter Fundtech recorded financial expenses of approximately $800,000 due to a decline in the value of balances of cash and accounts receivables denominated in non-dollar currencies. * During the fourth quarter Fundtech recorded a $2 million one time charge due to the impairment of goodwill and other intangible assets recorded in connection with the acquisition of Radius Partners.
Fundtech today also announced the election of Avi Fischer to the position of Chairman of the Board of Directors. Mr. Fischer is the Deputy Chairman of the IDB Group, Israel's largest holding group, and Co-Chief Executive Officer of Clal Industries and Investments (TASE: CII). Mr. Fischer is also the Chairman of Clal Bio Technologies (TASE: CBI) and serves on the boards of numerous Israeli and International companies. In addition, Mr. Fischer serves as Co-Chairman of "Matan - Your Way to Give" -- Israel's largest Philanthropic organization.
Gideon Argov will remain in the company as Vice Chairman.
The Audit Committee and Board of Directors of Fundtech have approved compensation for Mr. Fischer in an amount not to exceed the compensation paid to any other director of the company. Under Israel's Companies Law, this compensation will take effect provided that the company does not receive written notices of objection from shareholders holding 1% or more of the company's shares, in the aggregate, during the 14 days following publication of this announcement.
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 the Company 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, Impairment of marketable securities, and deferred taxes.
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.
Due to the current market environment we are providing guidance only for the first and second quarter of 2009.
For the first quarter of 2009 we expect revenues of between $25.5 million and $26.5 million, GAAP earnings per diluted share of between a (loss) of ($0.14) and loss of $(0.06) and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between a loss of ($0.06) to net income of $0.02.
For the second quarter of 2009 we expect revenues of between $27.7 million and $29.2 million, GAAP earnings per diluted share of between a (loss) of ($0.06) and net income of $0.02 and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.02 to $0.10.
Fundtech estimates that quarterly amortization expenses for the first two quarters of 2009 will be approximately $500,000 and that stock-based compensation expenses will be approximately $750,000 per quarter.
Fundtech's guidance for the first and second quarters of 2009 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.
Company to Host Conference Call
The senior management of Fundtech will host a conference call at 08:30 a.m. (EST) today, Wednesday, February 18, to discuss the Company's fourth-quarter and full year results as well as 2009 financial guidance, and to answer questions from the investment community.
To participate, please call (800)-798-2864 or 617-614-6206 and ask for the Fundtech call.
A replay of the conference call will be available for playback from 11:30am (EST) February 18, until 11:59pm (EST) February 25. The replay may be accessed by dialing (888) 286-8010 or 617-801-6888, pass code 58823591.
This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until March 13.
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 first and second 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: a 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, 2007. 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, December 31,
2008 2007
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $ 29,642 $ 31,612
Short term deposits 1,117 1,765
Marketable securities - short term 9,563 8,624
Trade receivables, net 28,264 22,387
Defer Tax Asset 1,022 658
Other accounts receivable, prepaid
expenses and inventories 3,957 2,942
------------ ------------
Total current assets 73,565 67,988
Marketable securities - Long term 2,204 12,847
Severance pay fund 1,394 1,197
Long term lease deposits 1,301 778
Prepaid expenses 2,797 2,434
Property and equipment, net 15,898 14,070
Goodwill, net 34,520 26,802
Other assets, net 5,995 2,156
------------ ------------
Total assets $ 137,674 $ 128,272
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Trade payables $ 2,908 $ 1,079
Deferred revenues 9,910 6,143
Accrued restructuring expenses -- 62
Employee and payroll accruals 6,807 6,298
Other accounts payable and accrued
expenses 6,256 8,591
------------ ------------
Total current liabilities 25,881 22,173
Accrued severance pay 1,734 1,518
Deferred taxes 970 878
Other long term liabilities 2,278 1,571
------------ ------------
Total liabilities 30,863 26,140
------------ ------------
Shareholders' equity:
Share capital 49 47
Additional paid-in capital 155,976 151,547
Accumulated other comprehensive income
(loss) 164 506
Accumulated deficit (45,470) (46,710)
Treasury stock, at cost (3,908) (3,258)
------------ ------------
Total shareholders' equity 106,811 102,132
------------ ------------
Total liabilities and shareholders'
equity $ 137,674 $ 128,272
============ ============
FUNDTECH LTD. AND ITS SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Revenues:
Software license $ 3,555 $ 6,236 $ 16,488 $ 19,741
Software hosting 5,169 4,446 19,889 15,384
Maintenance 9,590 8,102 34,506 27,570
Services 11,500 10,641 50,154 41,939
---------- ---------- ---------- ----------
Total revenues 29,814 29,425 121,037 104,634
---------- ---------- ---------- ----------
Operating expenses:
Software licenses
costs -- 342 291 590
Amortization of
capitalized software
development costs -- -- -- 394
Amortization of other
intangible assets 592 281 2,167 1,387
Impairment of goodwill
and others intangible
assets 2,018 -- 2,018 --
Maintenance, hosting
and services costs(1) 12,786 12,787 53,730 45,578
Software
development(1) 5,520 5,354 21,849 19,348
Selling and
marketing(1) 5,881 4,363 20,883 17,667
General and
administrative(1) 4,621 3,807 17,115 13,553
---------- ---------- ---------- ----------
Total operating
expenses 31,418 26,934 118,053 98,517
---------- ---------- ---------- ----------
Operating income (Loss) (1,604) 2,491 2,984 6,117
Impairment of & loss
on Investments (92) -- (692) --
Financial (expense) /
income, net (506) 638 48 2,197
Income taxes (19) (423) (1,100) (1,207)
---------- ---------- ---------- ----------
Net income (Loss) $ (2,221) $ 2,706 $ 1,240 $ 7,107
========== ========== ========== ==========
Net income per share:
Net income (Loss) used
in computing income
per share $ (2,221) $ 2,706 $ 1,240 $ 7,107
Basic income per
share $ (0.14) $ 0.17 $ 0.08 $ 0.46
Diluted income per
share $ (0.14) $ 0.16 $ 0.08 $ 0.43
Shares used in
computing:
Basic income per
share 15,890,060 15,501,400 15,769,588 15,322,515
Diluted income per
share 16,252,964 16,720,994 16,433,763 16,593,283
Adjusted non-GAAP(2)
net income per share:
Adjusted non-GAAP(2)
net income used in
computing income per
share $ 833 $ 3,626 $ 8,931 $ 11,484
Adjusted non-GAAP(2)
net income per
share $ 0.05 $ 0.22 $ 0.54 $ 0.69
Shares used in
computing adjusted
non-GAAP(2) net
income per share 16,252,964 16,720,994 16,433,763 16,593,283
Reconciliation of net
income to adjusted
non-GAAP(2) net
income:
Net income (Loss) $ (2,221) $ 2,706 $ 1,240 $ 7,107
Amortization 592 281 2,167 1,781
Impairment of
goodwill and others
intangible assets 2,018 -- 2,018 --
Stock-based
compensation 746 639 3,007 2,596
Impairment
of Investment -- -- 600 --
Deferred taxes (302) -- (101) --
---------- ---------- ---------- ----------
Adjusted non-GAAP(2)
net income $ 833 $ 3,626 $ 8,931 $ 11,484
========== ========== ========== ==========
(1) Includes charges for stock-based compensation in 2008 and 2007
(2) See Reconciliation to GAAP
FUNDTECH LTD. AND ITS SUBSIDIARIES
Consolidated Statement of Cash Flows
(In Thousands)
Three Months
Twelve Months Ended Ended
December 31 December 31,
2008 2007 2008
---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (Loss) $ 1,240 $ 7,107 $ (2,221)
Adjustments to reconcile
net income (Loss) provided
by operating activities:
Depreciation and
amortization 10,121 6,581 4,158
Decrease (Increase) in
trade receivables (6,259) 3,853 1,919
Decrease (Increase) in
prepaid expenses, other
accounts receivable and
inventories (925) (835) 440
Increase (Decrease) in
trade payables 1,296 (1,441) 1,867
Increase (Decrease) in
deferred revenues 4,608 (1,309) (213)
Increase in employee and
payroll accruals 346 1,494 729
Decrease in other accounts
payable and accrued
expenses (360) (431) (1,595)
Decrease in accrued
restructuring expenses (62) (185) --
Increase (Decrease) in
accrued severance pay, net 19 143 (21)
Increase (Decrease) in
accrued interest on
marketable securities 122 (170) 40
Decrease in Deferred taxes (101) (120) (302)
Losses on disposition of
fixed assets -- 38 --
Stock-based compensation 3,007 2,596 746
Impairment of & loss on
Investments 692 -- 92
Decrease in LT other
liabilities (32) -- --
------------ ------------ ------------
Net cash provided by
operating activities 13,712 17,321 5,639
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in held-to-
maturity marketable
securities (5,362) (25,841) (328)
Proceeds from held-to-
maturity marketable
securities 14,252 37,090 2,377
Investment in long term of
held to maturity marketable
securities -- (12,696) --
(Investment in) maturity of
short term deposits 614 (1,765) (1,117)
Purchase of property and
equipment (6,604) (6,745) (1,960)
Net change in long-term
lease deposits and prepaid
expenses (575) (111) (319)
Investments in subsidiaries (18,265) (7,465) (5,814)
Proceeds from sale of fixed
assets -- 14 --
------------ ------------ ------------
Net cash used in investing
activities (15,940) (17,519) (7,161)
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from the issuance
of share capital and
exercise of stock options
and warrants, net 1,424 2,341 42
Increase (Decrease) in
long-term other
liabilities 140 (61) 142
Investment in treasury
stock, at cost (650) -- (650)
------------ ------------ ------------
Net cash provided by
(used in) financing
activities 914 2,280 (466)
------------ ------------ ------------
Effect of exchange rate on
cash and cash equivalents (656) 914 1,057
------------ ------------ ------------
Increase (decrease) in cash
and cash equivalents (1,970) 2,996 (931)
Cash and cash equivalents at
the beginning of the period 31,612 28,616 30,573
------------ ------------ ------------
Cash and cash equivalents at
the end of the period $ 29,642 $ 31,612 $ 29,642
============ ============ ============
Appendix A
----------
Investment in Subsidiaries
--------------------------
Working Capital $ (1,210) $ 1,016 $ (395)
Long term assets 7,870 1,385 2,315
Long term liabilities (39) (394) --
Goodwill and other
intangible assets 11,644 5,458 3,894
------------ ------------ ------------
$ 18,265 $ 7,465 $ 5,814
============ ============ ============
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 Twelve Months Ended
------------------------- ------------------------
December 31, December 31,
------------------------- ------------------------
2008 2007 2008 2007
---- ---- ---- ----
Reconciliation
of net income
(loss) to
adjusted
non-GAAP net
income:
Net income
(Loss) $ (2,221)(1) $ 2,706(1) $ 1,240(1) $ 7,107(1)
Amortization
of
capitalized
software
development
costs -- -- -- 394
Amortization
of other
intangible
assets 592 281 2,167 1,387
Impairment of
goodwill and
others
intangible
assets 2,018 -- 2,018 --
Impairment of
Investment -- -- 600 --
Deferred
taxes (302) -- (101) --
Stock-based
compensation
charged as
follows:
Maintenance,
hosting and
services
costs 134 79 575 308
Software
development 59 98 261 358
Selling and
marketing 167 121 643 514
General and
administra-
tive 386 341 1,528 1,416
---------- ---------- ---------- ----------
Adjusted
non-GAAP net
income $ 833 $ 3,626 $ 8,931 $ 11,484
========== ========== ========== ==========
Adjusted
non-GAAP net
income per
share $ 0.05 $ 0.22 $ 0.54 $ 0.69
========== ========== ========== ==========
Shares used in
computing
adjusted
non-GAAP net
income per
share 16,252,964 16,720,994 16,433,763 16,593,283
========== ========== ========== ==========
(1) Net income (Loss) per share (diluted) was approximately $(0.14)
and $0.16 for the three months ended December 31, 2008 and 2007,
respectively. Net Income per share (diluted) was approximately
$0.08 and $0.43 for the twelve months ended December 31, 2008 and
2007, respectively.