UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F/A
¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-29634
_________________________
FUNDTECH LTD.
(Exact name of Registrant as specified in its charter)
________________________
STATE OF ISRAEL
(Jurisdiction of incorporation or organization)
12 Ha’hilazon Street, 5th Floor
Ramat-Gan, Israel 52522
(Address of principal executive offices)
____________________________________________________________________________
Joseph Aulenti, General Counsel, Fundtech Corporation
30 Montgomery Street, Suite 501
Jersey City, New Jersey 07302
Fax: (201) 946-1313
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
_____________________________________________________________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Ordinary Shares, NIS 0.01 Par Value | NASDAQ Global Market |
| (Title of each Class) | (Name of Exchange on which Registered) |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
________________________
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 16,401,442 Ordinary Shares, NIS 0.01 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP: x
International Financial Reporting Standards as issued by the International Accounting Standards Board: ¨
Other: ¨
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report on Form 20-F (the “Annual Report”) is being filed by Fundtech Ltd. (the “Company”) with the Securities and Exchange Commission for the sole purpose of expanding upon but not substantively changing certain disclosures contained therein.
This Amendment No. 1 consists of a cover page, this explanatory note, the overview section of Item 5 as amended and Item 11 as amended, the exhibit index, the signature page and the required certifications of the principal executive officer and principal financial officer of the Company.
Other than expressly set forth herein, this Amendment No. 1 does not, and does not purport to, amend or restate any other information contained in the Annual Report nor does this Amendment No. 1 reflect any events that have occurred after the Annual Report was filed.
Overview
Fundtech is a leading provider of end-to-end financial transaction processing software solutions for financial institutions. These solutions are grouped into four segments: (i) payment processing and management (including foreign exchange settlement processing), which automate the payment and settlement processes and provide real-time transaction processing capabilities to financial institutions and their customers; (ii) BBP, which provides financial messaging products and services that enable banks to communicate with the SWIFT network; (iii) cash management products, used by a bank’s corporate clients for initiating payments, making inquiries and managing their activities with their financial institution; (iv) electronic invoice presentment and payment, which consists of financial supply chain products that expand traditional transaction banking into electronic invoice presentment and trade services.
We derive our revenues principally from software licensing and from the provision of professional services. Professional services consist of (i) providing maintenance services with respect to our software, (ii) installation and training services related to the software, (iii) services to enhance or customize the software for particular client needs, inclusive of requirements analysis, (iv) operating hosting service bureaus which process transactions or messages and provide cash management and access to securities settlement services to our clients or which operate client licensed applications on their behalf and (v) providing contingency and recovery services to our clients. See “Critical Accounting Policies” below for a discussion of how we account for our revenues and their associated costs.
The demand for Fundtech products and services is influenced by a number of industry-wide factors:
(i) An increased focus on finding new sources of fee-based income, which currently account for almost half of banks’ revenues. This is largely the result of the increased competitiveness of bank lending activities, which has resulted in lower profit margins;
(ii) An ongoing objective to lower operating costs through automation. This has become an even greater issue as new regulations such as the U.S. Patriot Act are requiring banks to perform additional complex analyses that significantly benefit from automation;
(iii) Changes in the regulatory requirements that mandate changes in the IT systems of banks;
(iv) The competitive marketplace for corporate accounts that is continually innovating new services that are largely driven by new and more flexible technology; and
(v) The need to simplify banking relationships for corporate clients by eliminating “siloed” processing systems, that is, systems operating in a narrow or limited functionality spectrum.
Fundtech’s products offer financial institutions new capabilities that address these major industry factors. Our software products automate transaction procedures and also allow clients of our customers both to initiate transactions and access information over the Internet rather than by contacting the customer’s staff. The server-based architecture of our software also allows cost reductions in comparison to mainframe based applications. The software permits customers to easily change fee parameters and offer new financial products without having to reprogram the software.
During the period 2005 through 2007, spending on technology in the financial services industry increased. This trend continued during the first half of 2008. During the second half of 2008, we began to see the impact of the global recession, as there was a decline in revenue attributable to new license fees from both global and U.S-based clients. Other revenues from maintenance and services for previously installed systems were affected to a lesser degree. We continue to see interest and activity from U.S. regional banks, and have shifted some of our marketing emphasis to such businesses while maintaining our relationships with our global and large bank customers. We have also placed additional emphasis on our newly acquired products such as ACHplus which are attractive within the sectors that appear to be less affected by the slowdown. The trends toward increasing emphasis on transaction revenue and processing/management cost optimization has had a favorable impact on our business, but we continue to experience a slowdown in the sales cycle as banks deal with the recession’s impact on their businesses. We continually communicate with our sales personnel, clients and prospects to estimate the probability of consummating new contracts during future periods. While the current economic crisis has reduced our normal visibility in this regard, we were able to forecast sufficient business reductions to warrant undertaking cost cutting initiatives that are expected to somewhat reduce 2009 expenditures to offset the declining revenues. It is difficult to predict whether the duration of these trends will continue, as well as the extent of the impact that they may have on our future revenues, results of operations or the length of the time periods for which we can forecast potential revenues.
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our main foreign currency exposures are associated with exchange rate movements of the US dollar, our reporting currency as well as our primary functional currency, against the NIS, Swiss Franc, British Pounds, Indian Rupees and the Euro. Our diverse base of local currency costs, financings, and foreign exchange forward contracts will partially counterbalance the impact of changing foreign currency exchange rates on revenues, earnings, cash flows and fair values of assets and liabilities. Nevertheless, when those anticipated transactions are realized, actual effects of changing foreign currency exchange rates could have a material impact on earnings and cash flows in future periods.
To protect against some of the reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, we utilize foreign currency forward contracts in order to minimize part of the impact of foreign currency fluctuations on our financial position and results of operations. In order to mitigate our exposure to risk of fluctuations in the NIS/dollar exchange rate with respect to our NIS denominated expenses, mainly payroll, we entered into foreign currency forward contracts. As of December 31, 2008 the Company had $2.7 million of open exchange rate agreements which will expire throughout 2009. The aggregate amount of unrealized gains as of December 31, 2008 from the foreign exchange forward contracts was $126,000.
Short-term exposures to changing foreign exchange rates are primarily due to operating cash flows denominated in foreign currencies and transactions denominated in non-functional currencies. Our most significant foreign currency exposures are related to our operations in Germany, United Kingdom, Switzerland, India and Israel. We have used foreign exchange forward contracts to partially cover known and anticipated exposures. We estimate that an instantaneous 10% depreciation in all the currencies of these countries from their levels against the dollar as of December 31, 2008, with all other variables held constant, would decrease the fair value of our net assets denominated in foreign currencies, held at December 31, 2008, by approximately $919,000.
EXHIBIT INDEX
The exhibits filed with or incorporated into this annual report are listed on the index of exhibits immediately below.
EXHIBIT NUMBER | | DESCRIPTION OF EXHIBIT |
| 1.1 | | Amended Memorandum of Association of Registrant(1) |
| 1.2 | | Amended and Restated Articles of Association of Registrant(1) |
| 1.3 | | Amendment to Amended and Restated Articles of Association of Registrant(2) |
| 2.1 | | Form of Ordinary Share Certificate(1) |
| 4.2 | | Fundtech Ltd. 1999 Employee Option Plan(4) |
| 4.3 | | Fundtech Ltd. Directors Option Plan(5) |
| 4.4 | | Employment Agreement between Reuven Ben Menachem and Fundtech Corporation, dated November 25, 1997(3) |
| 4.5 | | Lease Agreement for Fundtech India’s facility in Bombay, India(9) |
| 4.6 | | Lease Agreement relating to Fundtech’s Facility in Ramat-Gan, Israel (English summary)(3) |
| 4.7 | | Lease Agreement relating to Fundtech’s Facility in Norcross, Georgia(3) |
| 4.8 | | Lease Agreement relating to Fundtech’s Facility in Jersey City, New Jersey(6) |
| 4.9 | | Lease Agreement relating to Fundtech’s Facility in Burlington, Massachusetts(7) |
| 4.10 | | Fundtech Ltd. 2005 International Share Option and Restricted Share Incentive Plan(8) |
| 4.11 | | Fundtech Ltd. 2005 Israeli Share Option and Restricted Share Incentive Plan(10) |
| 8 | | Subsidiaries of Company* |
| 11 | | Code of Ethics(11) |
| 12.1 | | Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act* |
| 12.2 | | Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act* |
| 13.1 | | Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
| 13.2 | | Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
| 15.1 | | Consent of Brightman Almagor & Co.* |
______________
| (1) | Incorporated by reference to an exhibit to the Registrant’s Registration Statement on Form F-1, as amended, filed with the SEC on March 13, 1998. |
| (2) | Incorporated by reference to Proposal 7 of the Company’s Proxy Statement for its 2007 Annual Shareholders Meeting, included as Exhibit 99.1 to the Company's Form 6-K that was filed with the SEC on November 14, 2007. |
| (3) | Incorporated by reference to Exhibits 10.12 and 10.14 (as appropriate) to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 1999. |
| (4) | Incorporated by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A for its 1999 Annual Meeting of Shareholders, filed with the SEC on August 23, 1999. |
| (5) | Incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8, as amended (SEC Registration No. 333-9380). |
| (6) | Incorporated by reference to Exhibit 4.10 to the Company’s Annual Report on Form 20-F, filed with the SEC on June 12, 2003. |
| (7) | Incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 20-F, filed with the SEC on June 12, 2003. |
| (8) | Incorporated by reference to Annex A to the Company’s Proxy Statement for its 2005 Annual Shareholders Meeting, included as Exhibit 99.1 to the Company's Form 6-K that was filed with the SEC on November 30, 2005. |
| (9) | Incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 20-F, filed with the SEC on May 27, 2005. |
| (10) | Incorporated by reference to Annex B to the Company’s Proxy Statement for its 2005 Annual Shareholders Meeting, included as Exhibit 99.1 to the Company's Form 6-K that was filed with the SEC on November 30, 2005. |
| (11) | Incorporated by reference to Exhibit 11 to the Company’s Annual Report on Form 20-F, filed with the SEC on June 29, 2004. |
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| FUNDTECH LTD. |
| |
| By: | /s/ Reuven Ben Menachem |
| | Name: Reuven Ben Menachem |
| | Title: Chief Executive Officer |
Date: September 16, 2009
