NEWS
RELEASE
FUNDTECH CONTACT:
Yoram Bibring
Fundtech Ltd.
Tel: 1-201-946-1100
yoramb@fundtech.com
FOR IMMEDIATE RELEASE
FUNDTECH REPORTS FINANCIAL RESULTS FOR THE
THIRD QUARTER OF 2004
- QUARTERLY REVENUES GROW 4% SEQUENTIALLY AND
18% YEAR-OVER-YEAR TO $14.2 MILLION
- GAAP EPS 5 CENTS
- ADJUSTED EPS 9 CENTS
- SWISS SUBSIDIARY BBP ANNOUNCES ACQUISITION OF DATASPHERE
JERSEY CITY, N.J., -- OCTOBER 27, 2004, -- Fundtech Ltd. (NASDAQ: FNDT), a
leading provider of global electronic payment, settlement and cash management
solutions, today announced its financial results for the third quarter ended
September 30, 2004.
Third quarter 2004 revenues increased 4% sequentially and 18% year-over-year to
$14.2 million, from $13.7 million in the second quarter of 2004 and $12.0
million in the third quarter of 2003.
On a GAAP (Generally Accepted Accounting Principles) basis, net income for the
third quarter of 2004 increased to $710,000, or $0.05 per diluted share,
compared with net income of $388,000, or $0.03 per diluted share, for the second
quarter of 2004 and net income of $247,000, or $0.02 per share, in the third
quarter of 2003.
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Excluding amortization of intangibles and amortization of capitalized software
costs, Fundtech's adjusted net profit for the third quarter of 2004 was $1.3
million, or $0.09 per diluted share, compared with $1.0 million, or $0.07 per
diluted share, in the second quarter of 2004 and $876,000, or $0.06 per diluted
share, in the third quarter of 2003. (See Schedule A attached to this news
release -- Reconciliation to GAAP).
"Fundtech achieved record revenues in the third quarter, driven by increased
demand at the high end of the market," said CEO Reuven Ben Menachem. "During the
quarter we added several new customers to our roster and secured new deals with
a number of existing customers. Our continued success in demonstrating the value
of Fundtech's electronic payment, settlement and cash management solutions has
enabled us to build a strong foundation for growth in 2005 and beyond."
On October 1, 2004 Fundtech's Swiss subsidiary, bbp, completed the acquisition
of Datasphere, a provider of interbank clearing and securities settlement
systems in Europe with a client base of more than 70 financial institutions.
Datasphere, based in Geneva, Switzerland, offers products for SWIFT, Swiss Franc
clearing (SIC) and electronic securities clearing (SECOM).
As the operator of the world's largest SWIFTNet service bureau, bbp expects to
realize numerous synergies with Datasphere. The companies have complementary
geographic coverage in European markets; provide complementary hardware platform
technologies; and expect to combine their product offerings to create unmatched
breadth and depth.
Additional third quarter highlights:
o Closed 38 new deals and added eight new bank customers.
o Closed nine new system sales: four PAYplus USA, two CASHplus and three
interbank connectivity.
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o Began providing services to a top five global bank in connection with a
possible Global PAYplus transaction in 2005.
o Generated revenues in connection with our new initiative in the securities
trading settlement market.
o In the U.S.: closed ASP and disaster recovery services transactions, which
are expected to generate $1.2 million of revenues over the next five
years.
For the nine months ended September 30, 2004, revenues were $40.8 million, up
18% from $34.7 million for the same period in 2003.
On a GAAP basis, net income for the first nine months of 2004 was $1.4 million,
or $0.09 per diluted share, compared with a net loss of $(608,000), or $(0.04)
per share, for the first nine months of 2003.
Excluding amortization of intangibles and amortization of capitalized software
costs, Fundtech's adjusted net profit for the first nine months of 2004 was $3.2
million, or $0.21 per diluted share, compared with adjusted net profit of $1.3
million, or $0.09 per diluted share, for the nine months of 2003. (See Schedule
A attached to this news release -- Reconciliation to GAAP).
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GUIDANCE
The financial guidance provided is current as of today only and the Company
undertakes no obligation to update its estimates.
For the fourth quarter of 2004, Fundtech expects revenues to be between $14.7
million and $15.4 million. GAAP earnings per diluted share, including all
amortization expenses, are expected to be in the range of $0.05 to $0.08.
Adjusted earnings per diluted share, excluding all amortization expenses, are
expected to be in the range of $0.09 to $0.12.
Amortization expenses in the fourth quarter are estimated to be approximately
$650,000, or $0.04 per share.
The impact of the Datasphere acquisition on the operating results of Fundtech in
the fourth quarter is expected to be immaterial.
COMPANY TO HOST CONFERENCE CALL
The senior management of Fundtech will host a conference call at 8:30 a.m. (ET)
tomorrow, Thursday, October 28, to discuss the Company's third-quarter 2004
results and to answer questions from the investment community.
To participate, please call 866-500-4964 or 011-972-3-925-5910 and ask for the
Fundtech Call. From Israel, please dial (03) 925-5910.
A replay of the conference call will be available for playback from noon (ET)
October 28 until noon (ET) November 3. The replay may be accessed by dialing
877-332-1104 or 972 (3) 9255934.
This call will also be webcast live on: http://www.fundtech.com.
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ABOUT FUNDTECH
Fundtech (www.fundtech.com) is a leading provider of software solutions and
services that facilitate payments, settlement and cash management by enabling
businesses and their banks to electronically manage cash, process payments and
transfer funds. The Company's client-server and Internet software products
automate the process of transferring funds among corporations, banks and
clearance systems and enable businesses to manage global cash positions
efficiently and in real-time. Its solutions have been sold to hundreds of
financial institutions around the globe.
FORWARD LOOKING STATEMENTS:
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. 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; failure to obtain revenue as anticipated; failure
of bbp to achieve expected synergies with Datasphere; 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, 2003. 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.
# # #
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FUNDTECH LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
September 30, December 31,
2004 2003
--------- ---------
ASSETS
Current assets:
Cash & cash equivalents $ 27,600 $ 28,900
Marketable securities - short term 9,083 9,028
Trade receivables, net 16,039 13,009
Other accounts receivable,
prepaid expenses and inventories 2,366 1,936
--------- ---------
Total current assets 55,088 52,873
Marketable securities - long term 9,247 8,436
Long term trade receivables, net 339 1,031
Severance pay fund 597 520
Long term lease deposits,
prepaid expenses and other deposit 2,935 860
Property and equipment, net 7,237 6,375
Goodwill, net 10,523 10,523
Other assets, net 7,056 8,942
--------- ---------
Total assets $ 93,022 $ 89,560
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade payables $ 1,966 $ 932
Deferred revenues 5,995 4,817
Accrued restructuring expenses 556 581
Employee and payroll accruals 2,344 2,015
Other accounts payable and accrued expenses 2,629 3,050
--------- ---------
Total current liabilities 13,490 11,395
Accrued severance pay 670 586
Accrued restructuring and other expenses 294 750
Deferred revenues - long term 429 295
--------- ---------
Total liabilities 14,883 13,026
--------- ---------
Shareholders' equity:
Share capital 43 43
Additional paid-in capital 140,959 140,730
Accumulated other comprehensive loss (162) (180)
Accumulated deficit (62,613) (63,971)
Treasury stock, at cost (88) (88)
--------- ---------
Total shareholders' equity 78,139 76,534
--------- ---------
Total liabilities and shareholders' equity $ 93,022 $ 89,560
========= =========
Note: Certain prior year amounts have been reclassified
to conform to current year presentation.
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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,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues:
Software license $ 4,091 $ 3,322 $ 11,760 $ 9,871
Software hosting 2,069 1,535 5,806 4,324
Maintenance 4,244 3,811 12,483 10,822
Services 3,737 3,354 10,638 9,432
Hardware sales 64 7 143 283
------------ ------------ ------------ ------------
Total revenues 14,205 12,029 40,830 34,732
------------ ------------ ------------ ------------
Operating expenses:
Software licenses costs 187 124 507 344
Amortization of capitalized software development costs 394 394 1,182 1,182
Amortization of other intangible assets 235 235 705 705
Maintenance, hosting and services costs 5,359 4,487 15,520 13,246
Hardware costs 66 5 127 237
Software development 2,888 2,328 8,195 7,274
Selling and marketing 2,641 2,458 8,145 7,441
General and administrative 1,728 1,867 5,237 5,243
------------ ------------ ------------ ------------
Total operating expenses 13,498 11,898 39,618 35,672
------------ ------------ ------------ ------------
Operating income (loss) 707 131 1,212 (940)
Financial income, net 199 133 544 454
Income taxes (196) (17) (398) (122)
------------ ------------ ------------ ------------
Net income (loss) $ 710 $ 247 $ 1,358 $ (608)
============ ============ ============ ============
Net income (loss) per share:
Net income (loss) used in computing income per share $ 710 $ 247 $ 1,358 $ (608)
Basic income (loss) per share $ 0.05 $ 0.02 $ 0.09 $ (0.04)
Diluted income (loss) per share $ 0.05 $ 0.02 $ 0.09 $ (0.04)
Shares used in computing:
Basic income (loss) per share 14,575,102 14,398,777 14,554,954 14,355,146
Diluted income (loss) per share 15,167,116 14,972,275 15,241,483 14,643,441
Adjusted net income (loss) per share:
Adjusted net income (loss)
used in computing income per share $ 1,339 $ 876 $ 3,245 $ 1,279
Adjusted net income (loss) per share $ 0.09 $ 0.06 $ 0.21 $ 0.09
Shares used in computing
adjusted net income (loss) per share 15,167,116 14,972,275 15,241,483 14,643,441
Reconciliation of net loss to adjusted net income:
Net income (loss) $ 710 $ 247 $ 1,358 $ (608)
Amortization 629 629 1,887 1,887
------------ ------------ ------------ ------------
Adjusted net income $ 1,339 $ 876 $ 3,245 $ 1,279
============ ============ ============ ============
Note: Certain prior year amounts have been
reclassified to conform to current year presentation.
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FUNDTECH LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2004 2003
-------- -------- --------
CASH FLOWS FROM OPERATIONS:
Net income (loss) $ 710 $ 1,358 $ (608)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,315 3,926 4,138
Increase in trade receivables and long-term trade receivables (3,597) (2,402) (1,308)
Increase in provision for doubtful accounts -- 50 150
Increase in other accounts receivable, prepaid expenses and inventories (82) (856) (569)
Increase in trade payables 1,194 1,034 88
(Decrease) increase in deferred revenues (3,157) 1,255 1,015
Increase in employee and payroll accruals 296 339 82
Decrease in other accounts payable and accrued expenses (68) (431) (245)
Decrease in accrued restructuring expenses (139) (481) (1,223)
Increase in accrued severance pay, net 8 7 8
Decrease (increase) in accrued interest on marketable securities 45 149 (99)
Loss on disposition of fixed assets -- 1 36
-------- -------- --------
Net cash provided by (used in) operations (3,475) 3,949 1,465
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from held-to-maturity marketable securities 5,543 -- 430
Investment in held-to-maturity marketable securities -- (182) --
Investment in long term held-to-maturity marketable securities (1,854) (833) (9,231)
Purchase of property and equipment (767) (2,883) (1,514)
(Increase) reduction in long-term lease deposits and prepaid expenses (41) (864) 117
Deposit made in anticipation of acquisition, net (778) (778) --
Proceeds from sale of property and equipment -- 9 2
-------- -------- --------
Net cash provided by (used in) investing activities 2,103 (5,531) (10,196)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of share capital and
exercise of stock options and warrants, net 44 229 486
-------- -------- --------
Net cash provided by financing activities 44 229 486
-------- -------- --------
Effect of exchange rate on cash and cash equivalents (17) 53 170
-------- -------- --------
Increase (decrease) in cash and cash equivalents (1,345) (1,300) (8,075)
Cash and cash equivalents at the beginning of the period 28,945 28,900 26,571
-------- -------- --------
Cash and cash equivalents at the end of the period $ 27,600 $ 27,600 $ 18,496
======== ======== ========
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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 net
income as contained in the Company's press release:
Three Months Ended
------------------------------------------- Nine Months Ended
September 30, June 30, September 30,
--------------------------- ----------- ---------------------------
2004 2003 2004 2004 2003
----------- ----------- ----------- ----------- -----------
RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED NET INCOME:
Net income (loss) $ 710[a] $ 247[a] $ 388[a] $ 1,358[a] $ (608)[a]
Amortization of capitalized
software development costs 394 394 394 1,182 1,182
Amortization of other intangible assets 235 235 235 705 705
----------- ----------- ----------- ----------- -----------
Adjusted net income $ 1,339 $ 876 $ 1,017 $ 3,245 $ 1,279
=========== =========== =========== =========== ===========
Adjusted net income per share $ 0.09 $ 0.06 $ 0.07 $ 0.21 $ 0.09
=========== =========== =========== =========== ===========
Shares used in computing
adjusted net income per share 15,167,116 14,972,275 15,221,711 15,241,483 14,643,441
=========== =========== =========== =========== ===========
[a] Net income per share (diluted) was approximately $0.05 , $0.02 and $0.03
for the three months ended September 30, 2004 and 2003 and the three
months ended June 30, 2004, respectively. Net income (loss) per share was
approximately $0.09 and $(0.04) for the nine months ended September 30,
2004 and 2003, respectively.
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