Fundtech Reports Financial Results for the Second Quarter of 2011

2nd Quarter revenue of $40.5 million represents year-over-year organic growth of 16%. 2nd Quarter GAAP EPS 13 Cents /2nd Quarter Non GAAP EPS 27 Cents.

Fundtech Ltd. (NASDAQ: FNDT), a market leader in global transaction banking solutions, today announced financial results for the second quarter 2011. Fundtech posted quarterly revenues of $40.5 million, a 16% increase year-over-year, compared to second quarter revenues of $34.8 million in 2010, and a 9% increase compared to first quarter 2011 revenues of $37.2 million.

On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $2.1million, or $0.13 per diluted share, for the second quarter of 2011 compared with net income of $2.4 million, or $0.15 per diluted share, in the second quarter of 2010, and net income of $2.4 million, or $0.15 per diluted share, in the first quarter of 2011.

Excluding stock-based compensation, amortization of intangibles, costs incurred in connection with the previously announced agreement to merge with S1 Corporation and deferred taxes, Fundtechs adjusted (non-GAAP) net income for the second quarter of 2011 was $4.2 million, or $0.27 per diluted share, compared with $3.5 million, or $0.22 per diluted share, in the second quarter of 2010 and $3.6 million, or $0.23 per diluted share, in the first quarter of 2011. (See Schedule A attached to this news release -- Reconciliation from GAAP).

The second quarter was another strong quarter for us as we posted record revenues exceeding our revenue guidance and meeting the high end of our non-GAAP earnings per share guidance said Fundtech CEO Reuven BenMenachem. "The second quarter was an especially strong quarter for our messaging business. We closed 15 new system sales, 13 of which were hosting deals. We continued to make good progress cross-selling our Swift product in the United States, as evidenced by four new system sales and we also closed two important GPP-SP sales, one in Europe and one in the Pacific Rim.

Other Highlights:

  • During the second quarter of 2011 Fundtech closed 130 new deals and added 14 new bank customers.
  • During the second quarter of 2011 Fundtech closed 20 new system sales with banks, including 15 for BBPs products, one US Payments, two PAYplus FTS, and two for GPP-SP.
  • During the second quarter Fundtech paid a quarterly dividend of $0.10 per share, amounting to a cash outlay of $1.5 million. The Company has agreed not to pay any additional dividends while the agreement with S1, as referenced below, is pending.
  • On June 27, 2011, Fundtech and S1 Corporation announced that they entered into a definitive agreement to combine businesses through a stock-for-stock merger. Under the terms of the agreement, Fundtech shareholders will receive 2.72 shares of S1 common stock for each Fundtech ordinary share they own. The merger is expected to close in the fourth quarter of 2011 and is subject to approval by S1 and Fundtech shareholders, receipt of regulatory and court approvals, and the satisfaction of customary closing conditions.

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 increasing its revenue guidance, primarily due to the weakening of the US Dollar vs. the Swiss Franc, while reducing its guidance for GAAP earnings per share due to the costs incurred during the second quarter in connection with the S1 merger and keeping its non-GAAP guidance unchanged as follows:

  • Fundtech estimates that revenues for 2011 will be between $160 million and $163 million compared to the previous guidance of $155 million to $160 million; that GAAP net income per diluted share will be between $0.71 and $0.81 compared to the prior guidance of $0.76 and $0.86; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, costs incurred in connection with the S1 merger and deferred taxes, will be between $1.03 and $1.13 unchanged compared to the prior guidance.
  • Fundtech estimates that financial income for the year 2011 will be $0.6 million and that tax expenses, excluding deferred taxes, will be approximately $2.2 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 $3.6 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 third quarter of 2011 Fundtech is providing the following guidance:

  • Fundtech estimates that third quarter revenues will be between $41.5 million and $42.5 million; that GAAP net income per diluted share will be between $0.19 and $0.22; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, costs incurred in connection with the S1 merger and deferred taxes, will be between $0.27 and $0.30.
  • Fundtech estimates that financial income for the third quarter will be $0.2 million and that tax expenses, excluding deferred taxes, will be approximately $0.6 million.
  • Fundtech estimates that quarterly amortization expenses for the third quarter of 2011 will be approximately $350,000 and that stock-based compensation expenses will be approximately $900,000.
  • Fundtech estimates that the number of shares used for the calculation of quarterly net income per share will be 16.0 million shares.

Fundtech's guidance for the remainder of 2011 does not include the impact in the third and fourth quarters of the S1 merger (including the costs incurred by Fundtech and the impact of the closing of the merger, if the closing occurs prior to December 31, 2011), deferred taxes, other one- time
charges and also does not include the impact of any future impairment of intangible assets, as these assets are periodically being evaluated by Fundtechs 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.

Fundtechs 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 Fundtechs 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, August 3, to discuss Fundtechs second quarter 2011 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) Wednesday August 3, until 11:59 PM (ET) August 10. The replay may be accessed by dialing 1-855-859-2056 or 1+404-537-3406, conference ID: 84876018.

This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until August 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 worlds largest SWIFT service bureau. We offer an extensive line of financial supply chain applications including electronic invoice presentment and supply chain financing. We are the leading provider of CLS systems to the worlds 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. Forwardlooking 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, 2010, including general economic and market conditions, changes in regulations and taxes and changes in competition in the 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.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed transaction, Fundtech and S1 Corporation ("S1") intend to file relevant materials with the U.S. Securities and Exchange Commission (the "SEC") and other governmental or regulatory authorities, including an information statement and proxy statement, respectively. INVESTORS ARE URGED TO READ THESE MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FUNDTECH AND S1 AND THE TRANSACTION. The proxy statement, information statement and certain other relevant materials (when they become available) and any other documents filed by Fundtech or S1 with the SEC may be obtained free of charge at the SECs website at http://www.sec.gov. In addition, investors may obtain free copies of the documents filed with the SEC (i) by contacting Fundtechs Investor Relations at (201) 946-1100 or by accessing Fundtechs investor relations website at www.fundtech.com or (ii) by contacting S1s Investor Relations at (404) 923-3500 or by accessing S1s investor relations website at www.s1.com. Investors are urged to read the proxy statement and information statement and the other relevant materials when they become available before making any voting or investment decision with respect to the transaction.

PARTICIPANTS IN THE SOLICITATION
S1, Fundtech and their respective executive officers and directors may be deemed to be participating in the solicitation of proxies in connection with the transaction. Information about the executive officers and directors of S1 and the number of shares of S1s common stock beneficially owned by such persons is set forth in the proxy statement for S1s 2011 Annual Meeting of Stockholders on Schedule 14A, which was filed with the SEC on April 8, 2011. Information about the executive officers and directors of Fundtech and the number of shares of Fundtechs ordinary shares beneficially owned by such persons is set forth in Fundtechs annual report on Form 20-F which was filed with the SEC on May 31, 2011. Investors may obtain additional information regarding the direct and indirect interests of S1, Fundtech and their respective executive officers and directors in the transaction by reading the proxy statement and information statement regarding the transaction when they become available. This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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