Fundtech posts full year profit rise

Fundtech posted quarterly revenues of $29.4 million, a 27% increase year-over-year, compared to fourth quarter revenue of $23.1 million in 2006, and 10% increase compared to third quarter 2007 revenue of $26.6 million.

On a GAAP (Generally Accepted Accounting Principles) basis, the Company reported net income of $2.7 million or $0.16 per diluted share, for the fourth quarter of 2007 compared with net income of $1.6 million, or $0.10 per diluted share, in the fourth quarter of 2006, and net income of $2.2 million, or $0.13 per diluted share, in the third quarter of 2007.

Excluding stock-based compensation and amortization of intangibles Fundtech's adjusted net income for the fourth quarter of 2007 was $3.6 million, or $0.22 per diluted share, compared with $3.0 million, or $0.19 per diluted share, in the fourth quarter of 2006 and $3.1 million, or $0.19 per diluted share, in the third quarter of 2007. The adjusted non-GAAP net income for the fourth quarter of 2006 also excluded amortization of capitalized software costs (See Schedule A attached to this news release -- Reconciliation to GAAP).

For the year ended December 31, 2007, revenues increased 22% to $104.6 million from $85.5 million in 2006. GAAP net income in 2007 was $7.1 million, or $0.43 per diluted share, compared with net income of $3.8 million or $0.24 per diluted share, in 2006. Excluding stock based compensation, amortization of intangibles and amortization of capitalized software costs, Non GAAP income for 2007 was $11.5 million, or $0.69 per diluted share, compared to $9.1 million, or $0.57 per diluted share, in 2006. (See Schedule A Attached to this Press Release -- Reconciliation to GAAP).

Other operational highlights:

• During the fourth quarter Fundtech closed 82 new deals and added 7 new bank customers.
• During the fourth quarter Fundtech closed 10 new system sales: including 3 PAYplus USA, 2 CASHplus, 2 at bbp and 2 CLS.
• During the fourth quarter Fundtech closed a sale of Global PAYplus System to a large European bank.

"2007 was a record year for Fundtech. We experienced organic growth at an annual rate of 17.5%, met our EPS guidance, and made excellent progress across our product lines to ensure our long term growth." said CEO Reuven Ben Menachem. "Despite the uncertainty in the general market environment we believe that our customers understand the strategic nature of our products and that we will to continue to show good growth in 2008.

While we continue to focus on good execution in 2008, I am also excited about the long term potential of our activities in the areas of Financial Supply Chain and Electronic Invoice Presentment and Payment, which we recently entered through the Accountis acquisition. Large banks are now starting to focus on these areas as they seek new sources of revenue growth, and I believe that Fundtech is well positioned as a technology solution provider to take advantage of this opportunity over the next few years."

Today Fundtech also announced the acquisition of TROY Group's ACH software product line. This acquisition adds an important component to Fundtech's existing line of cash management and corporate payment systems in the US. Consideration was approximately $1.5 million in cash and the transaction was closed in February 2008.

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 and amortization of capitalized software costs.

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 the Company undertakes no obligation to update its estimates. The financial guidance includes the estimated impact of the acquisitions of Accountis and Troy on the consolidated financial statements, excluding the impact of the amortization of intangibles associated with these acquisitions.

For the first quarter of 2008 we expect revenues of between $27 million and $28.0 million, GAAP earnings per diluted share of between a loss of ($0.01) and a profit of $0.04 and Non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.05 to $0.10.

For fiscal 2008, we expect revenues between $120.0 million and $122.5 million, GAAP earnings per diluted share between $0.46 and $0.56 and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.70 and $0.80

We estimate that the Accountis and Troy acquisitions will add $300,000 revenues to Q1 2008 and add approximately $4 million to 2008 annual revenues. We expect these acquisitions to dilute Fundtech's first quarter as well as annual 2008 Non-GAAP earnings per diluted share by 3 cents.

Excluding the impact of the Troy and Accountis acquisitions, we estimate that amortization expenses for the first quarter of 2008 will be approximately $300,000 and that stock-based compensation expenses will be approximately $700,000.

Excluding the impact of the Troy and Accountis acquisitions we estimate that amortization expenses for 2008 will be approximately $1.2 million and that stock-based compensation expenses will be approximately $2.9 million.

The Company's guidance for the first quarter of 2008 and full-year 2008 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 are being evaluated by the Company's management under evolving accounting standards which are incapable of assessment in advance.

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