Fundtech posted quarterly revenues of $36.0 million, an 18% increase year-over-year, compared to third quarter revenues of $30.6 million in 2009, and a 3% increase compared to second quarter 2010 revenues of $34.8 million.

On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $2.9 million, or $0.19 per diluted share, for the third quarter of 2010 compared with net income of $1.6 million, or $0.10 per diluted share, in the third quarter of 2009, and net income of $2.4 million, or $0.15 per diluted share, in the second quarter of 2010.

Excluding stock-based compensation, amortization of intangibles, and deferred taxes, Fundtech's adjusted (non-GAAP) net income for the third quarter of 2010 was $4.1 million, or $0.26 per diluted share, compared with $2.8 million, or $0.18 per diluted share, in the third quarter of 2009 and $3.6 million, or $0.22 per diluted share, in the second quarter of 2010. (See Schedule A attached to this news release -- Reconciliation to GAAP).
"The third quarter was another record revenue quarter for us as we continue to solidify our position as the leading provider of payment solutions to the high end of the market," said Fundtech CEO Reuven BenMenachem. "For the first nine months of 2010, revenues grew year over-year by 23%, Operating income grew by 485% and Adjusted EBITDA grew year over-year 69% from $10.2 million to $17.2 million. Our improved profitability is not coming at the expense of our investments in our next generation SOA based products. I believe that these investments in our payments, cash management and messaging products will pave the way for continued growth in the years to come."

Other Highlights:
• During the third quarter of 2010 Fundtech closed 124 new deals and added 8 new bank customers.
• During the third quarter of 2010 Fundtech closed 16 new system sales with banks, including 3 US Payments, 1 Global CASHplus, 1 PAYplus for CLS and 11 for BBP's products.
• For the nine months ended September 30, 2010, operating cash flows were $24 million compared to $13.8 million in the first nine months of 2009.
• During the third quarter of 2010 Fundtech acquired 169,000 ordinary shares in consideration for $2.2 million as part of its share repurchase program.
• In October 2010 the Israeli courts approved Fundtech's previously announced petition to permit the repurchase of Ordinary Shares limited to an additional investment of $15 million.

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.

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.

We are presenting Fundtech's 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.

Guidance

The financial guidance provided is current as of today only and Fundtech undertakes no obligation to update its estimates.

For the year 2010 Fundtech is increasing its guidance as follows:
• Fundtech estimates that revenues for 2010 will be between $140.2 million and $141.2 million compared to the prior guidance of $138 million and $140 million; that GAAP net income per diluted share will be between $0.59 and $0.63 compared to prior guidance of $0.51 and $ 0.57; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses and deferred taxes, will be between $0.88 and $0.92 compared to prior guidance of $0.79 and $0.85.
For the fourth quarter of 2010 Fundtech is providing the following guidance:
• Fundtech estimates that fourth quarter revenues will be between $36 million and $37 million; that GAAP net income per diluted share will be between $0.16 and $0.20; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, and deferred taxes, will be between $0.24 and $0.28.
• Fundtech estimates that financial income for the fourth quarter will be zero and that tax expenses, excluding deferred taxes, will be approximately $0.5 million.
• Fundtech estimates that quarterly amortization expenses for the fourth quarter of 2010 will be approximately $0.4 million and that stock-based compensation expenses will be approximately $0.7 million.
• Fundtech estimates that the number of shares used for the calculation of quarterly net income per share will be 16 million shares.

Fundtech's guidance 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.