================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 1, 1999
FUNDTECH LTD.
(Exact Name of Registrants as Specified in their Charters)
ISRAEL
(State or Other Jurisdiction of Incorporation)
333-08304 N/A
(Commission File Number) (I.R.S. Employer Identification No.)
C/O FUNDTECH CORP.
30 MONTGOMERY STREET, SUITE 501
JERSEY CITY, NEW JERSEY 07302
(Address of Principal Executive Offices) (Zip Code)
(201) 946-1100
(Registrants' Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE>
Item 2. Acquisition or Disposing of Assets.
Fundtech Ltd. (the "Company") hereby amends the following items,
financial statements, exhibits or other portions of its Current
Report on Form 8-K dated June 29, 1999 (the "Initial Report"), relating
to the Company's consummation of the purchase of all of the outstanding
shares of Biveroni Batschelet Partners AG ("BBP") from the shareholders
of BBP to include certain financial information omitted from the
Initial Report pursuant to Item 7(a)(4) of Form 8-K.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
See Exhibit 20.1 for the audited financial statements of Biveroni Batschelet
Partners AG.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed balance sheet was derived from
Fundtech's historical consolidated balance sheet and the historical balance
sheet of Biveroni Batschelet Partners AG. ("BBP") as of March 31, 1999. The
unaudited pro forma condensed statements of operations for the three month
period ended March 31, 1999 and for the year ended December 31, 1998 were
derived from Fundtech's historical consolidated statements of operations and the
historical statements of operations of "BBP" for the three month period ended
March 31, 1999 and for the year ended December 31, 1998. The unaudited pro forma
financial statements reflect the pro forma effects of the acquisitions of "BBP".
These unaudited pro forma financial statements give effect to the acquisitions
as if they had occurred on January 1, 1998 for the statements of operations and
as of March 31, 1999 for the balance sheet. The pro forma consolidated financial
statements do no purport to represent what Fundtech's results of operations or
financial position actually would have been if the acquisition had occurred on
or as of such dates and are not necessarily indicative of future operating
results or financial position. The unaudited pro forma condensed consolidated
financial statements are based upon, and should be read in conjunction with, the
historical consolidated financial statements of Fundtech Ltd., including notes
thereto, included in its annual Report on Form 10-K for the year ended December
31, 1998 and its unaudited historical interim financial statements including
notes thereto, included in its Quarterly Report on Form 10-Q for the period
ended March 31, 1999 and the audited annual historical financial statements and
the unaudited interim historical financial statements of "BBP", and the notes
thereto included in this Current Report on Form 8-K.
The acquisition of "BBP" has been accounted for using the purchase method of
accounting and on available financial information and certain estimates and
assumptions set forth in the notes to the unaudited pro forma consolidated
combined financial statements. Under the purchase method of accounting, the
purchase price is allocated to the fair value of the tangible and identifiable
intangible assets acquired and liabilities assumed. The pro forma adjustments
related to the "BBP" acquisition are based on preliminary assumptions of the
allocation of the purchase price and are subject to revision once appraisals,
evaluations and other studies of the fair value of the assets acquired and
liabilities assumed are completed. Actual purchase accounting adjustments
related to the "BBP" acquisition may differ from the pro forma adjustments
presented in this prospectus.
According to FASB 52, since the functional currency of BBP is the Swiss franc,
the historical financial statements of BBP have been translated to U.S. dollars
using the current rate method.
3
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEETS AT MARCH 31, 1999
<TABLE>
<CAPTION>
Fundtech Acquired Pro forma Pro forma
historical business adjustments combined
----------------- ------------------ ------------------ --------------
U.S. dollars in thousands
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 12,014 1,615 (10,403)(1) 3,226
Marketable securities - 940 - 940
Inventories - 10 - 10
Loan to a shareholder - 338 - 338
Trade receivables, net 12,282 633 - 12,915
Deferred income taxes - 36 - 36
Other accounts receivable 1,626 189 - 1,815
----------------- ------------------ ------------------ -----------------
Total current assets 25,922 3,761 (10,403) 19,280
----------------- ------------------ ------------------ -----------------
LONG-TERM TRADE RECEIVABLES 593 - - 593
----------------- ------------------ ------------------ -----------------
FIXED ASSETS, NET 4,740 708 - 5,448
----------------- ------------------ ------------------ -----------------
OTHER ASSETS 2,886 - 9,796(3) 12,682
----------------- ------------------ ------------------ -----------------
34,141 4,469 (607) 38,003
================= ================== ================== =================
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Trade payables 2,221 122 - 2,343
Other accounts payable and accrued expenses 4,290 3,493 - 7,783
Proposed dividend - 54 - 54
----------------- ------------------ ------------------ -----------------
Total current liabilities 6,511 3,669 - 10,180
----------------- ------------------ ------------------ -----------------
LONG-TERM LIABILITIES:
Deferred tax liabilities - 41 - 41
Other liabilities 71 - - 71
----------------- ------------------ ------------------ -----------------
71 41 - 112
----------------- ------------------ ------------------ -----------------
SHAREHOLDERS' EQUITY (DEFICIENCY):
Ordinary shares 34 540 2,414(2) (6) 2,988
Additional paid-in capital 42,358 - - 42,358
Deferred compensation (196) - - (196)
Retained earnings (accumulated deficit) (14,637) 219 (3,021)(3) (6) (17,439)
----------------- ------------------ ------------------ -----------------
Total shareholders' equity (deficiency) 27,559 759 (607) 27,711
----------------- ------------------ ------------------ -----------------
34,141 4,469 (607) 38,003
================= ================== ================== =================
</TABLE>
4
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 1999
<TABLE>
<CAPTION>
Fundtech Acquired Pro forma Pro forma
historical business adjustments combined
---------------- ---------------- ----------------- -----------------
U.S. dollars in thousands
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues 7,901 2,270 - 10,171
Cost of revenues 2,051 510 - 2,561
---------------- ---------------- ----------------- -----------------
Gross profit 5,850 1,760 - 7,610
Operating expenses:
Software development, net 2,337 404 - 2,741
Selling and marketing, net 1,095 222 - 1,317
General and administrative 748 202 288(5) 1,238
---------------- ---------------- ----------------- -----------------
Total operating expenses 4,180 828 288 5,296
Operating income 1,670 932 - 2,314
Financial income (expenses), net 124 1 (115)(4) 10
Other expenses, net - (13) - (13)
Income taxes - (247) - (247)
---------------- ---------------- ----------------- -----------------
Net income for the period 1,794 673 (403) 2,064
================ ================ ================= =================
Basic earnings per share 0.17 0.19
================ =================
Diluted earnings per share 0.16 0.18
================ =================
Shares used in computing:
Basic earnings per share 10,846 10,951
================ =================
Diluted earnings per share 11,554 11,659
================ =================
</TABLE>
5
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Fundtech Acquired Pro forma Pro forma
historical business adjustments combined
---------------- ---------------- ----------------- -----------------
U.S. dollars in thousands
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues 23,132 4,600 - 27,732
Cost of revenues 6,418 1,598 - 8,016
---------------- ---------------- ----------------- -----------------
Gross profit 16,714 3,002 - 19,716
Operating expenses:
Software development, net 6,636 1,563 - 8,199
Selling and marketing, net 2,970 608 - 3,578
General and administrative 2,471 1,017 1,152(5) 4,640
In-process research and development
write-off 16,600 - - 16,600
---------------- ---------------- ----------------- -----------------
Total operating expenses 28,677 3,188 1,152 33,017
Operating loss (11,963) (186) - (13,301)
Financial income (expenses), net 571 4 (489) (4) 86
Other expenses, net - (25) - (25)
Income taxes - 26 - 26
---------------- ---------------- ----------------- -----------------
Loss for the year (11,392) (181) (1,641) (13,214)
================ ================ ================= =================
Basic loss per share (1.12) (1.29)
================ =================
Diluted loss per share (1.12) (1.29)
================ =================
Shares used in computing:
Basic loss per share 10,171 10,276
================ =================
Diluted loss per share 10,171 10,276
================ =================
</TABLE>
6
<PAGE>
NOTES TO UNAUDITED PRO-FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(1) Reflects payment at the time of the closing of the acquisition in the form
of a cash consideration of $ 9,851 and other estimated acquisition expenses
of $ 552.
(2) Reflects amount of $ 2,954 for shares issued in connection with the
acquisition.
(3) The purchase price has been allocated as follows (U.S. dollars in
thousands):
In-process research and development 2,802
Goodwill 9,796
Tangible assets and liabilities of the acquired business, net 759
---------
13,357
=========
The total purchase price paid in connection with the acquisition has been
allocated in the accompanying pro forma information to the tangible and
identifiable intangible assets and liabilities of BBP based upon the
Company's estimates of their values. In connection with the allocation of
the purchase price, the pro forma combined condensed balance sheet
information included the write off of $ 2,802 thousand representing the
estimated value of the in process research and development ("R&D") of
software acquired from "BBP" for which technological feasibility has not
yet been established and for which no alternative future use exists. The
write off is not reflected in the unaudited pro forma consolidated combined
statement of earnings since pro forma adjustments are limited to those
events that are expected to have continuing impact, however it is reflected
as an increase in the accumulated deficit in the pro forma consolidated
combined balance sheet as of March 31, 1999. The allocation of the purchase
price for the acquisition is subject to revision when additional
information concerning assets and liability valuation is obtained. In the
opinion of the Company's management, the assets and liability valuations
for the acquisition will not be materially different from the pro forma
financial data presented.
(4) Reflects a pro forma adjustment in the amount of $ 489 for interest expense
from Janury 1, 1998 until the IPO date (March 13, 1998) and then a
reduction of interest income from the IPO date until December 31, 1998 and
a reduction of interest income of $ 115 from January 1, 1999 until March
31, 1999, respectively (which has been assumed to be 5.5% per annum on
loans and 4.5% per annum on investments) on $ 10,403 of loans and
investments assumed to finance the acquisition.
(5) Reflects a pro forma increase in amortization expenses associated with the
acquired goodwill of approximately $ 9,796 over its estimated useful life
of up to 8.5 years resulting from the application of purchase accounting
method (the increases were $ 1,152 and $ 288 for the year ended December
31, 1998 and for the three months ended March 31, 1999, respectively).
(6) Reflects the elimination of BBp's capital stock and retained earnings.
7
<PAGE>
(c) Exhibits
Exhibit No. Exhibit
2.1 Share Purchase Agreement, dated as of June 1, 1999, by and
among Fundtech Ltd., Biveroni Batschelet Partners AG and the
Shareholders listed on Schedule I thereto.*
2.2 Escrow Agreement, dated June 16, 1999, by and among Fundtech
Ltd., Fundtech Netherlands B.V.i.o., Dr. Marco Muller and
Jon A. Biveroni.*
20.1 Audited Financial Statements of Biveroni Batschelet Partners
AG.
23.1 Consent of Kost, Forer & Gabbay.
- --------------------
* Previously filed as an exhibit to the Initial Report
The Company agrees to furnish supplementally to the Commission, upon request, a
copy of any exhibit or schedule to the Agreement not filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FUNDTECH LTD.
(Registrant)
By: /s/ Reuven Ben-Menachem
-------------------------------
Date: July 21, 1999 Reuven Ben-Menachem
Chairman and Chief Executive Officer
8
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
----------- -------
2.1 Share Purchase Agreement, dated as of June 1, 1999,
by and among Fundtech Ltd., Biveroni Batschelet
Partners AG and the Shareholders listed on Schedule I
thereto.*
2.2 Escrow Agreement, dated June 16, 1999, by and among
Fundtech Ltd., Fundtech Netherlands B.V.i.o., Dr.
Marco Muller and Jon A. Biveroni.*
20.1 Audited Financial Statements of Biveroni Batschelet
Partners AG.
23.1 Consent of Kost, Forer & Gabbay.
- --------------------
* Previously filed as an exhibit to the Initial Report
9
Exhibit 20.1
BIVERONI BATSCHELET PARTNERS AG
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998
IN SWISS FRANCS
INDEX
Page
---------------
Report of Independent Auditors F-2
Balance Sheets F-3 - F-4
Statements of Operations F-5
Statements of Changes in Shareholders' Equity F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8 - F-17
- - - - - - - - - - -
<PAGE>
ERNST & YOUNG
KOST FORER & GABBAY
REPORT OF INDEPENDENT AUDITORS
To the shareholders of
BIVERONI BATSCHELET PARTNERS AG
We have audited the accompanying balance sheet of Biveroni Batschelet
Partners AG as of December 31, 1998, and the related statements of operations,
changes in shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance as to whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above, present
fairly, in all material respects, the financial position of Biveroni Batschelet
Partners AG as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles in the United States.
Tel-Aviv, Israel KOST FORER & GABBAY
June 30, 1999 A Member of Ernst & Young International
F-2
<PAGE>
<TABLE>
<CAPTION>
BIVERONI BATSCHELET PARTNERS AG
BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
(CHF in thousands)
December 31, March 31,
1998 1999
------------------ ----------------
Audited Unaudited
------------------ ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 988 2,390
Marketable securities (Note 2d) 344 1,391
Inventories 25 15
Loan to shareholders (Note 3) 500 500
Trade receivables (net of allowance - $ 65 in December 31, 1998) 782 699
Unbilled receivables 221 238
Deferred income taxes (Note 8d) 370 53
Other accounts receivable (Note 4) 119 280
------------------ ----------------
Total current assets 3,349 5,566
------------------ ----------------
FIXED ASSETS, NET (Note 5) 950 1,048
------------------ ----------------
4,299 6,614
================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
BIVERONI BATSCHELET PARTNERS AG
BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
(CHF in thousands)
December 31, March 31,
1998 1999
------------------ ----------------
Audited Unaudited
------------------ ----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables 334 180
Deferred revenues 1,679 3,760
Other payables and accrued expenses (Note 6) 1,980 1,409
Dividend declared - 80
------------------ ----------------
Total current liabilities 3,993 5,429
------------------ ----------------
LONG-TERM LIABILITIES:
Deferred tax liabilities (Note 8d) 71 61
------------------ ----------------
SHARHOLDERS' EQUITY (Note 7):
Ordinary shares 800 800
Appropriated retained earnings 149 169
Non-appropriated retained earnings (accumulated deficit) (714) 155
------------------ ----------------
Total shareholders' equity 235 1,124
------------------ ----------------
4,299 6,614
================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
BIVERONI BATSCHELET PARTNERS AG
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
(CHF in thousands, except per share data)
Three months ended
Year ended March 31,
December 31, -------------------------------------
1998 1998 1999
----------------- ---------------- ----------------
Audited Unaudited
----------------- -------------------------------------
<S> <C> <C> <C>
Revenues:
Software licensing fees 2,250 484 1,943
Maintenance and service fees 3,784 747 1,275
Hardware sales 641 137 52
----------------- ---------------- ----------------
Total revenues 6,675 1,368 3,270
----------------- ---------------- ----------------
Cost of revenues:
Software licensing costs 184 16 173
Maintenance and service costs 1,603 249 517
Hardware costs 531 106 45
----------------- ---------------- ----------------
Total cost of revenues 2,318 371 735
----------------- ---------------- ----------------
Gross profit 4,357 997 2,535
----------------- ---------------- ----------------
Operating expenses:
Software development 2,267 429 582
Selling and marketing 882 158 320
General and administrative 1,476 258 291
----------------- ---------------- ----------------
Total operating expenses 4,625 845 1,193
----------------- ---------------- ----------------
Operating income (loss) (268) 152 1,342
Financial expenses, net (Note 9c) (40) - (15)
Other income (expenses), net 7 - (2)
Income taxes (benefit) (Note 8b) (38) (21) 356
----------------- ---------------- ----------------
Net income (loss) for the period (263) 173 969
================= ================ ================
Basic earnings (loss) per share (0.33) 0.22 1.21
================= ================ ================
Diluted earnings (loss) per share (0.33) 0.22 1.21
================= ================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
BIVERONI BATSCHELET PARTNERS AG
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------
(CHF in thousands)
Non-appropriated
Appropriated retained earnings Total
Ordinary shares retained (accumulated shareholders'
Shares Amount earnings deficit) equity
-------------- ------------ ---------------- --------------------- ----------------
Audited
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance as of January 1, 1998 800 800 141 (403) 538
Dividend paid - - (40) (40)
Appropriated retained earnings - - 8 (8) -
Loss for the year - - (263) (263)
-------------- ------------ ---------------- --------------------- ----------------
Balance as of
December 31, 1998 800 800 149 (714) 235
============== ============ ================ ===================== ================
Unaudited
---------------------------------------------------------------------------------------
Balance as of January, 1, 1999 800 800 149 (714) 235
Dividend declared - - - (80) (80)
Appropriated retained earnings - - 20 (20) -
Net income for the period - - - 969 969
-------------- ------------ ---------------- --------------------- ----------------
Balance as of March 31, 1999 800 800 169 155 1,124
============== ============ ================ ===================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
BIVERONI BATSCHELET PARTNERS AG
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------------
(CHF in thousands)
Three months ended
Year ended March 31,
December 31, -------------------------------------
1998 1998 1999
----------------- ---------------- ----------------
Audited Unaudited
----------------- -------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) for the period (263) 173 969
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 399 76 122
Deferred taxes, net (112) (49) 307
Marketable securities (344) - (1,047)
Capital loss (gain) on sale of fixed assets 7 - -
Decrease (increase) in inventories (25) - 10
Increase in trade receivables and unbilled
receivables (682) (106) 66
Decrease (increase) in other accounts receivable (56) (111) (161)
Increase (decrease) in trade payables 29 (165) (154)
Increase (decrease) in other payables and
accrued expenses 839 108 (571)
Increase in deferred revenues 1,592 2,015 2,081
----------------- ---------------- ----------------
Net cash provided by operating activities 1,384 1,941 1,622
----------------- ---------------- ----------------
Cash flows from investing activities:
Loan to shareholders (353) - -
Purchase of fixed assets (569) (147) (220)
Proceeds from sale of fixed assets 10 10 -
----------------- ---------------- ----------------
Net cash used in investing activities (912) (137) (220)
----------------- ---------------- ----------------
Cash flows from financing activities:
Dividend paid (40) - -
----------------- ---------------- ----------------
Net cash used in financing activities (40) - -
----------------- ---------------- ----------------
Increase in cash and cash equivalents 432 1,804 1,402
Cash and cash equivalents at the beginning
of the period 556 556 988
----------------- ---------------- ----------------
Cash and cash equivalents at the end of the period 988 2,360 2,390
================= ================ ================
Supplemental disclosure of cash flows activities:
Cash paid during the period for:
Income taxes 27 19 5
================= ================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
NOTE 1:- GENERAL
Biveroni Batschelet Partners AG was incorporated in Switzerland in
1984, and commenced operations at approximately that time.
Biveroni Batschelet Partners AG ("the Company") designs, develops,
markets, supports and operates systems for automatic processing
and transmitting of data in the finance industry.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with
generally accepted accounting principles in the United States.
a. Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
b. Financial statements in Swiss francs:
The Company's sales are made in Swiss francs. In addition,
all of the Company's costs are incurred in Swiss francs.
Since the Swiss franc is the primary currency in the
economic environment in which the Company operates, the
Swiss franc is its functional currency and, accordingly,
monetary accounts maintained in currencies other than the
Swiss franc are remeasured using the foreign exchange rate
at the balance sheet date. Operational accounts and
non-monetary balance sheet accounts are measured and
recorded at the rate in effect at the date of the
transaction.
c. Cash equivalents:
Cash equivalents are short-term, highly liquid investments
that are readily convertible to cash, and purchased with
maturities of three months or less.
d. Marketable securities:
The Company accounts for its investments using Statement of
Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity
Securities". This standard requires that certain debt and
equity securities be adjusted to market value at the end of
each accounting period. Unrealized market value gains and
losses are charged to earnings, if the securities are
traded for short-term profit. Otherwise, such unrealized
gains and losses are charged or credited to a separate
component of shareholders' equity.
As of December 31, 1998, all securities covered by SFAS 115
were designated as trading securities. Accordingly, these
securities are carried at fair value, based upon the quoted
market price of those investments. Net realized and
unrealized gains and losses on these securities are
included in financial expenses.
F-8
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
e. Exchange rates:
Data concerning the CHF/U.S. dollar exchange rate are
presented below:
Exchange rate
of CHF
------------------
At the end of the year:
1997 1.4554
1998 1.37
Rate of change during the year (5.87%)
f. Trade receivables:
Trade receivables include amounts billed to clients and
various amounts due from transactions arising in the
ordinary course of business. Management periodically
evaluates the collectibility of these receivables and
adjusts the allowance for doubtful accounts to reflect the
amounts estimated to be uncollectible.
g. Fixed assets:
Fixed assets are stated at cost. Depreciation is calculated
by the straight-line method over the estimated useful lives
of the assets, at the following annual depreciation rates:
%
---------------------------
Office furniture and equipment 6 - 15
Computers and software 33
Leasehold improvements Over the term of the lease
h. Deferred taxes:
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) 109,
"Accounting for Income Taxes". This Statement prescribes
the use of the liability method whereby deferred tax asset
and liability account balances are determined based on
differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the
differences are expected to reverse.
F-9
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
i. Revenue recognition:
The Company generates revenues from licensing the rights to
use its software products directly to end-users. The
Company also generates revenues from sales of professional
services, including consulting, implementation, training
and maintenance.
Revenues from software license agreements are recognized,
in accordance with Statement Of Position (SOP) 97-2
"Software Revenue Recognition", upon delivery of the
software when collection is probable; all license payments
are due within one year, the license fee is otherwise fixed
or determinable, vendor-specific evidence exists to
allocate the total fee to the elements of the arrangement
and persuasive evidence of an arrangement exists.
Revenues from software licenses that require significant
customization, integration and installation are recognized
using contract accounting by the percentage of completion
method based on the relationship of actual costs incurred
to total estimated costs.
Revenues from maintenance and services are recognized over
the life of the maintenance agreement or at the time that
services are rendered.
Revenues from hardware sales are recognized upon shipment.
j. Software development:
Software development costs incurred in the process of
developing product improvements or new products, are
charged to expenses as incurred.
SFAS No. 86 "Accounting for the Costs of Computer Software
to be Sold, Leased or Otherwise Marketed" requires
capitalization of certain software development costs
subsequent to the establishment of technological
feasibility.
Based on the Company's product development process,
technological feasibility is established upon completion of
a working model. Costs incurred by the Company between
completion of the working model and the point at which the
product is ready for general release have been
insignificant. Therefore, all research and development
costs have been expensed.
k. Concentration of credit risks:
SFAS No.105, "Disclosure of Information About Financial
Instruments with Off-Balance-sheet Risk and Financial
Instruments with Concentrations of Credit Risk", requires
disclosure of any significant off-balance sheet and credit
risk concentrations. The Company has no significant
off-balance sheet concentration of credit risk, such as
foreign exchange contracts, option contracts or other
foreign hedging arrangements.
F-10
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
Financial instruments that potentially subject the Company
to concentrations of credit risk consist principally of
cash equivalents, marketable securities and accounts
receivable. The Company's cash and cash equivalents and
short-term bank deposits are invested in deposits with
major banks in Switzerland. Management believes that the
financial institutions holding the Company's investments
are financially sound, and accordingly, minimal credit risk
exists with respect to these investments. The Company's
accounts receivable are derived from sales to customers
located mainly in Switzerland. The Company generally does
not require collateral; however, in certain circumstances,
the Company may require letters of credit, other collateral
or additional guarantees. The Company performs ongoing
credit evaluations of its customers and to date has not
experienced any material losses.
The Company's marketable securities include investments in
debentures of several corporations. Management believes
that those corporations are financially sound, the
portfolio is well diversified, and accordingly, minimal
credit risk exists with respect to said marketable
securities.
l. Earnings (loss) per share:
The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per
Share", (Statement 128) which requires the presentation of
basic and diluted earnings per share. Basic earnings per
share excludes dilution and is computed by dividing income
available to holders of Ordinary shares by the weighted
average number of Ordinary shares outstanding for the
period. The Company does not have any dilutive potential
Ordinary shares.
m. Fair value of financial instruments:
The following methods and assumptions were used by the
Company in estimating its fair value disclosures for
financial instruments:
Cash and cash equivalents and short-term bank deposits -
The carrying amounts of these items approximate their fair
value due to the short-term maturity of such instruments.
Marketable securities - The fair value of marketable
securities is based on quoted prices.
F-11
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
n. Comprehensive income:
As of January 1, 1998, the Company adopted FASB Statement
130, "Reporting Comprehensive Income". Statement 130
establishes new rules for the reporting and display of
comprehensive income and its components. The adoption of
this Statement had no impact on the Company's net income or
shareholders' equity for the year ended December 31, 1998
or the three month periods ended March 31, 1998 and 1999.
o. Interim financial statements:
In the opinion of management, the unaudited financial
statements as of March 31, 1999, and for the three month
periods ended March 31, 1998, and March 31, 1999 have been
prepared in accordance with generally accepted accounting
principles for interim financial information and on the
same basis as the audited financial statements and include
all significant adjustments, consisting only of normal
recurring adjustments that are necessary for the fair
presentation of the results of the interim periods. The
data disclosed in these notes to the combined financial
statements for these periods are also unaudited. Operating
results from the interim periods are not necessarily
indicative of the results that may be expected for the
entire year.
NOTE 3:- LOAN TO SHAREHOLDERS
The loan was extended to two shareholders who own 45.75% and 8% of
the Company's shares, respectively. The loan is in Swiss francs
and bears interest of 2% being paid at the end of each month.
NOTE 4:- OTHER RECEIVABLES
December 31,
1998
------------------
Employees 88
Customer advances 6
Government authorities 2
Other 23
------------------
119
==================
F-12
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
NOTE 5:- FIXED ASSETS
December 31,
1998
------------------
Cost:
Office furniture 243
Computers and software 1,620
Equipment 32
------------------
1,895
------------------
Accumulated depreciation:
Office furniture 108
Computers and software 820
Equipment 17
------------------
945
------------------
Depreciated cost 950
==================
Depreciation expenses for the year
ended December 31, 1998 are $399.
NOTE 6:- OTHER PAYABLES AND ACCRUED EXPENSES
Employees and payroll accruals 1,317
Accrued vacation and employee benefits 384
Accrued expenses 89
Government authorities 69
Income tax payable 72
Others 49
------------------
1,980
==================
F-13
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
NOTE 7:- SHARE CAPITAL
a. Composition of share capital:
December 31, 1998
-------------------------------------
Issued and
Authorized outstanding
---------------- ----------------
Number of shares
-------------------------------------
Shares of CHF 1,000 par value:
Ordinary shares 800 800
================ ================
The Ordinary shares confer upon the holders the right to
receive notice to participate and vote in general meetings
of the Company and the right to receive dividends, if
declared.
b. Appropriated retained earnings:
According to the Swiss Code of Obligation, 5% of the net
income shall be allocated to the general reserve, up to 20%
of the outstanding share capital.
In addition, 10% of the amounts that are distributed as a
share of profits, after payment of a dividend of 5%, shall
be allocated to the general reserve.
To the extent it does not exceed half of the share capital,
the general reserve shall only be used to cover losses, or
for measures bound to maintain the Company in bad business
times to counteract unemployment, or to soften its
consequences.
As of December 31, 1998, the total general reserve is in
the amount of CHF 35. In 1999, the Company increased the
general reserve by CHF 9.50.
Aside from the abovementioned reserve, as of December 31,
1998, the Company allocated another CHF 114 as an
additional reserve. The Company is restricted from
withdrawing any portion of this reserve as a dividend. It
was management's decision to allocate additional funds to
beyond what it is obligated to allocate pursuant to the
abovementioned Code.
F-14
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
c. Dividends:
In the event that cash dividends are declared in the
future, such dividends will be paid in CHF, out of
the retained earnings.
During the year ended December 31, 1998, the Company
paid a dividend to its shareholders in the total
amount of CHF 40 out of the 1997 net income.
In February 1999, the Company declared a further
dividend of CHF 80 out of the 1998 net income, to be
distributed to its shareholders. The Company paid
these dividends in April 1999.
NOTE 8:- TAXES ON INCOME
a. Tax assessments:
The Company received final tax assessments up to and
including the 1996 tax year.
b. Composition of income taxes:
Year ended
December 31,
1998
------------------
Income taxes (benefit):
Current taxes 74
Deferred taxes (112)
------------------
Total (38)
==================
F-15
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
c. Reconciliation of the theoretical tax expenses:
A reconciliation between the theoretical income tax,
assuming all income is taxed at the statutory rate
applicable to income of the Company and the actual income
tax as reported in the statement of operations, is as
follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1998
------------------
<S> <C>
Pre tax loss (301)
Statutory tax 25%
==================
Theoretical tax benefit (75)
Tax in respect to prior years 15
Items for which deferred taxes were not recognized (13)
Expenses not recognized for tax purposes 35
------------------
Income taxes 38
==================
d. The following is a summary of amounts related to deferred
income taxes in accordance with statement No. 109 of the
FASB:
December 31,
1998
------------------
Deferred tax assets - current:
Reserves and allowance (50)
Deferred revenues 420
------------------
370
==================
Deferred tax liabilities - non-current:
Depreciation (71)
==================
</TABLE>
NOTE 9: - SELECTED STATEMENTS OF OPERATIONS DATA
a. Summary information about geographical destinations:
The Company attributes revenues from external customers on
the basis of where the products are sold. All revenues are
from sales to customers in Europe.
F-16
<PAGE>
BIVERONI BATSCHELET PARTNERS AG
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(CHF in thousands)
b. Major customers data by percentage of total revenues:
Year ended
December 31,
1998
------------------
Customer A 10%
==================
c. Financial expenses:
Financial expenses:
Losses from marketable securities, net 44
Interest and other 4
------------------
48
------------------
Financial income:
Interest and other 8
------------------
Financial expenses 40
==================
NOTE 10:- SUBSEQUENT EVENTS
On June 15, 1999, Fundtech Ltd. acquired the Company in
consideration of CHF 20,000, out of which 75% is payable in cash
and 25% is payable in Fundtech Ordinary shares.
- - - - - - - - - - - - -
F-17
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-9230 and Form S-8 No. 333-09380) pertaining to the Employee
Stock Option Plans of Fundtech Ltd. and the Fundtech Corporation Employee 401(k)
Plan of our report dated June 30, 1999, with respect to the financial statements
of Biveroni Batschelet Partners AG included in this Current Report (Form 8-K/A)
of Fundtech Ltd. filed with the Securities and Exchange Commission.
KOST, FORER and GABBAY
A member of Ernst & Young International
Tel Aviv, Israel
July 21, 1999
