RA'ANANA, Israel, Nov. 18, 2010 (GLOBE NEWSWIRE) -- Retalix ® Ltd. (Nasdaq:RTLX), a leading provider of Software and Services for retailers and distributors, announced today results for the third quarter ended September 30, 2010. Summarized financial highlights for the three months ended September 30, 2010:
  • Total Revenues were $52.9 million, compared to $50.1 million in the third quarter of 2009.  
  • Adjusted Income from Operations (Non-GAAP)* was $5.3 million, compared to $4.9 million in the third quarter of 2009.  
  • Income from Operations (GAAP) was $3.4 million, compared to $3.5 million in the third quarter of 2009.   
  • Financial Income was $2.7 million compared to a financial income of $1.5 million in the third quarter of 2009. Included in the financial income is higher interest income in 2010, the impact of currency fluctuations on the Company's non-dollar assets and the value of the Company's forward currency transactions.  
  • Adjusted Net Income (Non-GAAP)* was $6.5 million, or $0.27 per diluted share, compared to $5.0 million, or $0.24 per diluted share, in the third quarter of 2009. The per share calculation includes an increase in the weighted diluted shares outstanding to 24.2 million for the quarter versus 20.4 million shares in the third quarter of 2009 reflecting a private placement completed in November 2009.  
  • GAAP Net Income was $4.7 million, or $0.19 per diluted share, versus a GAAP Net Income of $4.2 million, or $0.20 per diluted share, in the third quarter of 2009. The per share figures again reflect the increase in shares outstanding mentioned above.   
  • Cash Flow from Operating Activities generated $13.3 million during the third quarter of 2010, including $7.5 million related to a tax refund.  
  • Balance Sheet grew to about $120 million in cash and cash equivalents, deposits and marketable securities with negligible debt as of September 30, 2010.

Shuky Sheffer, Chief Executive Officer of Retalix, said, "We again achieved growth in total revenues and maintained our level of profitability while continuing to build our growth engines. We are winning new clients and successfully delivering programs to our customers while also focusing on building our demand-driven products for the store platform and supply chain. We are rolling out new unique service offerings designed to leverage our domain expertise and provide distinct advantages to our customers. Last week we hosted our largest and most successful users' conference in the history of Retalix. We shared with our customers, partners and leading industry analysts our view of the markets and our strategy for the future and received very positive feedback about our direction."

Hugo Goldman, the Company's Chief Financial Officer, said, "We had solid financial results in the third quarter of 2010 compared to the previous quarter and year-ago period. We are continuing to add to our headcount to enhance our customer facing teams and build our services organization in addition to realigning internal resources to focus on the best opportunities. At the same time we maintained a 10% non-GAAP operating margin and generated $13.3 million in cash flow from operating activities during the third quarter. Income from operations (GAAP) was at $3.4 million, similar to the second quarter, and includes an increase in share based compensation costs versus year-ago period. Net Income GAAP and non-GAAP both showed healthy gains over the year-ago periods. Further we continue to maintain a very strong balance sheet with about $120 million in cash and cash equivalents, and very negligible debt."

Outlook for FY 2010

Sheffer added, "We are continuing to make progress executing on our plans. We are reiterating the guidance we gave in August. We expect total revenues for 2010 of between $200 and $210 million and similar or better profitability than 2009. Overall we are satisfied by our progress and we are on track with our goals for 2010." 

Conference Call and Webcast Information

Retalix will be holding a conference call to discuss results for the third quarter 2010 on Thursday, November 18 th at 9:00 am Eastern Time (4:00 pm Israel Time). This conference can be accessed by all interested parties through the Company's web site at http://www.retalix.com/conference-call.cfm, which web site is not part of this press release. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Retalix's web site.

About Retalix

Retalix is an independent provider of software solutions to retailers and distributors worldwide. Retalix solutions serve the needs of grocery chains, convenience and fuel retailers, food and consumer goods distributors and independent grocers. The Company offers a portfolio of software applications that automate and synchronize essential retail and supply chain operations, encompassing stores, headquarters and warehouses. The Company's International headquarters are located in Ra'anana, Israel, and its American headquarters are located in Dallas, Texas. For more information about Retalix, please visit www.retalix.com, the contents of which are not part of this press release.

Retalix is a registered trademark of Retalix Ltd. in the United States and in other countries. The names of actual companies, products and services mentioned herein may be the trademarks of their respective owners.

The Retalix Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5937

* Note Regarding the Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Retalix uses Non-GAAP measures of operating income, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity based compensation, indirect private placement costs, and amortization of intangibles related to acquisitions, as well as impairment of goodwill when applicable. Retalix's management believes the Non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future. The presentation of this Non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management also uses both GAAP and Non-GAAP information in evaluating and operating business internally and as such deemed it important to provide this information to investors. Reconciliations between GAAP measures and Non-GAAP measures are contained following the GAAP financial statements in this press release.   

Safe Harbor for Forward-Looking Statements:

Except for statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. For example, the statements regarding our "Outlook for FY 2010" including our expected results, expected demand and opportunities, future expansion of product offerings and services, and future strategic plans and positioning, all involve forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Retalix, including revenues, income and expenses, to be materially different from any future results, performance or achievements or other guidance or outlooks expressed or implied by such forward-looking statements. Such factors include risks relating to Retalix's anticipated future financial performance and growth, the performance of the US dollar relative to other currencies, continued roll-outs with existing customers, continued interest in Retalix's new platforms, the perception by leading retailers of Retalix's reputation, the potential benefits to food and fuel retailers and distributors, expansion into new geographic markets, and other factors over which Retalix may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. Readers are referred to the reports and documents filed by Retalix with the Securities and Exchange Commission, including Retalix's Annual Report on Form 20-F for the year ended December 31, 2009, for a discussion of these and other important risk factors. Except as required by law, Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
RETALIX LTD.
 
CONSOLIDATED STATEMENTS OF INCOME
 
  Nine months ended September 30 Three months ended September 30 Year ended December 31
  2010 2009 2010 2009 2009  
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)  
  U.S. $ in thousands (except per share data)  
REVENUES:            
Product sales 42,988 42,425 15,979 16,026 58,145  
Services 110,597 103,580 36,916 34,120 134,248  
Total revenues 153,585 146,005 52,895 50,146 192,393  
COST OF REVENUES:            
Cost of product sales 26,074 27,605 9,793 11,136 39,560  
Cost of services 65,847 56,562 22,276 18,372 74,564  
Total cost of revenues 91,921 84,167 32,069 29,508 114,124  
GROSS PROFIT 61,664 61,838 20,826 20,638 78,269  
  OPERATING EXPENSES:            
Research and development – net 21,709 20,965 7,308 6,977 28,991  
Selling and marketing 12,308 14,282 3,925 4,404 18,776  
General and administrative 17,972 15,627 6,178 5,702 21,007  
Other (income) expenses – net (1) 36 22 24 (154)  
Indirect private placement costs  -- -- -- -- 1,823  
Total operating expenses 51,988 50,910 17,433 17,107 70,443  
INCOME FROM OPERATIONS 9,676 10,928 3,393 3,531 7,826  
FINANCIAL INCOME, net 1,516 1,572 2,664 1,492 1,757  
INCOME BEFORE TAXES ON INCOME 11,192 12,500 6,057 5,023 9,583  
TAX EXPENSES (2,650) (2,448) (1,283) (838) (3,494)  
INCOME AFTER TAXES ON INCOME 8,542 10,052 4,774 4,185 6,089  
SHARE IN INCOME OF AN ASSOCIATED COMPANY 5 17 3 15 17  
NET INCOME 8,547 10,069 4,777 4,200 6,106  
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (379) (272) (99) (48) (310)  
NET INCOME ATTRIBUTABLE TO RETALIX LTD. 8,168 9,797 4,678 4,152 5,796  
EARNINGS PER SHARE – in U.S. $:            
Basic 0.34 0.48 0.19 0.20 0.28  
Diluted 0.34 0.48 0.19 0.20 0.28  
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF EARNINGS PER SHARE – in thousands:            
Basic 24,094 20,400 24,099 20,406 20,824  
Diluted 24,237 20,425 24,239 20,434 21,020  
 
 
RETALIX LTD.
 
CONDENSED CONSOLIDATED BALANCE SHEET
 
  September 30 December 31
  2010 2009 2009
  (Unaudited) (Audited)
  U.S. $ in thousands
A s s e t s      
CURRENT ASSETS:      
Cash and cash equivalents 60,524 70,317 103,675
Short-term deposits 57,000 -- --
Marketable securities 1,950 50 226
Accounts receivable:      
Trade 61,904 58,562 54,814
Other 4,721 9,228 8,891
Prepaid expenses 4,155 4,995 4,967
Inventories 1,145 1,579 1,496
Deferred income taxes 4,795 5,977 4,957
Total current assets 196,194 150,708 179,026
NON-CURRENT ASSETS :      
Long-term receivables 939 1,288 1,386
Long-term prepaid expenses 622 311 406
Long term investments 493 862 682
Amounts funded in respect of employee rights upon retirement 12,006 10,170 10,621
Deferred income taxes 10,611 11,668 12,150
Other 275 441 269
Total non - current assets 24,946 24,740 25,514
PROPERTY, PLANT AND EQUIPMENT, net 14,720 15,424 15,233
GOODWILL 50,803 50,864 50,803
OTHER INTANGIBLE ASSETS, net of accumulated amortization      
Customer base 10,469 13,270 12,544
Other 1,317 2,036 1,889
  11,786 15,306 14,433
Total assets 298,449 257,042 285,009
   
   
RETALIX LTD.  
   
CONDENSED CONSOLIDATED BALANCE SHEET  
   
  September 30 December 31  
  2010 2009 2009  
  (Unaudited) (Audited)  
  U.S. $ in thousands  
Liabilities and equity        
CURRENT LIABILITIES:        
Short-term loan -- -- 170  
Current maturities of long-term bank loans 393 265 263  
Accounts payable and accruals:        
Trade 4,991 4,396 7,071  
Employees and employee institutions 8,419 9,478 10,114  
Accrued expenses 11,969 11,112 10,908  
Other 1,846 2,333 1,804  
Deferred revenues 20,185 20,717 17,450  
Total current liabilities 47,803 48,301 47,780  
LONG-TERM LIABILITIES :        
Long-term bank loans, net of current maturities -- 412 275  
Long-term deferred revenues 2,746 2,023 2,336  
Employee rights upon retirement 15,970 14,374 14,243  
Deferred income tax 278 271 269  
Institutions 477 483 476  
Total long-term liabilities 19,471 17,563 17,599  
Total liabilities 67,274 65,864 65,379  
EQUITY:        
Share capital -Ordinary shares of NIS 1.00 par value (authorized: September 30, 2010 (unaudited), December 31, 2009 (audited) 50,000,000 shares; September 30, 2009 (unaudited) 30,000,000 shares; issued and outstanding: - September 30, 2010 (unaudited) 24,099,829 Shares; December 31, 2009 (audited) -24,082,582 shares; September 30, 2009 (unaudited) -- 20,406,363 shares 6,358 5,384 6,353  
Additional paid in capital 211,563 177,060 208,574  
Retained earnings  8,543 4,376 375  
Accumulated other comprehensive income  528 697 642  
Total Retalix shareholders' equity 226,992 187,517 215,944  
Non-controlling interest 4,183 3,661 3,686  
Total equity 231,175 191,178 219,630  
Total liabilities and equity 298,449 257,042 285,009  
 
 
RETALIX LTD.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
  Nine months ended September 30 Three months ended September 30 Year ended December 31
  2010 2009 2010 2009 2009
  Unaudited Unaudited Unaudited Unaudited Audited
  U.S. $ in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income 8,547 10,069 4,777 4,200 6,106
Adjustments required to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization 4,503 4,652 1,440 1,561 6,475
Losses from sale of property, plant and equipment -- 44 -- 23 44
Share in income of an associated company (5) (4) (3) (2) (17)
Stock based compensation expenses 2,988 1,623 1,055 461 2,624
Changes in accrued liability for employee rights upon retirement 1,812 408 1,590 616 311
Gains on amounts funded in respect of employee rights upon retirement (408) (797) (555) (1,080) (1,023)
Deferred income taxes -- net 1,738 2,683 787 282 3,209
Net decrease in marketable securities 144 159 80 13 162
Other 175 (5) 3 (33) 13
Changes in operating assets and liabilities:          
Decrease (increase) in accounts receivable:          
Trade (including the non-current portion) (6,777) 13,692 (3,292) (1,717) 17,339
Other (including the non-current portion) 4,822 1,588 4,854 910 2,190
Increase (decrease) in accounts payable and accruals:          
Trade (2,050) (4,302) (1,555) (219) (1,653)
Employees, employee institutions and other (330) 4,079 1,480 1,583 4,102
Decrease (increase) in inventories 346 (542) 187 (529) (456)
Increase (decrease) in long-term institutions 1 (629) -- (2,782) (636)
Increase in deferred revenues 3,143 3,545 2,445 2,836 625
Net cash provided by operating activities - forward 18,649 36,263 13,293 6,123 39,415
 
RETALIX LTD.
           
CONSOLIDATED STATEMENTS OF CASH FLOWS
           
       
  Nine months ended September 30 Three months ended September 30 Year ended December 31
  2010 2009 2010 2009 2009
  Unaudited Unaudited Unaudited Unaudited Audited
  U.S. $ in thousands
Net cash provided by operating activities - brought forward 18,649 36,263 13,293 6,123 39,415
CASH FLOWS FROM INVESTING ACTIVITIES:          
Maturity of marketable debt securities held to maturity -- 490 -- 200 490
Sales of marketable trading debt securities -- 2,535 -- -- 2,535
Investment in Short term deposits (57,000) -- (25,000) -- --
Investment in Available-for-sale marketable securities (1,679) -- -- -- --
Additional investments in subsidiaries --   --   (22)
Purchase of property, plant, equipment and other assets (1,657) (2,267) (620) (1,307) (2,985)
Proceeds from sale of property, plant and equipment -- 120 -- 50 120
Amounts funded in respect of employee rights upon retirement, net (976) (678) (390) (282) (913)
Changes in restricted deposits (179)   (249)   (184)
Long-term loans collected from employees -- 14 -- -- 14
Net cash provided by (used in) investing activities (61,491) 214 (26,259) (1,339) (945)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayment of long-term bank loans (123) (119) -- -- (249)
Issuance of share capital and warrants to shareholders -- -- -- -- 31,468
Issuance of share capital to employees and non-employees resulting from exercise of options 3 4 (4) -- 20
short-term loan - net (167) -- (54) -- 170
Net cash provided by (used in) financing activities (287) (115) (58) -- 31,409
EFFECT OF EXCHANGE RATE CHANGES ON CASH (22) 409 534 322 250
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (43,151) 36,771 (12,490) 5,106 70,129
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 103,675 33,546 73,014 65,211 33,546
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 60,524 70,317 60,524 70,317 103,675
           
Supplemental information on investing activities not involving cash flows:
1) During 2009 the Company purchased equipment in the amount of $842,000 in credit. An amount of $660,000 was paid and included in investing activities during the nine month period ended on September 30, 2010 and the remaining will be presented as investing activity when actual payment is made.        
2) During the nine month period ended on September 30, 2010, the company purchased equipment in the amount of $399,000 in credit. This amount will be presented as investing activity when actual payment is made.
 
 
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
 
The following tables reflect selected Retalix' non-GAAP results reconciled to GAAP results:  
  Nine months ended September 30, Three months ended September 30, Year ended December 31
  2010 2009 2010 2009 2009
  Unaudited Unaudited Unaudited Unaudited Unaudited
  U.S. $ in thousands (except share and per share data)
OPERATING INCOME          
GAAP Operating income 9,676 10,928 3,393 3,531 7,826
GAAP Operating Margin 6.3% 7.5% 6.4% 7% 4.1%
Plus:          
Amortization of acquisition-related intangible assets 2,609 2,812 860 929 3,731
Stock based compensation expenses 2,988 1,623 1,055 461 2,165
Indirect private placement costs* -- --   -- 1,823
Non-GAAP Operating income** 15,273 15,363 5,308 4,921 15,545
           
NET INCOME          
GAAP Net income 8,168 9,797 4,678 4,152 5,796
Plus:          
Amortization of acquisition-related intangible assets 2,609 2,812 860 929 3,731
Stock based compensation expenses 2,988 1,623 1,055 461 2,165
Indirect private placement costs*   --   -- 1,823
Less:          
Income tax effect of amortization of acquisition-related intangible assets (851) (1,100) (284) (365) (1,029)
Tax expenses (income) effect of stock based compensation expenses 160 (232) 141 (141) (96)
Income tax effect of Indirect private placement costs   --   -- (343)
Non-GAAP Net income 13,074 12,900 6,450 5,036 12,047
           
NET INCOME PER DILUTED SHARE          
GAAP Net income per diluted share 0.34 0.48 0.19 0.2 0.28
Plus:          
Amortization of acquisition-related intangible assets 0.11 0.14 0.04 0.05 0.18
Stock based compensation expenses 0.12 0.08 0.04 0.02 0.10
Indirect private placement costs         0.09
Less:          
Income tax effect of amortization of acquisition-related intangible assets (0.04) (0.05) (0.01) (0.02) (0.05)
Income tax effect of stock based compensation expenses 0.01 (0.01) 0.01 (0.01) (0.01)
Income tax effect of Indirect private placement costs   --   -- (0.02)
Non-GAAP Net income per diluted share 0.54 0.64 0.27 0.24 0.57
Shares used in computing diluted net income per share (in thousands) 24,237 20,425 24,239 20,434 21,020
 
* Indirect private placement costs include $459 of stock based compensation expenses.
** We calculate Non-GAAP Operating Margin by dividing Non-GAAP Operating income (reconciled to GAAP operating income above) by revenues. For the quarter ended September 30, 2010, this resulted in a Non-GAAP Operating Margin of 10%, calculated as follows: $5,308/$52,895 = 10%.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
             
The following table shows the classification of stock-based compensation expense:
             
  Nine months ended Three months ended Year ended  
  September 30 September 30 December 31  
  2010 2009 2010 2009 2009  
  Unaudited Unaudited Unaudited Unaudited Unaudited  
  U.S. $ in thousands  
Cost of product sales 21 76 8 23 105  
Cost of services  212 768 82 233 1,060  
Research and development  76 373 22 107 381  
Selling and marketing 394 144 135 40 126  
General and administrative 2,285 262 808 58 493  
Total 2,988 1,623 1,055 461 2,165  
             
             
The following table shows the classification of amortization of acquisition-related intangible assets:
             
  Nine months ended Three months ended Year ended  
  September 30 September 30 December 31  
  2010 2009 2010 2009 2009  
  Unaudited Unaudited Unaudited Unaudited Unaudited  
  U.S. $ in thousands  
Cost of product sales 1,858 1,870 602 624 2,490  
Cost of services  652 657 211 219 876  
General and administrative 99 285 47 86 365  
Total 2,609 2,812 860 929 3,731  
             
             
Indirect private placement costs relate to a Private Placement completed in November 2009 as part of the agreement with the Alpha Group that generated $32.9 million of gross proceeds and $1.8 million in expenses for Retalix. 
CONTACT:  Retalix Ltd.          Hugo Goldman          +972-9-776-6677          investors@retalix.com

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