updated 3/2/2011 6:45:41 AM ET 2011-03-02T11:45:41

RA'ANANA, Israel, March 2, 2011 (GLOBE NEWSWIRE) -- Retalix® Ltd. (Nasdaq:RTLX), a leading provider of software and services for retailers and distributors, announced today results for the fourth quarter and full year ended December 31, 2010.

Summarized financial highlights for the fourth quarter and twelve-month period ended December 31, 2010:

  • Total Revenues for the full year were $207.4 million, compared with $192.4 million in 2009. Total revenues for the fourth quarter of 2010 were $53.8 million, compared to $46.4 million in the fourth quarter of 2009.
  • Adjusted Income from Operations (Non-GAAP)* for the full year was $19.8 million, compared to $15.5 million in 2009. In the fourth quarter of 2010 adjusted income from operations (non-GAAP) was $4.5 million, compared to $0.2 million in the fourth quarter of 2009.
  • Income from Operations (GAAP) for the full year was $12.4 million, compared to $7.8 million in 2009. In the fourth quarter of 2010 income from operations (GAAP) was $2.7 million, compared to a loss of ($3.1) million in the fourth quarter of 2009.
  • Financial Income for the full year was $3.5 million, compared to financial income of $1.8 million in 2009. In the fourth quarter of 2010 financial income was $2 million, compared to $0.2 million the fourth quarter of 2009. Included in the financial income is $0.8 million in the fourth quarter of 2010 and a total of approximately $2 million for the full year in interest income related to tax refunds, in addition to 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)* for the full year grew to a record level of $17.1 million, or $0.70 per diluted share, compared to $12 million, or $0.57 per diluted share, in 2009. In the fourth quarter of 2010 the adjusted net income (non-GAAP) was $4 million, or $0.16 per diluted share, compared to a loss of ($0.9) million, or ($0.04) per diluted share, in the fourth quarter of 2009. The per diluted share calculation for the fourth quarter includes an increase in the weighted diluted shares outstanding to approximately 24.6 million versus 22.1 million shares in the fourth quarter of 2009 and for the full year 2010 the weighted diluted shares outstanding was 24.5 million versus 21 million shares for the full year 2009. The increases reflect the private placement to the Alpha Group completed in November 2009.
  • GAAP Net Income for the year was $10.8 million, or $0.44 per diluted share, versus $5.8 million, or $0.28 per diluted share, in 2009. For the fourth quarter of 2010, GAAP net income was $2.6 million, or $0.11 per diluted share, versus a loss of ($4.0) million, or a loss of ($0.18) per diluted share, in the fourth quarter of 2009. The per diluted share figures again reflect the increase in shares outstanding mentioned above.
  • Cash Flow from Operating Activities generated for the full year was $33.9 million, of which $15.3 million was generated during the fourth quarter of 2010. The cash flow from operating activities for the full year includes $10.6 million related to a tax refund and interest.
  • Balance Sheet grew to about $134.6 million in cash and cash equivalents, deposits and marketable securities with negligible debt as of December 31, 2010.

Shuky Sheffer, Chief Executive Officer of Retalix, said, "2010 was an important transition year for Retalix. We grew total revenues and profitability coming in at the higher end of our guidance, including a new record level of over $17 million in Net Income (Non-GAAP) for Retalix. We built a clear strategy for the company and are executing on this plan. In our first full year the new management team produced consistent performance, achieved its targets and took important steps including investing in building our growth engines, enhancing the infrastructure and customer facing teams and creating a sales driven organization to enable future growth. We are beginning 2011 with a lot of excitement, including the launch of our breakthrough new store suite, the Retalix 10 Store Suite, which offers advanced software applications and a unique architecture that seamlessly combines major customer-centric retail functions while enabling quicker time-to-market and reducing the total cost of ownership. We are also continuing to build and expand our value-added service offerings and pursuing new opportunities created by the blurring of lines between the retail verticals and in new geographies for Retalix."

Hugo Goldman, the Company's Chief Financial Officer, said, "In the fourth quarter of 2010 we again reported strong improvements in total revenues and our operating and net income versus the year-ago period. Included in our fourth quarter operating expenses were increased investments in sales and marketing and R&D as we prepared for the January 2011 launch of our innovative new store platform, Retalix 10. We also continued to invest in our services offering and add to our headcount to enhance our infrastructure and customer facing operations. Including the increased investments we were still able to achieve an 8.4% operating margin (non-GAAP) in the fourth quarter and a 9.5% operating margin (non-GAAP) for the full year. We also continued to produce a very healthy cash flow from operations, generating approximately $15.3 million in the fourth quarter and nearly $34 million for the full year. The interest income from the tax refunds along with our currency hedges and favorable fluctuations in the currency markets combined to provide strong financial income. We do not expect to have the same levels of financial income in 2011. The cash flows helped us to continue to maintain a very strong balance sheet with over $134 million in cash and cash equivalents with very negligible debt."

Outlook for FY 2011

Sheffer added, "As we begin 2011 we believe Retalix is well positioned with the innovative solutions designed to help retailers enhance their customer experience and operations by reducing the time, investment and effort required to integrate new technologies into their operations. In 2010 we built our long-term strategy and now we are executing on this plan, working hard to capture the market opportunities and build our pipeline.

Our business traditionally builds quarter-to-quarter and our expectation is the same for 2011. We expect total revenues for 2011 to be in the range of $217 million to $228 million. We also expect to maintain at least the same level of profitability in 2011 as compared to 2010, while continuing the investments to enhance and build our products and service offerings and operations. We believe that the positive responses to our efforts from our existing and new customers and industry analysts, confirms the opportunities our investments are creating and gives us the confidence that we can start to leverage these investments in the year ahead."

Avi Naor Appointed as Chairman of the Board of Retalix

Retalix also announced that the appointment of Avi Naor, a member of Retalix's board of directors, as chairman of the board has now become effective. In September 2010, Retalix announced that Avi Naor would succeed Eli Gelman who had requested to step down from the chairman of the board position to carry out his new responsibilities as the CEO and president of Amdocs. Gelman continues to serve as a member of the board of directors of Retalix. Naor and Gelman are members of the Alpha Group and joined Retalix's board of directors in 2009, after the Alpha Group completed its investment in Retalix in November 2009.

Conference Call and Webcast Information

Retalix will be holding a conference call to discuss results for the full year and fourth quarter of 2010 on Wednesday, March 2nd 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 and services 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.

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

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.

* 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, operating margin, net income and earnings per diluted 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 2011" 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.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(U.S. $ in thousands, except share and per share data)

 
  Year ended

December 31
Three months ended

December 31
  2010 2009 2010 2009  
  (Unaudited) (Audited) (Unaudited)  
     
REVENUES:  
 Product sales 58,000 58,145 15,012 15,720  
 Services 149,374 134,248 38,777 30,668  
Total revenues 207,374 192,393 53,789 46,388  
COST OF REVENUES:          
 Cost of product sales 34,974 39,560 8,900 11,955  
 Cost of services 88,526 74,564 22,679 18,002  
Total cost of revenues 123,500 114,124 31,579 29,957  
GROSS PROFIT 83,874 78,269 22,210 16,431  
OPERATING EXPENSES:          
Research and development – net 29,657 28,991 7,948 8,026  
Selling and marketing 17,338 18,776 5,030 4,494  
General and administrative 24,635 21,007 6,663 5,380  
Other income – net (181) (154) (180) (190)  
Indirect private placement costs  -- 1,823 -- 1,823  
Total operating expenses 71,449 70,443 19,461 19,533  
INCOME (LOSS) FROM OPERATIONS 12,425 7,826 2,749 (3,102)  
FINANCIAL INCOME, net 3,509 1,757 1,993 185  
INCOME (LOSS) BEFORE TAXES ON INCOME 15,934 9,583 4,742 (2,917)  
TAX EXPENSES (4,667) (3,494) (2,017) (1,046)  
INCOME (LOSS) AFTER TAXES ON INCOME 11,267 6,089 2,725 (3,963)  
SHARE IN INCOME OF AN ASSOCIATED COMPANY 25 17 20 --  
NET INCOME (LOSS) 11,292 6,106 2,745 (3,963)  
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (505) (310) (126) (38)  
NET INCOME (LOSS) ATTRIBUTABLE TO RETALIX LTD.  

10,787
 

5,796
 

2,619
 

(4,001)
 
EARNINGS (LOSSES) PER SHARE – in U.S. $:          
Basic 0.45 0.28 0.11 (0.18)  
Diluted 0.44 0.28 0.11 (0.18)  
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF EARNINGS PER SHARE – in thousands:          
Basic 24,102 20,824 24,126 22,121  
Diluted 24,515 21,020 24,552 22,121  

 

RETALIX LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. $ in thousands)

 
 
  December 31  
  2010 2009  
  (Unaudited) (Audited)  
   
A s s e t s    
CURRENT ASSETS:    
Cash and cash equivalents 77,066 103,675
Short-term deposits 55,000 --
Marketable securities 2,012 226
Accounts receivable:    
 Trade 55,536 54,814
 Other 2,723 8,891
 Prepaid expenses 4,436 4,967
 Inventories 1,016 1,496
 Deferred income taxes 4,572 4,957
 Total current assets 202,361 179,026
NON-CURRENT ASSETS :    
 Long-term receivables 1,099 1,386
 Long-term prepaid expenses 879 406
 Long term investments 494 682
 Amounts funded in respect of employee rights upon  retirement 12,855 10,621
 Deferred income taxes 9,737 12,150
 Other 298 269
 Total non - current assets 25,362 25,514
PROPERTY, PLANT AND EQUIPMENT, net 15,070 15,233
GOODWILL 50,803 50,803
OTHER INTANGIBLE ASSETS, net of accumulated     
 Amortization:    
Customer base 9,779 12,544
Other 1,317 1,889
  11,096 14,433
Total assets 304,692 285,009

 

RETALIX LTD.

CONDENSED CONSOLIDATED BALANCE SHEET

 
  December 31
  2010 2009
  (Unaudited) (Audited)
   
Liabilities and equity    
CURRENT LIABILITIES:    
 Short-term loan -- 170
 Current maturities of long-term bank loans 267 263
 Accounts payable and accruals:    
 Trade 6,511 7,071
 Employees and employee institutions 8,512 10,114
 Accrued expenses 11,175 10,908
 Other 2,117 1,804
 Deferred revenues 21,366 17,450
 Total current liabilities 49,948 47,780
LONG-TERM LIABILITIES :    
Long-term bank loans, net of current maturities -- 275
Long-term deferred revenues 2,055 2,336
Employee rights upon retirement 16,392 14,243
Deferred tax liability 271 269
Other tax payables 476 476
 Total long-term liabilities 19,194 17,599
 Total liabilities 69,142 65,379
EQUITY:    
Share capital -Ordinary shares of NIS 1.00 par value (authorized): December 31, 2010 (unaudited) and    
 December 31, 2009 (audited) - 50,000,000 shares;    
 issued and outstanding: December 31, 2010 (unaudited) --    
 24,160,075 Shares; December 31, 2009 (audited) --    
 24,082,582 shares; 6,375 6,353
Additional paid in capital 212,457 208,574
Retained earnings  11,162 375
Accumulated other comprehensive income 1,110 642
 Total Retalix shareholders' equity 231,104 215,944
 Non-controlling interest 4,446 3,686
 Total equity 235,550 219,630
Total liabilities and equity 304,692 285,009
 
RETALIX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
  Year ended

December 31
Three months ended

December 31
  2010 2009 2010 2009
  (Unaudited) (Audited) (Unaudited) (Audited)
  U.S. $ in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) 11,292 6,106 2,745 (3,963)
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization 5,989 6,475 1,486 1,823
Losses from sale of property, plant and equipment 21 44 21 --
Share in income of an associated company (25) (17) (20) (13)
Stock based compensation expenses 3,855 2,624 867 1,001
Changes in accrued liability for employee rights upon retirement 2,243 311 431 (97)
Gains on amounts funded in respect of employee rights upon retirement (1,365) (1,023) (957) (226)
Deferred income taxes – net 2,854 3,209 1,116 526
Net decrease (increase) in marketable securities 81 162 (63) 3
Other 172 13 (3) 18
Changes in operating assets and liabilities:        
Decrease (increase) in accounts receivable:        
 Trade (including the non-current portion) (598) 17,339 6,179 3,647
Other (including the non-current portion) 6,781 2,190 1,959 602
Increase (decrease) in accounts payable and 

 accruals:
       
 Trade (530) (1,653) 1,520 2,649
 Employees, employee institutions and other (979) 4,102 (649) 23
Decrease (Increase) in inventories 472 (456) 126 86
Decrease in long-term institutions -- (636) (1) (7)
Increase (decrease) in deferred revenues 3,638 625 495 (2,920)
Net cash provided by operating activities – forward 33,901 39,415 15,252 3,152
 
RETALIX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
  Year ended

December 31
Three months ended

December 31
  2010 2009 2010 2009
  (Unaudited) (Audited) (Unaudited)
  U.S. $ in thousands
Net cash provided by operating activities - brought forward 33,901 39,415 15,252 3,152
CASH FLOWS FROM INVESTING ACTIVITIES:        
Maturity of marketable debt securities held to maturity -- 490 -- --
Sales of marketable trading debt securities -- 2,535 -- --
Investment in available-for-sale marketable securities (1,679) -- -- --
Investment in short term deposits (55,000) -- 2,000 --
Additional investments in subsidiaries -- (22) -- (22)
Purchase of property, plant, equipment and other assets (2,566) (2,985) (909) (718)
Proceeds from sale of property, plant and equipment -- 120 -- --
Amounts funded in respect of employee rights upon retirement, net (855) (913) 121 (235)
Changes in restricted deposits (179) (184) -- (184)
Long-term loans collected from employees -- 14 -- --
Net cash provided by (used in) investing activities (60,279) (945) 1,212 (1,159)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayment of long-term bank loans (122) (249) 1 (130)
Issuance of share capital to Shareholders -- 31,468 -- 31,468
Issuance of share capital to employees resulting from exercise of options 22 20 19 16
Short-term bank credit – net (290) 170 (123) 170
Net cash provided by (used in) financing activities (390) 31,409 (103) 31,524
EFFECT OF EXCHANGE RATE CHANGES ON CASH 159 250 181 (159)
NET INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS (26,609) 70,129 16,542 33,358
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 103,675 33,546 60,524 70,317
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 77,066 103,675 77,066 103,675
 
 RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
         
The following tables reflect selected Retalix' non-GAAP results reconciled to GAAP results:
         
  Year ended

December 31
Three months

ended December 31
  2010 2009 2010 2009
  Unaudited Unaudited Unaudited
  U.S. $ in thousands (except per share data)
OPERATING INCOME (LOSS)        
GAAP Operating income (loss) 12,425 7,826 2,749 (3,102)
GAAP Operating Margin 6% 4.1% 5.1% (6.7%)
Plus:        
Amortization of acquisition-related intangible assets 3,494 3,731 885 919
Stock based compensation expenses 3,855 2,165 867 542
PIPE investment costs* -- 1,823 -- 1,823
Non-GAAP Operating income** 19,774 15,545 4,501 182
         
NET INCOME (LOSS) 10,787 5,796 2,619 (4,001)
GAAP Net income (loss)         
Plus:        
Amortization of acquisition-related intangible assets 3,494 3,731 885 919
Stock based compensation expenses 3,855 2,165 867 542
PIPE investment costs* -- 1,823 -- 1,823
Less:        
Income tax effect of amortization of acquisition-related intangible assets (1,366) (1,029) (515) 71
Income tax effect of stock based compensation expenses 283 (96) 123 136
Income tax effect of PIPE investment costs -- (343) -- (343)
Non-GAAP Net income (loss) 17,053 12,047 3,979 (853)
         
NET INCOME (LOSS) PER DILUTED SHARE        
GAAP Net income (loss) per diluted share 0.44 0.28 0.11 (0.18)
Plus:        
Amortization of acquisition-related intangible assets 0.14 0.18 0.04 0.04
Stock based compensation expenses 0.16 0.10 0.04 0.02
PIPE investment costs* -- 0.09 -- 0.08
Less:        
Income tax effect of amortization of acquisition-related intangible assets (0.05) (0.05) (0.02) 0.00
Income tax effect of stock based compensation expenses 0.01 (0.01) (0.01) 0.01
Income tax effect of PIPE investment costs -- (0.02) -- (0.02)
Non-GAAP Net income (loss) per diluted share 0.70 0.57 0.16 (0.04)
         
Shares used in computing diluted net income per share 24,515 21,020 24,552 22,121
         
         
         
* PIPE investment costs in 2009 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 and year ended December 31, 2010, this resulted in a Non-GAAP Operating Margin of 8.4% and 9.5%, respectively, calculated as follows: $4,501/$53,789 = 8.4% and $19,774/$207,374= 9.5%.
 
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
         
The following table shows the classification of stock-based compensation expense:
         
  Year ended

December 31
Three months ended

December 31
  2010 2009 2010 2009
  Unaudited Audited Unaudited
  U.S. $ in thousands
Cost of product sales 26 105 5 29
Cost of services  252 1,060 40 292
Research and development - net 101 381 25 8
Selling and marketing 518 126 124 (18)
General and administrative 2,958 493 673 231
Total 3,855 2,165 867 542
         
         
         
The following table shows the classification of amortization of acquisition-related intangible assets:    
         
  Year ended

December 31
Three months ended

December 31
  2010 2009 2010 2009
  Unaudited Audited Unaudited
  U.S. $ in thousands
Cost of product sales 2,483 2,490 625 620
Cost of services  872 876 220 219
General and administrative 139 365 40 80
Total 3,494 3,731 885 919
         
         
         
PIPE investment costs relate to a Private Placement completed in November 2009 as part of the agreement with the Alpha Group that generated $32.9 million dollars proceeds and $1.8 million dollars in expenses for Retalix. 
CONTACT: Retalix Ltd.
         Hugo Goldman
         +972-9-776-6677
         investors@retalix.com

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