Retalix Announces Third Quarter 2012 Results

Retalix Announces Third Quarter 2012 Results

Record Quarter With 15% Growth in Revenues; 34% Increase in Operating Income
(Non-GAAP); Strong Progress on Executing Strategy; Expanding Into Adjacent
Markets Via Cornell Mayo Acquisition; Expects to Exceed 2012 Revenue Guidance

RA'ANANA, Israel, Nov. 14, 2012 (GLOBE NEWSWIRE) -- Retalix^® Ltd.
(Nasdaq:RTLX), a leading global provider of software and services to high
volume, high complexity retailers, announced today results for the third
quarter and the nine months ended September 30, 2012.

Summarized financial highlights for the third quarter:

  *Total Revenues were up 15% to $70.5 million compared with $61.6 million in
    the third quarter of 2011.
    
  *Adjusted Operating Income (Non-GAAP)* was up 34% to $7.3 million compared
    to $5.5 million in the third quarter of 2011.
    
  *Operating Income (GAAP) was up 72% to $5.1 million compared to $3.0
    million in the third quarter of 2011.
    
  *Adjusted Net Income (Non-GAAP)* was $5.3 million, or $0.21 per diluted
    share, compared to $7.7 million, or $0.31 per diluted share, in the third
    quarter of 2011.The year-over-year comparison in third quarter Net Income
    reflects a change in financial income and a tax benefit realized in 2011
    versus both a financial and tax expense in 2012.
    
  *GAAP Net Income was $3.6 million, or $0.14 per diluted share, compared to
    $5.5 million, or $0.22 per diluted share, in the third quarter of 2011,
    reflecting the financial income and tax benefit in 2011 mentioned above.
    
  *Financial Expenses of $0.1 million were recorded in the third quarter of
    2012 including interest income, the net impact of currency fluctuations on
    the value of non-dollar assets, and currency translation costs.This
    compares to financial income of $1.1 million in the third quarter of 2011.
    
  *Cash Flow from Operating Activities was $5.3 million.
    
  *Balance Sheet included $134.1 million of cash and cash equivalents,
    deposits, marketable securities and long term investments with no debt as
    of September 30, 2012, and after the completion of the Cornell Mayo
    acquisition.

Shuky Sheffer, Chief Executive Officer of Retalix, said, "We are continuing to
make good progress executing our growth strategy and delivering innovative and
unique solutions for retailers. We continue to win new programs and logos for
our unique Retalix 10 products, services and software-as-a-service (SaaS)
offerings.This quarter we signed a multi-year strategic partnership with
Delhaize Group to become the preferred provider of in-store software for their
3,300 locations worldwide and we are starting work on another Retalix 10
project for a Tier 0 retailer.We also successfully executed on our strategy
to expand into adjacent high volume high complexity markets with the
acquisition of Cornell Mayo.Building on our great products and our
product-led services model ensures that Retalix is not only providing the
leading platform but that we are positioned to provide consistent value and
expertise in the delivery and implementation of our products thus paving the
way for long-term, deep partnerships with our customers."

Sarit Sagiv, the Company's Chief Financial Officer, said, "Our growing
strength in the market helped us to achieve record quarterly revenues,
surpassing the $70 million mark, as well as improved operating margins and
strong year-over-year growth in operating income. We achieved these
improvements while continuing our investments.Our headcount grew by 10% over
last quarter, reflecting our recruiting efforts designed to ensure successful
delivery on our customer wins and the addition of Cornell Mayo.Our balance
sheet is strong.We continue to generate cash flow from operations and we have
no debt.We have a strong financial platform which will continue to help us in
pursuing opportunities in our markets."

Outlook for FY 2012

Sheffer added, "We expect we will exceed our revenue guidance which was for
total revenues in the range of $260 to $270 million for 2012.Cornell Mayo
will have a minimal contribution in the remainder of 2012, but we expect it
will grow as we move forward.

"In the first nine months of 2012 we also successfully achieved our goal of
improving the profitability of operations versus 2011.We targeted 9 to 10
percent profitability from operations (on a non-GAAP basis) for 2012 and we
expect to be at the high end of this range.As I said last quarter, we expect
to continue our investments to deliver on our new wins and further build our
traction in the markets while balancing these investments against
profitability."

Conference Call and Webcast Information

Retalix will be holding a conference call to discuss results for the third
quarter and nine months of 2012 on Wednesday, November 14th 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/content/conference-call. 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 a leading global provider of innovative software and services to
high volume, high complexity retailers, including supermarkets, convenience
stores, fuel stations, drugstores and department stores.The company's
products and services help its customers to manage and optimize their retail
operations, differentiate their brand and build consumer loyalty, while
providing retailers with the flexibility and scalability to support ongoing
business transformation and growth.Retalix offers solutions for point-of-sale
(POS), sales channels and in-store management (including mobile and
e-commerce), customer management and marketing, merchandising, and logistics.
By leveraging a multitude of deployment options, including
Software-As-A-Service (SaaS), Retalix serves a large customer base of
approximately 70,000 stores across more than 50 countries worldwide. The
Company's headquarters are located in Ra'anana, Israel, and its North America
headquarters are located in Plano, Texas. Retalix stock trades on the NASDAQ
and the Tel Aviv Stock Exchange.

For more information, visit http://www.retalix.com and follow Retalix on
Twitter: @Retalix, 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, operating margin, net income and earnings per diluted share,
which are adjustments from results based on GAAP to exclude non-cash equity
based compensation, acquisition related costs and amortization of intangibles
related to acquisitions. 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 its 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 U.S. federal securities laws. For example, the statements
regarding our "Outlook for FY 2012" including our expected results, growth,
investments, demand, markets and opportunities, 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, 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, 2011, 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
(in thousands, except per share data) (unaudited)
                                                                  
                                         Three months ended Nine months ended
                                         September 30,      September 30,
                                         2012      2011     2012     2011
Revenues:                                                         
Product sales                             $14,632 $13,557 $42,311 $37,637
Services                                 55,905    48,006   162,116  135,899
Total revenues                            70,537    61,563   204,427  173,536
Cost of revenues:                                                  
Cost of product sales                     8,388     8,147    24,647   23,358
Cost of services                         32,452    28,120   93,723   77,630
Total cost of revenues                    40,840    36,267   118,370  100,988
Gross profit                              29,697    25,296   86,057   72,548
Operating expenses:                                                
Research and development                  9,356     8,333    27,041   23,397
Selling and marketing                     7,737     6,841    23,669   18,793
General and administrative                7,483     7,152    21,559   20,204
Total operating expenses                  24,576    22,326   72,269   62,394
                                                                  
Operating income                          5,121    2,970   13,788  10,154
Financial income (expenses), net          (138)    1,104   1,163   1,216
Share in income of an associated company  --      --     --     38
Income before income taxes                4,983    4,074   14,951  11,408
Income taxes                              (1,219)  1,539   (3,735) (388)
Net income                                3,764    5,613   11,216  11,020
Net income attributable to                (152)    (151)   (399)   (441)
non-controlling interests
Net income attributable to Retalix Ltd.   $3,612  $5,462 $10,817 $10,579
                                                                  
Earnings per share:                                                
Basic                                     $0.15   $0.23  $0.44  $0.44
Diluted                                   $0.14   $0.22  $0.43  $0.43
Weighted average number of shares used in                          
computation of earnings per share:
Basic                                     24,641    24,254   24,563   24,197
Diluted                                   25,595    24,717   25,450   24,692



RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)

                                                   September 30, December 31,
                                                   2012          2011
                                                   (Unaudited)   (Audited)
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                           $127,078    $38,644
Short-term deposits and marketable securities       6,008         96,009
Trade receivables                                   77,125        56,721
Inventories                                         1,459         1,407
Other receivables                                  7,584         5,234
Prepaid expense and other current assets            9,922         8,669
Total current assets                                229,176       206,684
Non-current assets:                                              
Amounts funded in respect of employee rights upon   9,903         10,329
retirement
Deferred income taxes                               11,256        11,385
Other non-current assets                            3,514         3,808
Property, plant and equipment, net                 19,293        17,586
Goodwill and other intangible assets, net of        90,871        82,288
accumulated amortization
Total assets                                        $364,013    $ 332,080
LIABILITIES AND EQUITY                                           
Current liabilities:                                             
Trade payables                                      $9,266      $6,855
Employees and employee institutions                 15,306        10,913
Other accrued expenses                              19,674        19,145
Deferred revenues                                  24,999        19,071
Total current liabilities                           69,245        55,984
Non-current liabilities:                                         
Employee rights upon retirement                     15,502        14,220
Other non-current liabilities                       9,743         7,705
Total liabilities                                  94,490        77,909
Retalix shareholders' equity:                                    
Share capital -Ordinary shares of NIS 1.00 par
value authorized: September 30, 2012, December 31,
2011 - 50,000 shares; issued and outstanding:       6,513         6,464
September 30, 2012 - 24,676 shares; December 31,
2011 - 24,486 shares;
Additional paid in capital                          221,475       217,715
Retained earnings                                  35,669        24,852
Accumulated other comprehensive income             708           273
Total Retalix shareholders' equity                  264,365       249,304
Non-controlling interest                            5,158         4,867
Total equity                                        269,523       254,171
Total liabilities and equity                        $364,013    $ 332,080



RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
                                                                 
                                    Three months ended   Nine months ended
                                    September 30,        September 30,
                                    2012       2011      2012       2011
                                                                 
Cash flows from operating                                         
activities:
Net income                          $3,764   $5,613  $11,216  $11,020
Adjustments required to reconcile
net income to net cash provided by                                
operating activities:
Depreciation and amortization        2,164     1,615    6,103     4,335
Stock based compensation expenses    664       607      2,080     1,791
Changes in accrued liability for     292       (414)    (144)     1,307
employee rights upon retirement
Deferred income taxes - net          550       (2,231)  2,408     (931)
Other                                (54)      1,250    (2)       701
Net changes in operating assets and                               
liabilities:
Trade receivables                   (3,438)   (2,690)  (17,642)  (3,159)
Trade payables                       (1,903)   2,200    2,346     1,611
Deferred revenues                   996       (746)    5,592     2,893
Other assets                         2,313     (1,119)  2,262     440
Net cash provided by operating       5,348      4,085     14,219     20,008
activities
                                                                 
Cash flows from investing                                         
activities:
Proceeds from (investment in) short  (6,000)   32,000   90,000    9,000
term deposits
Business purchased net of cash       (10,803)  (16,930) (10,803)  (16,930)
acquired
Purchase of property, plant and      (1,569)   (2,048)  (4,859)   (3,841)
equipment
Other investing activities           110       (388)    421       558
Net cash provided by (used in)       (18,262)  12,634   74,759    (11,213)
investing activities
                                                                 
Cash flows from financing                                         
activities:
Payment of contingent consideration  (2,090)   --      (2,090)   --
Proceeds from exercise of options    690       611      1,728     683
Repayment of long-term bank loans    --       --      --       (273)
Net cash provided by (used in)       (1,400)   611      (362)     410
financing activities
Effect of exchange rate changes on   131       (765)    (182)     (274)
cash
Net change in cash and cash          (14,183)  16,565   88,434    8,931
equivalents
Balance of cash and cash equivalents 141,261    69,432    38,644     77,066
at beginning of period
Balance of cash and cash equivalents $127,078 $85,997  $127,078 $85,997
at end of period



RETALIX LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
(in thousands, except per share data) (unaudited)
                                                                  
                                        Three months ended Nine months ended
                                        September 30,       September 30,
                                        2012      2011      2012     2011
                                                                  
GAAP operating income                   $5,121  $2,970  $13,788 $10,154
GAAP operatingas percentage of revenues 7.3%      4.8%      6.7%     5.9%
                                                                  
Amortization of acquisition-related      1,027     874       3,081    2,322
intangible assets ^1
Stock based compensation expenses ^ 2    728       607       2,144    1,791
Acquisition related costs                463       1,032     1,227    1,032
Non-GAAP operating income               $7,339  $5,483  $20,240 $15,299
Non-GAAP operating as a percentage of    10.4%     8.9%      9.9%     8.8%
revenues
                                                                  
GAAP net income                          $3,612  $5,462  $10,817 $10,579
Amortization of acquisition-related      1,027     874       3,081    2,322
intangible assets ^1
Stock based compensation expenses ^ 2    728       607       2,144    1,791
Acquisition related costs                463       1,032     1,227    1,032
Tax effects of the above items           (552)    (236)    (1,791) (821)
Non-GAAP net income                      $5,278  $7,739  $15,478 $14,903
                                                                  
Net income per diluted share                                       
GAAP net income per diluted share        $0.14   $0.22   $0.43  $0.43
Amortization of acquisition-related      0.04     0.04     0.12    0.09
intangible assets
Stock based compensation expenses        0.03     0.02     0.08    0.07
Acquisition related costs                0.02     0.04     0.05    0.04
Tax effects of the above items           (0.02)   (0.01)   (0.07)  (0.03)
Non-GAAP net income per diluted share    $0.21   $0.31   $0.61  $0.60
                                                                  
Shares used in computing diluted net     25,595    24,717    25,450   24,692
income per share
                                                                  
                                                                  
1) Classification of amortization of                              
acquisition-related intangible assets:
                                                                  
Cost of product sales                    $810    $605    $2,430 $1,672
Cost of services                         215       212       645      587
General and administrative               2         57        6        63
Total                                    $1,027  $874    $3,081 $2,322
                                                                  
                                                                  
2) Classification of stock-based                                  
compensation expense:
                                                                  
Cost of product sales                    $23     $9      $71    $24
Cost of services                         231       90        721      245
Research and development                104       36        327      93
Selling and marketing                    74        106       228      308
General and administrative               296       366       797      1,121
Total                                    $728    $607    $2,144 $1,791

CONTACT: Retalix Ltd.
         Sarit Sagiv
         +972-9-776-6618
         investors@retalix.com

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