RA'ANANA, Israel, March 19, 2008 (PRIME NEWSWIRE) -- Retalix(r) Ltd. (Nasdaq:RTLX), a global provider of software solutions for retailers and distributors, today announced results for the fourth quarter and the full year ended December 31, 2007.
Summarized financial highlights of the 2007 fourth quarter results:
- Total Revenues for the period were $55.2 million, compared to $56.5 million in the fourth quarter of 2006.
- GAAP Net Loss for the period was $(1.7) million, or $(0.09) per diluted share, compared to net income of $3.6 million, or $0.18 per diluted share in the fourth quarter of 2006.
- Adjusted Net Loss (Non-GAAP)* for the period was $(0.9) million, or $(0.05) per diluted share, compared to net income of $5.5 million, or $0.27 per diluted share, in the fourth quarter of 2006.
Summarized financial highlights of the full year 2007:
- Total Revenues for the year reached a Company record of $221.4 million, compared to $203.7 million in FY 2006.
- GAAP Net Loss for the year was $(0.5) million, or $(0.02) per diluted share, compared to net income of $1.3 million, or $0.06 per diluted share in FY 2006.
- Adjusted Net Income (Non-GAAP)* for the year was $6.1 million, or $0.31 per diluted share, compared to $8.1 million, or $0.40 per diluted share in FY 2006.
Barry Shaked, President and Chief Executive Officer of Retalix, said, "While 2007 has been another record year in revenues, we did not meet our bottom-line goals for the year. Our focus in 2008 is on improving our performance and profitability. Since January we have been busy implementing a change of mindset within Retalix. Our current efforts are targeted at improving the utilization of professional services while prioritizing our product development efforts."
"As new products mature in the development cycle, we are reassigning resources that were dedicated to product development to Professional Services. We believe this opens up an opportunity to increase service revenues. We are tracking more closely the resources being used for the services we provide to customers. This should enable us to get paid for this work as well as to identify and eliminate instances where the efforts do not justify the return."
"In the short term these changes are reflected in more cost of Services. However, we are monitoring services profitability more tightly and will determine where resources should best be allocated and identify opportunities to improve performance. As such, these efforts should either turn into more revenues from Services, or we will reduce the cost of Services by eliminating the inefficiencies on those efforts that are not producing satisfactory returns."
Hugo Goldman, the Company's Chief Financial Officer, said, "I am pleased that as of December 31, 2007, our balance sheet had $27.6 million in cash, cash equivalents and marketable securities, in spite of the fact that we discontinued the factoring of receivables. Overall, in 2007 the factoring of receivables cost us $1.8 million gross. As we are not incurring any new expenses on factoring, our financial income in the fourth quarter amounted to $656,000."
"The depreciation of the US dollar during the fourth quarter had a negative impact on our non-Dollar wage costs, primarily in Israel, amounting to $1.4 million of additional costs, as we previously estimated. We are monitoring the ongoing changes in currency exchange rates and in the general economic conditions, and are evaluating different options to be pursued, if necessary," Goldman added.
Outlook for FY 2008
Retalix anticipates total revenues for the full year 2008 to exceed $232 million, GAAP net income to exceed $8 million, and adjusted, non-GAAP* net income to exceed $15 million.
Shaked added, "Demand for our software solutions remains strong, allowing us to predict another year of top line growth, although moderate. We are taking a conservative approach to our 2008 guidance, but will strive to exceed the results we currently predict."
"Our business fundamentals remain strong. Retalix is uniquely positioned in the retail software market with a broad offering of software solutions tailored specifically to the requirements of the food retail industry. Industry analysts predict strong growth in our sector in the next five years, as commercial software matures and customers look to upgrade their aging, homegrown systems. We continue to believe that our investments in product development and in penetration into new territories will pay off in the coming years," Shaked concluded.
Conference Call and Webcast Information
The Company will be holding a conference call to discuss results for the fourth quarter 2007 on Wednesday, March 19th, 2008 at 9:00am EDT (3:00pm Israeli Time). This conference can be accessed by all interested parties through the Company's web site at http://www.retalix.com/conference-call.cfm. For those unable to participate during the live broadcast, a replay will be available shortly after the call on the Retalix site.
* Note on 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 in accordance with SFAS 123(R), amortization of intangibles related to acquisitions, and charges in connection with expenses relating to acquisitions that did not materialize. 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 all this information to investors. Reconciliations between GAAP measures and non-GAAP measures are contained following the GAAP financial statements in this press release. Reconciliation between GAAP to non-GAAP outlook for 2008 is provided in the table below.
FY 2008
Outlook
U.S. $
Thousands
GAAP Net Income (Loss) 8,000
(a) The effect of stock- based compensation -
SFAS 123(R), net of tax effect 4,900
(b) The effect of amortization of intangible
assets and acquisition related expenses,
net of tax effect 2,100
Non-GAAP Net Income (Loss) 15,000
About Retalix
Retalix is an independent provider of software solutions to retailers and distributors worldwide. With over 40,000 sites installed across more than 50 countries, 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. Retalix develops and supports its software through 1,500 employees in its various subsidiaries and offices worldwide. 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.
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 2008" including our expected results and reactions to changes in our markets, all involve forward looking statements, expected increased revenues and productivity from Services, reduced costs from inefficiencies and expected costs from the depreciation of the US dollar. These statements include comments regarding the guidance about revenues and net income, our ability to improve cash flow and profitability and to cut expenses, anticipated demand for the Company's software products, expectations with regard to implementation and rollout of existing license agreements, analysis of market conditions and penetration in emerging markets, pipeline of prospective customers, anticipated rate of growth and Management's expectations as to the Company's future financial performance. 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, 2006, for a discussion of these and other important risk factors. 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.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2007
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)
------- ------- ------- -------
U.S. $ in thousands
(except share and per share data)
REVENUES:
Product sales 80,511 73,195 20,178 19,838
Service and projects 140,900 130,549 34,998 36,614
------- ------- ------- -------
Total revenues 221,411 203,744 55,176 56,452
------- ------- ------- -------
COST OF REVENUES:
Cost of product sales 39,132 36,690 11,214 9,103
Cost of service and
projects 65,281 44,562 18,679 11,987
------- ------- ------- -------
Total cost of revenues 104,413 81,252 29,893 21,090
------- ------- ------- -------
GROSS PROFIT 116,998 122,492 25,283 35,362
------- ------- ------- -------
OPERATING EXPENSES:
Research and development
- net 58,653 60,375 12,252 15,232
Selling and marketing 31,617 33,495 7,469 7,848
General and administrative 27,539 27,426 8,695 7,472
Other (income) expenses
- net 643 22 (8) (12)
------- ------- ------- -------
Total operating
expenses 118,452 121,318 28,408 30,540
------- ------- ------- -------
INCOME (LOSS) FROM
OPERATIONS (1,454) 1,174 (3,125) 4,822
FINANCIAL INCOME
(EXPENSES), net 1,032 79 656 (321)
------- ------- ------- -------
INCOME (LOSS) BEFORE
TAXES ON INCOME (422) 1,253 (2,469) 4,501
TAX BENEFIT (EXPENSES) 435 507 846 (466)
------- ------- ------- -------
INCOME (LOSS) AFTER
TAXES ON INCOME 13 1,760 (1,623) 4,035
SHARE IN LOSSES OF AN
ASSOCIATED COMPANY (3) (57) -- (13)
MINORITY INTERESTS IN
GAINS OF SUBSIDIARIES (508) (425) (107) (439)
------- ------- ------- -------
NET INCOME (LOSS) (498) 1,278 (1,730) 3,583
======= ======= ======= =======
EARNINGS (LOSSES) PER
SHARE - in U.S. $:
Basic (0.02) 0.07 (0.09) 0.18
======= ======= ======= =======
Diluted (0.02) 0.06 (0.09) 0.18
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER
OF SHARES USED IN
COMPUTATION OF
EARNINGS PER SHARE
- in thousands:
Basic 19,851 19,491 19,967 19,533
======= ======= ======= =======
Diluted 19,851 20,127 19,967 19,980
======= ======= ======= =======
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, 2007
December 31,
------------------
2007 2006
------- -------
(Unaudited) (*)
------- -------
U.S. $ in thousands
------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 22,484 55,186
Marketable securities 3,454 4,554
Accounts receivable:
Trade 81,429 48,469
Other 5,535 5,524
Inventories 1,289 1,154
Deferred income taxes 8,305 5,930
------- -------
Total current assets 122,496 120,817
------- -------
NON-CURRENT ASSETS:
Marketable securities 1,657 1,237
Deferred income taxes 4,548 4,035
Long-term receivables 5,673 3,395
Amounts funded in respect of employee
rights upon retirement 8,806 6,759
Other 795 747
------- -------
Total non-current assets 21,479 16,173
------- -------
PROPERTY, PLANT AND EQUIPMENT, net 12,568 11,180
------- -------
GOODWILL 113,055 107,506
------- -------
OTHER INTANGIBLE ASSETS, net of
accumulated amortization:
Customer base 16,300 17,721
Other 4,379 5,777
------- -------
20,679 23,498
------- -------
Total assets 290,277 279,174
======= =======
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
December 31,
------------------
2007 2006
------- -------
(Unaudited) (*)
------- -------
U.S. $ in thousands
(except share and
per share data)
------------------
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term bank credit 11 4,742
Current maturities of long-term bank
loans 258 224
Accounts payable and accruals:
Trade 15,410 11,535
Employees and employee institutions 8,937 7,179
Accrued expenses 6,393 7,288
Other 1,917 7,443
Deferred revenues 16,763 13,747
------- -------
Total current liabilities 49,689 52,158
------- -------
LONG-TERM LIABILITIES:
Long-term bank loans, net of current
maturities 786 1,058
Employee rights upon retirement 14,362 11,392
Deferred tax liability 1,004 1,016
Institutions 1,516 --
Deferred revenues -- 206
------- -------
Total long-term liabilities 17,668 13,672
------- -------
Total liabilities 67,357 65,830
------- -------
MINORITY INTERESTS 2,791 2,293
------- -------
SHAREHOLDERS' EQUITY:
Share capital - Ordinary shares of NIS
1.00 par value (authorized):
December 31, 2007 (unaudited) and
December 31, 2006 (audited) -
30,000,000 shares; issued and
outstanding: December 31, 2007
(unaudited) - 20,001,382 shares;
December 31, 2006 (audited) -
19,613,454 shares; 5,273 5,178
Additional paid in capital 167,701 156,583
Retained earnings 46,864 49,188
Accumulated other comprehensive income 291 102
------- -------
Total shareholders' equity 220,129 211,051
------- -------
Total liabilities and shareholders'
equity 290,277 279,174
======= =======
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2007
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)
------- ------- ------------------
U.S. $ in thousands
----------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) (498) 1,278 (1,730) 3,583
Adjustments required to
reconcile net income
(loss) to net cash
provided by operating
activities:
Minority interests in
gains of subsidiaries 508 425 107 439
Depreciation and
amortization 6,790 8,362 1,627 2,116
Share in losses of an
associated company 3 57 -- 13
Stock based compensation
expenses 3,889 3,891 175 1,558
Changes in accrued
liability for employee
rights upon retirement 2,739 2,102 290 549
Gains on amounts funded
in respect of employee
rights upon retirement (950) (580) (470) (114)
Deferred income taxes -
net (3,302) (2,699) (1,405) (493)
Net decrease (increase)
in marketable securities (216) 3,025 11 408
Amortization of discount
on marketable debt
securities 11 56 1 12
Other 50 (32) 255 33
Changes in operating
assets and liabilities:
Increase in accounts
receivable:
Trade (including the
non-current portion) (34,536) (10,588) (17,139) (3,800)
Other -- (889) 216 970
Increase (decrease) in
accounts payable and
accruals:
Trade 3,491 (730) 3,823 (1,956)
Employees, employee
institutions and other (5,916) 933 (4,532) 517
Decrease (Increase) in
inventories (118) 1,022 (21) 379
Increase in long-term
institutions 1,516 -- 406 --
Increase (decrease) in
deferred revenues
(including the
non-current portion) 2,810 (2,616) 1,445 (3,209)
------- ------- ------- -------
Net cash provided by
(used in) operating
activities - forward (23,729) 3,017 (16,941) 1,005
======= ======= ======= =======
* The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2007
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)
------- ------- ------------------
U.S. $ in thousands
----------------------------------------
Net cash provided by
(used in) operating
activities - brought
forward (23,729) 3,017 (16,941) 1,005
------- ------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Maturity of marketable
debt securities held
to maturity 9,743 6,212 -- 2,758
Investment in marketable
debt securities held
to maturity (9,047) (2,066) -- (1,016)
Acquisition of
subsidiaries or
activities consolidated
for the first time (a) (1,370) (2,653) (20) (48)
Additional investments
in subsidiaries -- (5,754) -- 48
repayment of investment -- 651 -- 651
Purchase of property,
plant, equipment and
other assets (4,676) (2,567) (492) (554)
Proceeds from sale of
property, plant and
equipment 69 35 65 4
Amounts funded in respect
of employee rights upon
retirement, net (1,097) (777) (124) (225)
Long-term loans collected
from (granted to)
employees 17 (4) (2) --
------- ------- ------- -------
Net cash used in
investing activities (6,361) (6,923) (573) 1,618
------- ------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of long-term
bank loans (351) (117) (123) --
Issuance of share
capital to employees
resulting from exercise
of options 2,401 2,696 1,347 808
Short-term bank credit -
net (4,731) 760 (1,366) (149)
------- ------- ------- -------
Net cash provided by
(used in) financing
activities (2,681) 3,339 (142) 659
------- ------- ------- -------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 69 61 (53) 7
------- ------- ------- -------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (32,702) (506) (17,709) 3,289
BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING
OF PERIOD 55,186 55,692 40,193 51,897
------- ------- ------- -------
BALANCE OF CASH AND CASH
EQUIVALENTS AT END OF
PERIOD 22,484 55,186 22,484 55,186
======= ======= ======= =======
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2007
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Year ended
------------------
December 31,
------------------
2007 2006
------- -------
(Unaudited) (*)
------- -------
U.S. $ in thousands
------------------
(a) Net fair value of the assets acquired and
liabilities assumed at the date of
acquisition:
Assets and liabilities of the subsidiaries
at the date of acquisition:
Working capital (excluding cash and cash
equivalents) 278 302
Property, plant, equipment and other
assets, net (8) (54)
Goodwill and other intangible assets arising
on acquisition (1,640) (2,901)
------- -------
(1,370) (2,653)
======= =======
(b) Supplemental information on investing activities not involving
cash flows:
On April 1, 2005, the Company acquired substantially all of the
assets of Integrated Distribution Solutions Inc. ("IDS"), in
consideration for cash, as well as the issuance of share capital.
In addition, shareholders of IDS were issued additional 207,236
shares valued at $4,916,000 that were released from escrow as
certain customer retention milestones agreed upon were met as of
April 1, 2007.
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following tables reflect selected Retalix's non-GAAP results
reconciled to GAAP results:
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)(Unaudited)
U.S. $ in thousands
(except share and per share data)
----------------------------------------
OPERATING INCOME (LOSS)
GAAP Operating income
(loss) (1,454) 1,174 (3,125) 4,822
Plus:
Amortization of
acquisition-related
intangible assets 3,576 4,910 861 1,196
Stock based
compensation expenses 3,889 3,891 175 1,558
Other acquisition-
related operating
expenses (**) 700 -- -- --
------- ------- ------- -------
Non-GAAP Operating income 6,711 9,975 (2,089) 7,576
======= ======= ======= =======
NET INCOME (LOSS) (498) 1,278 (1,730) 3,583
GAAP Net income (loss)
Plus:
Amortization of
acquisition-related
intangible assets 3,576 4,910 861 1,196
Stock based
compensation expenses 3,889 3,891 175 1,558
Other acquisition-
related operating
expenses (**) 700 -- -- --
Less:
Income tax effect of
amortization of
acquisition-related
intangible assets (1,287) (1,654) (348) (565)
Expenses (income) tax
effect of stock based
compensation expenses (70) (282) 125 (282)
Income tax effect of
other acquisition-
related operating
expenses (161) -- -- --
------- ------- ------- -------
Non-GAAP Net income
(loss) 6,149 8,143 (917) 5,490
======= ======= ======= =======
NET INCOME (LOSS) PER
DILUTED SHARE
GAAP Net income (loss)
per diluted share (0.02) 0.06 (0.09) 0.18
Plus:
Amortization of
acquisition-related
intangible assets 0.18 0.24 0.04 0.06
Stock based
compensation expenses 0.19 0.19 0.01 0.08
Other acquisition-
related operating
expenses (**) 0.03 -- -- --
Less:
Income tax effect of
amortization of
acquisition-related
intangible assets (0.06) (0.08) (0.02) (0.03)
Income tax effect of
stock based
compensation expenses (0.00) (0.01) 0.01 (0.01)
Income tax effect of
other acquisition-
related operating
expenses (0.01) -- -- --
------- ------- ------- -------
Non-GAAP Net income (loss)
per diluted share 0.31 0.40 (0.05) (0.27)
======= ======= ======= =======
Shares used in computing
diluted net income per
share 20,150 20,127 19,976 19,980
======= ======= ======= =======
(**) Pre-acquisition costs from potential transactions that have not
materialized.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following table shows the classification of stock-based
compensation expense:
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)(Unaudited)
U.S. $ in thousands
----------------------------------------
Cost of product sales 60 45 1 6
Cost of services and
projects 707 719 (14) 276
Research and development -
net 1,407 2,221 (37) 642
Selling and marketing 450 531 13 377
General and administrative 1,265 374 212 256
------- ------- ------- -------
Total 3,889 3,890 175 1,557
======= ======= ======= =======
The following table shows the classification of amortization of
acquisition-related intangible assets:
Year ended Three months ended
December 31 December 31
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (*) (Unaudited)(Unaudited)
U.S. $ in thousands
----------------------------------------
Cost of product sales 2,260 2,976 551 861
Cost of services and
projects 963 1,176 215 36
Selling and marketing 93 372 1 177
General and administrative 263 386 95 122
------- ------- ------- -------
Total 3,576 4,910 861 1,196
======= ======= ======= =======
(*) The 2006 figures were extracted from the audited consolidated
financial statements for year 2006.
RETALIX LTD.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE - Adoption of FIN 48
Effective January 1, 2007, the Company adopted FIN 48, "Accounting for Uncertainty Taxes -- an interpretation of FAS 109", which was issued in July 2006. FIN 48 clarifies the accounting for uncertainty in income taxes, and prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company's accounting policy, pursuant to the adoption of FIN 48, is to classify interest and penalties recognized in the financial statements relating to uncertain tax positions, under provision for income taxes.
The adoption of FIN 48 resulted in the recording of an increase of the tax liabilities totaling $1,826,000 (including interest in the amount of $222,000) associated with tax benefits and other uncertainties related to tax returns, which was accounted for as a reduction of to the retained earnings balance as of January 1, 2007.
The Company and its U.S. subsidiaries which comprise most of the group, received final tax assessments through the year ended December 31, 2002.