Retalix Announces Third Quarter 2009 Results

Improved Operating Efficiencies and Financial Income Contributed to Adjusted Net Income (Non-GAAP)* of $5.0 Million; Generated $6.1 Million in Cash Flow From Operations


RA'ANANA, Israel, Nov. 17, 2009 (GLOBE NEWSWIRE) -- Retalix(R) Ltd. (Nasdaq:RTLX), a leading provider of software solutions for retailers and distributors, announced today results for the third quarter and nine-month period ended September 30, 2009.

Summarized financial highlights for the third quarter and nine-month period ended September 30, 2009 results:



 * Total Revenues in the third quarter were $50.1 million, compared
   to $56.2 million in the third quarter of 2008. Total Revenues in
   the nine-month period ended September 30, 2009 were $146.0
   million, compared to $169.5 million in the nine-month period
   ended September 30, 2008.

 * Income from Operations for the third quarter and the nine-month
   period ended September 30, 2009 was $3.5 million and $10.9
   million, respectively, compared to $1.9 million and $2.0 million
   in the third quarter and the nine-month period ended September
   30, 2008, respectively.

 * Adjusted Income from Operations (Non-GAAP)* for the third quarter
   and the nine-month period ended September 30, 2009 was $4.9
   million and $15.4 million, respectively, compared to $3.9 million
   and $8.5 million in the third quarter and the nine-month period
   ended September 30, 2008, respectively.

 * Financial Income for the third quarter was $1.5 million, due to
   currency exchange income and benefits related to valuation of
   forward currency transactions, versus a financial expense ($0.1)
   million in the third quarter of 2008.

 * GAAP Net Income for the third quarter of 2009 was $4.2 million,
   or $0.20 per diluted share, compared to $1.1 million, or $0.05
   per diluted share in the third quarter of 2008. GAAP Net Income
   in the nine-month period ended September 30, 2009 was $9.8
   million, or $0.48 per diluted share, compared to $2.1 million, or
   $0.10 per diluted share in the nine-month period ended September
   30, 2008.

 * Adjusted Net Income (Non-GAAP)* for the third quarter was $5.0
   million, or $0.24 per diluted share, compared to $2.8 million, or
   $0.13 per diluted share in the third quarter of 2008. Adjusted
   Net Income (Non-GAAP)* in the nine-month period ended September
   30, 2009 was $12.9 million, or $0.64 per diluted share, compared
   to $7.1 million, or $0.34 per diluted share, in the nine-month
   period ended September 30, 2008.

 * Cash Flow from Operating Activities generated $6.1 million during
   the third quarter of 2009, compared to a cash flow of $1.8
   million generated during the third quarter of 2008. During the
   nine-month period ended September 30, 2009, the Company generated
   $36.3 million from Operating Activities, compared to a cash flow
   of $0.9 million generated from Operating Activities in the
   nine-month period ended September 30, 2008.

 * Balance Sheet: As of September 30, 2009, the Company had more
   than $71.2 million in cash, cash equivalents and marketable
   securities on its balance sheet and less than $0.7 million
   dollars in debt

Barry Shaked, President and Chief Executive Officer of Retalix, said, "We are continuing to achieve positive results by executing on our plan for 2009, which was designed to maintain profitability despite the challenges in the global economy. We have been successful in increasing operating efficiencies and managing costs in order to address the difficult market conditions which continue to impact our revenues. At the same time we continue to meet the global needs of our customers for effective and cost-efficient solutions for their operations."

Hugo Goldman, the Company's Chief Financial Officer, said, "We are maintaining improved income from operations through careful management of our costs. Operating expenses were down nearly fifteen percent in the third quarter and were down by twenty-one percent in the first nine months of 2009 versus the respective periods in 2008. Profitability was further aided by $1.5 million in financial income recorded in the third quarter due to currency translation benefits on the value of our non-dollar net assets and the valuation of our currency hedges. The profitability along with the cost savings, the ongoing collections from customers and the timing of certain payments helped us to generate $6.1 million in cash flow in the third quarter and $36.3 million in the first nine months of 2009. We continue to maintain a strong balance sheet with over $71.2 million in cash, cash equivalents and marketable securities."

Outlook for FY 2009

Shaked added, "Market conditions remain largely unchanged with retailers and distributors focusing on near-term operational and cost improvements and efforts to maintain and grow their market share. We expect little to change in the remainder of 2009, and are beginning to focus on the opportunities for 2010 while carefully monitoring the global economy.

"At the beginning of 2009, we announced that Retalix expected full year 2009 revenues to be between $180.0 million and $200.0 million, Non-GAAP* net income to be between $5.0 million and $11.0 million and GAAP net income to be between $1.0 million and $6.0 million. While market conditions continue to be challenging in the fourth quarter, we expect to meet the original revenue targets and expect to exceed both the forecast for Non-GAAP* net income and GAAP net income for 2009."

Conference Call and Webcast Information

The Company will be holding a conference call to discuss results for the third quarter of 2009 on Tuesday, November 17th 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, 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 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. Reconciliation between GAAP to Non-GAAP outlook for 2009 is provided in the table below.



                                                      FY 2009 Outlook
                                                     (U.S. $ Millions)
                                                     -----------------
 Total Revenues                                         180.0-200.0
 GAAP Net Income                                            1.0-6.0
 (a) The effect of equity-based compensation,
     net of tax effect                                      2.0-2.8
 (b) The effect of amortization of acquisition
     related intangible assets, net of tax effect           2.0-2.2
 Non-GAAP Net Income                                       5.0-11.0

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 2009" including our expected results, reactions to market conditions, anticipated demand for our software products, customers pipeline, and about our market position and expected cash flow and profitability, 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, the transition of management 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, 2008, 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       Three months     Year
                             ended              ended         ended
                            Sept. 30           Sept. 30      Dec. 31
                         ----------------  ----------------  -------
                          2009     2008     2009     2008     2008
                         -------  -------  -------  -------  -------
                           (Unaudited)        (Unaudited)   (Audited)
                         ----------------  ----------------  -------
                                       U.S. $ in thousands
                                     (except per share data)
                         --------------------------------------------
 REVENUES:
   Product sales           42,425   54,795   16,026   17,715   72,907
   Services               103,580  114,657   34,120   38,519  148,720
                          -------  -------  -------  -------  -------
     Total revenues       146,005  169,452   50,146   56,234  221,627
                          -------  -------  -------  -------  -------
 COST OF REVENUES:
   Cost of product sales   27,605   35,830   11,136   12,184   45,201
   Cost of services        56,562   66,818   18,372   21,913   88,078
                          -------  -------  -------  -------  -------
     Total cost of
      revenues             84,167  102,648   29,508   34,097  133,279
                          -------  -------  -------  -------  -------
 GROSS PROFIT              61,838   66,804   20,638   22,137   88,348
                          -------  -------  -------  -------  -------

 OPERATING EXPENSES:
   Research and
    development - net      20,965   29,928    6,977    9,079   38,357
   Selling and marketing   14,282   16,697    4,404    5,054   23,623
   General and
    administrative         15,627   18,153    5,702    6,173   26,677
   Other (income)
    expenses - net             36      (64)      24      (38)    (376)
   Impairment of goodwill      --       --       --       --   58,182
                          -------  -------  -------  -------  -------
     Total operating
      expenses             50,910   64,714   17,107   20,268  146,463
                          -------  -------  -------  -------  -------
 INCOME (LOSS)
  FROM OPERATIONS          10,928    2,090    3,531    1,869  (58,115)
 FINANCIAL INCOME
  (EXPENSES), net           1,572      621    1,492     (119)  (1,978)
                          -------  -------  -------  -------  -------
 INCOME (LOSS) BEFORE
  TAXES ON INCOME          12,500    2,711    5,023    1,750  (60,093)
 TAX BENEFIT (EXPENSES)    (2,448)      50     (838)    (423)   8,960
                          -------  -------  -------  -------  -------
 INCOME (LOSS) AFTER
  TAXES ON INCOME          10,052    2,761    4,185    1,327  (51,133)
 SHARE IN INCOME OF AN
  ASSOCIATED COMPANY           17       35       15        4       54
                          -------  -------  -------  -------  -------
 NET INCOME (LOSS)         10,069    2,796    4,200    1,331  (51,079)
                          -------  -------  -------  -------  -------
 NET INCOME ATTRIBUTABLE
  TO NON-CONTROLLING
  INTERESTS                  (272)    (745)     (48)    (234)    (537)
                          -------  -------  -------  -------  -------
 NET INCOME (LOSS)
  ATTRIBUTABLE TO
  RETALIX LTD.              9,797    2,051    4,152    1,097  (51,616)
                          =======  =======  =======  =======  =======
 EARNINGS (LOSSES)
  PER SHARE - in U.S. $:
   Basic                     0.48     0.10     0.20     0.05    (2.55)
                          =======  =======  =======  =======  =======
   Diluted                   0.48     0.10     0.20     0.05    (2.55)
                          =======  =======  =======  =======  =======
 WEIGHTED AVERAGE NUMBER
  OF SHARES USED IN
  COMPUTATION OF
  EARNINGS PER SHARE -
  in thousands:
   Basic                   20,400   20,235   20,406   20,315   20,265
                          =======  =======  =======  =======  =======
   Diluted                 20,425   20,275   20,434   20,333   20,265
                          =======  =======  =======  =======  =======


                             RETALIX LTD.

                 CONDENSED CONSOLIDATED BALANCE SHEET


                                               Sept. 30       Dec. 31
                                            ----------------  -------
                                              2009     2008     2008
                                            -------  -------  -------
                                               (Unaudited)   (Audited)
                                            ----------------  -------
                                                U.S. $ in thousands
                                            -------------------------
               Assets
 CURRENT ASSETS:
   Cash and cash equivalents                 70,317   22,924   33,546
   Marketable securities                         50    3,660    3,239
   Accounts receivable:
     Trade                                   58,562   85,160   70,017
     Other                                    9,228    5,056   11,554
   Prepaid expenses                           4,995    4,681    4,003
   Inventories                                1,579    1,597    1,037
   Deferred income taxes                      5,977    8,088    4,871
                                            -------  -------  -------
     Total current assets                   150,708  131,166  128,267
                                            -------  -------  -------
 NON-CURRENT ASSETS :
   Long-term receivables                      1,288    3,782    3,382
   Long-term prepaid expenses                   311      596      539
   Long term investments                        862    1,043      862
   Amounts funded in respect of employee
    rights upon retirement                   10,170   10,450    8,663
   Deferred income taxes                     11,668    9,918   15,462
   Other                                        441      207      424
                                            -------  -------  -------
     Total non - current assets              24,740   25,996   29,332
                                            -------  -------  -------
 PROPERTY, PLANT AND EQUIPMENT, net          15,424   13,888   14,734
                                            -------  -------  -------
 GOODWILL                                    50,864  109,013   50,660
                                            -------  -------  -------
 OTHER INTANGIBLE ASSETS, net of
  accumulated amortization
   Customer relationship                     13,270   15,578   15,386
   Other                                      2,036    3,107    2,413
                                            -------  -------  -------
                                             15,306   18,685   17,799
                                            -------  -------  -------
       Total assets                         257,042  298,748  240,792
                                            =======  =======  =======


                             RETALIX LTD.

                 CONDENSED CONSOLIDATED BALANCE SHEET


                                               Sept. 30       Dec. 31
                                            ----------------  -------
                                              2009     2008     2008
                                            -------  -------  -------
                                               (Unaudited)   (Audited)
                                            ----------------  -------
                                                U.S. $ in thousands
                                            -------------------------
   Liabilities and shareholders' equity
 CURRENT LIABILITIES:
   Current maturities of long-term
    bank loans                                  265      259      249
   Accounts payable and accruals:
     Trade                                    4,396   13,315    8,672
     Employees and employee institutions      9,478    8,818    8,783
     Accrued expenses                        11,112    7,011    6,527
     Other                                    2,333    1,963    2,596
   Deferred revenues                         22,740   18,393   19,135
                                            -------  -------  -------
       Total current liabilities             50,324   49,759   45,962
                                            -------  -------  -------
 LONG-TERM LIABILITIES:
   Long-term loans, net of
    current maturities                          412      673      523
   Employee rights upon retirement           14,374   15,321   13,860
   Deferred tax liability                       271      266      286
   Other tax payables                           483    1,058    1,112
                                            -------  -------  -------
       Total long-term liabilities           15,540   17,318   15,781
                                            -------  -------  -------
       Total liabilities                     65,864   67,077   61,743
                                            -------  -------  -------
 EQUITY:
   Share capital -Ordinary shares of
    NIS 1.00 par value (authorized:
    September 30, 2009 (unaudited),
    December 31, 2008 (audited) and
    September 30, 2008 (unaudited)
    30,000,000 shares; issued and
    outstanding: - September 30, 2009
    (unaudited) 20,406,363 Shares;
    December 31, 2008 (audited) -
    20,389,771 shares; September
    30, 2008 (unaudited) -
    20,315,515 shares                         5,384    5,361    5,380
   Additional paid in capital               177,060  174,587  175,435
   Retained earnings                          4,376   48,246   (5,421)
   Accumulated other comprehensive income       697      (61)     328
                                            -------  -------  -------
       Total Retalix shareholders' equity   187,517  228,133  175,722
                                            -------  -------  -------
       Non-controlling interest               3,661    3,538    3,327
                                            -------  -------  -------
       Total equity                         191,178  231,671  179,049
                                            -------  -------  -------
         Total liabilities and equity       257,042  298,748  240,792
                                            =======  =======  =======


                             RETALIX LTD.

                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                             Nine months       Three months     Year
                                ended              ended        ended
                              Sept. 30           Sept. 30      Dec. 31
                          -----------------  ----------------  -------
                           2009      2008     2009     2008     2008
                          -------   -------  -------  -------  -------
                             Unaudited          Unaudited      Audited
                          -----------------  ----------------  -------
                                      U.S. $ in thousands
                          --------------------------------------------
 CASH FLOWS FROM
  OPERATING ACTIVITIES:
   Net income (loss)       10,069    2,796     4,200    1,331  (51,079)
   Adjustments required
    to reconcile net
    income to net cash
    provided by
    operating activities:
     Depreciation and
      amortization          4,652    4,606     1,561    1,513    6,265
     Losses (gains) from
      sale of property,
      plant and equipment      44       --        23       --      (46)
     Share in gains of
      an associated
      company                  (4)     (35)       (2)      (4)     (54)
     Stock based
      compensation
      expenses              1,623    3,927       461    1,257    4,777
     Changes in accrued
      liability for
      employee rights
      upon retirement         408      965       616     (573)    (396)
     Losses (gains) on
      amounts funded in
      respect of employee
      rights upon
      retirement             (797)  (1,293)   (1,080)     230      312
     Deferred income
      taxes -  net          2,683   (2,623)      282      250   (4,928)
     Net decrease
      (increase) in
      trading securities      159      (79)       13      187      342
     Impairment of
      available for sale
      securities               --       --        --       --      700
     Amortization of
      discount on
      marketable debt
      securities               --       --        --       --        5
     Impairment of
      goodwill                 --       --        --       --   58,182
     Other                     (5)      43       (33)     117      (26)
     Changes in
      operating assets
      and liabilities:
       Decrease
        (increase) in
        accounts
        receivable:
         Trade
          (including
          the non-
          current
          portion)         13,692   (1,916)   (1,717)  (1,205)  13,395
         Other
          (including
          the non-
          current
          portion)          1,588   (4,246)      910     (538) (10,080)
       Increase
        (decrease) in
        accounts payable
        and accruals:
         Trade             (4,302)  (2,071)     (219)    (401)  (6,655)
         Employees,
          employee
          institutions
          and other         4,079     (441)    1,583   (1,136)    (113)
     Decrease (increase)
      in inventories         (542)    (307)     (529)    (519)     247
     Increase (decrease)
      in long-term
      institutions           (629)     (39)   (2,782)    (205)      15
     Increase in
      deferred revenues     3,545    1,635     2,836    1,453    2,381
                          -------   -------  -------  -------  -------

   Net cash provided by
    operating
    activities - forward   36,263      922     6,123    1,757   13,244
                          =======  =======  ========  =======  =======


                             RETALIX LTD.

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Nine months       Three months     Year
                                ended              ended        ended
                              Sept. 30           Sept. 30      Dec. 31
                          -----------------  ----------------  -------
                           2009      2008     2009     2008     2008
                          -------   -------  -------  -------  -------
                             Unaudited          Unaudited      Audited
                          -----------------  ----------------  -------
                                      U.S. $ in thousands
                          --------------------------------------------
   Net cash provided by
    operating
    activities - brought
    forward                36,263      922     6,123    1,757   13,244
                          =======  =======  ========  =======  =======
 CASH FLOWS FROM
  INVESTING ACTIVITIES:
   Maturity of
    marketable debt
    securities held to
    maturity                  490       370      200       --      370
   Sales of marketable
    trading debt
    securities              2,535        --       --       --       --
   Investment in
    marketable debt
    securities held to
    maturity                   --      (199)      --       --     (208)
   Acquisition of
    subsidiaries and
    business
    consolidated for
    the first time(a)          --      (735)      --     (110)    (110)
   Additional
    investments in
    subsidiaries               --        --       --       --     (714)
   Purchase of property,
    plant, equipment and
    other assets           (2,267)   (3,446)  (1,307)  (2,078)  (5,055)
   Proceeds from sale of
    property, plant and
    equipment                 120        38       50       38       55
   Amounts funded in
    respect of employee
    rights upon
    retirement, net          (678)     (360)    (282)      32     (168)
   Long-term loans
    collected from
    employees                  14        17       --        1       36
                          -------   -------  -------  -------  -------
   Net cash provided by
    (used in) investing
    activities                214    (4,315)  (1,339)  (2,117)  (5,794)
                          -------   -------  -------  -------  -------
 CASH FLOWS FROM
  FINANCING ACTIVITIES:
   Repayment of
    long-term bank loans     (119)     (116)      --       --     (241)
   Issuance of share
    capital to employees
    and non-employees
    resulting from
    exercise of options         4     3,995       --       --    4,012
   short-term bank 
    credit - net               --       (11)      --      (11)     (11)
                          -------   -------  -------  -------  -------
   Net cash provided by
    (used in) financing
    activities               (115)    3,868       --      (11)   3,760
                          -------   -------  -------  -------  -------
 EFFECT OF EXCHANGE RATE
  CHANGES ON CASH             409       (35)     322     (103)    (148)
                          -------   -------  -------  -------  -------
 NET INCREASE (DECREASE)
  IN CASH AND CASH
  EQUIVALENTS              36,771       440    5,106     (474)  11,062
 BALANCE OF CASH AND
  CASH EQUIVALENTS AT
  BEGINNING OF PERIOD      33,546    22,484   65,211   23,398   22,484
                          -------   -------  -------  -------  -------
   BALANCE OF CASH AND
    CASH EQUIVALENTS AT
    END OF PERIOD          70,317    22,924   70,317   22,924   33,546
                          =======   =======  =======  =======  =======


                             RETALIX LTD.

                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                             Nine months       Three months     Year
                                ended             ended         ended
                               Sept. 30          Sept. 30      Dec. 31
                           ----------------  ----------------  -------
                            2009     2008     2009     2008     2008
                           -------  -------  -------  -------  -------
                              Unaudited         Unaudited      Audited
                           ----------------  ----------------  -------
                                      U.S. $ in thousands
                           -------------------------------------------
(a) Supplementary
     disclosure of
     cash flow
     information -
    Fair value of assets
     acquired and
     liabilities assumed
     of subsidiaries and
     activities acquired
     at the date of
     acquisition -
     Goodwill and other
      intangible assets
      arising on
      acquisition               --     (735)      --     (110)    (110)
                           -------  -------  -------  -------  -------
                                --     (735)      --     (110)    (110)
                           =======  =======  =======  =======  =======

 (b) Supplemental information on investing activities not involving
     cash flows:

     1. During 2008 the Company, through its subsidiary
        StoreAlliance.com Ltd. acquired the Supplier's Portal
        activity. An amount of approximately $81,000 acquired in
        credit and will be presented as investing activity when
        actually paid.

     2. The Company purchased equipment in the amount of $863,000 in
        credit. This amount will be presented as investing activity
        when actual payment will be performed.


                             RETALIX LTD.
           UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

 The following tables reflect selected Retalix' non-GAAP results
 reconciled to GAAP results:

                             Nine months       Three months     Year
                                ended             ended         ended
                               Sept. 30          Sept. 30      Dec. 31
                           ----------------  ----------------  -------
                            2009     2008     2009     2008     2008
                           -------  -------  -------  -------  -------
                                           Unaudited
                           -------------------------------------------
                                      U.S. $ in thousands
                               (except share and per share data)
                           -------------------------------------------
 OPERATING INCOME (LOSS)
   GAAP Operating income
    (loss)                  10,928    2,090    3,531    1,869  (58,115)
   GAAP Operating Margin*      7.5%     1.2%       7%     3.3%   (26.2%)
   Plus:
     Amortization of
      acquisition-related
      intangible assets      2,812    2,478      929      823    3,308
     Stock based
      compensation
      expenses               1,623    3,927      461    1,257    4,775
     Impairment of
      goodwill                                                  58,182
                           -------  -------  -------  -------  -------
   Non-GAAP Operating
    income                  15,363    8,495    4,921    3,949    8,150
                           =======  =======  =======  =======  =======
   Non-GAAP Operating
    Margin*                   10.5%     5.0%     9.8%     7.0%     3.7%
                           =======  =======  =======  =======  =======

 NET INCOME (LOSS)
   GAAP Net income (loss)    9,797    2,051    4,152    1,097  (51,616)
   Plus:
     Amortization of
      acquisition-related
      intangible assets      2,812    2,478      929      823    3,308
     Stock based
      compensation
      expenses               1,623    3,927      461    1,257    4,775
     Impairment of
      goodwill                                                  58,182
   Less:
     Income tax effect of
      amortization of
      acquisition-related
      intangible assets     (1,100)    (927)    (365)    (288)  (1,262)
     Tax expenses (income)
      effect of stock
      based compensation
      expenses                (231)    (412)    (141)    (135)    (456)
     Income tax effect of
      impairment of
      goodwill                           --                --   (3,041)
                           -------  -------  -------  -------  -------
   Non-GAAP Net income      12,900    7,117    5,036    2,754    9,890
                           =======  =======  =======  =======  =======

 NET INCOME (LOSS) PER
  DILUTED SHARE
   GAAP Net income (loss)
    per diluted share         0.48     0.10     0.20     0.05    (2.55)
   Plus:
     Amortization of
      acquisition-related
      intangible assets       0.14     0.12     0.05     0.04     0.16
     Stock based
      compensation
      expenses                0.08     0.19     0.02     0.06     0.24
     Impairment of
      goodwill                                                    2.87
   Less:
     Income tax effect of
      amortization of
      acquisition-related
      intangible assets      (0.05)   (0.05)   (0.02)   (0.01)   (0.06)
     Income tax effect of
      stock based
      compensation
      expenses               (0.01)   (0.02)   (0.01)   (0.01)   (0.02)
     Income tax effect of
      impairment of
      goodwill                  --       --       --       --    (0.15)
                           -------  -------  -------  -------  -------

   Non-GAAP Net income per
    diluted share             0.64     0.34     0.24     0.13     0.49
                           =======  =======  =======  =======  =======

   Shares used in
    computing diluted net
    income per share        20,425   20,275   20,434   20,333   20,265
                           =======  =======  =======  =======  =======

 * Operating Margin calculation: Operating Income as a percentage of
   Total Revenues


                             RETALIX LTD.
           UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS


 The following table shows the classification of stock-based
 compensation expense:
                             Nine months       Three months     Year
                                ended             ended         ended
                               Sept. 30          Sept. 30      Dec. 31
                           ----------------  ----------------  -------
                            2009     2008     2009     2008     2008
                           -------  -------  -------  -------  -------
                              Unaudited         Unaudited      Audited
                           ----------------  ----------------  -------
                                      U.S. $ in thousands
                           -------------------------------------------
 Cost of product sales          76      125       23       38      174
 Cost of services              768    1,488      233      451    1,847
 Research and development      373      857      107      240    1,029
 Selling and marketing         144      310       40       91      360
 General and                                                  
  administrative               262    1,147       58      437    1,365
                           -------  -------  -------  -------  -------
 Total                       1,623    3,927      461    1,257    4,775
                           =======  =======  =======  =======  =======


 The following table shows the classification of amortization of
 acquisition-related intangible assets:

                              Nine months      Three months     Year
                                ended             ended         ended
                               Sept. 30          Sept. 30      Dec. 31
                           ----------------  ----------------  -------
                            2009     2008     2009     2008     2008
                           -------  -------  -------  -------  -------
                              Unaudited         Unaudited      Audited
                           ----------------  ----------------  -------
                                      U.S. $ in thousands
                           -------------------------------------------
 Cost of product sales       1,870    1,650      624      548    2,211
 Cost of services              657      590      219      197      786
 Selling and marketing          --        3       --        1        3
 General and                                                  
  administrative               285      235       86       77      308
                           -------  -------  -------  -------  -------
 Total                       2,812    2,478      929      823    3,308
                           =======  =======  =======  =======  =======


            

Coordonnées