RA'ANANA, Israel, Aug. 20, 2008 (GLOBE NEWSWIRE) -- Retalix(r) Ltd. (Nasdaq:RTLX), a leading provider of software solutions for retailers and distributors, today announced results for the second quarter and six months period ended June 30, 2008.
Summarized financial highlights of the three months ended June 30, 2008:
-- Total Revenues reached a Company record of $59.3 million,
compared to $55.4 million in the second quarter of 2007.
-- GAAP Operating Income (Loss) was $1.1 million, or 1.8% of total
revenues, compared to $(2.2) million, or (3.9%), in the second
quarter of 2007.
-- Adjusted Operating Income (Non-GAAP)* was $3.2 million, or 5.5%
of total revenues, compared to $0.8 million, or 1.4%, in the
second quarter of 2007.
-- GAAP Net Income was $1.5 million, or $0.07 per diluted share,
compared to net loss of $(1.8) million, or $(0.09) per diluted
share, in the second quarter of 2007.
-- Adjusted Net Income (Non-GAAP)* increased to $3.2 million, or
$0.15 per diluted share, compared to $0.6 million, or $0.03 per
diluted share, in the second quarter of 2007.
Summarized financial highlights of the six months ended June 30, 2008:
-- Total Revenues for the period reached a Company record of $113.2
million, compared to $108.2 million in the six months ended
June 30, 2007.
-- GAAP Net Income for the period was $1.0 million, or $0.04 per
diluted share, compared to net loss of $(1.8) million, or $(0.09)
per diluted share in the six months ended June 30, 2007.
-- Adjusted Net Income (Non-GAAP)* increased to $4.4 million, or
$0.22 per diluted share, compared to $2.5 million, or $0.13 per
diluted share, in the six months ended June 30, 2007.
Business and operations highlights:
-- PetroChina rolled out Retalix software to 30 service stations as
the initial step in its plan to install Retalix in 1,200 pilot
sites by the end of 2008.
-- In Europe, a tier-1 grocery retailer selected Retalix for a
chain-wide point-of-sale upgrade project.
-- Associated Food Stores, a North American wholesale distributor,
decided to deploy Retalix TRICEPS warehouse management systems in
two additional sites, replacing a homegrown solution.
-- Big Y Foods, a prominent mid-tier grocery chain in the United
States, selected Retalix HQ and Retalix InSync Purchasing to
replace its current merchandising systems.
Management comments:
Barry Shaked, President and Chief Executive Officer of Retalix, said, "The results of the second quarter demonstrate how we are executing on the profitability goals we have set for 2008. The improvement in profitability, which began in the first quarter, continued and grew in the second quarter. At the same time, we are proud of reaching record quarterly revenues. We are delivering on our plan and are making progress with our turnaround. We believe that we can continue to build on these results throughout 2008."
Hugo Goldman, the Company's Chief Financial Officer, said: "During the second quarter of 2008, we used $1.2 million in operating activities, compared to $1.5 million used in the second quarter of 2007. This includes a tax payment of $2.3 million for a previous year. We expect cash flow from operations to continue the improvement trend in the coming quarters. As of June 30, 2008, we had $28.4 million in cash, cash equivalents and marketable securities, and practically no debt."
Shaked added: "Although retailers and distributors are cautiously evaluating economic conditions, they are largely moving ahead with IT investment plans. Industry analysts from AMR Research recently noted(i), that the economy may cause delays in planned investments, but few retailers will be willing to turn their backs on key IT investments, realizing that slashing budgets in the short term jeopardizes their health in the long term."
"Although new deals are taking longer to be closed, we believe that we can achieve the goals we have set for 2008 of total revenues exceeding $232 million, GAAP net income of $8 million, and adjusted, non-GAAP* net income of $15 million. We also 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 second quarter 2008 on Wednesday, August 20th, 2008 at 9:00am EDT (4:00pm 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. 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.
Retalix is a registered trademark of Retalix Ltd. in the USA, the EU and in other countries.
(i) AMR Research, Retail IT Budget Benchmarking Study, 2007-2008, July 2008
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 expected results for 2008, our statements regarding continuing to build on our quarter progress, the business outlook, the expected negative impact of the weakness of the U.S. dollar, our expected improvement in operating cash flows, the strength of the pipeline for, and our goals for, the remainder of 2008 and our expectation of the payoff of investments in product development and new territories 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 U.S. 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, 2007, 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.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX AND THREE MONTHS PERIOD ENDED JUNE 30, 2008
Six months ended Three months ended Year ended
June 30, June 30, Dec. 31
------------------ ------------------ --------
2008 2007 2008 2007 2007
-------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Audited)
-------- -------- -------- -------- --------
U.S. $ in thousands
(except per share data)
------------------------------------------------
REVENUES:
Product sales 37,080 37,629 21,521 20,181 80,511
Services 76,138 70,541 37,764 35,264 140,900
-------- -------- -------- -------- --------
Total
revenues 113,218 108,170 59,285 55,445 221,411
-------- -------- -------- -------- --------
COST OF REVENUES:
Cost of product
sales 23,646 18,841 13,856 10,049 39,132
Cost of services 44,905 29,805 22,952 16,026 65,281
-------- -------- -------- -------- --------
Total cost of
revenues 68,551 48,646 36,808 26,075 104,413
-------- -------- -------- -------- --------
GROSS PROFIT 44,667 59,524 22,477 29,370 116,998
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Research and
development -
net 20,850 31,814 10,075 16,369 58,653
Selling and
marketing 11,643 15,886 5,692 7,925 31,617
General and
administrative 11,980 12,442 5,639 6,576 27,539
Other expenses -
net -- 577 -- 681 643
-------- -------- -------- -------- --------
Total
operating
expenses 44,473 60,719 21,406 31,551 118,452
-------- -------- -------- -------- --------
INCOME (LOSS)
FROM OPERATIONS 194 (1,195) 1,071 (2,181) (1,454)
FINANCIAL INCOME,
net 766 208 623 72 1,032
-------- -------- -------- -------- --------
INCOME (LOSS)
BEFORE TAXES ON
INCOME 960 (987) 1,694 (2,109) (422)
TAX BENEFIT
(EXPENSES) 473 (588) 26 377 435
-------- -------- -------- -------- --------
INCOME (LOSS)
AFTER TAXES ON
INCOME 1,433 (1,575) 1,720 (1,732) 13
SHARE IN GAINS
(LOSSES) OF AN
ASSOCIATED
COMPANY 32 (2) 20 2 (3)
MINORITY
INTERESTS IN
GAINS OF
SUBSIDIARIES (511) (247) (254) (114) (508)
-------- -------- -------- -------- --------
NET INCOME (LOSS) 954 (1,824) 1,486 (1,844) (498)
======== ======== ======== ======== ========
EARNINGS (LOSSES)
PER SHARE - in
U.S. $:
Basic 0.05 (0.09) 0.07 (0.09) (0.02)
======== ======== ======== ======== ========
Diluted 0.04 (0.09) 0.07 (0.09) (0.02)
======== ======== ======== ======== ========
WEIGHTED AVERAGE
NUMBER OF SHARES
USED IN
COMPUTATION OF
EARNINGS PER
SHARE - in
thousands:
Basic 20,191 19,764 20,273 19,881 19,851
======== ======== ======== ======== ========
Diluted 20,242 19,764 20,307 19,881 19,851
======== ======== ======== ======== ========
RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 2008
June 30 Dec. 31
2008 2007 2007
------- ------- -------
(Unaudited) (Audited)
---------------- -------
U.S. $ in thousands
-------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 23,398 53,324 22,484
Marketable securities 3,647 4,201 3,455
Accounts receivable:
Trade 85,588 55,306 81,429
Other 9,213 5,182 5,485
Inventories 1,089 873 1,289
Deferred income taxes 8,361 5,726 8,286
------- ------- -------
Total current assets 131,296 124,612 122,428
------- ------- -------
NON-CURRENT ASSETS :
Marketable securities 1,364 860 1,657
Deferred income taxes 9,878 5,248 7,050
Long-term receivables 2,571 5,311 5,681
Amounts funded in respect of employee
rights upon retirement 10,486 7,372 8,806
Other 839 757 795
------- ------- -------
25,138 19,548 23,989
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT, net 12,539 10,828 12,568
------- ------- -------
GOODWILL 109,173 112,979 108,926
------- ------- -------
OTHER INTANGIBLE ASSETS, net of
accumulated amortization
Customer relationship 15,620 16,991 16,450
Other 3,609 5,694 4,229
------- ------- -------
19,229 22,685 20,679
------- ------- -------
Total assets 297,375 290,652 288,590
======= ======= =======
June 30 Dec. 31
2008 2007 2007
------- ------- -------
(Unaudited) (Audited)
---------------- -------
U.S. $ in thousands
-------------------------
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term bank credit 11 7,566 11
Current maturities of long-term
bank loans 279 233 258
Accounts payable and accruals:
Trade 13,892 11,141 15,410
Employees and employee institutions 9,450 9,348 8,977
Accrued expenses 5,722 6,130 6,393
Other 3,542 5,915 3,005
Deferred revenues 16,945 16,503 16,763
------- ------- -------
Total current liabilities 49,841 56,836 50,817
------- ------- -------
LONG-TERM LIABILITIES :
Long-term loans, net of current
maturities 710 848 786
Employee rights upon retirement 15,812 12,735 14,362
Deferred tax liability 251 976 219
Other tax payables 1,263 -- 1,097
Deferred revenues -- 206 --
------- ------- -------
Total long-term liabilities 18,036 14,765 16,464
------- ------- -------
Total liabilities 67,877 71,601 67,281
------- ------- -------
MINORITY INTERESTS 3,301 2,529 2,791
------- ------- -------
SHAREHOLDERS' EQUITY:
Share capital -Ordinary shares of NIS
1.00 par value (authorized: June 30,
2008 (unaudited), December 31, 2007
(audited) and June 30, 2007
(unaudited) 30,000,000 shares; issued
and outstanding: - June 30, 2008
(unaudited) 20,315,515 Shares; December
31,2007 (audited) -20,001,382 shares;
June 30, 2007 (unaudited) -19,888,984
shares 5,361 5,244 5,273
Additional paid in capital 173,330 165,088 166,752
Retained earnings 47,149 46,015 46,195
Accumulated other comprehensive income 357 175 298
------- ------- -------
Total shareholders' equity 226,197 216,522 218,518
------- ------- -------
Total liabilities and shareholders
equity 297,375 290,652 288,590
======= ======= =======
RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX AND THREE MONTHS PERIOD ENDED JUNE 30, 2008
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
--------------- --------------- -------
2008 2007 2008 2007 2007
------ ------ ------ ------ -------
Unaudited Unaudited Audited
--------------- --------------- -------
U.S. $ in thousands
-------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) 954 (1,824) 1,486 (1,844) (498)
Adjustments required to
reconcile net income to
net cash provided by
operating activities:
Minority interests in
gains of subsidiaries 511 247 254 114 508
Depreciation and
amortization 3,093 3,474 1,521 1,713 6,947
Share in losses (gains)
of an associated
company (32) 2 (20) (2) 3
Stock based
compensation expenses 2,670 2,733 1,352 1,376 3,889
Changes in accrued
liability for employee
rights upon retirement 1,303 1,301 86 988 2,739
Losses (gains) on
amounts funded in
respect of employee
rights upon retirement (1,288) (65) (484) 75 (950)
Deferred income taxes
- net (2,873) (917) (1,097) (728) (6,570)
Net decrease (increase)
in trading securities (266) 28 (191) (33) (216)
Amortization of discount
on marketable debt
securities -- 9 -- 4 11
Other (73) 62 114 61 (109)
Changes in operating
assets and liabilities:
Decrease (increase) in
accounts receivable:
Trade (including the
non-current portion) (711) (8,491) (1,222) 1,798 (34,700)
Other (including long
term other tax
payables) (3,542) 328 (3,630) 332 1,278
Increase (decrease) in
accounts payable and
accruals:
Trade (1,670) (564) 1,179 (463) 3,537
Employees, employee
institutions and
other 695 (2,266) (623) (1,378) (2,290)
Decrease (increase) in
inventories 212 283 (2) 272 (118)
Increase (decrease) in
deferred revenues
(including the non-
current portion) 182 2,755 81 (3,761) 2,810
------ ------ ------ ------ -------
Net cash used in operating
activities - forward (835) (2,905) (1,196) (1,476) (23,729)
====== ====== ====== ====== =======
RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX AND THREE MONTHS PERIOD ENDED JUNE 30, 2008
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
--------------- --------------- -------
2008 2007 2008 2007 2007
------ ------ ------ ------ -------
Unaudited Unaudited Audited
--------------- --------------- -------
U.S. $ in thousands
(except share and per share data)
------------------------------------------
Net cash used in
operating activities
- brought forward (835) (2,905) (1,196) (1,476) (23,729)
====== ====== ====== ====== =======
CASH FLOWS FROM INVESTING
ACTIVITIES:
Maturity of marketable
debt securities held
to maturity 370 9,743 370 9,242 9,743
Investment in marketable
debt securities held
to maturity (199) (9,047) (199) -- (9,047)
Acquisition of
subsidiaries or
activities consolidated
for the first time(a) (625) (1,350) -- (1,350) (1,370)
Purchase of property,
plant, equipment and
other assets (1,368) (1,319) (1,005) (931) (4,676)
Proceeds from sale of
property, plant and
equipment -- 4 -- 4 69
Amounts funded in respect
of employee rights upon
retirement, net (392) (548) (53) (427) (1,097)
Long-term loans collected
from employees 16 21 1 -- 17
------ ------ ------ ------ -------
Net cash provided by
(used in) investing
activities (2,198) (2,496) (886) 6,538 (6,361)
------ ------ ------ ------ -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of long-term
bank loans (116) (226) (133) (116) (352)
Issuance of share capital
to employees resulting
from exercise of
options 3,995 922 1,333 197 2,402
Net increase (decrease)
in short-term bank
credit -- 2,824 11 (4,015) (4,731)
------ ------ ------ ------ -------
Net cash provided by
(used in) financing
activities 3,879 3,520 1,211 (3,934) (2,681)
------ ------ ------ ------ -------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 68 19 (71) 23 69
------ ------ ------ ------ -------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 914 (1,862) (942) 1,151 (32,702)
BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING
OF PERIOD 22,484 55,186 24,340 52,173 55,186
------ ------ ------ ------ -------
BALANCE OF CASH AND CASH
EQUIVALENTS AT END
OF PERIOD 23,398 53,324 23,398 53,324 22,484
====== ====== ====== ====== =======
RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX AND THREE MONTHS PERIOD ENDED JUNE 30, 2008
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
------------- ------------- ------
2008 2007 2008 2007 2007
---- ------ ---- ------ ------
Unaudited Unaudited Audited
------------- ------------- ------
U.S. $ in thousands
(except share and per share data)
--------------------------------------
(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:
Working capital
(excluding cash and
cash equivalents) -- 157 -- 157 174
Property plant and
equipment, net -- (8) -- (8) (6)
Goodwill and other
intangible assets
arising on
acquisition (625) (1,499) -- (1,499) (1,679)
Increase in account
payable - other -- -- -- -- 141
---- ------ ---- ------ ------
(625) (1,350) -- (1,350) (1,370)
==== ====== ==== ====== ======
(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, in respect of this acquisition, in
2007 an additional 207,236 shares valued at $3,973,129 were
released from escrow as certain customer retention milestones
agreed upon were met.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following tables reflect selected Retalix' non-GAAP results
reconciled to GAAP results:
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
--------------- --------------- --------
2008 2007 2008 2007 2007
------ ------ ------ ------ --------
Unaudited Unaudited Unaudited
--------------- --------------- --------
U.S. $ in thousands
(except share and per share data)
-------------------------------------------
OPERATING INCOME (LOSS)
GAAP Operating income
(loss) 194 (1,195) 1,071 (2,181) (1,454)
GAAP Operating Margin** 0.2% -1.1% 1.8% -3.9% -0.7%
Plus:
Amortization of
acquisition-related
intangible assets 1,655 1,829 824 900 3,576
Stock based compensation
expenses 2,670 2,733 1,352 1,376 3,889
Other acquisition-related
operating expenses(*) -- 700 -- 700 700
Non-GAAP Operating income 4,519 4,067 3,247 795 6,711
Non-GAAP Operating
Margin** 4.0% 3.8% 5.5% 1.4% 3.0%
NET INCOME (LOSS) 954 (1,824) 1,486 (1,844) (498)
GAAP Net income (loss)
Plus:
Amortization of
acquisition-related
intangible assets 1,655 1,829 824 900 3,576
Stock based compensation
expenses 2,670 2,733 1,352 1,376 3,889
Other acquisition-related
operating expenses(*) -- 700 -- 700 700
Less:
Income tax effect of
amortization of
acquisition-related
intangible assets (638) (624) (313) (308) (1,287)
Income tax effect of
stock based
compensation expenses (277) (144) (162) (73) (70)
Income tax effect of
other acquisition-related
operating expenses -- (161) -- (161) (161)
Non-GAAP Net income 4,364 2,509 3,187 590 6,149
NET INCOME (LOSS) PER
DILUTED SHARE
GAAP Net income (loss)
per diluted share 0.05 (0.09) 0.07 (0.09) (0.02)
Plus:
Amortization of
acquisition-related
intangible assets 0.08 0.09 0.04 0.05 0.18
Stock based compensation
expenses 0.13 0.14 0.07 0.07 0.03
Other acquisition-related
operating expenses(*) -- 0.04 -- 0.04 0.19
Less:
Income tax effect of
amortization of
acquisition-related
intangible assets (0.03) (0.03) (0.02) (0.02) (0.06)
Income tax effect of
stock based compensation
expenses (0.01) (0.01) (0.01) (0.01) (0.00)
Income tax effect of
other acquisition-related
operating expenses -- (0.01) -- (0.01) (0.01)
Non-GAAP Net income per
diluted share 0.22 0.13 0.15 0.03 0.31
Shares used in computing
diluted net income per
share 20,242 19,764 20,307 19,881 20,150
* Pre-acquisition costs from potential transactions that have not
materialized.
** 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:
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
------------- ------------- -----
2008 2007 2008 2007 2007
----- ----- ----- ----- -----
Unaudited Unaudited Audited
------------- ------------- -----
U.S. $ in thousands
-------------------------------------
Cost of product sales 87 45 45 28 60
Cost of services 1,037 524 544 293 707
Research and development - net 617 1,118 302 573 1,407
Selling and marketing 219 305 104 155 450
General and administrative 710 741 357 327 1,265
----- ----- ----- ----- -----
Total 2,670 2,733 1,352 1,376 3,889
===== ===== ===== ===== =====
The following table shows the classification of amortization of
acquisition-related intangible assets:
Six months Three months Year
ended ended ended
June 30 June 30 Dec. 31
------------- ------------- -----
2008 2007 2008 2007 2007
----- ----- ----- ----- -----
Unaudited Unaudited Audited
------------- ------------- -----
U.S. $ in thousands
-------------------------------------
Cost of product sales 1,102 1,118 549 562 2,260
Cost of services 393 510 196 249 962
Selling and marketing 2 90 1 34 92
General and administrative 158 111 78 55 262
----- ----- ----- ----- -----
Total 1,655 1,829 824 900 3,576
===== ===== ===== ===== =====