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Retalix Ltd. Announces Fourth Quarter and Year End 2000 Results

Record revenues of $13.2 million and net income of $1.9 million in Q4 Year 2000 revenues increase 45% to record $36 million

Ra'anana, Israel, February 27, 2001 - Retalix Ltd., (Nasdaq: RTLX), a leading provider of integrated enterprise-wide software solutions for the retail food industry worldwide, today announced its operating results for the fourth quarter ended December 31, 2000.

Revenues for the three months ended December 31, 2000 were a record $13.2 million, an increase of 75% from $7.6 million in the fourth quarter of 1999. Net income for the quarter was $1.9 million, or $0.17 per fully diluted share, as compared to net income of $1.1 million, or $0.10 per share, in the fourth quarter of 1999. The net profit for the fourth quarter of 2000 reflected capital gains related to StoreAlliance Israel. As a result of an agreement announced in December 2000, Coca-Cola Israel made a strategic investment of $5 million and purchased a 33% equity interest and services in StoreAlliance Israel, a Retalix subsidiary.

Expenditures on research and development increased 100% to $3.6 million in the fourth quarter of 2000, from $1.8 million in the fourth quarter of 1999. Sales and marketing expenditures increased 99% to $3.2 million for the fourth quarter of 2000, from $1.6 million in 1999. These increases reflect the Company's ongoing commitment to technology investment and in the technology and Internet infrastructure for its Application Service Provider (ASP) and e-marketplace initiatives in Israel and the U.S., and the expansion of sales and marketing activities related to its acquisition of RCS Technologies and the Fujitsu-ICL sales activities. 


Business highlights for Q4 2000 include:

    * Retalix posts operating profit for Q4 2000, continues ASP investment
    * Coca-Cola Israel invests $5 million, takes 33% stake in StoreAlliance
      Israel
    * Delek Oil licenses "host-to-post" software, plans chain-wide roll out
    * Albertsons roll out now totals 400+ U.S. store installations
    * New sales agreement with Fujitsu-ICL opens direct sales to tier-one U.S.
      groceries

For the year 2000, the Company reported record revenues of $36 million, an increase of 45% as compared to revenues of $24.8 million in 1999. The Company realized a net profit for the year of $574,000, or $0.05 per share, as compared to a net profit of $5.4 million, or $0.49 per fully diluted share, for the year 1999.

"I am pleased to be able to report a year of major strategic achievements and record revenues for Retalix," said Barry Shaked, chairman and CEO of Retalix Ltd. "In the fourth quarter we realized an important milestone by returning to operating profitability, despite the considerable ongoing investment we are making in developing our new ASP and e-marketplace businesses. We are continuing to see strong increased demand for our platform-neutral 'host-to-post' applications and we are finding increased synergy between our licensed applications and our Internet based ASP services."

"The increased demand for accurate, real-time data across multiple sales channels is creating the perfect growth climate for our suite of advanced, platform-neutral 'host-to-post' applications. Our reputation for supplying innovative, hardware-neutral software solutions to the food retailing industry continues to set us apart, and we are excited by our growth prospects going forward. We will continue to seek out new markets and grow our core business through a combination of product innovation, enlightened acquisitions and beneficial strategic alliances.

"Our fourth quarter was also marked by several important strategic events. Our acquisition of RCS Technologies provided us not only a strong group of industry-knowledgeable employees, but provides us with a large installed base in our ASP targeted sectors. While RCS is providing us added strength in the lower tiers of the market, our acquisition of Fujitsu-ICL's sales activities is providing us increased momentum in the largest of US supermarket chains.

Mr. Shaked continued, "One year after launching our ASP and e-marketplace initiative, we are in a position to more accurately gauge the progress and future potential of these businesses. Over the past 12 months we have developed the technology, validated the value proposition and assembled the key strategic partnerships required for success. The response from smaller retailers has been very strong and both manufacturing and wholesaler interest has been intense. This was affirmed by the recent agreement that brought Coca-Cola, Israel on board as our first industry partner and key strategic investor in StoreAlliance Israel, together with our recent acquisition of Tradanet, which secures our control in EDI B2B messaging in Israel. In Israel, we can now claim over 400 retailers receiving information and accessing a range of simple applications. In the first half of 2001, we intend to release a number of new robust, web-based applications that will allow these smaller retailers to manage all their vital business functions via the ASP model. This will position us to begin realizing revenues in the second half of 2001.

"Looking ahead to 2001, we expect that strong growth in our enterprise software business will allow us to achieve top-line growth in the range of 50% next year," continued Shaked. "Even with the significant investment in building our ASP initiatives, we anticipate that the Company will be profitable in 2001. Our financial condition remains strong, with cash and marketable securities of over $21 million and shareholders' equity of $44 million as of December 31, 2000. And we continue to believe that our e-marketplace initiatives offer the potential for generating outstanding long-term returns for Retalix and for our shareholders."

For further information:

Sharon Ben Arzi, Morgen-Walke Israel, Tel. 03-5611424, ext. 116 Danny Moshaioff, Retalix CFO, Tel. 09-7766600

About Retalix Ltd.

Retalix Ltd., with headquarters in Israel, provides integrated enterprise-wide software solutions for the retail food industry worldwide, including supermarkets, convenience stores and restaurants. The Company offers a full suite of software applications that support a food retailer's essential retailing operations and enable retailers to increase their operating efficiencies while improving customer acquisition, retention and profitability. Recently, the Company expanded its product line by offering its head and back-office applications via the Internet to small chains and single store food retailers. With installations in more than 15,000 stores and quick service restaurants across 41 countries, the Company markets its software solutions through direct sales, distributors, local dealers and through its U.S. subsidiary, Retalix USA, Inc., and its various other subsidiaries. The Company was founded in 1982 as Point of Sale Limited and changed its name in November of 2000 to Retalix Ltd. The Company's Ordinary Shares have been publicly traded on the Tel Aviv Stock Exchange since November 1994 and on the NASDAQ National Market System since July 1998. For further information, please visit the Company's web sites at www.retalix.com or www.storealliance.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. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, including revenues, income and expenses, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include risks relating to the Company's anticipated future financial performance, continued roll-outs with existing customers, the market reception of its new e-marketplace and ASP services, the potential benefits to food retailers and suppliers, the conversion of sales leads into customers and the ramp-up of ASP users, 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 Retalix with the Securities and Exchange Commission, including the Company's Annual Report on Form 20-F for the year ended December 31, 1999, for a discussion of these and other important risk factors. The Company 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.