Retalix Announces Fourth Quarter and FY 2009 Results
Retalix Meets/Exceeds Guidance for FY09 Reporting $12 Million Net Income (Non-GAAP)* and Generates $39.2 Million in Cash Flow From Operations
RA'ANANA, Israel, March 16, 2010 -- Retalix® Ltd. (Nasdaq:RTLX), a leading provider of software solutions for retailers and distributors, announced today results for the fourth quarter and full year ended December 31, 2009.
Summarized financial highlights for the fourth quarter and twelve-month period ended December 31, 2009 results:
Total Revenues for the full year were $192.4 million, compared to $221.6 million in 2008. Total revenues in the fourth quarter of 2009 were $46.4 million, compared to $52.2 million in the fourth quarter of 2008.
Income from Operations(GAAP) for the full year was $7.8 million, compared to a loss of ($58.1) million in 2008. In the fourth quarter of 2009, Retalix recorded a loss from operations (GAAP) of ($3.1) million versus a loss of ($60.2) million from operations (GAAP) in the fourth quarter of 2008. In the fourth quarter of 2008, Retalix reported a ($58.2) million dollar non-cash charge for the impairment of goodwill.
Adjusted Income from Operations (Non-GAAP)* for the full year was $15.5 million compared to $8.2 million for the full year 2008. In the fourth quarter of 2009, Retalix recorded adjusted income from operations (Non-GAAP) of $0.2 million versus an adjusted loss from operations (Non-GAAP) of ($0.3) million in the fourth quarter of 2008.
Financial Income for the full year 2009 was $1.8 million, due to currency exchange income and benefits related to valuation of forward currency transactions, versus a financial expense of ($2) million for the full year 2008. In the fourth quarter of 2009, Retalix recorded financial income of $0.2 million versus a financial expense of ($2.6) million in the fourth quarter of 2008.
GAAP Net Income for the full year was $5.8 million, or $0.28 per diluted share, versus a loss of ($51.6) million, or a loss of ($2.55) per diluted share, for the full year 2008. For the fourth quarter of 2009, Retalix reported a GAAP net loss of ($4.0) million, or a loss of ($0.18) per diluted share, versus a GAAP net loss of ($53.7) million, or ($2.64) per diluted share, in the fourth quarter 2008. Included in the fourth quarter of 2009 was approximately ($1.8) million in expenses related to the private placement transaction completed in November 2009 and ($1.5) million in amortization and stock based compensation expenses. In the fourth quarter of 2008, Retalix recorded a non-cash charge of ($58.2) million for the impairment of goodwill.
Adjusted Net Income (Non-GAAP)* for the full year 2009 was $12 million, or $0.57 per diluted share, compared to $9.9 million, or $0.49 per diluted share, for the full year 2008. Adjusted net income (Non-GAAP) was ($0.9) million, or ($0.04) per diluted share, in the fourth quarter 2009, compared to $2.8 million, or $0.14 per diluted share, in the fourth quarter 2008.
Cash Flow from Operating Activities generated $2.9 million during the fourth quarter of 2009, compared to a cash flow of $12.3 million generated during the fourth quarter of 2008. For the full year 2009, Retalix generated approximately $39.2 million from operating activities, compared to a cash flow of $13.2 million generated from operating activities in the full year 2008.
Balance Sheet: As of December 31, 2009, Retalix had approximately $104.6 million in cash, cash equivalents and marketable securities on its balance sheet, which included $32.9 million from the private placement completed in November 2009 with the Alpha Group, and $0.7 million dollars in debt.
A Private Placement completed in November 2009 with the Alpha Group generated $32.9 million for Retalix. Retalix issued to the investors 3,612,804 ordinary shares, constituting 17.7% of the outstanding share capital (prior to such issuance), and warrants to purchase up to an additional 1,250,000 ordinary shares. After the completion of the transaction Retalix's diluted shares outstanding on an annual basis increased to 21 million.
As part of a continuing effort to enhance Retalix's internal control over financial reporting, in the second half of 2009 Retalix implemented a new Oracle ERP financial software system to replace its various legacy systems. Due to the inherent complexity of the implementation of a new ERP system, Retalix's annual financial information took longer than usual to compile and is undergoing additional review processes. In addition, Retalix has not yet completed the analysis of certain complex income tax-related items. As a result, the results set forth in this press release are preliminary and could change pending the completion of these processes. Retalix will file its final audited annual financial statements on Form 20-F with the U.S. Securities and Exchange Commission by June 30, 2010.
Shuky Sheffer, Chief Executive Officer of Retalix, said, "Since assuming the helm at Retalix in January I have been impressed by the many strengths of the Company, including its products, strong customer and geographic base and dedicated employees worldwide. We have already completed a Horizon I strategic exercise that helped to define the immediate targets, determining where we will compete, and what value we bring to the market. We defined an exciting, demand driven and innovative product roadmap, which, although still being refined, has been very positively received by customers. We are actively managing our portfolio of products, engaging our customers and shifting resources and spending to the areas where we see the best growth opportunities while also developing the longer-term strategic plan of Retalix. I am encouraged by the start of 2010 and am confident that Retalix can build on its 28 year history of providing innovative services and solutions to retailers."
Hugo Goldman, the Company's Chief Financial Officer, said, "We met or exceeded our guidance for 2009, improving income from operations and cash flow. Operating expenses were down twenty one percent year over year, excluding the previous year's charge for the impairment of goodwill. Profitability was further aided by $1.8 million in financial income recorded for the year due to currency translation benefits on the value of our non-dollar net assets and the valuation of our currency hedges. Our fourth quarter results were impacted by seasonally slowed revenues and a continued decline in license revenues, but we were able to generate $2.9 million in cash from operating activities in the fourth quarter. For the year we generated approximately $39.2 million in cash from operating activities and, combined with the $32.9 million raised by the private investment in the fourth quarter, we have almost $105 million in cash on our balance sheet providing us the strength to grow Retalix to the next level."
Outlook for FY 2010
Sheffer added, "While retailers remain cautious in the current economic environment they need cost-efficient and innovative solutions for their operations. I am encouraged by the level of activity I see developing and we are taking steps to leverage our strengths and build our pipeline."
"Today we are announcing our initial outlook for 2010. Retalix expects full year 2010 revenues to be between $195 million and $210 million, with similar profitability as in 2009. We will continue to monitor the market conditions looking for new opportunities as we also develop our long-term business strategy."
Conference Call and Webcast Information
Retalix will be holding a conference call to discuss results for the fourth quarter and full year 2009 on Tuesday, March 16th at 9:00 am Eastern Time (3:00 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.
* 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, PIPE investment costs, and amortization of intangibles related to acquisitions, as well as impairment of goodwill when applicable. 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 2010 is provided in the table below.
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 2010" including our expected results, the possibility that Retalix's financial results could change upon completion of the audit, activity levels and pipeline, reactions to market conditions, new opportunities, and future strategic plans, 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, 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(U.S. $ in thousands, except share and per share data)
Year ended December 31
Three months ended December 31
2009
2008
2009
2008
(Unaudited)
(Audited)
(Unaudited)
REVENUES:
Product sales
58,145
72,907
15,720
18,112
Services
134,248
148,720
30,668
34,063
Total revenues
192,393
221,627
46,388
52,175
COST OF REVENUES:
Cost of product sales
39,560
45,201
11,955
9,371
Cost of services
74,564
88,078
18,002
21,260
Total cost of revenues
114,124
133,279
29,957
30,631
GROSS PROFIT
78,269
88,348
16,431
21,544
OPERATING EXPENSES:
Research and development – net
28,991
38,357
8,026
8,429
Selling and marketing
18,776
23,623
4,494
6,926
General and administrative
21,007
26,677
5,380
8,524
Other income – net
(154)
(376)
(190)
(312)
PIPE investment cost
1,823
--
1,823
--
Impairment of goodwill
--
58,182
--
58,182
Total operating expenses
70,443
146,463
19,533
81,749
INCOME (LOSS) FROM OPERATIONS
7,826
(58,115)
(3,102)
(60,205)
FINANCIAL INCOME (EXPENSES), net
1,757
(1,978)
185
(2,599)
INCOME (LOSS) BEFORE TAXES ON INCOME
9,583
(60,093)
(2,917)
(62,804)
TAX BENEFIT (EXPENSES)
(3,494)
8,960
(1,046)
8,910
INCOME (LOSS) AFTER TAXES ON INCOME
6,089
(51,133)
(3,963)
(53,894)
SHARE IN INCOME OF AN ASSOCIATED COMPANY
17
54
--
19
NET INCOME (LOSS)
6,106
(51,079)
(3,963)
(53,875)
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
(310)
(537)
(38)
208
NET INCOME (LOSS) ATTRIBUTABLE TO RETALIX LTD.
5,796
(51,616)
(4,001)
(53,667)
EARNINGS (LOSSES) PER SHARE – in U.S. $:
Basic
0.28
(2.55)
(0.18)
(2.64)
Diluted
0.28
(2.55)
(0.18)
(2.64)
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTATION OF EARNINGS PER SHARE – in thousands:
Basic
20,824
20,265
22,121
20,348
Diluted
20,995
20,265
22,121
20,348
RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. $ in thousands)
December 31
2009
2008
(Unaudited)
(Audited)
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents
103,675
33,546
Marketable securities
226
3,239
Accounts receivable:
Trade
54,814
70,017
Other
8,891
11,554
Prepaid expenses
4,967
4,003
Inventories
1,496
1,037
Deferred income taxes
4,957
4,871
Total current assets
179,026
128,267
NON-CURRENT ASSETS :
Long-term receivables
1,386
3,382
Long-term prepaid expenses
406
539
Long term investments
682
862
Amounts funded in respect of employee rights upon retirement
10,621
8,663
Deferred income taxes
12,150
15,462
Other
269
424
Total non - current assets
25,514
29,332
PROPERTY, PLANT AND EQUIPMENT, net
15,233
14,734
GOODWILL
50,803
50,660
OTHER INTANGIBLE ASSETS, net of accumulated
Amortization:
Customer base
12,610
15,386
Other
1,823
2,413
14,433
17,799
Total assets
285,009
240,792
RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
December 31
2009
2008
(Unaudited)
(Audited)
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term loan
170
--
Current maturities of long-term bank loans
263
249
Accounts payable and accruals:
Trade
7,071
8,672
Employees and employee institutions
10,114
8,783
Accrued expenses
10,908
6,527
Other
1,804
2,596
Deferred revenues
19,786
19,135
Total current liabilities
50,116
45,962
LONG-TERM LIABILITIES :
Long-term bank loans, net of current maturities
275
523
Employee rights upon retirement
14,243
13,860
Deferred tax liability
256
286
Other tax payables
489
1,112
Total long-term liabilities
15,263
15,781
Total liabilities
65,379
61,743
SHAREHOLDERS' EQUITY:
Share capital -Ordinary shares of NIS 1.00 par value (authorized): December 31, 2009 (unaudited) and December 31, 2008 (audited) - 30,000,000 shares; issued and outstanding: December 31, 2009 (unaudited) - 24,082,582 Shares; December 31, 2008 (audited) - 20,389,771 shares;
6,353
5,380
Additional paid in capital
208,574
175,435
Retained earnings
375
(5,421)
Accumulated other comprehensive income
642
328
Total Retalix shareholders' equity
215,944
175,722
Non-controlling interest
3,686
3,327
Total equity
219,630
179,049
Total liabilities and equity
285,009
240,792
RETALIX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
December 31
Three months ended December 31
2009
2008
2009
2008
(Unaudited)
(Audited)
(Unaudited)
(Audited)
U.S. $ in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
6,106
(51,079)
(3,963)
(53,875)
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
6,261
6,265
1,609
1,659
Losses (gains) from sale of property, plant and equipment
44
(46)
--
(46)
Share in income of an associated company
(4)
(54)
--
(19)
Stock based compensation expenses
2,624
4,777
1,001
850
Changes in accrued liability for employee rights upon retirement
311
(396)
(97)
(1,361)
Losses (gains) on amounts funded in respect of employee rights upon retirement
(1,023)
312
(226)
1,605
Deferred income taxes – net
3,195
(4,928)
512
(2,305)
Net decrease in trading securities
162
342
3
421
Impairment of available for sale securities
--
700
--
700
Amortization of discount on marketable debt securities
--
5
--
5
Impairment of goodwill
--
58,182
--
58,182
Other
(12)
(26)
(6)
(69)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable:
Trade (including the non-current portion)
17,339
13,395
3,647
15,311
Other (including the non-current portion)
2,201
(10,080)
613
(5,834)
Increase (decrease) in accounts payable and accruals:
Trade
(1,653)
(6,655)
2,649
(4,584)
Employees, employee institutions and other
4,102
(113)
22
328
Decrease (Increase) in inventories
(456)
247
86
554
Increase (decrease) in long-term institutions
(623)
15
6
54
Increase (decrease) in deferred revenues
625
2,381
(2,920)
746
Net cash provided by operating activities – forward
39,199
13,244
2,936
12,322
RETALIX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
December 31
Three months ended
December 31
2009
2008
2009
2008
(Unaudited)
(Audited)
(Unaudited)
(Audited)
U.S. $ in thousands
Net cash provided by operating activities - brought forward
39,199
13,244
2,936
12,322
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity of marketable debt securities held to maturity
490
370
--
--
Sales of marketable trading debt securities
2,535
--
--
Investment in marketable debt securities held to maturity
--
(208)
--
(9)
Acquisition of subsidiaries or activities consolidated for the first time (a)
--
(110)
--
--
Additional investments in subsidiaries
--
(714)
--
(89)
Purchase of property, plant, equipment and other assets
(2,786)
(5,055)
(519)
(1,609)
Proceeds from sale of property, plant and equipment
120
55
--
17
Amounts funded in respect of employee rights upon retirement, net
(913)
(168)
(235)
192
Changes in restricted deposits
(184)
--
(184)
--
Long-term loans collected from employees
14
36
--
19
Net cash used in investing activities
(724)
(5,794)
(938)
(1,479)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term bank loans
(249)
(241)
(130)
(125)
Issuance of share capital to Shareholders
30,510
--
30,510
Issuance of share capital to employees resulting from exercise of options
973
4,012
969
17
Short-term bank credit – net
170
(11)
170
--
Net cash provided by (used in) financing activities
31,404
3,760
31,519
(108)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
250
(148)
(159)
(113)
NET INCREASE IN CASH AND CASH EQUIVALENTS
70,129
11,062
33,358
10,622
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
33,546
22,484
70,317
22,924
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD
103,675
33,546
103,675
33,546
RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Year ended
December 31,
2009
2008
(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
--
(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 from Bezeq Int. Ltd. An amount of approximately $81,000 was acquired in credit and will be presented as investing activity when actually paid.
2. The Company purchased equipment in the amount of $842,000 in credit. This amount will be presented as investing activity when actual payment will be made.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following tables reflect selected Retalix' non-GAAP results reconciled to GAAP results:
Year ended
December 31
Three months ended
December 31
2009
2008
2009
2008
Unaudited
Audited
Unaudited
Audited
U.S. $ in thousands (except per share data)
OPERATING INCOME (LOSS)
GAAP Operating income (loss)
7,827
(58,115)
(3,101)
(60,205)
GAAP Operating Margin
4.1%
(26.2%)
(6.7%)
(115.39%)
Plus:
Amortization of acquisition-related intangible assets
3,731
3,308
919
830
Stock based compensation expenses
2,165
4,775
542
848
PIPE investment costs*
1,823
--
1,823
--
Impairment of goodwill
--
58,182
--
58,182
Non-GAAP Operating income (loss)
15,546
8,150
183
(345)
NET INCOME (LOSS)
5,796
(51,616)
(4,001)
(53,667)
GAAP Net income (loss)
Plus:
Amortization of acquisition-related intangible assets
3,731
3,308
919
830
Stock based compensation expenses
2,165
4,775
542
848
PIPE investment costs*
1,823
--
1,823
--
Impairment of goodwill
--
58,182
--
58,182
Less:
Income tax effect of amortization of acquisition-related intangible assets
(1,029)
(1,262)
71
(336)
Expenses (income) tax effect of stock based compensation expenses
(96)
(456)
136
(44)
Income tax effect of PIPE investment costs
(343)
(343)
Income tax effect of impairment of goodwill
--
(3,041)
--
(3,041)
Non-GAAP Net income (loss)
12,047
9,890
(853)
2,772
NET INCOME (LOSS) PER DILUTED SHARE
GAAP Net income (loss) per diluted share
0.28
(2.55)
(0.18)
(2.63)
Plus:
Amortization of acquisition-related intangible assets
0.18
0.16
0.04
0.04
Stock based compensation expenses
0.10
0.24
0.02
0.04
PIPE investment costs
0.09
--
0.08
--
Impairment of goodwill
--
2.87
--
2.86
Less:
Income tax effect of amortization of acquisition-related intangible assets
(0.05)
(0.06)
0.00
(0.02)
Income tax effect of stock based compensation expenses
(0.01)
(0.02)
0.01
(0.00)
Income tax effect of PIPE investment costs
(0.02)
--
(0.01)
--
Income tax effect of impairment of goodwill
--
(0.15)
--
(0.15)
Non-GAAP Net income (loss) per diluted share
0.57
0.49
(0.04)
0.14
Shares used in computing diluted net income per share
20,995
20,265
22,726
20,348
* PIPE investment costs include $459 thousands of stock based compensation expenses.
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following table shows the classification of stock-based compensation expense:
Year ended
December 31
Three months ended
December 31
2009
2008
2009
2008
Unaudited
Audited
Unaudited
Audited
U.S. $ in thousands
Cost of product sales
105
174
29
49
Cost of services
1060
1,847
292
359
Research and development - net
381
1,029
8
172
Selling and marketing
126
360
(18)
50
General and administrative
493
1,365
231
218
Total
2,165
4,775
542
848
The following table shows the classification of amortization of acquisition-related intangible assets:
Year ended
December 31
Three months ended
December 31
2009
2008
2009
2008
Unaudited
Audited
Unaudited
Audited
U.S. $ in thousands
Cost of product sales
2,490
2,211
620
561
Cost of services
876
786
219
196
Selling and marketing
--
3
--
--
General and administrative
365
308
80
73
Total
3,731
3,308
919
830
PIPE investment costs relate to a Private Placement completed in November 2009 as part of the agreement with the Alpha Group that generated $32.9 million dollars proceeds and $1.8 million dollars in expenses for Retalix.
CONTACT: Retalix Ltd.
Hugo Goldman
+972-9-776-6677
investors@retalix.com
Home| Company| Industries| Products| News & Events| Investors| Services| Customers| Careers| Contact Us
