RETALIX LTD.

Comparison of 2003, 2004 and 2005
Revenues
During 2005, our revenue increase resulted primarily from an increase in sales to international customers in both the supermarket and convenience
store sectors, where revenues increased from $32 million in 2004 to $75.2 million in 2005, an increase of approximately 137%. In addition, revenues in the
United States increased from $79.7 million in 2004 to $98.4 million in 2005 primarily due to the increase of our sales in the supply chain sector and the
contribution of the acquired IDS activities to these sales. International sales in 2005 consisted, in significant part, of several large sales. In addition, during
2005, our revenues from services and projects increased as a percentage of total revenues to 51% compared to 37% in 2004 and 36% in 2003, primarily
due to the significant portion of such revenues derived from some large international customers as well as in IDS, the activities of which we acquired in
April 2005.
During 2004, our revenues increase resulted from an increase in sales to U.S. and international customers in Europe and Asia, both in the grocery
and convenience store sectors. The increase in revenue from sales to U.S. customers constituted 55% of the total increase in sales during 2004. The
increase in revenue from sales to international customers constituted 45% of the total increase in sales during 2004. Revenues from sales in the Israeli
market were consistent with those achieved during 2003.
Our international revenues could fluctuate from period to period in the near term, as these sales are still affected to a great extent by a small number
of relatively large customers.
Cost of Revenues
Year ended December 31, % Change % Change
2003 2004 2005 2003 2004 2005 2004 vs. 2003 2005 vs. 2004
(U.S. $ in millions) % of total revenues
Product sales $ 58.5 $ 77.5 $ 91.7 64% 63% 49% 33% 19%
Services and projects 33.6 45.4 95.7 36% 37% 51% 35% 110%
Total revenues $ 92.1 $ 122.9 $ 187.4 34% 52%
Year ended December 31, % Change % Change
2003 2004 2005 2003 2004 2005 2004 vs. 2003 2005 vs. 2004
(U.S. $ in millions) % of corresponding revenues
Cost of product sales $ 16.6 $ 23.2 $ 31.5 28% 30% 34% 40% 36%
Cost of services and projects 12.4 18.9 34.5 37% 42% 36% 52% 82%
Total cost of revenues $ 29.0 $ 42.1 $ 66.0 45% 57%
50