RETALIX LTD.

ITEM 3 – KEY INFORMATION
A. Selected Financial Data
The selected consolidated statement of income data set forth below with respect to the years ended December 31, 2001, 2002, 2003 and 2004 and the
selected consolidated balance sheet data as of December 31, 2001, 2002, 2003 and 2004 set forth below have been derived from our consolidated financial
statements that were audited by Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited. The selected consolidated
statement of income data set forth below with respect to the year ended December 31, 2005 and the selected consolidated balance sheet data as of
December 31, 2005 set forth below have been derived from our consolidated financial statements that were audited by Kost, Forer, Gabbay & Kasierer, a
member of Ernst & Young Global. The selected consolidated financial data set forth below should be read in conjunction with “Item 5 -- Operating and
Financial Review and Prospects” and our consolidated financial statements and notes to those statements for the years 2003, 2004 and 2005 included
elsewhere in this annual report. Historical results are not necessarily indicative of the results to be expected in the future.
6
Year ended December 31,
2001 2002 2003 2004 2005
(in thousands, except share and per share data)
Consolidated statement of income data
Revenues:
Product sales $ 34,333 $ 47,280 $ 58,432 $ 77,494 $ 91,692
Services and projects 24,953 29,173 33,625 45,460 95,679
Total revenues 59,286 76,453 92,057 122,954 187,371
Cost of revenues:
Cost of product sales 7,135 11,970 16,576 23,246 31,521
Cost of services and projects 8,781 10,141 12,440 18,890 34,465
Total cost of revenues 15,916 22,111 29,016 42,136 65,986
Gross profit 43,370 54,342 63,041 80,818 121,385
Operating expenses:
Research and development expenses-net 14,571 17,036 18,344 34,096 44,683
Selling and marketing expenses 14,506 18,111 21,542 24,798 33,382
General and administrative expenses 12,017 12,455 13,345 15,944 23,131
Other general income (expenses) – net 17 1,043 (62) 15
Total operating expenses 41,077 46,559 53,293 74,823 101,196
Income from operations 2,293 7,783 9,748 5,995 20,189
Financial income (expenses)-net (365) (499) (95) 85 202
Gain arising from issuance of shares by a subsidiary and an
associated company 2,877 – 1,068 200 83
Other expenses (501) – – – –
Income before taxes on income 4,304 7,284 10,721 6,280 20,474
Taxes on income 706 2,103 2,639 1,553 5,912
Share in losses of an associated company – – (90) (137) (130)
Minority interests in losses of subsidiaries 166 524 288 247 189
Net income $ 3,764 $ 5,705 $ 8,280 $ 4,837 $ 14,621
Earnings per share:
Basic $ 0.33 $ 0.48 $ 0.67 $ 0.31 $ 0.78
Diluted $ 0.31 $ 0.46 $ 0.63 $ 0.29 $ 0.74
Weighted average number of shares used in computation:
Basic 11,472 11,902 12,323 15,746 18,710
Diluted 12,153 12,395 13,083 16,552 19,659