Retek's Strong Growth Continued in Fourth Quarter; Software License Revenues up 72%

Business Wire, Jan 22, 2002

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Jan. 22, 2002

Retek Inc., the leading provider of software to help retailers create, manage, and fulfill consumer demand, announced that its fourth quarter revenues rose 60% to $51.3 million compared with the year earlier quarter. Software license revenue rose 72% to $38.7 million. After tax operational income, which excludes non-cash and other charges, was $0.06 per share in the fourth quarter compared with a loss of $0.08 per share in the year earlier quarter. Compared with the third quarter of 2001, total revenue rose 8% and software license revenue rose 10%. For all of 2001, total revenue rose 95% to $179.5 million and the Company reported after tax operational income of $0.08 per share compared with a loss of $0.55 per share in 2000. For GAAP purposes, the fourth quarter 2001 net income was $0.5 million, or $0.01 per diluted and basic share and for all of 2001, the net loss was $14.3 million or $0.29 per diluted and basic share.

The Company added seven new customers in the fourth quarter and expanded relationships with several others. New customers included Fast Retailing in Japan, one of Asia's fastest growing and most respected retailers; leading children's retailer Gymboree; BHV, a division of France's Galeries Lafayette; and Mitre 10, Australia's largest home improvement retail chain. Significant additional business was signed with Krogers, Williams Sonoma, Long's Drug, Best Buy, WH Smith, and Sainsbury's.

The Company's financial metrics continued strong with gross margins improving to 64.2% from 62.4% in the third quarter. Days sales outstanding (DSO) improved to 73 from 75 in the previous quarter while cash flow from operations totaled $6 million.

Commenting on the results, Steve Ladwig, President and CEO of Retek said, "This is another excellent quarter for Retek and shows again that we have solid value propositions to offer our customers. The Company's results were strong across all geographies and I am especially pleased with our entry into the Japanese market with the signing of Fast Retailing. Our U.S. business substantially grew several existing relationships and continued to move sales efforts forward at a number of key accounts. The upcoming release of Retek 10 late in the first quarter will provide a terrific platform for us to grow our business.

We continue to have good visibility on our financial performance. We entered the first quarter of 2002 with over 75% of our software license objective under contract for the quarter and have over 65% of that objective under contract for the next six months."

The Company is maintaining its guidance for 2002 revenues of $245 to $270 million and after tax operational income, which excludes non-cash and other charges, of $0.40 to $0.50 per share.

About Retek Inc.

Retek Inc. is a leading provider of collaborative software solutions and services that help the retail industry create, manage and fulfill consumer demand. The RIS News Leaderboard 2001 ranked Retek the No. 1 software vendor for retail. Retek's offering, Retek 10, encompasses Retek's proven strategies, sophisticated software applications, patented predictive technology, unparalleled services, and the best practices of its customers and partners. Retek 10 provides retailers with the fastest path to sustainable business value. Many of the world's leading retailers use Retek solutions, including Best Buy, A&P, Tesco, Family Dollar Stores, Gap, Sainsbury's, Eckerd Corp. and Kohl's Department Stores. For more information, visit http://www.retek.com, or call 1-888-61-RETEK. Retek can be contacted in Europe at 44 20 7563 4646.

Retek is a trademark of Retek Inc. Other names may be trademarks of their respective owners. Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors are described from time to time in the company's Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.

                              Retek Inc.
                 Consolidated Statements of Operations
          (Unaudited, in thousands, except per share amounts)

                             Three Months Ended       Year Ended
                                 December 31,        December 31,
                                2001      2000       2001      2000
                                ----      ----       ----      ----
Revenue:
 License and maintenance       $38,740   $22,500   $131,682   $57,729
 Services and other             12,547     9,542     47,792    34,228
                             ---------- ---------  --------- ---------
    Total revenue               51,287    32,042    179,474    91,957
Cost of revenue:
 License and maintenance         9,233     6,908     33,568    23,323
 Services and other              9,058     6,897     34,978    24,889
                             ---------- ---------  --------- ---------
    Total cost of revenue       18,291    13,805     68,546    48,212
                             ---------- ---------  --------- ---------
Gross profit                    32,996    18,237    110,928    43,745
Operating expenses:
 Research and development       10,816    11,586     40,261    37,784
 Sales and marketing            13,850    10,325     52,337    38,561
 General and
  administrative                 3,781     2,894     13,576    10,788
                             ---------- ---------  --------- ---------
Total operating expenses
 excluding non-cash,
 impairment and lease
 termination charges            28,447    24,805    106,174    87,133
                             ---------- ---------  --------- ---------

Operating income/(loss),
 excluding non-cash,
 impairment and lease
 termination charges             4,549    (6,568)     4,754   (43,388)
Acquisition and
 compensation non-cash
 charges                         5,261     5,009     19,450    22,210
Impairment and lease
 termination charges               426      --        8,623      --
                             ---------- ---------  --------- ---------
Operating loss                  (1,138)  (11,577)   (23,319)  (65,598)
Other income, net                  712       185      1,828     1,711
                             ---------- ---------  --------- ---------
Loss before income
 tax benefit                      (426)  (11,392)   (21,491)  (63,887)
Income tax benefit                (889)   (4,494)    (7,181)  (20,982)
                             ---------- ---------  --------- ---------

Net income/(loss)                 $463   $(6,898)  $(14,310) $(42,905)
                             ========== =========  ========= =========

Basic and diluted net

 income/(loss) per share         $0.01    $(0.14)    $(0.29)   $(0.91)
Weighted average shares
 used in computing basic
 net income/(loss) per
 common share                   51,174    47,938     49,925    47,232
Weighted average shares
 used in computing diluted
 net income/(loss) per
 common share                   54,946    47,938     49,925    47,232
Reconciliation to operational
 EPS:
Operating loss                 $(1,138) $(11,577)  $(23,319) $(65,598)
Acquisition and
 compensation non-cash
 charges                         5,261     5,009     19,450    22,210
Impairment and lease
 termination charges               426      --        8,623      --
Other income, net                  712       185      1,828     1,711
                             ---------- ---------  --------- ---------
Net operational
 income/(loss) before
 income tax
 provision/(benefit)             5,261    (6,383)     6,582   (41,677)
Operational income tax
 provision/(benefit)             1,973    (2,394)     2,468   (15,629)
                             ---------- ---------  --------- ---------
Operational income/(loss)       $3,288   $(3,989)    $4,114  $(26,048)
                             ========== =========  ========= =========

Basic and diluted net loss
 per share, operational                   $(0.08)              $(0.55)
                                        =========            =========
Shares used in computing
 basic and diluted net
 loss per share,
 operational                              47,938               47,232
                                        =========            =========
Diluted net income per
 share, operational              $0.06                $0.08
                             ==========            =========
Shares used in computing
 diluted net income per
 share, operational             54,946               54,042
                             ==========            =========



                              Retek Inc.
                 Consolidated Condensed Balance Sheet
                       (Unaudited, in thousands)


                                   December 31,  December 31,
Assets:                                2001         2000
                                       ----         ----
  Cash, cash equivalents
    and investments                    $85,617    $51,775
  Accounts receivable, net              41,409     27,972
  Deferred income taxes                 74,227     49,818
  Other assets                          12,241     11,275
  Property and equipment, net           29,641     26,249
  Intangible assets, net                56,235     28,094
                                      --------   --------
            Total assets              $299,370   $195,183
                                      ========   ========

Liabilities and stockholders' equity:
  Accounts payable                     $10,735    $11,089
  Accrued liabilities                   14,167      6,022
  Deferred revenue                      70,709     53,024
  Note payable                             236        453
                                      --------   --------
             Total liabilities          95,847     70,588

Stockholders' equity:
  Total stockholders' equity           203,523    124,595
                                      --------   --------
Total liabilities and stockholders'
  equity                              $299,370   $195,183
                                      ========   ========