-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UiZYhKgj2FmnX5C0A9zESmhIJXIGgbgNYSxd5KNQm0zgSMVxEVFIXX6qrrqcJq0V blPuHLZKv91ApatcM6lLng== 0001144204-03-001527.txt : 20030403 0001144204-03-001527.hdr.sgml : 20030403 20030403154130 ACCESSION NUMBER: 0001144204-03-001527 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030402 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA SYSTEMS & SOFTWARE INC CENTRAL INDEX KEY: 0000880984 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 222786081 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19771 FILM NUMBER: 03638668 BUSINESS ADDRESS: STREET 1: 200 RTE 17 CITY: MAHWAH STATE: NJ ZIP: 07430 BUSINESS PHONE: 2015292026 MAIL ADDRESS: STREET 1: 200 ROUTE 17 CITY: MAHWAH STATE: NJ ZIP: 07430 FORMER COMPANY: FORMER CONFORMED NAME: DEFENSE SOFTWARE & SYSTEMS INC DATE OF NAME CHANGE: 19930328 8-K 1 doc1.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 2, 2003 DATA SYSTEMS & SOFTWARE INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-19771 22-2786081 - ----------------------------- -------------------------- -------------------- (State or Other Jurisdiction (Commission file Number) (IRS Employer of Incorporation) Identification No.) 200 ROUTE 17, MAHWAH, NEW JERSEY 07430 ----------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (201) 529-2026 -------------- ================================================================================ Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. ------------------------------------------------------------------ (c) Exhibits Exhibit 99.1 - Press release of Registrant, dated April 2, 2003. Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. --------------------------------------------- On April 2, 2003, we announced our results for the fourth quarter and year ended December 31, 2003. Our press release announcing the results is attached as Exhibit 99.1. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DATA SYSTEMS & SOFTWARE INC. Date: April 2, 2003 BY: /S/ SHELDON KRAUSE ---------------------------------- Sheldon Krause Secretary -3- EX-99.1 3 doc2.txt EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACT: George Morgenstern, CEO DATA SYSTEMS & SOFTWARE INC. (201) 529-2026 E-mail: IR@DSSIINC.COM DATA SYSTEMS & SOFTWARE INC. ANNOUNCES RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2002 MAHWAH, NEW JERSEY - APRIL 1, 2003 -- DATA SYSTEMS & SOFTWARE INC. (NASDAQ: DSSI) today announced results for the fourth quarter and year ended December 31, 2002. The Company reported net income of $0.2 million for the fourth quarter of 2002, which partially offset the net loss from the first three quarters of 2002 and resulted in a net loss for the year ended December 31, 2002 of $8.1 million, a decrease of $1.7 million, or 17%, from the net loss of $9.8 million reported for the year ended December 31, 2001. The net income for the quarter and reduced loss for the year were primarily due to improved results in the energy intelligence segment. Sales for the year 2002 were $55.9 million, increasing by $10.0 million, or 22%, from $45.9 million in 2001, due to sales increases in all segments. Energy intelligence solution sales increased by $5.2 million, or 38%, from $13.8 million in 2001, to $19.0 million in 2002. The increase in this segment's sales was primarily attributable to fulfillment of a large contract to sell MaingateTM C & I and PowerCAMPTM systems to a major U.S, utility and to a generally higher level of business activity in 2002 compared to 2001. Sales in the computer hardware segment continued to improve, increasing by $2.8 million, or 14%, from $19.8 million in 2001, to $22.6 million in 2002. Although sales in this segment improved through the year, the increase was primarily attributable to the $9.2 million segment sales in the fourth quarter of 2002. Software consulting and development sales increased by $1.9 million, or 16%, from $12.3 million in 2001, to $14.2 million in 2002. This improvement in sales was entirely attributable to the expanded revenue base achieved as a result of the Endan acquisition by dsIT in December 2001, which more than offset the general weakness in the global hi-tech markets and in the market in Israel for software consulting and development services. Gross profit in 2002 was $13.0 million increasing by $4.6 million, or 55%, from $8.4 million in 2001. Gross profit margins improved from 19% in 2001 to 23% in 2002. The increase in gross profit was attributable to improvements in all segments, particularly in the energy intelligence solutions segment. Gross profit in the energy intelligence solution segment increased by $3.4 million, or 130%, from $2.7 million, or 19% of sales, in 2001 to $6.1 million, or 32% of sales, in 2002. The increase in gross profit margin was primarily attributable to improved sales mix, with increases in sales of higher margin products and services, as well as a credit of $0.7 million related to a settlement with a former contract manufacturer which reduced cost of goods for the period. In the computer hardware segment, gross profit increased by $0.6 million, or 17%, primarily due to the increase in sales. -4- Gross profit in the software consulting and development segment also increased by $0.6 million, or 27%, from $2.1 million, or 17% of sales, in 2001, to $2.7 million, or 19% of sales, in 2002. The increase in gross profit was primarily attributable to the increase in sales, as well as the improved gross profit margin, resulting from the segment's more efficient cost structure in 2002. Net loss for 2002 included a goodwill impairment charge in 2002 of $2.8 million all of which related to the writeoff of a portion of our software consulting and development segment goodwill, in addition to the $0.2 million write-off of software acquired by that segment in connection with the acquisition of Endan. We had net interest expense in 2002 of $1.0 million as compared to net interest income of $0.6 million in 2001, reflecting lower interest income in 2002 due to use of investments to fund operating activities and increased interest expense incurred in financing transactions. Of the $1.2 million of interest expense during the year ended December 31, 2002, $0.7 million was from the amortization of interest costs associated with the conversion feature of convertible debt and warrants issued in financing transactions. George Morgenstern, Chairman and Chief Executive Officer of DSSI commented: "We were successful in the fourth quarter in improving operating income in each of our segments. The fourth quarter of 2002 was profitable and brought us to our highest level of operating income since the second quarter of 1998. During the year we also improved the cost structure in our software consulting and development segment and grew our computer hardware business. However our greatest achievement in 2002 has been the progress made by our energy intelligence segment, where Comverge's management team has achieved steadily improving results and market presence through the year. Comverge is currently on the verge of obtaining independent financing from a group of world-class outside investors. Negotiation of the terms of Comverge's venture financing is almost complete and we expect the definitive documents to be signed and the investment funded in the very near future. We believe that this transaction, which will give Comverge the capital and enhanced industry relationships it needs to grow its business, will herald a new era for both Comverge and DSSI." This press release includes forward-looking statements, which are subject to risks and uncertainties, including risks associated with (i) the completion of definitive documentation and closing of the Comverge venture capital transaction, (ii) conditions in the market for energy intelligence solutions, including the pace and consequences of deregulation and competition, (iii) conditions in the computer hardware markets, (iv) the downturn in the hi-tech markets, (v) the need to raise additional capital to finance the activities of the Company's energy intelligence solutions subsidiary, which funding may not be available on a timely basis or on reasonable terms and (vi) the Company's business generally. Actual results may vary from those projected or implied by such forward-looking statements. There is no assurance that the Comverge transaction referred to in this release will be consummated in the near future or at all. A more complete discussion of risks and uncertainties which may affect the accuracy of these statements and the Company's business generally is included in under the caption "Business--Factors Which May Affect Future Results" in the Company's most recent Annual Report on Form 10-K as filed by the Company with the Securities and Exchange Commission. Data Systems & Software Inc. is a provider of software consulting and development services, and is an authorized direct seller and value added reseller of computer hardware. Through its Comverge Technologies subsidiary, the Company provides energy intelligence solutions to utilities. Tables Follow -5- DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)
As Of December 31, --------------------- 2001* 2002 ----- ---- (unaudited) ASSETS Current assets: Cash and cash equivalents........................................................ $4,025 $1,150 Debt securities.................................................................. 1,828 - Restricted cash.................................................................. 317 241 Accounts receivable, net......................................................... 10,197 12,267 Inventory........................................................................ 658 2,217 Other current assets............................................................. 1,858 1,401 ------- ------ Total current assets.......................................................... 18,883 17,276 ------- ------ Investments......................................................................... 90 - Property and equipment, net ........................................................ 2,296 1,972 Goodwill............................................................................ 7,737 4,929 Other intangible assets, net........................................................ 909 404 Long-term deposits.................................................................. 6,000 5,700 Other assets........................................................................ 676 669 Prepaid employee termination benefits............................................... 2,653 2,355 ------- ------- Total assets.................................................................. $39,244 $33,305 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt and current maturities of long-term debt, net.................... $2,499 $3,755 Trade accounts payable........................................................... 4,010 5,185 Accrued payroll, payroll taxes and social benefits............................... 2,193 2,098 Other current liabilities........................................................ 3,372 3,411 ----- ----- Total current liabilities..................................................... 12,074 14,449 ------- ------ Long-term liabilities: Long-term debt .................................................................. 6,182 6,278 Other liabilities................................................................ 285 477 Liability for employee termination benefits...................................... 3,811 3,364 ------ ------ Total long-term liabilities................................................... 10,278 10,119 ------ ------ Minority interests.................................................................. 2,530 1,609 ------ ------ Shareholders' equity: Common stock $.01 par value per share; Authorized 20,000 shares; Issued and outstanding 8,161 shares.......................................... 82 82 Additional paid-in capital....................................................... 36,981 37,687 Warrants......................................................................... 114 364 Deferred compensation............................................................ (14) (7) Accumulated deficit.............................................................. (18,643) (26,787) Treasury stock, at cost - 809 and 846 shares at December 31, 2001 and 2002, respectively..................................... (3,860) (3,913) Shareholder's note............................................................... (298) (298) -------- -------- Total shareholders' equity.................................................... 14,362 7,128 ------- -------- Total liabilities and shareholders' equity.................................... $39,244 $33,305 ======= ======= *Certain amounts have been reclassified from the 2001 Form 10-K.
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, --------------------- 2001* 2002 ------ ------ (unaudited) Sales: Products......................................................................... $32,717 $39,831 Services......................................................................... 13,207 16,055 ------ ------ ................................................................................. 45,924 55,886 ------ ------ Cost of sales: Products......................................................................... 27,122 30,994 Services......................................................................... 10,436 11,912 ------ ------ 37,558 42,906 Gross profit.................................................................. 8,366 12,980 Research and development expenses................................................... 2,284 1,526 Selling, general and administrative expenses........................................ 16,671 16,754 Impairment of goodwill and investment............................................... 227 2,850 Gain on sale of subsidiary.......................................................... 397 -- ---------- -------- Operating loss................................................................ (10,419) (8,150) Interest income..................................................................... 1,104 253 Interest expense.................................................................... (459) (1,212) Other income (loss), net ........................................................... (32) 113 Minority interests.................................................................. - 880 ---------- -------- Loss before provision for income taxes........................................ (9,806) (8,116) Provision (benefit) for income taxes................................................ (11) 28 ---------- -------- Net income (loss)............................................................. $ (9,795) $ (8,144) ========== ========= Basic and diluted net loss per share:............................................... $ (1.41) $ (1.11) ========== ======== Weighted average number of shares outstanding - basic and diluted.............................................................. 6,970 7,349 ========== ========
*Certain amounts have been reclassified from the 2001 Form 10-K. Effective July 1, 2002, the Company adopted Statement of Financial Standards (SFAS) No. 141, "Business Combinations" and effective January 1, 2002 adopted SFAS No. 142, "Goodwill and Other Intangibles". As a result, the Company ceased amortization of all goodwill beginning January 1, 2002. Had SFAS No. 142 been adopted by the Company effective January 1, 2001, net loss and net income loss per share, basic and diluted, would have been as follows (in thousands, except per share data):
Year ended December 31, 2001 -------------- Net loss, as reported............................................ $(9,795) Plus: Goodwill amortization, net of income taxes................. 502 -------------- Adjusted net loss................................................ $(9,293) ============== Net loss per share: Basic and diluted - as reported............................... $(1.41) ============== Basic and diluted - as adjusted............................... .$(1.33) ==============
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