================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 ON FORM 8-K/A TO CURRENT REPORT ON FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) August 30, 1999 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 ================================================================================ This Amendment No. 2 on Form 8-K/A amends "Item 7(b) Pro Forma Financial Information" of the Registrant's Report on Form 8-K filed on September 9, 1999 reporting the acquisition ("Acquisition") by the Registrant's Comverge Technologies, Inc. subsidiary of assets of the Control Systems Business Unit of Scientific-Atlanta, Inc., as amended by Amendment No. 1 filed on November 12, 1999. The amendment reflects certain corrections and certain modifications to the presentation of such pro forma financial information. Item 7. Financial Statements and Exhibits. (b) Pro Forma Financial Information. The following unaudited pro forma condensed consolidated statements of operations of the Registrant for the year ended December 31, 1998 and the six months ended June 30, 1999 assume the Acquisition occurred on January 1, 1998. The following unaudited condensed consolidated pro forma balance sheet as of June 30, 1999 assumes that the Acquisition occurred on June 30, 1999. The unaudited pro forma condensed consolidated financial statements presented herein are based on the historical financial statements of the Registrant included with the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998 and the Registrant's Quarterly Reports on Form 10-Q for the six months ended June 30, 1999 as filed with the Securities and Exchange Commission and should be read in conjunction therewith. In the opinion of management, all adjustments have been made that are necessary to present fairly the pro forma data. Such statements are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have been achieved if the Acquisition had occurred on the date specified, nor are they indicative of the Registrant's future operating results. DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1999 (in thousands, except per share data) Acquisition of Pro Forma Historical Control Systems Adjustments Pro Forma ---------- --------------- ----------- --------- Assets Current assets: Cash and cash equivalents $ 969 $ 969 Trade accounts receivable, net 7,255 7,255 Inventory 581 $ 1,862 2,443 Other current assets 1,098 1,098 -------------- -------------- -------------- Total current assets 9,903 1,862 11,765 -------------- -------------- -------------- Investments 50,967 50,967 -------------- -------------- Property and equipment, net 1,499 1,810 3,309 -------------- -------------- -------------- Other assets 3,601 509 4,110 -------------- -------------- -------------- $ 65,970 $ 4,181 $ 70,151 ============== ============== =============== Liabilities and Shareholders' Equity Current liabilities: Accounts payable, accrued expenses and short-term debt $ 8,209 $ 3,431 (1) $ 11,640 Other current liabilities 980 750 (2) 1,730 -------------- -------------- -------------- Total current liabilities 9,189 4,181 13,370 -------------- -------------- -------------- Long-term liabilities 554 554 -------------- -------------- Minority interests 22,535 22,535 -------------- -------------- Shareholders' equity: Common stock -- $.01 par value per share: Authorized 20,000 shares; Issued 7,923 shares 79 79 Additional paid-in capital 35,024 (3) 35,027 Retained earnings 954 954 -------------- -------------- 36,057 36,060 Treasury stock, at cost -- 490 shares (2,365) (2,365) -------------- -------------- Total shareholders' equity 33,692 33,695 -------------- -------------- -------------- Total liabilities and shareholders' equity $ 65,970 $ 4,181 $ 70,154 ============== ============== ============== See referenced notes attached. DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1999 (in thousands, except per share data) Acquisition of Pro Forma Historical Control Systems Adjustments Pro Forma ---------- --------------- ------------- --------- Sales: Products $ 2,419 $ 4,137 $ 6,556 Services 5,257 5,257 ------------- ------------ ------------- 7,676 4,137 11,813 ------------- ------------ ------------- Cost of sales: Products 2,032 4,378 6,410 Services 3,878 3,878 ------------- ------------ ------------- 5,910 4,378 10,288 ------------- ------------ ------------- Gross profit 1,766 (241) 1,525 Research and development expenses 309 8 317 Selling, general and administrative expenses 2,790 976 $ 190 (4) 3,956 ------------- ------------ ------------- Operating loss (1,333) (1,225) (2,748) Other expenses, net 13 18 181 (5) 212 ------------- ------------ ------------- Loss before income taxes (1,346) (1,243) (2,960) Provision for income taxes 37 (6) 37 ------------- ------------ ------------- Loss after income taxes (1,383) (1,243) (2,997) Minority interests 18 18 Loss in affiliates, net of minority interests (1,513) (1,513) ------------- ------------ ------- ------------- Net loss $ (2,878) $ (1,243) $ 371 $ (4,492) ============= ============ ======= ============= Basic and diluted net loss per share $ (0.39) $ (0.60) ============= ============= Weighted average number of shares outstanding (in thousands) 7,433 7,433 ============= ============= See referenced notes attached. DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998 (in thousands, except per share data) Acquisition of Pro Forma Historical Control Systems Adjustments Pro Forma ---------- --------------- ----------- --------- Sales: Products $ 18,062 $ 11,351 $ 29,413 Services 19,433 19,433 ------------ -------------- ------------ 37,495 11,351 48,846 ------------ -------------- ------------ Cost of sales: Products 14,306 11,903 26,209 Services 14,869 14,869 ------------ -------------- ------------ 29,175 11,903 41,078 ------------ -------------- ------------ Gross profit 8,320 (552) 7,768 Research and development expenses 1,605 2,590 4,195 Selling, general and administrative expenses 14,303 2,831 $ 379 (4) 17,513 ------------ -------------- ------------ Operating loss (7,588) (5,973) (13,940) Gain on sale of division 5,998 5,998 Loss from contingent performance of bank guarantees for affiliate (1,135) (1,135) Unrealized loss from writedown of investment (6,103) (6,103) Other expenses, net (1,102) (4) 658 (5) (1,764) ------------ -------------- ------------ Loss before income taxes (9,930) (5,977) (16,944) Provision for income taxes 35 (6) 35 ------------ -------------- ------------ Loss after income taxes (9,965) (5,977) (16,979) Minority interests 929 929 Loss in affiliates, net of minority interests (3,908) (3,908) ------------ -------------- -------- ------------ Net loss $ (12,944) $ (5,977) $ 1,037 $ (19,958) ============ ============== ======== ============ Basic net loss per share $ (1.75) $ (2.70) ============ ============ Weighted average number of shares outstanding (in thousands) 7,391 7,391 ============ ============ See referenced notes attached. DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) Notes to Pro Forma Financial Statements (1) Increase in short term bank debt and accounts payable to finance Acquisition. (2) Balance due to seller. (3) The $318 value attributed to the warrants issued to lender for nominal consideration in connection with loan to finance Acquisition will be amortized to paid-in-capital over the term of the loan. (4) Depreciation and amortization of tangible and intangible assets assumes Acquisition occurred on January 1, 1998. (5) Finance expense on loan to finance Acquisition assumed taken on January 1, 1998. Finance expense for the year ended December 31, 1998 includes $318 of amortization of deferred interest expense associated with the issuance of the warrants referred to in Note 3. (6) As the Registrant establishes a valuation allowance against all deferred tax assets, no adjustment has been made to reflect any deferred tax benefit associated with the losses of the acquired business. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, in the Township of Mahwah, State of New Jersey, on December 14, 1999. DATA SYSTEMS & SOFTWARE INC. BY: /s/ GEORGE MORGENSTERN GEORGE MORGENSTERN Chairman of the Board, President and Chief Executive Officer