EXHIBIT 99.1
[LOGO]
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 SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2005
Mahwah, New Jersey - August 12, 2005 -- Data Systems & Software Inc. (OTCBB:
DSSI) today announced results for the quarter and six months ended June 30,
2005.
Sales in the first six months of 2005 increased by $1.1 million, from
$14.6 million in the first six months of 2004 to $15.7 million in the first six
months of 2005. This increase was due to increased sales in both segments,
particularly in the first quarter of this year. Sales in the second quarter of
2005 decreased in comparison to those in the second quarter of 2004. The
decrease in sales was due to a $0.5 million decrease in computer hardware sales,
partially offset by a $0.3 million increase in software consulting and
development sales.
Gross profit in the first six months of 2005 increased by $0.2 million
compared to the first six months of 2004, due to increased gross profit in both
segments in the first quarter of this year. Gross profit in the second quarter
of 2005 decreased by $0.1 million in comparison to the second quarter of 2004,
due a decrease in gross profit in the Company's computer hardware segment.
Selling, marketing, general and administrative expenses in the first
six months and second quarter of 2005 increased by $0.3 million and $0.2
million, respectively, as compared to the same periods in 2004. The increase was
due to increased compensation expenses and professional fees. Although the
Company expects this increased level of expense to continue in the third
quarter, they are expected to decrease significantly in the fourth quarter of
this year with the closing of the transaction for the sale of dsIT's outsourcing
consulting business.
The Company's share of Comverge's net loss of $6.1 million for the
first six months and $3.0 million for the second quarter of 2005 was $0.4
million and $0.2 million, respectively. As the carrying value of the Company's
investment in Comverge's common stock and preferred stock has been reduced to
zero, the Company will no longer be recording equity losses in Comverge.
On July 27, 2005, the Company and the other shareholders of dsIT
entered into a definitive agreement for the sale of dsIT's outsourcing
consulting business to Taldor Computer Systems (1986) Ltd. (TASE: TALD) for
approximately $6 million in cash. The price is subject to adjustment under the
terms set forth in the agreement. The Company's net share of the purchase price
is expected to be approximately $3.5 million. The closing of the transaction is
subject to consents and approvals, including approval of various Israeli
government authorities, dsIT's banks and certain other parties.
Mr. George Morgenstern, President and CEO of DSSI commented: "The
results in the second quarter suffered from the volatile nature of the computer
hardware market and a decrease in consulting sales, due in part to dsIT being in
flux as a result of the pending sale of this business. We are close to
completing the sale of dsIT's consulting outsourcing business. We believe our
increased focus on dsIT's project and solution business, which the company will
be retaining, will allow us to better leverage our expertise and reputation in
developing and marketing solutions in the defense, homeland security and
commercial areas."
Data Systems & Software Inc. (OTCBB: DSSI) is a provider of software
consulting and development services, and is an authorized direct seller and
value added reseller of computer hardware. In addition, its Comverge Inc. equity
affiliate provides energy intelligence solutions to utilities. Additional
information about DSSI is available at www.dssiinc.com.
This press release includes forward-looking statements, which are subject to
risks and uncertainties. Actual results may vary from those projected or implied
by such forward-looking statements. The ability of the Company to maintain
profitable operations in its consolidated operating segments is subject to risks
and uncertainties related to conditions in the market for computer hardware and
the projects and solutions markets. The closing of the sale of dsIT's
outsourcing consulting business is subject to the receipt of all necessary
corporate and other approvals. The actual consideration to be paid for the dsIT
shares, and the amount that the Company may receive in connection with the
transaction, is subject to adjustment. There is no assurance that the
transaction will be consummated on the terms previously announced or at all. The
Company's ability to leverage its experience and reputation in the projects and
solutions markets is subject to many risks and uncertainties, and there is no
assurance that the Company will be able to do so. 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 "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.
Tables Follow
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
As of As of
December June 30,
ASSETS 31, 2004 2005
-------- --------
Current assets: (unaudited)
Cash and cash equivalents $ 685 $ 265
Short-term bank deposits 72 --
Restricted cash 354 352
Accounts receivable, net 6,069 6,021
Unbilled work-in-process 533 588
Inventory 61 63
Other current assets 540 610
-------- --------
Total current assets 8,314 7,899
Property and equipment, net 649 598
Other assets 737 730
Funds in respect of employee termination benefits 2,836 2,748
Goodwill 4,408 4,151
Other intangible assets, net 81 61
-------- --------
Total assets $ 17,025 $ 16,187
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank credit $ 729 $ 858
Current maturities of long-term debt 466 401
Note payable - related party -- 100
Trade accounts payable - related party 2,283 2,147
Accrued payroll, payroll taxes and social benefits 1,735 1,715
Other current liabilities 2,227 2,326
-------- --------
Total current liabilities 7,440 7,547
-------- --------
Long-term liabilities:
Investment in Comverge, net 1,444 1,824
Long-term debt 201 166
Liability for employee termination benefits 4,279 4,270
Other liabilities 65 21
-------- --------
Total long-term liabilities 5,989 6,281
-------- --------
Minority interests 1,471 1,437
-------- --------
Shareholders' equity:
Common stock - $0.01 par value per share:
Authorized - 20,000,000 shares; Issued - 8,937,395 shares at 88
December 31, 2004 and June 30, 2005 88
Additional paid-in capital 39,733 39,733
Warrants 461 461
Deferred compensation (59) (47)
Accumulated deficit (34,290) (35,303)
Treasury stock, at cost -820,704 shares at December 31, 2004 and June 30, (3,791)
2005 (3,791)
Accumulated other comprehensive loss (17) (219)
-------- --------
Total shareholders' equity 2,125 922
-------- --------
Total liabilities and shareholders' equity $ 17,025 $ 16,187
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DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Six months ended Three months ended
June 30, June 30,
--------------------------- ------------------------
2004 2005 2004 2005
------------- ------------ ----------- ----------
Sales:
Products $8,156 $9,053 $ 4,123 $ 3,925
Services 4,927 4,947 2,467 2,359
Projects 1,472 1,657 710 814
-------- -------- -------- --------
Total sales 14,555 15,657 7,300 7,098
-------- -------- -------- --------
Cost of sales:
Products 6,914 7,422 3,549 3,237
Services 3,379 3,855 1,684 1,871
Projects 1,186 1,143 541 603
-------- -------- -------- --------
Total cost of sales 11,479 12,420 5,774 5,711
-------- -------- -------- --------
Gross profit 3,076 3,237 1,526 1,387
Operating expenses:
Research and development expenses -- 26 -- 17
Selling, marketing, general and administrative 3,328 3,614 1,498 1,722
-------- -------- -------- --------
Total operating expenses 3,328 3,640 1,498 1,739
-------- -------- -------- --------
Operating income (loss) (252) (403) 28 (352)
Interest income 77 4 75 2
Interest expense (86) ( 98) (29) (43)
Other income, net 237 60 136 55
-------- -------- -------- --------
Income (loss) before taxes on income (24) (437) 210 (338)
Taxes on income (20) 137 (13) 40
-------- -------- -------- --------
Income (loss) from operations of the Company and its (4) (574) 223 (378)
consolidated subsidiaries
Share of losses in Comverge (684) (380) (331) (179)
Minority interests (48) (59) (33) (17)
-------- -------- -------- --------
Net loss from continuing operations (736) (1,013) (141) (574)
Net income from discontinued operations, 348 --
net of tax 348 --
-------- -------- -------- --------
Net income (loss) (388) (1,013) 207 (574)
-------- -------- -------- --------
Other comprehensive income (loss), net of tax:
Differences from translation of financial
statements of subsidiaries (170) (202) 26 (161)
-------- -------- -------- --------
Comprehensive income (loss) $(558) 1,215) $ 233 $ (735)
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Basic and diluted net income (loss) per share:
Loss per share from continuing operations $(0 09) $(0 12) $ (0 01) $ (0 07)
Discontinued operations 0 04 -- 0 04 --
-------- -------- -------- --------
Basic and diluted net income (loss) per share $(0 05) (0 12) $ 0 03 $ (0 07)
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Weighted average number of shares outstanding:
Basic and diluted 7,918 8,117 7,922 8,117
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