SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
Commission File Number 0-19771
Cusip Number 237887104
NOTIFICATION OF LATE FILING
(Check One): [X Form 10-K [_] Form 11-K [_] Form 20-F [ ] Form 10-Q
[_] Form N-SAR
For Period Ended: December 31, 2002
[_] Transition Report on Form 10-K
[_] Transition Report on Form 20-F
[_] Transition Report on Form 11-K
[_] Transition Report on Form 10-Q
[_] Transition Report on Form N-SAR
For the Transition Period Ended:
Read attached instruction sheet before preparing form. Please print or
type.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the item(s) to which the notification relates:
PART I
REGISTRANT INFORMATION
DATA SYSTEMS & SOFTWARE INC.
________________________________________________________________________________
Full Name of Registrant
________________________________________________________________________________
Former Name if Applicable
200 Route 17
________________________________________________________________________________
Address of Principal Executive Office (Street and Number)
Mahwah, New Jersey 07430
________________________________________________________________________________
City, State and Zip Code
PART II
RULE 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate.)
| (a) The reasons described in reasonable detail in Part III of this
| form could not be eliminated without unreasonable effort or
| expense;
|
| (b) The subject annual report, semi-annual report, transition report
| on Form 10-K, Form 20-F, Form 11-K or Form N-SAR, or portion
[X] | thereof will be filed on or before the 15th calendar day
| following the prescribed due date; or the subject quarterly
| report or transition report on Form 10-Q, or portion thereof will
| be filed on or before the fifth calendar day following the
| prescribed due date; and
|
| (c) The accountant's statement or other exhibit required by Rule
| 12b-25(c) has been attached if applicable.
PART III
NARRATIVE
State below in reasonable detail why the Form 10-K, 11-K, 20-F 10-Q, N-SAR
or the transition report portion thereof could not be filed within the
prescribed time period.
The registrant was not able to file the Annual Report on Form 10-K on March
31, 2003 as required due to a pending significant corporate transaction which
needs to be disclosed as a significant subsequent event in the notes to the
financial statements for the year ended December 31, 2002. The registrant
expects this transaction and any necessary disclosures and procedures related
thereto to be completed on or before the fifteenth calendar day following the
original due date of the Report.
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
George Morgenstern 201 529-2026
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is
no, identify report(s).
[x] Yes [_] No
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion
thereof?
[X] Yes [ ] No
If so: attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
The Company has announced its results for the year ended December 31, 2002.
This press release announcing the results is annexed to this Notification.
Data Systems & Software Inc.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date April 1, 2003 By: /s/ Sheldon Krause
------------------- ---------------------------------------------
Sheldon Krause, Secretary
Authorized Representative
INSTRUCTION: The form may be signed by an executive officer of the
registrant or by any other duly authorized representative. The name and title of
the person signing the form shall be typed or printed beneath the signature. If
the statement is signed on behalf of the registrant by an authorized
representative (other than an executive officer), evidence of the
representative's authority to sign on behalf of the registrant shall be filed
with the form.
ATTENTION
Intentional misstatements or omissions of fact constitute Federal Criminal
Violations (see 18 U.S.C. 1001).
GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and
amendments thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the General
Rules and Regulations under the Act. The information contained in or filed with
the form will be made a matter of public record in the Commission files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of the
registrant is registered.
4. Amendments to the notifications must also be filed on Form 12b-25 but
need not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
5. ELECTRONIC FILERS. This form shall not be used by electronic filers
unable to timely file a report solely due to electronic difficulties. Filers
unable to submit a report within the time period prescribed due to difficulties
in electronic filing should comply with either Rule 201 or Rule 202 of
Regulation S-T or apply for an adjustment in filing date pursuant to Rule 13(b)
of Regulation S-T.
DSSI 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 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 our
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.
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 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 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 term's of Comverge's venture financing are
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.
2
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
3
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 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)
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Net loss per share:
Basic and diluted - as reported ............. $ (1.41)
=======
Basic and diluted - as adjusted ............. $ (1.33)
=======