SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.1
ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 12, 2005
DATA SYSTEMS & SOFTWARE INC.
(Exact name of Registrants as Specified in their Charters)
Delaware 0-19771 22-2786081
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(States or Other Jurisdiction (Commission file Numbers) (IRS Employer
of Incorporation) Identification Nos.)
200 Route 17, Mahwah, New Jersey 07430
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(Address of Principal Executive Offices) (Zip Code)
Registrants' telephone number, including area code (201) 529-2026
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-2 under the Exchange Act (17 CFR
240.14a-2)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On August 12, 2005, the Registrant announced its financial results for
the second quarter and six months ended June 30, 2005. A press release relating
to such announcement was filed as an exhibit to a Current Report on Form 8-K
filed August 18, 2005, which is being amended by this Amendment No.1 on Form
8-K/A. Included herewith is an unaudited pro forma condensed consolidated
balance sheet as of June 30, 2005 and unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 2004 and the six-month
period ended June 30, 2005, all of which give effect to the sale by the
Registrant of the outsourcing consulting business of its dsIT Technologies Ltd.
subsidiary to Taldor Computer Systems (1986) Ltd. on August 18, 2005.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
See unaudited pro forma condensed consolidated financial information
attached hereto.
(c) Exhibits.
99.1 Press Release dated August 12, 2005 announcing the financial
results. (previously filed)
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 on this 6th day of September 2005.
DATA SYSTEMS & SOFTWARE INC.
By: /S/ GEORGE MORGENSTERN
------------------------------------
Name: George Morgenstern
Title: President and Chief Executive Officer
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
The following unaudited pro forma condensed consolidated financial statements
give effect to the sale by Data Systems & Software Inc. (the "Company" or
"DSSI") of the outsourcing consulting business of its dsIT Technologies Ltd.
subsidiary ("dsIT Technologies") to Taldor Computer Systems (1986) Ltd.
("Taldor") on August 18, 2005 (the "Disposition").
Prior to the consummation of the Disposition, dsIT Technologies completed a
spin-off of its project development and solutions activities to certain of its
current shareholders. DSSI owns 80% of the entity, which will continue to
conduct these activities under the name dsIT Solutions Ltd.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet (the "Pro Forma
Balance Sheet") as of June 30, 2005 has been prepared as if the Disposition
occurred on June 30, 2005. The Pro Forma Balance Sheet is based upon the
historical consolidated balance sheet of DSSI as of June 30, 2005, which was
included in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005, and gives effect to the unaudited pro forma adjustments necessary
to account for the Disposition.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 2004 (the "Annual Pro Forma Statement of Operations")
has been prepared as if the Disposition occurred on January 1, 2004. This Annual
Pro Forma Statement of Operations is based upon the historical consolidated
statement of operations of DSSI for the year ended December 31, 2004, which was
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2004, and gives effect to the unaudited pro forma adjustments necessary to
account for the Disposition. The Annual Pro Forma Statement of Operations does
not include the anticipated gain on the Disposition of approximately $323, net
of taxes.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
six-month period ended June 30, 2005 (the "Six-Month Period Pro Forma Statement
of Operations") has been prepared as if the Disposition occurred on January 1,
2005. This Six-Month Period Pro Forma Statement of Operations is based upon the
historical consolidated statement of operations of DSSI for the six-month period
ended June 30, 2005, which was included in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2005, and gives effect to the unaudited
pro forma adjustments necessary to account for the Disposition. The Six-Month
Period Pro Forma Statement of Operations does not include the anticipated gain
on the Disposition of approximately $323, net of taxes.
The unaudited pro forma adjustments are based on an estimated sale price and
assumptions that DSSI believes are reasonable. Therefore, the amounts in the Pro
Forma Statements of Operations and Pro Forma Balance Sheet and accompanying
notes (collectively, the "Pro Forma Financial Information") are subject to
change. The Pro Forma Financial Information is provided for illustrative
purposes only and does not purport to represent what DSSI's results of
operations or financial position would actually have been, had the Disposition
in fact occurred on such dates, nor does it purport to project the results of
operations or financial position of DSSI for any future period or date.
The Pro Forma Financial Information should be read in conjunction with, and is
qualified by reference to, the audited and unaudited financial statements and
accompanying notes of DSSI, which were included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2004 and Quarterly Report on Form
10-Q for the quarter ended June 30, 2005.
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share data)
As of June 30, 2005
Business
disposition
DSSI as (Notes 1 and Pro forma
ASSETS reported 2) adjustments Notes Pro forma
------------ -------------- --------------- --------- --------------
Current assets:
Cash and cash equivalents $265 3,318 (1,441) 7,8 $2,142
Investment in short-term
restricted deposits -- 300 7 300
Restricted cash 352 (109) 243
Accounts receivable, net 6,021 (1,540) 4,481
Unbilled work-in-process 588 (127) 461
Inventory 63 63
Other current assets 610 (103) (38) 6 469
------------ --------------
Total current assets 7,899 8,159
Property and equipment, net 598 598
Other assets 730 (91) (262) 6 377
Long-term restricted deposits -- 1,141 7 1,141
Funds in respect of employee
termination benefits 2,748 (972) 1,776
Goodwill 4,151 (4,022) 129
Other intangible assets, net 61 61
------------ --------------
Total assets $16,187 $12,241
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank credit $858 (398) $460
Current maturities of long-term
debt 401 (3) 398
Related Party - Note payable 100 100
Trade accounts payable 2,147 (243) 1,904
Accrued payroll, payroll taxes
and social benefits 1,715 (985) 730
Other current liabilities 2,326 (220) 2,106
------------ --------------
Total current liabilities 7,547 5,698
------------ --------------
Long-term liabilities:
Investment in Comverge, net 1,824 1,824
Long-term debt 166 166
Liability for employee
termination benefits 4,270 (1,428) 2,842
Other liabilities 21 21
------------ --------------
Total long-term liabilities 6,281 4,853
------------ --------------
Minority interests 1,437 (1,437) 5 --
------------ --------------
Shareholders' equity:
Common stock - $0.01 par value per
share:
Authorized - 20,000,000 shares; Issued
- 8,937,395 shares at December 31,
2004 and June 30, 2005 88 88
Additional paid-in capital 39,733 335 40,068
Warrants 461 461
Deferred compensation (47) (47)
Accumulated deficit (35,303) 544 (300) 6 (35,059)
Treasury stock, at cost -820,704
shares at December 31, 2004 and June
30, 2005 (3,791) (3,791)
Accumulated other comprehensive loss (219) 189 (30)
------------ --------------
Total shareholders' equity 922 1,690
------------ --------------
Total liabilities and
shareholders' equity $16,187 $12,241
============ ==============
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2004
(in thousands, except net loss per share data)
Business
disposition Pro-forma
DSSI (Notes 1 and 3) adjustments Note Pro-forma
---- --------------- ----------- ---- ---------
Sales $30,113 $(8,273) $21,840
Cost of sales 23,587 (6,344) 17,243
----------------- -------------- -------------
Gross profit 6,526 (1,929) 4,597
Research and development expenses 30 -- 30
Selling, marketing, general and
administrative expenses 7,369 (260) 7,109
----------------- -------------- -------------
Total operating expenses 7,399 (260) 7,139
----------------- -------------- -------------
Operating loss (873) (1,669) (2,542)
Interest income 84 18 8 102
Interest expense (175) (175)
Other income (expense), net 197 (51) 5 146
----------------- -------------- ------------------ -------------
Loss before taxes on income (767) (1,669) (33) (2,469)
Taxes on income 126 327 6 453
----------------- -------------- ------------------ -------------
Loss from operations of the Company and
its consolidated subsidiaries (893) (1,669) (360) (2,922)
Share in losses of Comverge (1,242) (1,242)
Gain on sale of shares in Comverge 705 705
Minority interests (90) 90 5 --
----------------- -------------- ------------------ -------------
Net loss (1,520) (1,669) (270) (3,459)
================= ============== ================== =============
Basic and diluted net loss per share:
Loss per share $(0.19) $(0.43)
================= =============
Weighted average number of shares
outstanding - basic and diluted 7,976 7,976
================= =============
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2005
(in thousands, except loss per share data)
Business
disposition
(Notes 1 Pro-forma
DSSI and 4) adjustments Note Pro-forma
---- --------------- ----------- ---- ---------
Sales $15,657 (4,303) $11,354
Cost of sales 12,420 (3,388) 9,032
----------------- ----------------- --------------
Gross profit 3,237 (915) 2,322
Research and development expenses 26 26
Selling, marketing, general and
administrative expenses 3,614 (84) 3,530
----------------- ----------------- --------------
Total operating expenses 3,640 (84) 3,556
----------------- ----------------- --------------
Operating loss (403) (831) (1,234)
Interest income 4 10 8 14
Interest expense (98) (98)
Other income (expense), net 60 (62) 5 (2)
----------------- ----------------- ---------------- --------------
Loss before taxes on income (437) (831) (52) (1,320)
Taxes on income 137 301 6 438
----------------- ----------------- ---------------- --------------
Loss from operations of the Company and
its consolidated subsidiaries (574) (831) (353) (1,758)
Share in losses of Comverge (380) (380)
Minority interests (59) 59 5 --
----------------- ----------------- ---------------- --------------
Net loss (1,013) (831) (294) (2,138)
================= ================= ================ ==============
Basic and diluted net loss per share:
----------------- --------------
Loss per share $(0.12) $(0.26)
================= ==============
Weighted average number of shares
outstanding - basic and diluted 8,117 8,117
================= ==============
DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands, except share and per share data)
NOTE 1
To record the Disposition resulting in estimated proceeds to DSSI of $3,318, net
of estimated expenses of $200 ($150 of transaction expenses and $50 of tax). As
a result of the transaction, goodwill, minority interest and accumulated other
comprehensive loss balances associated with dsIT Technologies are accordingly
adjusted.
NOTE 2
To record the reduction of assets and liabilities in the spin-off of dsIT
Technologies' project development and solutions activities as follows:
Assets
Restricted cash $ (109)
Accounts receivable, net (1,540)
Unbilled work-in-process (127)
Other current assets (103)
Other assets (91)
Funds in respect of employee termination benefits (972)
-------
Reduction in total assets (2,942)
=======
Liabilities
Short-term bank credit (398)
Current maturities of long-term debt (3)
Trade accounts payable (243)
Accrued payroll, payroll taxes and social benefits (985)
Other current liabilities (220)
Liability for employee termination benefits (1,428)
-------
Reduction in total liabilities (3,277)
=======
Excess of liabilities over assets - to additional
paid-in-capital 335
=======
NOTE 3
To record the exclusion of dsIT Technologies' outsourcing consulting business
activities for the period from January 1, 2004 to December 31, 2004 as follows:
Sales $8,273
Cost of sales 6,344
------
Gross profit 1,929
Selling, marketing, general and administrative 260
------
Operating income $1,669
NOTE 4
To record the exclusion of dsIT Technologies' outsourcing consulting business
activities for the period from January 1, 2005 to June 30, 2005 as follows:
Sales $4,303
Cost of sales 3,388
------
Gross profit 915
Selling, marketing, general and administrative 84
------
Operating income $ 831
NOTE 5
To adjust for the recording of minority interests' share of income/losses in
dsIT Solutions. As a result of the transaction, there is no longer a minority
interest participation in dsIT Solutions' income/losses. DSSI records the full
amount of dsIT Solutions' losses with no adjustment for minority interests.
NOTE 6
To expense all deferred tax assets in dsIT Solutions.
NOTE 7
To record the funding of the present value of the remaining balance of the
consulting agreement of the Company's Chief Executive Officer in accordance with
the Company's agreement with him dated as of January 1, 1997, as amended to
date.
NOTE 8
To record interest income resulting from the investment in short-term and
long-term deposits of the remaining balance of cash remaining from the
Disposition after the funding of the Company's Chief Executive Officer's
consulting agreement.
NOTE 9
As part of the Disposition, DSSI granted to Taldor warrants to purchase 10% of
dsIT Solutions Ltd. for $200. The warrants have a seven-year life and expire on
August 18, 2012. The value of such warrants is immaterial.