DSSI News Data Systems & Software Inc. Announces Results for the Second Quarter and Six Months Ended June 30, 2006
MAHWAH, N.J.--(BUSINESS WIRE)--Aug. 11, 2006--Data Systems & Software Inc. (OTCBB:DSSI) today announced results for the quarter and six months ended June 30, 2006.
Sales in the first six months of 2006 decreased from $2.2 million in the first six months of 2005 to $2.0 million in 2006. Gross profit in the first six months of 2006 decreased by $0.1 million compared with the first six months of 2005, while gross profit gross in the second quarter of 2006 increased slightly as compared with gross profit in the second quarter of 2005.
Selling, marketing, general and administrative expenses ("SMG&A") in the first six months of 2006 were approximately the same as in the first six months of 2005 and increased by $0.1 million in the second quarter of 2006 as compared to the second quarter of 2005. SMG&A expenses decreased in the Company's operating segments; however this decrease was offset by increases in corporate SMG&A expense, attributable primarily to stock option compensation recorded in 2006. Corporate SMG&A expense in 2006 includes $0.4 million of stock option compensation expense ($0.3 million recorded in the second quarter) due to the adoption of SFAS 123R effective January 1, 2006.
Under applicable accounting principles, as a result of the Company's sale of Databit in the first quarter of 2006, the results of Databit have been reclassified in the current period and for all prior periods as a discontinued operation. The condensed results of this business are presented in each of the current and comparative periods as net income from discontinued operations.
The decrease in net income from discontinued operations in the 2006 periods as compared with 2005 periods, was primarily due to the inclusion in the 2005 periods of the results of the outsourcing consulting services business which was sold in 2005.
The $2.2 million loss on sale of discontinued operation for the six months ended June 30, 2006, reflects the loss from the sale of the Databit computer hardware company and contract settlement with our former CEO during the first quarter of 2006.
The results of the Company's Comverge equity affiliate did not impact the Company's results for the second quarter ended June 30, 2006, since the Company's net carrying value for its preferred stock investment in Comverge has been reduced to zero by previously recorded losses.
John A. Moore, President and CEO commented: "We look forward to increased activity in our operating segments in future periods." Moore added: "Although, Comverge did not impact our operating results for the quarter, the recent heat wave in the United States drove home to utilities, consumers and regulators alike the importance of Comverge's Demand Response in keeping the lights on during times of peak usage. Over one gigawatt of electric capacity, including over 100 megawatts of capacity provided by Comverge to its utility customers under its Virtual Peaking Capacity(TM) programs, was called on to provide demand relief from New England to California - enough energy to power approximately one million homes on an average day. We are clearly seeing the market needs and regulatory pressure increase towards expanding and optimizing Demand Response programs via business models such as Comverge's Virtual Peaking Capacity(TM) offering."
About DSSI
Data Systems & Software Inc. (OTCBB:DSSI) is a provider of software consulting and development services. In addition, its Comverge Inc. equity affiliate is a leading Demand Response company enabling utilities, industry and consumers to better manage peak electricity usage. Additional information about DSSI is available at http://www.dssiinc.com and at http://www.dsit.co.il.
About Comverge
Comverge provides clean, low-cost peak electric capacity reduction achieved through Demand Response solutions and technologies, such as its patent pending fully outsourced Virtual Peaking Capacity(TM) offering. As North America's leader in Demand Response, Comverge serves over 500 clients in the electric utility industry, implementing both integrated and outsourced solution-based models for direct and price responsive load management, remote meter reading, and distributed generation monitoring. Comverge's investors include Nth Power, EnerTech Capital, Data Systems & Software Inc., E.ON Venture Partners, Ridgewood Capital, Easton Hunt Capital Partners, Norsk Hydro Technology Ventures, Air Products, Emerson, Rockport Capital Partners, Partners for Growth, and the Shell Internet Ventures affiliate of Royal Dutch/Shell. For more information, please visit www.comverge.com.
This press release includes forward-looking statements, which are subject to risks and uncertainties. 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 real-time and IT solutions market and the market for Demand Response and other energy intelligence solutions. The ability of Comverge to continue to grow and improve its results is subject to risks associated with conditions in the market for Demand Response solutions. 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 "Risk Factors" 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. AND SUBSIDIARIES
Consolidated Statements Of Operations
(in thousands, except per share data)
Six months Three months
ended ended
June 30, June 30,
--------------- ---------------
2005 2006 2005 2006
------- ------- ------- -------
Sales:
Projects 1,657 1,521 814 791
Services and other 551 442 235 199
------- ------- ------- -------
Total sales 2,208 1,963 1,049 990
------- ------- ------- -------
Cost of sales:
Projects 1,127 1,021 590 482
Services and other 451 369 190 163
------- ------- ------- -------
Total cost of sales 1,578 1,390 780 645
------- ------- ------- -------
Gross profit 630 573 269 345
Operating expenses:
Research and development expenses 26 97 17 71
Selling, marketing, general and
administrative expenses 1,945 1,966 915 1,044
------- ------- ------- -------
Total operating expenses 1,971 2,063 932 1,115
------- ------- ------- -------
Operating loss (1,341) (1,490) (663) (770)
Interest income 3 25 2 --
Interest expense (50) (16) (27) (6)
Other income (expense), net 59 315 49 (14)
------- ------- ------- -------
Loss before taxes on income (1,329) (1,166) (639) (790)
Taxes on income 6 (6) 4 (4)
------- ------- ------- -------
Loss from operations of the Company and
its consolidated subsidiaries (1,323) (1,172) (635) (794)
Share of losses in Comverge (380) (210) (179) --
Minority interests (59) -- (17) --
------- ------- ------- -------
Net loss from continuing
operations (1,762) (1,382) (831) (794)
Net income from discontinued
operations, 749 78 257 --
net of tax
Loss on sale of discontinued operations
and contract settlement, net of tax -- (2,298) -- --
------- ------- ------- -------
Net loss (1,013) (3,602) (574) (794)
------- ------- ------- -------
Basic and diluted net income (loss) per share:
Loss per share from continuing
operations ($0.22) ($0.17) ($0.10) ($0.10)
Discontinued operations 0.1 (0.27) 0.03 --
------- ------- ------- -------
Net loss per share - basic and
diluted ($0.12) ($0.44) ($0.07) ($0.10)
======= ======= ======= =======
Weighted average number of shares
outstanding -basic and diluted 8,117 8,152 8,117 8,161
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DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
ASSETS As of As of
December 31, June 30,
2005 2006
-------------------------
Current assets: (unaudited)
Cash and cash equivalents $913 $170
Restricted cash 247 --
Restricted cash (under agreement with a
related party) 300 --
Accounts receivable, net 4,096 1,272
Unbilled work-in-process 348 400
Inventory 25 --
Other current assets 709 653
------------ ------------
Total current assets 6,638 2,495
Property and equipment, net 500 428
Other assets 334 324
Funds in respect of employee termination
benefits 1,441 1,426
Restricted cash - non-current (under
agreement with a related party) 1,050 --
Goodwill 129 128
Other intangible assets, net 81 65
------------ ------------
Total assets $10,173 $4,866
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank credit $130 $152
Current maturities of long-term debt 160 100
Trade accounts payable 1,950 316
Accrued payroll, payroll taxes and social
benefits 740 426
Other current liabilities 2,200 1,697
------------ ------------
Total current liabilities 5,180 2,691
------------ ------------
Long-term liabilities:
Investment in Comverge, net 1,824 1,824
Long-term debt 75 --
Liability for employee termination
benefits 2,264 2,239
Other liabilities 10 52
------------ ------------
Total long-term liabilities 4,173 4,115
------------ ------------
Shareholders' equity:
Common stock - $0.01 par value per share:
Authorized - 20,000 shares; Issued - 8,939
shares at December 31, 2005 and June 30,
2006 88 89
Additional paid-in capital 40,011 40,756
Warrants 183 183
Deferred stock-based compensation (36) --
Accumulated deficit (35,608) (39,370)
Treasury stock, at cost - 821 and 777 shares
for December 31, 2005 and June 30, 2006,
respectively (3,791) (3,592)
Accumulated other comprehensive loss (27) (6)
------------ ------------
Total shareholders' equity 820 (1,940)
------------ ------------
Total liabilities and shareholders' equity $10,173 $4,866
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