Data Systems & Software Inc fka DSSI

[midastouch017]

Data Systems & Software Inc. Announces Results for the Year

Ended December 31, 2005

Friday March 31, 4:24 pm ET
-- To Focus on Energy Intelligence Assets and Port Security Operations Following Disposition of Hardware Sales Unit --
-- Announces April 5 Conference Call with New CEO John Moore --

MAHWAH, N.J., March 31 /PRNewswire-FirstCall/ -- Data Systems & Software Inc. (OTC Bulletin Board: DSSI - News) today announced results for the year ended December 31, 2005.

The results as reported reflect the Company's sale in August 2005 of its dsIT Technologies subsidiary and its associated outsourcing consulting business. Under applicable accounting principles, the results of this business were reclassified in the current periods and for all prior periods as discontinued operations. The condensed results of these operations are presented in each of the current and comparative periods as net income from discontinued operations. The continuing operations and assets of the Company's software consulting and development segment consist of dsIT's project development services and solutions activities, including its port security business.

The results continue to reflect the Company's computer hardware sales segment for the periods reported. As previously announced, these activities, which were conducted through the Company's Databit subsidiary, were sold in March 2006 and will be reflected as a discontinued operation in future periods.

Sales for the year 2005 increased marginally to $21.9 million from 2004 sales of $21.8 million. The increase was due to an increase in sales of the software consulting and development segment, partially offset by a decrease in sales of the computer hardware segment.

The decrease in gross profit to $4.4 million in 2005 as compared to $4.6 million in 2004 was entirely attributable to a decrease of $0.6 million in gross profit in the computer hardware segment, which was partially offset by an increase in gross profit in its software consulting and development segment of $0.4 million. In the software consulting and development segment, the gross profit margin increased to 29%, from 25% in 2004, whereas in the computer hardware sales segment gross profit margin decreased to 18% from 20% in 2004.

The decrease in selling, general, marketing and administrative (SMG&A) expenses to $6.5 million in 2005, as compared to $7.1 million in 2004, was primarily due to lower corporate professional fees and compensation expense in the computer hardware segment in 2005. The decrease in net finance expenses was attributable to the continued reduction of dsIT's outstanding bank debt.

The decrease in income tax expense in 2005 was primarily due to a tax benefit recorded from the sale of the Company's dsIT Technologies subsidiary, partially offset by a one-time expense due to the reorganization of dsIT's business, which resulted in the expensing of certain previously recognized foreign income tax assets.

The Company's share of Comverge's net loss was $0.4 million in 2005, down from $1.2 million in 2004. This reduction in the Company's share of the Comverge loss is attributable to the Company ceasing to record equity losses in Comverge, as its preferred stock investment has been reduced to zero.

The net loss from the Company's continuing operations was reduced to $2.2 in 2005 from $2.4 million in 2004.

In August 2005, the Company sold its Israeli outsourcing consulting business for approximately $3.7 million, resulting in a gain of $0.5 million. Net income from these operations, net of income taxes, have been restated for 2004. The decrease in net income from discontinued operations, net of tax, is due to the fact that the 2005 period reflects the operations through the date of the sale of the business in August 2005, as compared to 2004, which reflects an entire year's results.

John A. Moore, Chairman, President and Chief Executive Officer of DSSI commented: "My number one priority is to help the greater investment community understand the potential of Comverge. Comverge was incubated at dsIT and was further developed following our acquisition of energy intelligence technology and expertise through our purchase of the Lucent and Scientific Atlanta's energy intelligence businesses in 1998 and 1999. Comverge, which is establishing itself as the #1 energy Demand Response solutions provider, was named by Newsweek Magazine as "One of the Top Ten Eco-Friendly Companies in North America" in the November 21, 2005 issue." Mr. Moore continued, "With the recent heightened sensitivity to port security, we are also looking at doing more to leverage off dsIT's platform of expertise in naval and port security solutions."

The Company also announced that it will host a conference call with its new President and CEO John A. Moore on Wednesday, April 5, 2006 at 2:00 p.m. Eastern time. To participate, call [phone] (U.S. toll-free number) or [phone] (international callers) and mention passcode: 9824009.

About DSSI

Data Systems & Software Inc. (OTC Bulletin Board: DSSI - News) 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, Inc., The Power in Power Technology(TM), is a leading Demand Response company whose investors include Nth Power, EnerTech Capital, Data Systems & Software Inc. (OTC Bulletin Board: DSSI - News), E.ON Venture Partners GmbH, Ridgewood Capital, Easton Hunt Capital Partners, L.P., Norsk Hydro Technology Ventures, Rockport Capital Partners, Partners for Growth and Shell Internet Ventures, an affiliate of the Royal Dutch/Shell Group of Companies. Providing software and system solutions to over 500 clients in the electric utility industry, Comverge implements both integrated and outsourced solution based models for remote meter reading, distributed generation monitoring, and time-of-use billing and demand response, and direct or voluntary load control initiatives. For additional information about Comverge visit http://www.comverge.com.

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