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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001144204-03-001527.txt : 20030403
<SEC-HEADER>0001144204-03-001527.hdr.sgml : 20030403
<ACCEPTANCE-DATETIME>20030403154130
ACCESSION NUMBER:		0001144204-03-001527
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20030402
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20030403

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DATA SYSTEMS & SOFTWARE INC
		CENTRAL INDEX KEY:			0000880984
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				222786081
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-19771
		FILM NUMBER:		03638668

	BUSINESS ADDRESS:	
		STREET 1:		200 RTE 17
		CITY:			MAHWAH
		STATE:			NJ
		ZIP:			07430
		BUSINESS PHONE:		2015292026

	MAIL ADDRESS:	
		STREET 1:		200 ROUTE 17
		CITY:			MAHWAH
		STATE:			NJ
		ZIP:			07430

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DEFENSE SOFTWARE & SYSTEMS INC
		DATE OF NAME CHANGE:	19930328
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>





================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 2, 2003


                          DATA SYSTEMS & SOFTWARE INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



           DELAWARE                     0-19771                22-2786081
- -----------------------------   -------------------------- --------------------
 (State or Other Jurisdiction   (Commission file Number)        (IRS Employer
       of Incorporation)                                     Identification No.)



                    200 ROUTE 17, MAHWAH, NEW JERSEY               07430
         -----------------------------------------------------------------------
                (Address of Principal Executive Offices)        (Zip Code)



        Registrant's telephone number, including area code (201) 529-2026
                                                            --------------

================================================================================


<PAGE>





Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
        ------------------------------------------------------------------

     (c)  Exhibits

         Exhibit 99.1 - Press release of Registrant, dated April 2, 2003.

Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
         ---------------------------------------------

         On April 2, 2003, we announced  our results for the fourth  quarter and
year ended  December  31,  2003.  Our press  release  announcing  the results is
attached as Exhibit 99.1.




                                      -2-
<PAGE>





                                   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.


                          DATA SYSTEMS & SOFTWARE INC.



Date:  April 2, 2003                     BY:          /S/ SHELDON KRAUSE
                                            ----------------------------------
                                                      Sheldon Krause
                                                      Secretary








                                      -3-
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>doc2.txt
<TEXT>

<PAGE>
                                                                    EXHIBIT 99.1
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 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.

                                      -4-

<PAGE>
         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 to 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 the 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 terms of Comverge's venture
financing is 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.

     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

                                      -5-
<PAGE>


                  DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                          As Of December 31,
                                                                                        ---------------------
                                                                                        2001*            2002
                                                                                        -----            ----
                                                                                                      (unaudited)
<S>                                                                                    <C>                <C>
                                     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.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                  DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

                                                                                        Year Ended December 31,
                                                                                         ---------------------
                                                                                          2001*         2002
                                                                                         ------         ------
                                                                                                     (unaudited)
<S>       <C>                                                                              <C>         <C>
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
                                                                                      ==========       ========
</TABLE>

*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 income loss
per  share,  basic and diluted, would have been as follows (in thousands, except
per  share  data):



<PAGE>


<TABLE>
<CAPTION>

                                                                              Year ended
                                                                             December 31,
                                                                                 2001
                                                                             --------------
<S>                                                                                 <C>

            Net loss, as reported............................................      $(9,795)
            Plus: Goodwill amortization, net of income taxes.................          502
                                                                             --------------
            Adjusted net loss................................................      $(9,293)
                                                                             ==============

            Net loss per share:
               Basic and diluted - as reported...............................       $(1.41)
                                                                             ==============
               Basic and diluted - as adjusted...............................      .$(1.33)
                                                                             ==============


</TABLE>
<PAGE>





</TEXT>
</DOCUMENT>
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