<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999
---------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934.
For the transition period from __________________ to _________________________
Commission File Number: 0-26330
ASTEA INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2119058
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 BUSINESS CENTER DRIVE, HORSHAM, PA 19044
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 682-2500
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of May 11, 1999, 13,911,127 shares of the registrant's Common Stock, par
value $.01 per share, were outstanding.
<PAGE>
ASTEA INTERNATIONAL INC.
FORM 10-Q
QUARTERLY REPORT
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Facing Sheet 1
Index 2
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets (Unaudited) 3
Consolidated Statements of Operations (Unaudited) 4
Consolidated Statements of Cash Flows (Unaudited) 5
Notes to Unaudited Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBIT 27 FINANCIAL DATA SCHEDULE
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ASTEA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,389,000 $ 14,291,000
Investments available for sale 27,312,000 22,603,000
Notes and escrow receivable 9,407,000 9,407,000
Receivables, net of reserves of $846,000 and $768,000 8,712,000 9,347,000
Prepaid expenses and other 2,479,000 2,097,000
Deferred income taxes 1,462,000 1,462,000
------------ ------------
Total current assets 56,761,000 59,207,000
Property and equipment, net 1,267,000 1,469,000
Capitalized software development costs, net 2,769,000 2,937,000
============ ============
Total assets $ 60,797,000 $ 63,613,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current portion of long-term debt $ 189,000 $ 887,000
Accounts payable and accrued expenses 6,776,000 8,673,000
Deferred revenues 4,374,000 4,105,000
------------ ------------
Total current liabilities 11,339,000 13,665,000
Deferred income taxes 463,000 463,000
Long-term debt 419,000 468,000
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value, 25,000,000 shares
authorized, 13,897,000 and 13,540,000 issued and
outstanding 139,000 135,000
Additional paid-in capital 51,925,000 51,098,000
Deferred compensation (83,000) (29,000)
Cumulative currency translation adjustment (644,000) (836,000)
Accumulated deficit (2,761,000) (1,351,000)
------------ ------------
Total stockholders' equity 48,576,000 49,017,000
============ ============
Total liabilities and stockholders' equity $ 60,797,000 $ 63,613,000
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
3
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<TABLE>
<CAPTION>
ASTEA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months
Ended March 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues:
Software license fees $ 1,952,000 $ 1,226,000
Services and maintenance 5,786,000 5,200,000
------------ ------------
Total revenues 7,738,000 6,426,000
------------ ------------
Costs and expenses:
Cost of software license fees 724,000 337,000
Cost of services and maintenance 4,770,000 4,067,000
Product development 1,329,000 1,210,000
Sales and marketing 2,409,000 1,572,000
General and administrative 907,000 1,162,000
------------ ------------
Total costs and expenses 10,139,000 8,348,000
------------ ------------
Loss from continuing operations before interest and (2,401,000) (1,922,000)
taxes
Net interest income 615,000 34,000
------------ ------------
Loss from continuing operations before income tax (1,786,000) (1,888,000)
Income tax benefit (376,000) (136,000)
------------ ------------
Loss from continuing operations (1,410,000) (1,752,000)
Loss from discontinued operations, net of taxes -- (474,000)
------------ ------------
Net loss $ (1,410,000) $ (2,226,000)
------------ ------------
Basic and diluted net loss per share:
Continuing operations $ (0.10) $ (0.13)
Discontinued operations $ -- $ (0.04)
------------ ------------
Net loss $ (0.10) $ (0.17)
============ ============
Share outstanding used in computing basic and diluted 13,688,000 13,376,000
net loss per share
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
ASTEA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,410,000) $ (2,226,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 666,000 550,000
Other 6,000 --
Changes in operating assets and liabilities:
Receivables 713,000 116,000
Prepaid expenses and other (380,000) (206,000)
Accounts payable and accrued expenses (1,842,000) (800,000)
Deferred revenues 312,000 682,000
------------ ------------
Net cash used in operating activities of continuing operations (1,935,000) (1,884,000)
Net cash provided by (used in) discontinued operations -- 174,000
------------ ------------
Net cash used in operating activities (1,935,000) (1,710,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments available for sale (4,709,000) (2,215,000)
Purchases of property and equipment (88,000) (195,000)
Capitalized software development costs (200,000) (200,000)
------------ ------------
Net cash used in investing activities (4,997,000) (2,610,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and employee stock
purchase plan 764,000 62,000
Net repayments of long-term debt (747,000) (68,000)
------------ ------------
Net provided by (cash used) in financing activities 17,000 (6,000)
------------ ------------
Effect of exchange rate changes on cash and cash equivalents 13,000 (2,000)
------------ ------------
Net increase (decrease) in cash and cash equivalents (6,902,000) (4,328,000)
Cash and cash equivalents balance, beginning of period 14,291,000 6,396,000
============ ============
Cash and cash equivalents balance, end of period $ 7,389,000 $ 2,068,000
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
5
<PAGE>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ASTEA INTERNATIONAL INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements at March 31, 1999 and for the three month
periods ended March 31, 1999 and 1998 of Astea International Inc. and
subsidiaries (the "Company") are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto, together with Management's Discussion and Analysis of Financial
Condition and Results of Operations, contained in the Company's 1998 Annual
Report on Form 10-K which are hereby incorporated by reference in this quarterly
report on Form 10-Q.
2. DISCONTINUED OPERATIONS
In September 1998 and December 1998, the Company completed the sales of its
Bendata, Inc. and Abalon AB subsidiaries, respectively.
Bendata and Abalon have been accounted for as discontinued operations. The
accompanying Consolidated Financial Statements reflect the operating results of
the discontinued operations separately from continuing operations.
Loss from the discontinued operations of Bendata and Abalon in the accompanying
consolidated statements of operations for the three months ended March 31, 1998
were:
Revenues:
$ 6,934,000
===================
Loss before income taxes (338,000)
Income taxes 136,000
-------------------
Net loss $ (474,000)
===================
6
<PAGE>
3. STOCKHOLDERS' EQUITY/COMPREHENSIVE INCOME (LOSS)
The reconciliation of Stockholders' Equity and comprehensive loss from December
31, 1998 to March 31, 1999 is summarized as follows:
<TABLE>
<CAPTION>
CUMULATIVE
ADDITIONAL CURRENCY
COMMON PAID-IN DEFERRED TRANSLATION ACCUMULATED COMPREHENSIVE
STOCK CAPITAL COMPENSATION ADJUSTMENT DEFICIT INCOME (LOSS)
----------- ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $ 135,000 $51,098,000 $ (29,000) $ (836,000) $(1,351,000) --
Grant of stock options below
fair market value -- 61,000 (61,000) -- -- --
Amortization of deferred
compensation -- -- 7,000 -- -- --
Exercise of options 4,000 766,000 -- -- -- --
Cumulative currency
translation adjustment -- -- -- 192,000 -- 192,000
Net Loss -- -- -- -- (1,410,000) (1,410,000)
----------- ----------- ----------- ----------- ----------- -----------
Balance at March 31, 1999 $ 139,000 $51,925,000 $ (83,000) $ (644,000) $(2,761,000) $(1,218,000)
=========== =========== =========== =========== =========== ===========
</TABLE>
4. MAJOR CUSTOMERS
In the first quarter of 1999, the Company had two customers that accounted for
15% and 12% of total revenue, respectively. In the first quarter 1998, the same
two customers accounted for 11% and 12% of total revenues, respectively.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
This document contains various forward-looking statements and information that
are based on management's beliefs as well as assumptions made by and information
currently available to management. Such statements are subject to various risks
and uncertainties, which could cause actual results to vary materially from
those contained in such forward-looking statements. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated,
expected or projected. Certain of these, as well as other risks and
uncertainties, are described in more detail herein and in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.
The Company develops, markets and supports front-office solutions for the
Customer Management Solutions (CMS) software market. Astea's client/server and
host-based applications are designed specifically for organizations for which
field service and customer support are considered mission critical aspects of
business operations. The Company maintains operations in the United States,
Canada, Australia, New Zealand, the Netherlands, France, the United Kingdom,
Japan and Israel.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998
CONTINUING OPERATIONS
REVENUES
Revenues increased $1,312,000, or 20%, to $7,738,000 for the three months ended
March 31, 1999 from $6,426,000 for the three months ended March 31, 1998.
Software license fee revenues increased $726,000, or 59%, from the same period
last year. Services and maintenance fees for the three months ended March 31,
1999 amounted to $5,786,000, an 11% increase from the same quarter in 1998.
The Company's international operations contributed $2,406,000 of revenues in the
first quarter of 1999 compared to $2,122,000 in the first quarter of 1998. This
represents a 13% increase from the same period last year and 31% of total
revenues in the first quarter 1999.
Software license fee revenues increased 59% to $1,952,000 in the first quarter
of 1999 from $1,226,000 in the first quarter of 1998. The increase is
attributable to the continued market acceptance of ServiceAlliance.
ServiceAlliance license revenues increased $834,000 or 288%, to $1,124,000 in
the first quarter of 1999 from $290,000 in the first quarter of 1998. The
increase in Service Alliance license revenue was offset by a decrease in
DISPATCH-1 license fee revenue, which decreased $168,000 or 19% from $864,000 in
the first quarter of 1998 to $696,000 in the first quarter of 1999 due to
decreasing demand for this product. DISPATCH-1 accounted for only 36% of total
software license fee revenues in the first quarter of 1999 compared to 70% of
total license fee revenues in the first quarter of 1998. In addition, software
license fee revenues from royalties received on PowerHelp, which is sold via a
distributor, was $132,000 in the first quarter of 1999 compared to $72,000 in
the quarter ended March 31, 1998.
Services and maintenance revenues increased 11% to $5,786,000 in the first
quarter of 1999 from $5,200,000 in the first quarter of 1998. The increase
primarily relates to service and maintenance revenues from ServiceAlliance which
increased $488,000 to $581,000 from $93,000 in the first quarter of 1998.
Service and maintenance revenues from DISPATCH-1 increased 3% to $5,133,000 in
the first quarter of 1999 from $4,993,000 in the first quarter of 1998.
In the first quarter of 1999, the Company had two customers that accounted for
15% and 12% of total revenue, respectively. In the first quarter 1998, the same
two customers accounted for 11% and 12% of total revenues, respectively.
8
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COSTS OF REVENUES
Cost of software license fees increased 115% to $724,000 in the first quarter of
1999 from $337,000 in the first quarter of 1998. The software licenses gross
margin percentage was 63% in the first quarter of 1999 compared to 73% in the
first quarter of 1998. This decrease in gross margin was attributable to the mix
of third-party products sold in conjunction with the company's products.
Cost of services and maintenance increased 17% to $4,770,000 in the first
quarter of 1999 from $4,067,000 in the first quarter of 1998. The services and
maintenance gross margin percentage was 18% in the first quarter of 1999
compared to 22% in the first quarter of 1998. The decrease in services and
maintenance gross margin was primarily due to non-billable services and
maintenance relating to the start up costs associated with ServiceAlliance, the
Company's newest product offering, and due to lower than planned utilization for
DISPATCH-1 service professionals.
PRODUCT DEVELOPMENT
Product development expense increased 10% to $1,329,000 in the first quarter of
1999 from $1,210,000 in the first quarter of 1998. Product development as a
percentage of revenues decreased to 17% in the first quarter of 1999 from 19% in
the first quarter of 1998.
SALES AND MARKETING
Sales and marketing expense increased 53% to $2,409,000 in the first quarter of
1999 from $1,572,000 in the first quarter of 1998. This increase resulted from
the Company's continued effort to increase market share and expand its presence
through both direct and indirect channels. As a percentage of revenues, sales
and marketing expenses increased to 31% from 24% in the first quarter of 1998.
GENERAL AND ADMINISTRATIVE
General and administrative expenses decreased 22% to $907,000 in the first
quarter of 1999 from $1,162,000 in the first quarter of 1998. The decrease
primarily relates to the Company's ongoing cost containment efforts.
NET INTEREST INCOME
Net interest income increased $581,000 to $615,000 in the first quarter of 1999
from $34,000 in the first quarter of 1998. This increase is attributable to the
interest earned on the proceeds from the sales of Bendata and Abalon.
INTERNATIONAL OPERATIONS
Total revenue from the Company's international operations grew by $284,000, or
13%, to $2,406,000 in first quarter of 1999 from $2,122,000 in the same quarter
in 1998. The increase in revenue from international operations was primarily
attributable to the introduction of ServiceAlliance in the third quarter of
1997, offset by reductions in DISPATCH-1 and PowerHelp due to decreasing demand.
International operations resulted in a $207,000 loss for the first quarter ended
March 31, 1999 compared to a loss of $139,000 in the same quarter in 1998.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $1,935,000 for the three months ended
March 31, 1999 compared to $1,710,000 for the three months ended March 31, 1998.
This increase in cash used was primarily attributable to increases in payments
of accounts payable and accrued expenses offset by a reduced net loss and
increased collections of accounts receivable.
The Company's investing activities used $4,997,000 of cash in the first three
months of 1999 compared to $2,610,000 in the first three months of 1998. The
increase in cash used was primarily attributable to increased purchases of
investments available for sale.
The Company provided $17,000 from financing activities during the three months
ended March 31, 1999 compared to cash used of $6,000 in the first three months
of 1998. This increase is due to increased proceeds from the exercise of options
and employee stock purchase plan offset by increased payments on long-term debt.
At March 31, 1999, the Company had a working capital ratio of 5:1, with cash and
investments available for sale of $34,701,000. The Company believes that it has
adequate cash resources to make the investments necessary to maintain or improve
its current position and to sustain its continuing operations for the
foreseeable future. The Company does not anticipate that its operations or
financial condition will be affected materially by inflation.
RISK ASSOCIATED WITH THE YEAR 2000
The "Year 2000" risk arises because some computer programs, particularly older
ones, were written using two digits rather than four to define the applicable
year--for example, date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures or
miscalculations causing disruptions of operations, including, among others, a
temporary inability to process transactions and information, send invoices, or
engage in similar normal business activities.
THE COMPANY'S SOFTWARE. The Company continues to review and test its
existing product offerings to ensure that these offerings are adequately able to
address the issues expected to arise in connection with the upcoming change in
the century. The Company does not believe that it has material exposure to the
Year 2000 issue with respect to its own products and information systems.
ServiceAlliance and certain later recent releases of DISPATCH-1 (versions 8.0,
6.0j and 6.2g) are designed to accurately calculate, compare and sequence date
and time data between the twentieth and twenty-first centuries. The Company has
implemented plans and announced timetables for modifying or phasing out the
remainder of its products (older versions of DISPATCH-1) that are not currently
able to calculate, compare and sequence all date and time data between the
twentieth and twenty-first centuries. The Company regularly provides its
customers with current information on the status of these development efforts.
There can be no assurance, however, that the Company will successfully complete
this development in the published timeframes. In addition, the Company has not
fully determined the extent to which the Company's products may be impacted by
third parties' systems, which may not be Year 2000 compliant. Failure by the
Company to successfully modify or phase out its older systems that are not year
2000 compliant within the published timeframes could have a material, adverse
effect on the Company's operations and financial condition.
OTHER SOFTWARE AND HARDWARE. Non-information technology systems that
use embedded technology, such as microcontrollers, may also face Year 2000
risks. The Company believes, however, that it does not have a material Year 2000
risk related to non-information technology systems, and the Company is currently
reviewing these systems. In addition, the Company is conducting an analysis to
determine the extent to which its major vendors' systems (insofar as they relate
to the Company's business) are subject to the Year 2000 risk. To date, all major
vendors that have been reviewed are compliant. This review is expected to be
completed by mid-1999 with the replacement of all non-compliant vendors by the
end of 1999. While the Company has made efforts to seek reassurance from its
suppliers, there can be no assurance that the systems of other companies with
which the Company deals or on which the Company's systems rely will be timely
converted, or that any such failure to convert by another company could not have
an adverse effect on the Company. The Company also faces potential loss of
revenue from customers who may have Year 2000 problems in their own businesses.
Currently, the Company is unable to predict how and to what extent its
operations may be affected by Year 2000 issues at its
10
<PAGE>
customers; however, Year 2000 issues at a significant customer could have a
material adverse effect on the Company.
COSTS AND CONTINGENCY PLANS. To date, the Company has not made any
contingency plans to address third-party Year 2000 risks. The Company plans to
formulate contingency plans to the extent necessary in fiscal 1999. Costs
related to Year 2000 remediation at the Company have been and are expected to be
immaterial, since the Company's systems have been and will be upgraded on a
normal replacement schedule with only immaterial purchases of hardware and
software and opportunity costs of Company personnel to ensure that new systems
and those of third parties are Year 2000 compliant. The Company estimates that
the expenses and capital expenditures associated with achieving Year 2000
compliance will approximate $100,000. Funding for these costs will come from
cash flows from operations. The Company has not deferred any significant system
projects due to its Year 2000 efforts.
LEGAL LIABILITIES. The law regarding liability for Year 2000 problems
is evolving rapidly and could become friendlier to users of software with
alleged Year 2000 deficiencies. The Company limits its contractual warrantees on
Year 2000 compliance to objective performance standards that the Company has
tested, and the Company makes no warrantees for nonconformance if the Company's
software products are combined with other software or data that are not
conducive to accurately calculating, comparing or sequencing date and time data
between the twentieth and twenty-first centuries. Nonetheless, there can be no
assurance that some of the Company's customers will not assert legal claims
against the Company based on Year 2000 theories of liability. While the Company
believes that such claims would be precluded by its contracts, if such a claim
were upheld in court, the resulting expense to the Company and diversion of
management and development time could have a material, adverse effect on the
Company's operations and financial condition.
VARIABILITY OF QUARTERLY RESULTS AND POTENTIAL RISKS INHERENT IN THE BUSINESS
The Company's operations are subject to a number of risks, which are described
in more detail in the Company's prior SEC filings. Risks which are peculiar to
the Company on a quarterly basis, and which may vary from quarter to quarter,
include but are not limited to the following:
o The Company's quarterly operating results have in the past varied and may
in the future vary significantly depending on factors such as the size,
timing and recognition of revenue from significant orders, the timing of
new product releases and product enhancements, and market acceptance of
these new releases and enhancements, increases in operating expenses, and
seasonality of its business.
o The Company's future success will depend in part on its ability to increase
licenses of ServiceAlliance and other new product offerings, and to develop
new products and product enhancements to complement its existing field
service, sales automation and customer support offerings.
o The Customer Management Solutions (CMS) market is intensely competitive.
o International sales for the Company's products and services, and the
Company's expenses related to these sales, continue to be a substantial
component of the Company's operations. International sales are subject to a
variety of risks, including difficulties in establishing and managing
international operations and in translating products into foreign
languages.
o The market price of the common stock could be subject to significant
fluctuations in response to, and may be adversely affected by, variations
in quarterly operating results, changes in earnings estimates by analysts,
developments in the software industry, adverse earnings or other financial
announcements of the Company's customers and general stock market
conditions, as well as other factors.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
INTEREST RATE RISK. The Company's exposure to market risk for changes
in interest rates relates primarily to the Company's investment portfolio. The
Company does not have any derivative financial instruments in its portfolio. The
Company places its investments in instruments that meet high credit quality
standards. The Company is adverse to principal loss and ensures the safety and
preservation of its invested funds by limiting default risk, market risk and
reinvestment risk. As of March 31, 1999, the Company's investments consisted of
U.S. government agencies securities, commercial paper and corporate bonds. The
Company does not expect any material loss with respect to its investment
portfolio.
FOREIGN CURRENCY RISK. The Company does not use foreign currency
forward exchange contracts or purchased currency options to hedge local currency
cash flows or for trading purposes. All sales arrangements with international
customers are denominated in foreign currency. The Company does not expect any
material loss with respect to foreign currency risk.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company is
not involved in any legal proceedings, which would, in management's opinion,
have a material adverse effect on the Company's business or results of
operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
There have been no changes in securities during the quarter ended March 31,
1999.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There have been no defaults by the Company on any Senior Securities during the
quarter ended March 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during the
first quarter of the fiscal year covered by this report through the solicitation
of proxies or otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(27) Financial Data Schedule
(B) Reports on Form 8-K
On January 14, 1999, the Company filed a current report on Form 8-K
relating to the sale of Abalon AB on December 31, 1998.
12
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this 13th day of May
1999.
ASTEA INTERNATIONAL INC.
By: /s/ ZACK B. BERGREEN
--------------------------------------------
Zack B. Bergreen
Chairman and Chief Executive Officer
(Principal Executive Officer)
By: /s/ JOHN G. PHILLIPS
--------------------------------------------
John G. Phillips
Vice President and Chief Financial Officer
(Principal Financial and Chief
Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> US$
<S> <C> <C>
<PERIOD-TYPE> 3-MOS OTHER
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<EXCHANGE-RATE> 1 1
<CASH> 7,389,000 0
<SECURITIES> 27,312,000 0
<RECEIVABLES> 9,558,000 0
<ALLOWANCES> (846,000) 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 56,761,000 0
<PP&E> 5,985,000 0
<DEPRECIATION> (4,718,000) 0
<TOTAL-ASSETS> 60,797,000 0
<CURRENT-LIABILITIES> (11,339,000) 0
<BONDS> 0 0
0 0
0 0
<COMMON> (139,000) 0
<OTHER-SE> (49,164,000) 0
<TOTAL-LIABILITY-AND-EQUITY> (60,797,000) 0
<SALES> 1,952,000 1,226,000
<TOTAL-REVENUES> 7,738,000 6,426,000
<CGS> 724,000 337,000
<TOTAL-COSTS> 4,770,000 4,067,000
<OTHER-EXPENSES> 4,562,000 3,838,000
<LOSS-PROVISION> 83,000 106,000
<INTEREST-EXPENSE> (615,000) (34,000)
<INCOME-PRETAX> (1,786,000) (1,888,000)
<INCOME-TAX> (376,000) (136,000)
<INCOME-CONTINUING> (1,410,000) (1,752,000)
<DISCONTINUED> 0 (474,000)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,410,000) (2,226,000)
<EPS-PRIMARY> (0.10) (0.17)
<EPS-DILUTED> (0.10) (0.17)
</TABLE>
