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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 June 30, 2000
-------------------------
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
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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
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(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 August 8, 2000, 14,820,675 shares of the registrant's Common Stock, par
value $.01 per share, were outstanding.
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ASTEA INTERNATIONAL INC.
FORM 10-Q
QUARTERLY REPORT
INDEX
Page No.
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 7
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit 27 Financial Data Schedule
2
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
ASTEA INTERNATIONAL INC.
------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Unaudited)
-----------
JUNE 30, DECEMBER 31,
2000 1999
---- ----
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 1,935,000 $ 6,158,000
Investments available for sale .......................... 8,862,000 37,907,000
Receivables, net of reserves of $1,417,000 and $1,047,000 8,335,000 9,287,000
Prepaid expenses and other .............................. 2,285,000 1,632,000
Deferred income taxes ................................... 856,000 856,000
----------------------------
Total current assets ............................ 22,273,000 55,840,000
Property and equipment, net ............................... 1,010,000 1,022,000
Capitalized software development costs, net ............... 1,772,000 1,772,000
----------------------------
Total assets .................................... $ 25,055,000 $ 58,634,000
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ....................... $ 78,000 $ 410,000
Accounts payable and accrued expenses ................... 6,323,000 7,707,000
Deferred revenues ....................................... 3,899,000 3,553,000
----------------------------
Total current liabilities ....................... 10,300,000 11,670,000
Deferred income taxes ................................... 298,000 298,000
Long-term debt .......................................... 10,000 49,000
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued .............................. -- --
Common stock, $.01 par value, 25,000,000 shares
authorized, 14,818,000 and 14,136,000 issued and
outstanding ......................................... 148,000 141,000
Additional paid-in capital ............................. 22,666,000 52,242,000
Cumulative currency translation adjustment ............. (974,000) (839,000)
Accumulated deficit .................................... (7,393,000) (4,927,000)
----------------------------
Total stockholders' equity ...................... 14,447,000 46,617,000
----------------------------
Total liabilities and stockholders' equity ...... $ 25,055,000 $ 58,634,000
============================
The accompanying notes are an integral part of these statements.
3
ASTEA INTERNATIONAL INC.
------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(UNAUDITED)
-----------
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Revenues:
Software license fees ............ $ 2,298,000 $ 2,368,000 $ 3,591,000 $ 4,320,000
Services and maintenance .... 3,682,000 5,521,000 7,980,000 11,307,000
------------------------------------------------------------
Total revenues ......... 5,980,000 7,889,000 11,571,000 15,627,000
------------------------------------------------------------
Costs and expenses:
Cost of software license fees 429,000 504,000 755,000 1,228,000
Cost of services and
maintenance ................. 3,026,000 4,099,000 6,257,000 8,869,000
Product development ......... 833,000 1,294,000 1,524,000 2,623,000
Sales and marketing ......... 2,059,000 1,913,000 3,912,000 4,322,000
General and administrative .. 773,000 1,005,000 1,675,000 1,912,000
Restructuring charge (Note 2) 1,101,000 -- 1,101,000 --
------------------------------------------------------------
Total costs and expenses 8,221,000 8,815,000 15,224,000 18,954,000
------------------------------------------------------------
Loss from continuing operations
before interest and taxes ... (2,241,000) (926,000) (3,653,000) (3,327,000)
Net interest income .............. 601,000 477,000 1,214,000 1,092,000
Loss on sale of investments ...... (27,000) -- (27,000) --
------------------------------------------------------------
Loss before income tax ........... (1,667,000) (449,000) (2,466,000) (2,235,000)
Income tax benefit ............... -- -- -- (376,000)
------------------------------------------------------------
Net loss ......................... $ (1,667,000) $ (449,000) $ (2,466,000) $ (1,859,000)
============================================================
Basic and diluted net loss per
share:
Continuing operations ....... $ (0.12) $ (0.03) $ (0.17) $ (0.13)
Share outstanding used in
computing basic and diluted
net loss per share ........ 14,373,000 13,919,000 14,316,000 13,804,000
============================================================
The accompanying notes are an integral part of these statements.
4
ASTEA INTERNATIONAL INC.
------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
-----------
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------------
2000 1999
---------------------------
Cash flows from operating activities:
Net loss ................................................................. $ (2,466,000) $ (1,859,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization .................................... 777,000 1,298,000
Variable option compensation benefit ............................. (224,000) --
Loss on sale of investments ...................................... 27,000 --
Other ............................................................ 9,000 10,000
Changes in operating assets and liabilities:
Receivables ..................................................... 827,000 816,000
Prepaid expenses and other ...................................... (612,000) (363,000)
Accounts payable and accrued expenses ........................... (1,509,000) (2,805,000)
Deferred revenues ............................................... 325,000 (197,000)
----------------------------
Net cash used in operating activities .................................... (2,846,000) (3,100,000)
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sales (purchases) of investments available for sale ......... 29,018,000 (2,846,000)
Purchases of property and equipment .............................. (348,000) (359,000)
Capitalized software development costs ........................... (400,000) (400,000)
----------------------------
Net cash provided by (used in) investing activities ...................... 28,270,000 (3,605,000)
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and employee stock purchase 1,021,000 822,000
plan
Net repayments of long-term debt .................................. (371,000) (793,000)
Dividend distribution ............................................. (30,376,000) --
----------------------------
Net cash (used in) provided by financing activities ...................... (29,726,000) 29,000
----------------------------
Effect of exchange rate changes on cash and cash equivalents ............. 79,000 19,000
----------------------------
Net decrease in cash and cash equivalents ................................ (4,223,000) (6,657,000)
Cash and cash equivalents balance, beginning of period ................... 6,158,000 14,291,000
----------------------------
Cash and cash equivalents balance, end of period ......................... $ 1,935,000 $ 7,634,000
============================
The accompanying notes are an integral part of these statements.
5
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------------------
ASTEA INTERNATIONAL INC.
------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
The consolidated financial statements at June 30, 2000 and for the three and six
month periods ended June 30, 2000 and 1999 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 1999 Annual
Report on Form 10-K/A which are hereby incorporated by reference in this
quarterly report on Form 10-Q.
2. RESTRUCTURING CHARGES
---------------------
During the second quarter of 2000, the Company recorded a restructuring charge
of $1,101,000 for actions aimed at reducing costs and consolidating its
development activities primarily in its service automation product line. The
charge includes severance payments relating to foreign and domestic operations
as well as buy-out payments for various leased equipment and office facilities.
Through June 2000, these charges totaled $539,000, including $502,000 of
severance payments and $37,000 of lease buy-out costs.
3. STOCKHOLDERS' EQUITY/COMPREHENSIVE LOSS
---------------------------------------
The reconciliation of Stockholders' Equity and comprehensive loss from December
31, 1999 to June 30, 2000 is summarized as follows:
CUMULATIVE
ADDITIONAL CURRENCY
COMMON PAID-IN TRANSLATION ACCUMULATED COMPREHENSIVE
STOCK CAPITAL ADJUSTMENT DEFICIT INCOME (LOSS)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1999 $ 141,000 $ 52,242,000 $ (839,000) $ (4,927,000) --
Exercise of options 7,000 1,024,000 -- -- --
Compensation benefit in
connection with variable
stock options -- (224,000) -- -- --
Dividends paid - $2.05 a share -- (30,376,000) -- -- --
Cumulative currency
translation adjustment -- -- (135,000) -- (135,000)
Net Loss -- -- -- (2,466,000) (2,466,000)
----------------------------------------------------------------------------
Balance at June 30, 2000 $ 148,000 $ 22,666,000 $ (974,000) $ (7,393,000) $ (2,601,000)
============================================================================
4. MAJOR CUSTOMERS
---------------
In the second quarter of 2000, the Company had one customer that accounted for
13% of total revenues. For the first six months of 2000, there were no customers
that accounted for 10% of total revenues. In the three and six month periods of
1999, the Company had two customers that each accounted for 12% of total
revenues.
6
5. DIVIDEND DECLARATION AND DISTRIBUTION
-------------------------------------
During the second quarter of 2000, the Company declared a dividend for all
stockholders of record as of June 15, 2000. The dividend payable was declared at
$2.05 per share and was distributed on June 30, 2000. In accordance with
generally accepted accounting principles, this transaction was treated as a
return of capital.
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, assumptions made by management 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/A for the fiscal year ended December 31,
1999.
The Company develops, markets and supports front-office solutions for the
Customer Relationship Management (CRM) 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 June 30, 2000 and 1999
- -------------------------------------------------------
Revenues
- --------
Revenues decreased $1,909,000, or 24%, to $5,980,000 for the three months ended
June 30, 2000 from $7,889,000 for the three months ended June 30, 1999. Software
license fee revenues decreased $70,000, or 3%, from the same period last year.
Services and maintenance fees for the three months ended June 30, 2000 amounted
to $3,682,000, a 33% decrease from the same quarter in 1999.
The Company's international operations contributed $2,842,000 of revenues in the
second quarter of 2000 compared to $2,152,000 in the second quarter of 1999.
This represents a 32% increase from the same period last year and 48% of total
revenues in the second quarter 2000.
Software license fee revenues decreased 3% to $2,298,000 in the second quarter
of 2000 from $2,368,000 in the second quarter of 1999. The decrease is
attributable to a decline in ServiceAlliance license revenues, which decreased
$78,000 or 8%, to $899,000 in the second quarter of 2000 from $977,000 in the
second quarter of 1999. DISPATCH-1 license fee revenue increased $9,000 from
$1,390,000 in the second quarter of 1999 to $1,399,000 in the second quarter of
2000 due to sales of source code. DISPATCH-1 accounted for 61% of total software
license fee revenues in the second quarter of 2000 compared to 59% of total
license fee revenues in the second quarter of 1999. There were no software
license fee revenues from royalties received on PowerHelp, which was sold in the
fourth quarter of 1999, compared to $1,000 in the quarter ended June 30, 1999.
Services and maintenance revenues decreased 33% to $3,682,000 in the second
quarter of 2000 from $5,521,000 in the second quarter of 1999. The decrease
primarily relates to service and maintenance revenues from DISPATCH-1, which
decreased $2,096,000 to $2,455,000 from $4,551,000 in the second quarter of
1999. Partially offsetting this decline was a 31% increase in ServiceAlliance
services and maintenance from $931,000 in the second quarter of 1999 to
$1,221,000 in the second quarter of 2000. Because of the sale of PowerHelp in
the fourth quarter 1999,
7
there was no service and maintenance revenue from PowerHelp in the second
quarter of 2000 compared to $39,000 in the second quarter of 1999.
In the second quarter of 2000, the Company had one customer that accounted for
13% of total revenues. In the second quarter 1999, the Company had two different
customers that each accounted for 12% of total revenues.
Costs of Revenues
- -----------------
Cost of software license fees decreased 15% to $429,000 in the second quarter of
2000 from $504,000 in the second quarter of 1999. Included in the cost of
software license fees is the fixed cost of capitalized software amortization.
Capitalized software amortization was $200,000 and $368,000 in the second
quarters of 2000 and 1999 respectively. The decrease in the cost of software
license fees represents decreased third party software costs attributable to the
mix of products sold in conjunction with the company's products in the second
quarter of 2000 and a decrease in capitalized software amortization. The
software licenses gross margin percentage was 81% in the second quarter of 2000
compared to 79% in the second quarter of 1999. This increase in gross margin was
primarily attributable to lower software amortization.
Cost of services and maintenance decreased 26% to $3,026,000 in the second
quarter of 2000 from $4,099,000 in the second quarter of 1999. The services and
maintenance gross margin percentage was 18% in the second quarter of 2000
compared to 26% in the second quarter of 1999. The decrease in services and
maintenance gross margin was primarily due to lower utilization of service
professionals.
Product Development
- -------------------
Product development expense decreased 36% to $833,000 in the second quarter of
2000 from $1,294,000 in the second quarter of 1999. Product development as a
percentage of revenues decreased to 14% in the second quarter of 2000 from 16%
in the second quarter of 1999.
Sales and Marketing
- -------------------
Sales and marketing expense increased 8% to $2,059,000 in the second quarter of
2000 from $1,913,000 in the second quarter of 1999. As a percentage of revenues,
sales and marketing expenses increased to 34% from 24% in the second quarter of
1999.
General and Administrative
- --------------------------
General and administrative expenses decreased 23% to $773,000 in the second
quarter of 2000 from $1,005,000 in the second quarter of 1999. The decrease
primarily relates to the Company's ongoing cost containment efforts.
Restructuring Charge
- --------------------
During the second quarter of 2000, the Company recorded a restructuring charge
of $1,101,000 for actions aimed at reducing costs and consolidating its
development activities.
Net Interest Income
- -------------------
Net interest income increased $124,000 to $601,000 in the second quarter of 2000
from $477,000 in the second quarter of 1999. The increase of interest income is
attributable to an increase in interest rates from last year.
International Operations
- ------------------------
Total revenue from the Company's international operations increased by $690,000,
or 32%, to $2,842,000 in second quarter of 2000 from $2,152,000 in the same
quarter in 1999. The increase in revenue from international operations was
primarily attributable to the increase in DISPATCH-1 licenses sold in 2000,
offset by decreased ServiceAlliance license revenue in 2000. International
operations resulted in a net loss of $315,000 for the second quarter ended June
30, 2000 compared to a net loss of $391,000 in the same quarter in 1999.
8
Comparison of Six Months Ended June 30, 2000 and 1999
- -----------------------------------------------------
Revenues
- --------
Revenues decreased $4,056,000, or 26%, to $11,571,000 for the six months ended
June 30, 2000 from $15,627,000 for the six months ended June 30, 1999. Software
license fee revenues decreased $729,000, or 17%, from the same period last year.
Services and maintenance fees for the six months ended June 30, 2000 amounted to
$7,980,000, a 29% decrease from the same six months in 1999.
The Company's international operations contributed $4,658,000 of revenues in the
first six months of 2000 compared to $4,558,000 in the first six months of 1999.
This represents a 2% increase from the same period last year and 40% of total
revenues in the first six months of 2000.
Software license fee revenues decreased 17% to $3,591,000 in the first six
months of 2000 from $4,320,000 in the first six months of 1999. ServiceAlliance
license revenues decreased $560,000, or 27%, to $1,549,000 in the first six
months of 2000 from $2,109,000 in the first six months of 1999. DISPATCH-1
license fee revenue decreased $70,000 or 3% from $2,112,000 in the first six
months of 1999 to $2,041,000 in the first six months of 2000 due to decreasing
demand for this product. DISPATCH-1 accounted for 57% of total software license
fee revenues in the first six months of 2000 compared to 49% of total license
fee revenues in the first six months of 1999. There were no software license fee
revenues from royalties received on PowerHelp, which was sold in the fourth
quarter 1999, compared to $99,000 in the six months ended June 30, 1999.
Services and maintenance revenues decreased 29% to $7,980,000 in the first six
months of 2000 from $11,307,000 in the six months of 1999. The decrease
primarily relates to service and maintenance revenues from DISPATCH-1, which
decreased $4,472,000 to $5,223,000 from $9,695,000 in the first six months of
1999. However, this decrease was partially offset by service and maintenance
revenue from ServiceAlliance, which increased by 77% to $2,751,000 during the
first six months of 2000 compared to $1,558,000 for the same period in 1999.
There was no service and maintenance revenue from PowerHelp in the first six
months of 2000 compared to $54,000 in the first six months of 1999.
In the first six months of 2000, the Company had no major customers. In the
first six months of 1999, the Company had two customers that each accounted for
12% of total revenues.
Costs of Revenues
- -----------------
Cost of software license fees decreased 39% to $755,000 in the first six months
of 2000 from $1,228,000 in the first six months of 1999. Included in the cost of
software license fees is the fixed cost of capitalized software amortization.
Capitalized software amortization was $400,000 and $736,000 in the first six
months of 2000 and 1999, respectively. The decrease in the cost of software
license fees represents increased third party software costs attributable to the
mix of products sold in conjunction with the company's products in the first six
months of 2000 and an decrease in capitalized software amortization. The
software licenses gross margin percentage was 79% in the first six months of
2000 compared to 72% in the first six months of 1999. This increase in gross
margin was attributable to lower software amortization.
Cost of services and maintenance decreased 29% to $6,257,000 in the first six
months of 2000 from $8,869,000 in the first six months of 1999. The services and
maintenance gross margin percentage was 22% in the first six months of both 2000
and 1999.
Product Development
- -------------------
Product development expense decreased 42% to $1,524,000 in the first six months
of 2000 from $2,623,000 in the first six months of 1999. Product development as
a percentage of revenues decreased to 13% in the first six months of 2000 from
17% in the first six months of 1999.
Sales and Marketing
- -------------------
Sales and marketing expense decreased 9% to $3,912,000 in the first six months
of 2000 from $4,322,000 in the first six months of 1999. As a percentage of
revenues, sales and marketing expenses increased to 34% from 28%
9
in the first six months of 1999, due to the Company's continued effort to
increase market share and expand its presence through both direct and indirect
channels.
General and Administrative
- --------------------------
General and administrative expense decreased 12% to $1,675,000 in the first six
months of 2000 from $1,912,000 in the first six months of 1999. The decrease
primarily relates to the Company's ongoing cost containment efforts.
Net Interest Income
- -------------------
Net interest income increased $122,000 to $1,214,000 in the first six months of
2000 from $1,092,000 in the first six months of 1999. This increase is
attributable to an increase in interest rates from the same period last year.
International Operations
- ------------------------
Total revenue from the Company's international operations grew by $100,000, or
2%, to $4,658,000 in first six months of 2000 from $4,558,000 in the same six
months of 1999. The increase in revenue from international operations was
primarily attributable to an increase in DISPATCH-1 license revenue of
$1,289,000 and an increase in ServiceAlliance license revenue of $44,000, offset
by a decrease in DIPATCH-1 service and maintenance revenue of $1,226,000.
International operations resulted in a $752,000 loss for the six months ended
June 30, 2000 as compared to a loss of $598,000 for the six months ended June
30, 1999.
Liquidity and Capital Resources
- -------------------------------
Net cash used in operating activities was $2,846,000 for the six months ended
June 30, 2000 compared to $3,100,000 for the six months ended June 30, 1999.
This decrease in cash used was primarily attributable to large reductions of
accounts payable in 1999, slightly offset by an increase in deferred revenues.
The Company's investing activities generated $28,270,000 during the first six
months of 2000 compared to using $3,605,000 of cash in the first six months of
1999. The increase in cash generated resulted from the sale of investments
available for sale, which was used to pay the special dividend payment in June,
2000.
The Company used $29,726,000 for financing activities during the first six
months of 2000 compared to providing $29,000 during the six months ended June
30, 1999. This decrease is due primarily to the payment of a special dividend of
$30,376,000 or $2.05 per share in the quarter ended June 30, 2000.
At June 30, 2000, the Company had a working capital ratio of 2.16:1, with cash
and investments available for sale of $10,797,000. 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.
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 offerings.
o The Customer Relationship Management (CRM) software market is intensely
competitive.
10
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, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- -----------------------------------------------------------------
Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relate 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 June 30, 2000, 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 June 30, 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------
There have been no defaults by the Company on any Senior Securities during the
quarter ended June 30, 2000.
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
second quarter of the fiscal year covered by this report through the
solicitation of proxies or otherwise.
ITEM 5. OTHER INFORMATION
- -------------------------
None.
11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(A) Exhibits
(27) Financial Data Schedule
(B) Reports on Form 8-K
None.
12
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 August
2000.
ASTEA INTERNATIONAL INC.
By:
-----------------------------
Zack Bergreen
Chief Executive Officer
(Principal Executive
Officer)
By:
-----------------------------
Fredric Etskovitz
Chief Financial Officer
(Principal Financial and
Chief
Accounting Officer)
13