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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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): September 4, 1998
ASTEA INTERNATIONAL INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-26330 23-2119058
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(Commission File Number) (IRS Employer Identification No.)
455 BUSINESS CENTER DRIVE, HORSHAM, PENNSYLVANIA 19044
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 682-2500
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N.A.
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(Former name or former address, if changed since last report)
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PAGE 2
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT ON FORM 8-K
DATE OF REPORT: SEPTEMBER 4, 1998
ITEM 2. DISPOSITION OF ASSETS
On September 4, 1998, Astea International Inc. ("Astea" or the "Company")
completed the sale of all of the capital stock of its subsidiary, Bendata, Inc.,
a Colorado corporation ("Bendata") to a subsidiary of Ixchange Technology
Holdings Limited, a South Africa corporation ("Ixchange"). This transaction is
referred to as the "Sale of Bendata." Astea had entered into a Stock Purchase
Agreement, dated August 14, 1998, among Astea, Ixchange, Bendata, Bendata
(Europe) Limited LLC, Network Data, Inc., and Bendata Holding, Inc.
In consideration of the transfer of all of the outstanding capital stock of
Bendata to a subsidiary of Ixchange, Astea (through its wholly-owned subsidiary,
Network Data, Inc.) received from Ixchange at the closing (a) $35 million in
cash and (b) a promissory note in the principal amount of $7.5 million, payable
on September 4, 1999, bearing interest at 4.89% per annum, secured by a letter
of credit. In addition, within the next several weeks, Astea will receive from
Ixchange a secured promissory note, payable on September 4, 1999, in the
principal amount of approximately $900,000, subject to certain post-closing
adjustments that have not yet been calculated related to taxes.
Ixchange is not affiliated with Astea or Bendata or any of their respective
officers or directors or their associates. The consideration paid by Ixchange
and received by Astea was determined through arms-length negotiations between
Astea and Ixchange.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information
PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Balance Sheet as of June 30, 1998 and the
Pro Forma Statements of Operations for the six months ended June 30, 1998 and
1997 and for the years ended December 31, 1997, 1996 and 1995, are presented to
give effect to the Sale of Bendata.
Historical financial data used to prepare the pro forma financial
statements were derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997, 1996 and 1995 and the unaudited consolidated financial statements
included in the Company's quarterly reports on Form 10-Q for the periods ended
June 30, 1998 and 1997. These pro forma financial statements should be read in
conjunction with such historical financial statements and notes thereto.
The pro forma adjustments reflected herein are based on available
information and certain assumptions that the Company's management believes are
reasonable. Pro forma adjustments made in the Pro Forma Balance Sheet assume
that the Sale of Bendata was consummated on June 30, 1998 and do not reflect the
impact of the Bendata operating results or changes in the balance sheet amounts
subsequent
to June 30, 1998. The pro forma adjustments to the Pro Forma Statements of
Operations assume that the Sale of Bendata was consummated on January 1, 1995.
The Pro Forma Balance Sheet and Pro Forma Statements of Operations are
based on assumptions and approximations and, therefore, do not reflect in
precise numerical terms the impact of the transaction on the historical
financial statements. In addition, such pro forma financial statements should
not be used as a basis for forecasting the future operations of the Company.
Astea International Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet
As of June 30, 1998
(In Thousands, Unaudited)
Less
Bendata net
Historical assets sold Adjustments Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 6,024 $ 4,105 $29,837 A $ 31,756
Note receivable - - 8,400 A 8,400
Investments available for sale 1,953 1,953
Receivables, net of reserves 13,635 4,502 9,133
Prepaid expenses and other 2,744 628 2,116
Deferred income taxes 2,274 2,222 52
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Total current assets 26,630 11,457 38,237 53,410
Property and equipment, net 3,530 1,403 2,127
Capitalized software development costs, net 3,773 3,773
Goodwill, net 1,041 (293)B 748
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Total assets $ 34,974 $12,860 $37,944 $ 60,058
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 1,463 - $ 1,463
Current portion of long-term debt 1,054 37 1,017
Accounts payable and accrued expenses 10,260 2,050 149 C 8,359
Deferred revenues 10,142 5,005 5,137
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Total current liabilities 22,919 7,092 149 15,976
Deferred income taxes 1,352 99 1,253
Long-term debt 1,143 142 1,001
Preferred stock -
Common stock 135 135
Additional paid-in capital 49,726 49,726
Deferred compensation (55) (55)
Cumulative currency translation (816) (816)
Retained earnings (Accumulated deficit) (39,430) 32,268 C (7,162)
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Stockholders' equity 9,560 32,268 41,828
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Total liabilities and stockholders' equity $ 34,974 $32,417 $ 60,058
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The accompanying notes are an integral part of this statement.
Astea International Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the six months ending June 30, 1998
(In Thousands, Unaudited)
Historical Less Bendata Adjustments Pro Forma
Revenues:
Software license fees $ 9,291 $ 5,474 $ 3,817
Services and maintenance 18,878 5,650 13,228
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Total revenues 28,169 11,124 17,045
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Costs and expenses:
Cost of software license fees 1,745 698 1,047
Cost of services and maintenance 12,929 2,673 10,256
Product development 3,768 707 3,061
Sales and marketing 10,336 5,099 5,237
General and administrative 4,185 898 (15) D 3,272
Restructuring charge (800) (800)
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Total costs and expenses 32,163 10,075 (15) 22,073
Income (loss) from operations (3,994) 1,049 15 (5,028)
Net interest income 66 60 6
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Income (loss) before income taxes (3,928) 1,109 15 (5,022)
Income tax - 432 - (432)
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Net income (loss) $(3,928) $ 677 15 $ (4,590)
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Basic and diluted loss per share $ (0.29) $ (0.34)
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Shares used in computing basic and
diluted loss per share 13,417 13,417
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The accompanying notes are an integral part of these statements.
Astea International Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the six months ending June 30, 1997
(In Thousands, Unaudited)
Less
Historical Bendata Adjustments Pro Forma
Revenues:
Software license fees $ 10,086 $ 5,135 $ 4,951
Services and maintenance 18,265 4,121 14,144
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Total revenues 28,351 9,256 19,095
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Costs and expenses:
Cost of software license fees 2,206 575 1,631
Cost of services and maintenance 12,749 2,014 10,735
Product development 5,274 376 4,898
Sales and marketing 10,815 4,481 6,334
General and administrative 10,469 971 (45) D 9,453
Restructuring charge 5,328 5,328
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Total costs and expenses 46,841 8,417 (45) 38,379
Income (loss) from operations (18,490) 839 45 (19,284)
Net interest income (expense) (63) 26 (89)
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Income (loss) before income taxes (18,553) 865 45 (19,373)
Income tax - 469 - (469)
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Net income (loss) $(18,553) $ 396 45 $(18,904)
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Basic and diluted loss per share $ (1.41) $ (1.43)
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Shares used in computing basic and diluted loss per share 13,179 13,179
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The accompanying notes are an integral part of these statements.
Pro Forma Consolidated Statement of Operations
For the year ending December 31, 1997
(In Thousands, Unaudited)
Less
Historical Bendata Adjustments Pro Forma
Revenues:
Software license fees $ 24,777 11,704 13,073
Services and maintenance 36,157 8,664 27,493
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Total revenues 60,934 20,368 40,566
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Costs and expenses:
Cost of software license fees 4,702 1,291 3,411
Cost of services and maintenance 23,949 4,528 19,421
Product development 10,273 817 9,456
Sales and marketing 21,196 9,616 11,580
General and administrative 13,953 1,971 (54) D 11,928
Restructuring charge 5,328 5,328
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Total costs and expenses 79,401 18,223 (54) 61,124
Income (loss) from operations (18,467) 2,145 54 (20,558)
Net interest income (expense) (15) 82 (97)
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Income (loss) before income taxes (18,482) 2,227 54 (20,655)
Income tax 12 877 - (865)
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Net income (loss) $(18,494) $ 1,350 54 $ (19,790)
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Basic and diluted loss per share $ (1.40) $ (1.49)
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Shares used in computing basic and diluted loss per share 13,252 13,252
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The accompanying notes are an integral part of these statements.
Astea International Inc. and Subsidiaries
Pro forma Consolidated Statement of Operations
For the year ending December 31, 1996
(In Thousands, Unaudited)
Historical Less Bendata Adjustments Pro Forma
Revenues:
Software license fees $ 28,857 11,130 17,727
Services and maintenance 33,851 5,545 28,306
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Total revenues 62,708 16,675 - 46,033
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Costs and expenses:
Cost of software license fees 3,982 1,016 2,966
Cost of services and maintenance 23,477 3,139 20,338
Product development 7,989 1,040 6,949
Sales and marketing 22,390 7,041 15,349
General and administrative 9,535 1,595 (6) D 7,934
Expenses related to Bendata merger transaction 3,416 3,416
Charge for purchased research and development 13,810 13,810
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Total costs and expenses 84,599 13,831 (6) 70,762
Income (loss) from operations (21,891) 2,844 6 (24,729)
Net interest income (expense) 571 (19) 590
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Income (loss) before income taxes (21,320) 2,825 6 (24,139)
Income tax (1,613) 1,549 - (3,162)
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Net income (loss) $ (19,707) $ 1,276 6 $(20,977)
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Basic and diluted loss per share $ (1.53) $ (1.63)
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Shares used in computing basic and
diluted loss per share 12,844 12,844
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The accompanying notes are an integral part of these statements.
Astea International Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the year ending December 31, 1995
(In Thousands, Unaudited)
Less
Historical Bendata Adjustments Pro Forma
Revenues:
Software license fees $ 29,904 $ 7,245 $ 22,659
Services and maintenance 24,062 3,705 20,357
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Total revenues 53,966 10,950 43,016
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Costs and expenses:
Cost of software license fees 3,880 1,147 2,733
Cost of services and maintenance 16,198 2,481 13,717
Product development 4,178 590 3,588
Sales and marketing 14,902 5,670 9,232
General and administrative 6,357 908 5,449
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Total costs and expenses 45,515 10,796 34,719
Income (loss) from operations 8,451 154 8,297
Net interest income (expense) 179 (104) 283
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Income before income taxes 8,630 50 8,580
Income tax 1,883 19 1,864
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Net income $ 6,747 $ 31 $ 6,716
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Basic earnings per share $ 0.64 $ 0.64
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Diluted earnings per share $ 0.59 $ 0.58
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Shares used in computing basic earnings per share 10,514 10,514
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Shares used in computing diluted earnings per share 11,484 11,484
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The accompanying notes are an integral part of these statements.
Astea International Inc. and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. Historical
The historical balances represent the financial position as of June 30,
1998 and the results of operations for the six months ended June 30, 1998
and 1997 and for the years ended December 31, 1997, 1996 and 1995 as
reported in the historical consolidated financial statements of Astea
International Inc. (the "Company"), by reference to Astea International Inc.
Form 10-K for the year ended December 31, 1997 and Form 10-Q for the quarter
ended June 30, 1998.
2. Sale of the Capital Stock of Bendata, Inc.
On September 4, 1998, the Company completed the sale of all of the
capital stock of its subsidiary, Bendata. The Company merged with Bendata on
February 27, 1996. The sale will be accounted for as a taxable sale of assets.
The following pro forma adjustments for the Sale of Bendata are
reflected as of June 30, 1998 in the case of the pro forma consolidated balance
sheet, or as of January 1, 1995 in the case of the pro forma consolidated
statements of operations for the six months ended June 30, 1998 and 1997 and the
years ended December 31, 1997, 1996 and 1995:
(A) In consideration for the Sale of Bendata, the Company
received (a) $35 million in cash and (b) a promissory note in
the principal amount of $7.5 million, payable on September 4,
1999, bearing interest at 4.89% per annum, secured by a
letter of credit. In addition, within the next several weeks,
the Company will receive a secured promissory note, payable
on September 4, 1999, in the principal amount of
approximately $900,000, subject to certain post-closing
adjustments that have not yet been calculated related to
taxes.
Gross cash proceeds from the sale $35,000,000
Less Estimated state and federal tax payments (4,182,000)
Estimated cash expenses related to sale (981,000)
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Net Cash Proceeds $29,837,000
(B) Write off of net goodwill related to the acquisition of
Professional Help Desk, an Australian HEAT distributor
acquired in August 1996.
(C) Net change in retained earnings is calculated as follows:
Gross proceeds from the sale $43,400,000
Less - Estimated cash expenses related to the sale (981,000)
Less Estimated accrued expenses (149,000)
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Proceeds net of expenses 42,270,000
Less Bendata net assets sold (5,527,000)
Less - Goodwill (293,000)
Estimated state and federal tax payments (4,182,000)
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Net book gain on the sale of Bendata $32,268,000
(D) Elimination of goodwill amortization expense.
(c) Exhibit.
10.1 Stock Purchase Agreement, dated August 14, 1998, among
the Company, Ixchange Technology Holdings Limited, Network Data, Inc., Bendata,
Inc., Bendata (Europe) Limited LLC, and Bendata Holding, Inc.
PAGE 3
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT ON FORM 8-K
DATE OF REPORT: SEPTEMBER 4, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
ASTEA INTERNATIONAL INC.
By: /s/ John G. Phillips
_________________________
John G. Phillips
Vice President and Chief Financial Officer
Date: September 18, 1998