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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): December 31, 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: DECEMBER 31, 1998
ITEM 2. DISPOSITION OF ASSETS
On December 31, 1998, Astea International Inc. ("Astea" or the "Company")
completed the sale of all of the capital stock of its subsidiary, Abalon AB, a
Swedish corporation ("Abalon"), including Abalon's subsidiaries, to Industri-
Matematik International Corporation, a Delaware corporation ("IMIC"). This
transaction is referred to as the "Sale of Abalon." Astea entered into a Stock
Purchase Agreement, dated December 31, 1998, among IMIC, Astea, and Astea's
wholly owned subsidiary Network Data, Inc. The closing of the Sale of Abalon
took place simultaneously with the signing of the Stock Purchase Agreement.
In consideration of the transfer of all of the outstanding capital stock of
Abalon AB to IMIC, Astea (through its wholly-owned subsidiary, Network Data,
Inc.) received from IMIC at the closing $9.5 million in cash, of which $1.1
million was deposited in escrow to secure certain indemnification obligations
through June 2000.
IMIC is not affiliated with Astea and, prior to the closing, was not
affiliated with Abalon AB, or any of their respective officers or directors or
their associates. The consideration paid by IMIC and received by Astea was
determined through arms-length negotiations between Astea and IMIC.
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 September 30, 1998
and the Pro Forma Statements of Operations for the nine months ended September
30, 1998 and 1997 and for the years ended December 31, 1997 and 1996 are
presented to give effect to the Sale of Abalon. No Pro Forma information is
necessary for any periods prior to December 31, 1996 as the Company purchased
Abalon in June 1996.
Historical financial data used to prepare the pro forma financial
statements were derived from the pro forma consolidated financial statements
included in the Company's Report on Form 8-K dated September 4, 1998 for the
years ended December 31, 1997 and 1996 (as adjusted for discontinued operations)
and the unaudited consolidated financial statements included in the Company's
quarterly report on Form 10-Q for the quarterly period ended September 30, 1998
for the nine month periods ended September 30, 1998 and 1997. The September 4,
1998 Form 8-K was filed to report the Company's sale of all the capital stock of
its subsidiary, Bendata, Inc. 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 Abalon was consummated on September 30, 1998 and do not reflect
the impact of the Abalon operating results or changes in the balance sheet
amounts subsequent to September 30, 1998. The pro
forma adjustments to the Pro Forma Statements of Operations assume that the Sale
of Abalon was consummated on June 28, 1996, the date the Company acquired
Abalon.
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 September 30, 1998
(In Thousands, Unaudited)
Less
Abalon net
Historical assets sold Adjustments Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 16,079 $ -- $ 8,200 A $ 24,279
Note receivable 8,400 -- 8,400
Investments available for sale 16,441 -- 16,441
Receivables, net of reserves 10,151 1,820 8,331
Prepaid expenses and other 2,248 495 1,753
Deferred income taxes 75 (402) 477
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Total current assets 53,394 1,913 8,200 59,681
Restricted cash -- -- 1,100 A 1,100
Property and equipment, net 1,965 423 1,542
Capitalized software development costs, net 3,578 521 3,057
Goodwill, net 725 725 -- --
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Total assets $ 59,662 $ 3,582 $ 9,300 $ 65,380
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 906 $ 906 $ --
Current portion of long-term debt 663 -- 663
Accounts payable and accrued expenses 8,906 1,506 325 B 7,725
Income taxes payable 2,211 -- (1,596) B 615
Deferred revenues 4,876 235 4,641
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Total current liabilities 17,562 2,647 (1,271) 13,644
Deferred income taxes 1,253 1,253
Long-term debt 973 973
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Stockholders' equity 39,874 9,636 B 49,510
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Total liabilities and stockholders'
equity $ 59,662 $ 8,365 $ 65,380
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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 nine months ending September 30, 1998
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
Revenues:
Software license fees $ 5,526 $ 1,266 $ 4,260
Services and maintenance 20,456 3,515 16,941
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Total revenues 25,982 4,781 21,201
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Costs and expenses:
Cost of software license fees 1,695 275 1,420
Cost of services and maintenance 15,923 2,762 13,161
Product development 5,066 785 4,281
Sales and marketing 7,937 1,676 6,261
General and administrative 4,777 814 3,963
Restructuring charge (800) -- (800)
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Total costs and expenses 34,598 6,312 28,286
Loss from continuing operations before
interest and taxes (8,616) (1,531) (7,085)
Net interest income (expense) 64 (56) 120
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Loss from continuing operations before
income taxes (8,552) (1,587) (6,965)
Income tax benefit (432) -- (432)
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Loss from continuing operations (8,120) $(1,587) $(6,533)
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Gain on disposal of discontinued operations,
net of income taxes 33,902
Income from discontinued operations 677
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Net income (loss) $26,459
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Basic and diluted net income (loss) per share:
Continuing Operations $ (0.60)
Discontinued Operations $ 2.57
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Net Income $ 1.97
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Shares used in computing basic and
diluted income per share 13,457
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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 nine months ending September 30, 1997
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
Revenues:
Software license fees $ 8,645 $ 2,016 $ 6,629
Services and maintenance 20,979 3,063 17,916
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Total revenues 29,624 5,079 24,545
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Costs and expenses:
Cost of software license fees 2,449 268 2,181
Cost of services and maintenance 15,023 2,270 12,753
Product development 7,138 513 6,625
Sales and marketing 8,903 1,340 7,563
General and administrative 10,619 657 9,962
Restructuring charge 5,328 -- 5,328
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Total costs and expenses 49,460 5,048 44,412
Income (loss) from continuing operations
before interest and taxes (19,836) 31 (19,867)
Net interest expense (106) (70) (36)
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Loss from continuing operations
before income taxes (19,942) (39) (19,903)
Income tax (benefit) (659) 5 (664)
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Loss from continuing operations (19,283) $ (44) $(19,239)
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Income from discontinued operations 677
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Net Loss $(18,606)
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Basic and diluted net income (loss) per share:
Continuing operations $ (1.46)
Discontinued Operations $ 0.05
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Net Loss $ (1.41)
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Shares used in computing basic and diluted loss
per share 13,215
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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, 1997
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
Revenues:
Software license fees $ 13,073 $ 3,192 $ 9,881
Services and maintenance 27,493 4,308 23,185
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Total revenues 40,566 7,500 33,066
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Costs and expenses:
Cost of software license fees 3,411 662 2,749
Cost of services and maintenance 19,421 3,020 16,401
Product development 9,456 726 8,730
Sales and marketing 11,580 1,940 9,640
General and administrative 11,928 855 11,073
Restructuring charge 5,328 5,328
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Total costs and expenses 61,124 7,203 53,921
Income (loss) from continuing operations
before interest and taxes (20,558) 297 (20,855)
Net interest income (expense) (97) (101) 4
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Income (loss) from continuing operations
before income taxes (20,655) 196 (20,851)
Income tax (benefit) (865) 12 (877)
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Net income (loss) from continuing operations (19,790) $ 184 $(19,974)
Income from discontinued operations 1,296 ========== ===============
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Net loss $(18,494)
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Basic and diluted net income (loss) per share:
Continuing operations $ (1.49)
Discontinued operations 0.09
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Net loss $ 1.40
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Shares used in computing basic and diluted loss
per share 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 Abalon Adjustments Pro Forma
Revenues:
Software license fees $ 17,727 $ 1,935 $15,792
Services and maintenance 28,306 2,296 26,010
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Total revenues 46,033 4,231 41,802
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Costs and expenses:
Cost of software license fees 2,966 504 2,462
Cost of services and maintenance 20,338 1,430 18,908
Product development 6,949 321 6,628
Sales and marketing 15,349 1,296 14,053
General and administrative 7.934 410 7,524
Charge for purchased research
and development 13,810 -- 13,810 C
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Total costs and expenses 67,346 3,961 13,810 49,575
Income (loss) from continuing operations
before interest and taxes (21,313) 270 (13,810) (7,773)
Net interest income (expense) 590 (42) 632
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Income (loss) from continuing operations
before income taxes (20,723) 228 (7,141)
Income tax (benefit) (3,162) -- (3,162)
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Income (loss) from continuing operations (17,561) $ 228 $(13,810) $(3,979)
========================== ===============
Loss from discontinued operations (2,146)
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Net loss $(19,707)
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Basic and diluted loss per share
Continuing Operations $ (1.37)
Discontinued operations $ (0.16)
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Net loss $ (1.53)
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Shares used in computing basic and
diluted loss per share 12,844
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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 September
30, 1998 and the results of operations for the nine months ended September 30,
1998 and 1997 and for the years ended December 31, 1997 and 1996 as reported
in the historical consolidated financial statements of Astea International
Inc. (the "Company"), by reference to Company's Form 8-K dated September 4,
1998 for the years ended December 31, 1997 and 1996 (and adjusted for
discontinued operations) and Form 10-Q for the quarterly period ended
September 30, 1998 for the nine month periods ended September 30, 1998 and
1997. The September 4, 1998 Form 8-K was filed to report the Company's sale of
all the capital stock of its subsidiary, Bendata, Inc.
2. Sale of the Capital Stock of Abalon AB
On December 31, 1998, the Company completed the sale of all of the capital
stock of its subsidiary, Abalon AB and related subsidiaries (collectively
"Abalon"). The Company acquired Abalon on June 28, 1996.
The following pro forma adjustments for the Sale of Abalon are reflected as
of September 30, 1998 in the case of the pro forma consolidated balance sheet,
or as of June 28, 1996 in the case of the pro forma consolidated statements of
operations for the nine months ended September 30, 1998 and 1997 and the years
ended December 31, 1997 and 1996:
(A) In consideration for the Sale of Abalon, the Company received $9.5 million
in cash, of which $1.1 million was deposited in escrow to secure certain
indemnification obligations through June 2000.
Gross cash proceeds from the sale $8,400,000
Less - Estimated cash expenses related to sale (200,000)
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Net Cash Proceeds $8,200,000
(B) Net change in retained earnings is calculated as follows:
Gross proceeds from the sale $9,500,000
Less - Estimated cash expenses related to the sale (200,000)
Less - Estimated accrued expenses (325,000)
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Proceeds net of expenses 8,975,000
Less - Abalon net assets sold (935,000)
Estimated federal tax benefit 1,596,000
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Net book gain on the sale of Abalon $9,636,000
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(C) To reverse charge for purchased research and development related to the
June 26, 1996 acquisition of Abalon.
PAGE 3
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT ON FORM 8-K
DATE OF REPORT: DECEMBER 31, 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: January 14, 1999
(c) Exhibits
2.1 Stock Purchase Agreement, dated December 31, 1998.
99.1 Press Release, dated January 4, 1999.