Astea Announces Fourth Quarter And 1997 Results; Year Marked By Quarter To Quarter Revenue Increases And New Product Launches.

HORSHAM, Pa.--(BUSINESS WIRE)--Feb. 18, 1998--Astea International Inc. (Nasdaq: ATEA), a leading developer and supplier of client/server customer interaction software, today announced financial results for the fourth quarter and the full year of 1997.

For the quarter ended December 31, 1997, Astea reported revenues of $17.2 million, an increase of 11% over third quarter 1997, but a decrease of 9% for the same period one year ago. The net profit for the fourth quarter of 1997 was $112,000, or $0.01 per share, compared with a net loss of $587,000, or $0.04 per share, in the comparable period of 1996.

Weighted average common shares and equivalents outstanding during the fourth quarter of 1997 were 13.6 million versus 13.1 million during the fourth quarter of 1996.

For the fiscal year ended December 31, 1997, Astea reported revenues of $60.9 million, a 3% decline from the $62.7 million for the same period ended one year ago. Astea's net loss for 1997, excluding one-time restructuring and other non-recurring charges of $10.5 million in the first quarter, was $8.0 million or $0.60 per share. In 1996 the net loss, excluding one-time charges of $16.9 million, was $2.8 million, or $0.22 per share.

"The fourth quarter of 1997 was a pivotal quarter for the Company in many respects," said Zack Bergreen, Chairman and Chief Executive Officer of Astea. "The Company recorded revenue from two new customer service product offerings, ServiceAlliance(tm) and Virtual Service Bureau(tm). These products are positioned to meet the needs of mid-sized and smaller enterprises. We are gratified by their quick market acceptance. These products along with the growth of our Abalon sales and marketing product and Bendata HEAT products helped contribute to our quarter to quarter revenue increases in 1997."

"During the year we continued to see the effect of our first quarter 1997 restructuring and other cost containment programs. By working diligently to return the Company to profitability for the second half of 1997, we were able to produce a small quarterly profit," Bergreen said. "This occurred with only limited contribution from new products, which are in the early stages of product roll out. We expect that our new product offerings and technologies will increase our license revenue growth in the future to begin another cycle of growth and profit."

Product Developments

Astea's major 1997 product initiatives included:

-- Introduction of our ServiceAlliance client/server customer service product targeted to mid-sized enterprises and divisions of large companies.

-- Establishment of a new subsidiary called Virtual Service Corporation to provide, in collaboration with Mitsubishi Electronics America, deployment of DISPATCH-1 fully-functional field service management software (FSMS) via the Internet, in a highly secure environment, with minimal up-front investment.

-- Release of DISPATCH-1 Version 8.0, which is Year 2000 compliant, offering WebAccess(tm) and a choice of three different interfaces: a new WebView(tm) Internet browser, a graphical desktop or traditional terminals.

-- Bendata's announcement of the HEAT Work Group Asset Manager that lets users monitor product life cycles and reduce total cost of ownership.

-- Bendata's Signature Series, a collaborative effort to develop the first set of tools for help desk managers with participants including Oracle, U.S. West, Digital Equipment, the Gartner Group and the Meta Group.

-- The newest release of Abalon CMS version 3.8, which supports the growing use of web-based intranets, the Java platform, UNIX, Windows 95 and NT.

-- Signing of partnerships with a variety of third party software vendors including, Stratman Software OSQ, IET's W-6 Scheduler and Folio Views.

Astea is making significant investments to develop new technologies for its future generation of products that can sustain Astea's competitive market position into the next century. Astea's goal is to deliver a complete enterprise level Technology Enabled Relationship Management (TERM) solution that is as comprehensive as Astea's individual current products. The new technology, which Astea expects to introduce by the end of 1998, will be developed from pre-built components that can be configured and assembled in steps. This will allow Astea to develop implementation steps so existing customers do not have to migrate to the new capabilities all at once. Both customers and prospects can choose to migrate when they feel the new products meet their functional and operational needs.

Sale of Products

Since the commercial release of ServiceAlliance in September of 1997, Astea has sold nine licenses ranging up to $250,000. During the quarter, Astea recorded significant license revenue for new DISPATCH-1 customers, including Packard Bell and Mitsubishi Lithographic Services. Abalon developed capacity to address vertical markets including Insurance, Telecommunications and Utilities. For example, Abalon's Telecommunications partner, TP DEC Systems, helped Astea close three contracts in the Pacific. Bendata has continued to grow revenues and over the past several years has outpaced the growth of the internal help desk market. The initial customer for the Virtual Service Bureau, Cerplex, was up and running within a two-week period and is already experiencing 60% savings in operating costs.

New President

As announced in January, Jake La Motta has joined Astea International as President & COO. "Jake represents the continuation of our restructuring to move toward a more accountable and effective organization," Bergreen said. "He has a successful track record of managing growth companies. LaMotta brings over 30 years of software and computer systems industry experience to Astea, having held positions such as President, CEO and senior sales and marketing positions at large, public, private and international companies. His broad range of software services and outsourcing expertise spans both private and public sectors."

Astea International

Astea International develops client/server-based customer interaction software that enables organizations to automate their customer support, field service, and marketing and sales operations. Astea markets its products through a direct sales and services network throughout North America, Europe, Israel, Asia, Australia, and New Zealand. The Company's customer base of approximately 4,000 companies and 90,000 end users includes such industry leaders as Chevron, GTE Customer Networks, Siemens Business Communications Systems, Sprint and the Swedish PTT. Astea can be reached at 215/682-2500 or via the World Wide Web at www.astea.com. -0-

This press release contains forward-looking statements which are made under the "safe harbor" provisions of Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could materially affect future results. Among these risk factors are continuing acceptance of Astea's products, general competitive pressures in the marketplace, and the continued overall growth in the customer interaction software industry. Further information regarding these as well as other key risk factors and meaningful cautionary statements which could affect the Company's financial results are included at length in the Company's Form 10-K for the fiscal year ended December 31, 1996, filed with the Securities and Exchange Commission. -0-

                       ASTEA INTERNATIONAL INC.
                       CONDENSED BALANCE SHEETS
                            (In thousands)
                              (Unaudited)

                                   Dec. 31,             Dec. 31,
                                     1997                 1996
ASSETS
Current assets:
  Cash and cash equivalents      $   8,745           $    3,334
  Investments available for
   sale                              1,359                8,994
  Receivables, net of
   reserves                         18,068               24,187
  Prepaid expenses and
   other                             2,709                2,279
  Income tax refund
   receivable                            -                1,516
  Deferred income taxes              1,830                1,869
                                 -------------------------------
      Total current assets          32,711               42,179

Property and equipment, net          3,958                8,117
Capitalized software
 development costs, net              3,556                4,022
Goodwill, net                        1,103                3,373
                                 -------------------------------
          Total assets           $  41,328           $   57,691
                                 ===============================

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Line of credit                 $     914           $    1,678
  Current portion of
   long-term debt                    1,085                  525
  Accounts payable and
   accrued expenses                 10,927               10,861
  Accrued restructuring
   charge                            1,868                    -
  Accrued reserves for
   contingencies                       954                  215
  Deferred revenues                  9,608                8,140
                                 -------------------------------
  Total current liabilities         25,356               21,419

Deferred income taxes                  907                  947
Long-term debt                       1,636                3,708
Stockholders' equity                13,429               31,617
                                 -------------------------------
Total liabilities and
 stockholders' equity            $  41,328            $  57,691
                                 ===============================

    The accompanying notes are an integral part of these statements.



                       ASTEA INTERNATIONAL INC.
                         Statements of Income
               (In thousands, except per share amounts)
                             (Unaudited)

                           Three months ended          Year ended
                           Dec. 31,    Dec. 31,     Dec.31,    Dec.31,
                            1997         1996        1997       1996
                           ------------------------------------------
Revenues:
   Software license fees    $ 8,319     $ 9,324  $  24,777 $  28,857
   Services and maintenance   8,847       9,516     36,157    33,851
                           ------------------------------------------
       Total revenues        17,166      18,840     60,934    62,708
                           ------------------------------------------
Costs and expenses:
   Cost of software license
     fees (1)                 1,403       1,351      4,702     3,982
   Cost of services and
     maintenance              5,716       7,281     23,949    23,477
   Product development        2,557       2,021     10,273     7,989
   Sales and marketing        5,400       6,611     21,196    22,390
   General and
    administrative  (2)       1,996       2,112     13,953     9,535
   Expenses related to
    Bendata merger
    transaction                  --          --         --     3,416
   Charge for purchased
    research & development       --          --         --    13,810
   Restructuring charge (3)      --          --      5,328        --
                           ------------------------------------------
       Total costs and
        expenses             17,072      19,376     79,401    84,599

Income (loss) from
  operations                     94        (536)   (18,467)  (21,891)

Net interest income
  (expense)                      30         (51)       (15)      571
                           ------------------------------------------
Income (loss) before income
  taxes                         124        (587)   (18,482)  (21,320)
Income tax expense (benefit)     12          --         12    (1,613)
                           ------------------------------------------
Net income (loss)              $112      $(587)  $(18,494) $(19,707)
                           ==========================================
Basic earnings(loss) per
 share                        $0.01     $(0.04)    $(1.40)  $(1.53)
                           ==========================================
Diluted earnings (loss)
  per share                   $0.01     $(0.04)    $(1.40)  $(1.53)
                           ==========================================
Shares used in computing
  basic earnings (loss)
  per share                  13,360      13,065     13,252    12,844
                           ==========================================
                           ==========================================
Shares used in computing
 diluted earnings (loss)
 per share                   13,640      13,065     13,252    12,844
                           =========================================

    The accompanying notes are an integral part of these statements.

Astea International Inc.

Notes to Consolidated Financial Statements

1. Included in costs of software license fees for the first quarter of 1997 is a charge of $0.5 million for the write-off of certain capitalized software products.

2. Included in general and administrative for the first quarter of 1997 is a $2.6 million charge to settle certain disputes and $2.1 million for the write-off of goodwill.

3. Included in the first quarter of 1997 is a restructuring charge of $5.3 million which includes severance costs, office closing costs and consolidation costs.

CONTACT: AT THE COMPANY:

Astea International, Inc.

John G. Phillips, 215/682-2500

[e-mail]

or

INVESTOR RELATIONS:

Focus Partners LLC

Harvey A. Goralnick, 212/752-9445

[e-mail]

or

MEDIA RELATIONS:

Southard Communications

Jeyran Ghara, 212/777-2220

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