8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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):  October 21, 2003

LATITUDE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
000-25475
(Commission File Number)
Delaware	94-3177392
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
2121 Tasman Drive
Santa Clara, CA 95054
(Address of principal executive offices, with zip code)
(408) 988-7200
(Registrant’s telephone number, including area code)

Item 7.	Financial Statements, Pro-Forma Financial Information and Exhibits.
(c)	Exhibits.
	99.1    Press Release of Latitude Communications, Inc.

Item 9.  Results of Operation and Financial Condition (pursuant to Item 12).

The following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

October 21, 2003 Latitude Communications, Inc., a Delaware corporation (“Latitude”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2003.  A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

The press release contains non-GAAP financial measures.  Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position, or cash flow that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. As used herein, “GAAP” refers to accounting principles generally accepted in the United States. Certain information required by Regulation G adopted by the Securities and Exchange Commission has been provided in the press release.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LATITUDE COMMUNICATIONS, INC.
Date:  October 21, 2003	By:	/s/ Luis Buhler
		Luis Buhler
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of Latitude Communications, Inc. dated October 21, 2003

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:
Meg Taylor	Marlo DeLeon
Public Relations	Investor Relations
408-988-7200	408-988-7296
meg.taylor@latitude.com	marlo.deleon@latitude.com

LATITUDE REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS

SANTA CLARA, Calif., October 21, 2003 — Latitude Communications (Nasdaq: LATD), a leading provider of fully integrated web and voice conferencing applications, today reported its financial results for the third quarter ended September 30, 2003.

Revenue for the quarter was $8.6 million, as compared with $8.3 million in the second quarter of 2003.  In accordance with GAAP, the Company reported a net loss for the quarter of $1.5 million, or $0.08 per share diluted, compared to a net loss of $1.7 million, or $0.09 per share diluted, in the second quarter of 2003.

Cash, cash equivalents and marketable securities totaled $21.2 million as of September 30, 2003.

Service revenue was $6.8 million, as compared with $6.3 million in the previous quarter.   Product revenue was $1.8 million, compared to $2.0 million in the previous quarter.  Service revenue was 79 percent and product revenue was 21 percent of total revenue in the third quarter of 2003.

Revenue from Hewlett-Packard (“HP”) totaled approximately $500,000 for the quarter.  Excluding revenue from HP, service revenue increased 10 percent to $6.3 million in the current quarter from $5.7 million in the second quarter of 2003 and 15% from the $5.5 million in the third quarter of 2002.  This increase was primarily driven by growth in non-HP MeetingPlace Services revenue, which increased 27 percent sequentially to $3.4 million in the current quarter from $2.6 million in the second quarter of 2003 and increase 127 percent from $1.5 million in the prior year quarter.  MeetingPlace Services include the Company's managed, hosted and premium service offerings.

“We are pleased to deliver a sequential increase in quarterly revenue, driven by the growth in our MeetingPlace Services business,” said Rick McConnell, chief executive officer.  “The consistent growth in both voice and web conferencing is generating an increasing market opportunity for MeetingPlace. Additionally, our reduction in operating expenses this quarter demonstrates our focus on returning to sustainable profitability as soon as possible.”

The Company will host a conference call related to these announcements today at 1:30 p.m. Pacific Daylight Time. Access to the call will be available both on a

live, as well as recorded, basis through the Company’s Web site at http://www.latitude.com/investor.

Cautionary Language

This press release contains forward-looking statements regarding Latitude’s future operating results and business strategies that involve risks and uncertainties that could cause actual results to differ materially from those in such statements. All forward-looking statements in this release are based upon information available to Latitude as of the date hereof, and Latitude assumes no obligation to update any such forward-looking statements. Potential risks and uncertainties include, without limitation, Latitude’s limited operating history, economic uncertainty and resulting weakness in capital expenditures, the Company’s shift toward a more services-oriented business, the Company’s dependence upon major customers, potential fluctuations in operating results, intense competition, including price competition, from substantially larger, more recognized companies, the early stage of development of the market for integrated rich-media conferencing systems, the Company’s reliance on the performance of its development and distribution partners, uncertain market acceptance for Latitude’s products and services, and rapid technological change. Risk factors are described in detail in the company’s annual report on Form 10-K for the year ended December 31, 2002, Form 10-Q for the quarter ended June 30, 2003 and in its other filings with the Securities and Exchange Commission.

About Latitude Communications

Latitude Communications is a leading provider of fully integrated web and voice conferencing applications that make remote meetings as natural and productive as face-to-face meetings. Its flagship solution, MeetingPlace, is used by over a third of the Fortune 50, including Agilent, Cap Gemini Ernst & Young and Lockheed Martin. Unlike other conferencing solutions, MeetingPlace is deployed directly on a company’s private voice and data networks, regardless of whether the system is hosted or in-house.  Through this “on-network” deployment and seamless integration with enterprise applications like Outlook, Notes and corporate directories, MeetingPlace provides enterprises with unparalleled cost savings, security and customer satisfaction.  Visit www.latitude.com or call 800-999-7400.

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NOTE: MeetingPlace is a registered trademark of Latitude Communications, Inc. All other product and company names are trademarks of their respective holders.

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LATITUDE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

	3 Months Ended September 30,						9 Months Ended September 30,
	2003			2002			2003			2002
Revenue:
Product	$	1,846		$	3,211		$	5,772		$	10,135
Service	6,757			7,557			20,569			20,120
Total revenue	8,603			10,768			26,341			30,255
Cost of revenue:
Product	750			1,311			2,260			3,719
Service	3,898			3,632			10,720			10,394
Total cost of revenue	4,648			4,943			12,980			14,113
Gross profit	3,955			5,825			13,361			16,142
Operating expenses:
Research and development	1,451			1,702			3,971			4,610
Marketing and sales	2,966			4,614			9,468			13,930
General and administrative	1,099			1,249			3,348			3,894
Restructuring charge	—			5,400			—			5,400
Purchased in-process technology	—			—			70			—
Amortization of deferred stock compensation	—			55			—			181
Total operating expenses	5,516			13,020			16,857			28,015
Loss from operations	(1,561		)	(7,195		)	(3,496		)	(11,873		)
Interest income, net	64			212			336			729
Loss before benefit from (provision for) income taxes	(1,497		)	(6,983		)	(3,160		)	(11,144		)
Benefit from (provision for) income taxes	(24		)	(8,965		)	(72		)	(7,498		)
Net loss	$	(1,521	)	$	(15,948	)	$	(3,232	)	$	(18,642	)
Net loss per share - basic	$	(0.08	)	$	(0.82	)	$	(0.17	)	$	(0.96	)
Shares used in per share calculation - basic	19,517			19,375			19,456			19,345
Net loss per share - diluted	$	(0.08	)	$	(0.82	)	$	(0.17	)	$	(0.96	)
Shares used in per share calculation - diluted	19,517			19,375			19,456			19,345

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LATITUDE COMMUNICATIONS, INC.

RECONCILIATION OF GAAP NET LOSS PER SHARE

TO PRO-FORMA NET LOSS PER SHARE

(Amounts in thousands, except per share amounts)

(Unaudited)

	3 Months Ended September 30,						9 Months Ended September 30,
	2003			2002			2003			2002
Net loss - as reported (GAAP)	$	(1,521	)	$	(15,948	)	$	(3,232	)	$	(18,642	)
Pro-forma adjustments:
Amortization of deferred stock compensation	—			55			—			181
Purchased in-process technology	—			—			70			—
Restructuring charge	—			5,400			—			5,400
Income tax rate effect at 36%	563			9,515			1,184			9,501
Pro-forma net loss	$	(958	)	$	(978	)	$	(1,978	)	$	(3,560	)
Pro-forma net loss per share - diluted	$	(0.05	)	$	(0.05	)	$	(0.10	)	$	(0.18	)

USE OF PRO-FORMA FINANCIAL INFORMATION

To supplement our consolidated financial statements presented on a GAAP basis, Latitude uses non-GAAP, or pro-forma, measures of operating results, net income (loss) and net income (loss) per share, which are adjusted to exclude stock based compensation, purchased in-process technology, restructuring charges and to ensure consistency of income tax rates that we believe are approximate to enhance the overall understanding of our financial performance.  These adjustments to our GAAP results are made with the intent of providing both management and investors a supplemental understanding of Latitude’s underlying operational results and trends.  Adjusted pro-forma results are among the indicators management uses as a basis for planning and forecasting our business.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for Latitude’s financial results prepared in accordance with generally accepted accounting principles in the United States.

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LATITUDE COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share amounts)

(Unaudited)

	September 30, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	21,172		$	13,119
Short-term investments	—			12,066
Accounts receivable, net	5,344			7,035
Inventory	1,291			952
Prepaid and other assets	1,902			2,135
Total current assets	29,709			35,307
Property and equipment, net	3,339			3,915
Goodwill, net	914			—
Deposits and other long-term assets	961			1,060
Total assets	$	34,923		$	40,282
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	519		$	744
Accrued liabilities	4,528			5,274
Deferred revenue	4,777			5,054
Total current liabilities	9,824			11,072
Other non-current liabilities	1,611			2,605
Total liabilities	11,435			13,677
Stockholders’ equity:
Common stock, $0.001 par value	19			19
Additional paid-in capital	57,987			57,757
Accumulated other comprehensive income (loss)	(65		)	49
Accumulated deficit	(34,453		)	(31,220		)
Total stockholders’ equity	23,488			26,605
Total liabilities and stockholders’ equity	$	34,923		$	40,282

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