RNDC Raindance Communications (MM)

Raindance Communications(R), Inc. (Nasdaq:RNDC), the leader in integrated multimedia conferencing services and support, today reported results for its fourth quarter and year ended December 31, 2005. The company reported total revenue for the fourth quarter of $18.8 million, up 4% from the $18.0 million reported in the fourth quarter of last year. Net income for the fourth quarter was $433,000, or $0.01 per diluted share, compared to a net loss of $354,000, or $0.01 per share, in the year-ago quarter. Fourth-quarter adjusted EBITDA(a) was $2.3 million, versus $2.5 million reported in the fourth quarter of last year. Cash flow from operations was $3.4 million compared to $2.2 million in the comparable period a year ago. Usage-based minutes were a record 218 million, compared to 217 million in the preceding quarter and 176 million in the fourth quarter of 2004. The company reported a total active customer base at quarter end of 5,026, versus 4,087 in the year-ago quarter. Cash, cash equivalents and short-term investments remained strong at $44.1 million, or $0.80 per basic share outstanding, as of December 31, 2005. For the twelve months ended December 31, 2005, the company reported net income of $4.0 million, or $0.07 per diluted share, on revenue of $74.5 million, compared to net loss of $3.3 million, or $0.06 per share, on revenue of $75.3 million in 2004. Adjusted EBITDA was $12.3 million in 2005 compared to $9.9 million in 2004. On February 6, 2006, Raindance and West Corporation (Nasdaq:WSTC) announced a definitive merger agreement whereby West intends to purchase all of the outstanding shares of Raindance for $2.70 per share in cash. Based in Omaha, Nebraska, West Corporation is the nation's premier provider of outsourced communications solutions. The acquisition is expected to close no later than the end of the second quarter of 2006 and will require Hart-Scott-Rodino review and Raindance shareholder approval. It will not require approval by the shareholders of West Corporation. "We are very pleased with our strong top line results in the fourth quarter as we started to see some traction from our multimedia product offerings," commented Don Detampel, president and chief executive officer of Raindance. "We were also very excited to end the year with record net income of $4.0 million, or $0.07 per fully diluted share." Conference Call Management will report fourth-quarter and year-end results, as well as comment on the recently announced definitive agreement with West Corporation, during Raindance's quarterly conference call today, February 15, beginning at 4:30 p.m. EST. To participate in the multimedia event, participants must visit http://earnings.on.raindance.com and click 'Join Now'. Once in the web conference, dial 877-707-9632 and reference the Raindance earnings call to join by phone or select the option to listen online via the webcast. Participants should join via the web several minutes before the scheduled start time. For technical assistance, please call 866-562-2309. To join by phone only, dial 877-707-9632 and reference the Raindance earnings call. The press release and accompanying presentation will be available prior to the conference on Raindance's web site in the 'Investor Center' section. (a) Explanation of Adjusted EBITDA, a Non-GAAP Financial Measure We report adjusted EBITDA (EBITDA excluding stock-based compensation expense), a financial measure that is not defined by Generally Accepted Accounting Principles. We believe that adjusted EBITDA is a useful performance metric for our investors and is a measure of operating performance and liquidity that is commonly reported and widely used by financial and industry analysts, investors and other interested parties because it eliminates significant non-cash charges to earnings. Additionally, sophisticated financial institutions and banks use adjusted EBITDA as a performance metric in their lending practices. For example, adjusted EBITDA is used to determine our compliance with a financial covenant in the company's credit agreement. Adjusted EBITDA for the three months and years ended December 31, 2005 and 2004 have been reconciled with net income (loss) for such periods in the attached Condensed Statements of Operations. It is important to note that non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income (loss), cash flows, or other measures of financial performance prepared in accordance with GAAP. About Raindance Communications Raindance Communications, Inc. (Nasdaq:RNDC), the leader in integrated multimedia conferencing services and support, brings an entirely new level of simplicity and interaction to remote meetings and events. Its suite of best-in-class services, Raindance Seminar Edition and Raindance Meeting Edition, redefine the everyday meeting experience. Thousands of corporate customers currently use Raindance's technology to more effectively communicate with colleagues, vendors, customers and partners around the world. For more information, please visit www.raindance.com or call 800-878-7326. Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995 This release contains plans, intentions, objectives, estimates and expectations that may constitute forward-looking statements. Forward-looking statements include any and all statements or implications of continued or sustainable growth in our financial results, expectations regarding future company and service performance, market acceptance, customer adoption and increased use of our services, and positive operating results from the provision of these services, the anticipated timing and ability to close the proposed merger and the perceived benefits of the acquisition. These statements are subject to risks and uncertainties that could cause future events to differ materially. Risks and uncertainties include, but are not limited to, the failure or interruptions in the software, systems or network underlying Raindance's services, competition from presently existing and new competitors, price pressure, difficulties retaining existing customers, adopting new customers and increasing customer usage of our services, the ability to satisfy all the closing conditions of the proposed merger, such as the receipt of regulatory and shareholder approvals, difficulties in attracting or retaining customers or employees as a result of the signing of the definitive agreement, risks of unforeseen material adverse changes to our business or operations, the risk that the proposed merger disrupts current plans, operations and product development efforts, and the ability to successfully integrate the two companies and obtain expected synergies and efficiencies. In addition, risks and uncertainties include those identified in documents filed by West and Raindance, respectively, with the SEC, including Raindance's Form 10-Q filed on November 9, 2005. Copies of filings made with the SEC are available through the SEC's electronic data gather analysis and retrieval system (EDGAR) at www.sec.gov. All forward-looking statements made in this press release are made as of the date hereof, and we assume no obligation to update the forward-looking statements included in this document. Additional Information and Where to Find It In connection with the proposed transaction, Raindance intends to file a proxy statement and other relevant materials with the Securities and Exchange Commission ("SEC"). Before making any voting decision with respect to the proposed transaction, shareholders of Raindance are urged to read the proxy statement and other relevant materials because they will contain important information about the proposed transaction. The proxy statement and other relevant materials, and any other documents filed by Raindance with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. In addition, stockholders of Raindance may obtain free copies of the documents filed with the SEC by directing a request through the Investor Relations portion of Raindance's website at http://www.raindance.com or by mail to Raindance, 1157 Century Drive, Louisville, CO 80027, attention: Investor Relations, telephone: 303-928-3000. You may also read and copy any reports, statements and other information filed by Raindance with the SEC at the SEC public reference room at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 800-SEC-0330 or visit the SEC's website for further information on its public reference room. Interests of Certain Persons in the Merger Raindance and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Raindance stockholders in favor of the proposed transaction. Certain executive officers and directors of Raindance have interests in the transaction that may differ from the interests of stockholders generally, including acceleration of vesting of stock options and/or restricted stock awards, payment of cash bonuses in connection with a change in control transaction and continuation of director and officer insurance and indemnification. These interests will be described in the proxy statement when it becomes available. Raindance, Raindance Communications, SwitchTower, OpenGo and our logo are trademarks or registered trademarks of Raindance Communications, Inc. All other company names and products may be trademarks of their respective companies. -0- *T RAINDANCE COMMUNICATIONS, INC. BALANCE SHEETS (IN THOUSANDS) (unaudited) December 31, 2005 December 31, 2004 ----------------- ----------------- Assets Current assets: Cash and cash equivalents $11,115 $10,458 Short-term investments 32,981 32,935 Accounts receivable, net 10,573 9,922 Prepaid expenses and other current assets 1,200 1,605 ------- ------- Total current assets 55,869 54,920 Property and equipment, net 15,641 17,807 Goodwill 48,325 45,587 Acquired intangibles, net 1,912 -- Other assets 295 411 ------- ------- Total Assets $122,042 $118,725 ======= ======= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $7,864 $7,447 Accrued expenses 1,871 2,619 Restructuring reserve -- 188 Current portion of deferred revenue 304 420 ------- ------- Total current liabilities 10,039 10,674 Deferred revenue, less current portion -- 45 ------- ------- Total Liabilities 10,039 10,719 ------- ------- Stockholders' Equity: Common stock 83 82 Additional paid-in capital 280,571 280,561 Deferred stock-based compensation (996) (960) Accumulated deficit (167,655) (171,677) ------- ------- Total Stockholders' Equity 112,003 108,006 ------- ------- Total Liabilities and Stockholders' Equity $122,042 $118,725 ======= ======= *T -0- *T RAINDANCE COMMUNICATIONS, INC. STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) Three months ended Years ended December 31, December 31, ------------------ ------------ 2005 2004 2005 2004 ---- ---- ---- ---- Revenue $18,779 $17,951 $74,518 $75,269 Cost of revenue 8,397 7,998 31,658 34,029 ------- ------- ------- ------- Gross profit 10,382 9,953 42,860 41,240 ------- ------- ------- ------- Operating expenses: Sales and marketing 5,065 5,249 20,079 24,044 Research and development 2,220 2,695 10,187 10,466 General and administrative 2,916 2,302 8,960 8,038 Stock-based compensation expense 140 139 776 2,211 ------- ------- ------- ------- Total operating expenses 10,341 10,385 40,002 44,759 ------- ------- ------- ------- Income (loss) from operations 41 (432) 2,858 (3,519) Other income (expense), net 392 78 1,264 194 ------- ------- ------- ------- Net income (loss) before taxes 433 (354) 4,122 (3,325) Provision for income taxes -- -- 100 -- ------- ------- ------- ------- Net income (loss) $433 $(354) $4,022 $(3,325) ======= ======= ======= ======= Net income (loss) per share: Basic $0.01 $(0.01) $0.07 $(0.06) ======= ======= ======= ======= Diluted $0.01 $(0.01) $0.07 $(0.06) ======= ======= ======= ======= Weighted average number of common shares outstanding: Basic 55,361 54,255 55,026 53,937 Diluted 56,574 54,255 56,462 53,937 Reconciliation of net income (loss) to adjusted EBITDA: Net income (loss) $433 $(354) $4,022 $(3,325) Add: depreciation, amortization and other income (expense), net 1,723 2,685 7,424 11,001 Add: provision for income taxes -- -- 100 -- Add: stock-based compensation expense 140 139 776 2,211 ------- ------- ------- ------- Adjusted EBITDA $2,296 $2,470 $12,322 $9,887 ======= ======= ======= ======= *T -0- *T RAINDANCE COMMUNICATIONS, INC. STATEMENTS OF CASH FLOWS (IN THOUSANDS) (unaudited) Years ended December 31, ------------ 2005 2004 ---- ---- Cash flows from operating activities: Net income (loss) $4,022 $(3,325) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 8,687 11,195 Stock-based compensation 776 2,211 Other 53 139 Changes in operating assets and liabilities: Accounts receivable 491 (964) Prepaid expenses and other current assets 431 (49) Other assets (71) 57 Accounts payable and accrued expenses (1,256) (1,340) Deferred revenue (161) 353 ------- ------- Net cash provided by operating activities 12,972 8,277 ------- ------- Cash flows from investing activities: Purchase of property and equipment (5,580) (3,479) Proceeds from disposition of equipment 43 18 Purchase of investments (56,542) (42,172) Proceeds from maturities of investments 56,496 9,237 Cash paid for BCE Conferencing (5,930) -- Cash received from affiliate -- 77 Change in restricted cash -- 236 ------- ------- Net cash used by investing activities (11,513) (36,083) ------- ------- Cash flows from financing activities: Proceeds from issuance of common stock 2,058 1,198 Purchase of treasury stock (2,860) -- Payments on debt -- (2,541) ------- ------- Net cash used by financing activities (802) (1,343) ------- ------- Increase (decrease) in cash and cash equivalents 657 (29,149) Cash and cash equivalents at beginning of year 10,458 39,607 ------- ------- Cash and cash equivalents at end of year $11,115 $10,458 ======= ======= *T