Raindance Communications (NASDAQ:RNDC)
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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.
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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
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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
======= ======= ======= =======
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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
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