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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

  For the fiscal year ended December 31, 2002

  For the transition period from            to            

Commission File Number 0-27560

ACT Teleconferencing, Inc.

(Exact name of registrant as specified in its charter)

Securities registered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) of the Exchange Act:

Common stock, no par value

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2002 was $, $15.9 million based on the closing price of the Company’s common stock on the Nasdaq National Market on June 28, 2002 of $ 2.90 per share.

The number of shares outstanding of the Company’s Common Stock, no par value was 9,980,469 shares as of March 31, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information called for by Part III is incorporated by reference to specified portions of the definitive Proxy Statement for the Registrant’s 2003 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the Registrant’s fiscal year ended December 31, 2002.

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ACT Teleconferencing, Inc.

Form 10-K

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Caution Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined in our former registration statements or future registration statements. These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Important factors that could cause actual results to differ materially from such expectations described in this report include: the capital requirements required for the development and expansion of the Company’s business; risks relating to obtaining additional financing; risks associated with the expansion of the Company’s business and the possible inability of the Company to manage its growth; risks related to the Company’s expansion into new products and new technologies; the competitive nature of the teleconferencing business; and the Company’s dependence on its significant customers. Moreover, we do not assume responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our expectations.

PART I

Item 1. Business

Overview

General. We are a full-service provider of audio, video, data and web-based teleconferencing services to businesses and organizations in North America, Europe and Asia Pacific. Our conferencing services enable our clients to cost-effectively conduct conference calls by linking participants in geographically dispersed locations. We are present in nine countries and provide local access dial in access from a total of 45 countries. Our primary focus is to provide high quality conferencing services to organizations such as professional service firms, investment banks, high tech companies, law firms, investor relations firms, telecommunications companies and other domestic and multinational companies.

We were incorporated in December 1989 and began offering audio teleconferencing services at our Denver location in January 1990. In 1992 we invested in an audio teleconferencing operation in the United Kingdom, and in 1995 we invested in a similar operation in the Netherlands. In 1997 we announced a capacity expansion plan intended to grow the Company from its then three locations in three countries (United States, United Kingdom and the Netherlands) into Canada, France, Germany, Australia, Hong Kong and Singapore offering a full range of audio, video and web-based conferencing

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services. In 2001 we acquired the assets of 1414c, the worldwide videoconferencing service delivery business of PictureTel Corporation. The assets acquired include equipment, software and customer contracts. The assets were previously used by PictureTel Corporation to provide videoconferencing bridging services to its customers.

In 2002 we acquired Proximity, Inc., which provides room-based videoconferencing services in over 3,000 locations worldwide. With these acquisitions, we are able to offer a full range of video conferencing services to augment our existing audioconferencing services. In 2002 we also signed an outsourcing agreement with AT&T to provide audioconferencing services to AT&T and its customers in 45 countries outside of the United States.

Teleconferencing Market Growth Factors

Several key trends in today’s business world are driving growth in the world market for teleconferencing services:

Audioconferencing Services. Our ActionCall^sm audioconferencing services include full-service attended conferencing; reservationless unattended conferencing; and a comprehensive suite of enhanced audioconferencing management services. Our data and web conferencing services supplement these offerings. Enhanced audioconferencing services, which are available on request, include:

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In a full-service attended conference, our conference coordinators either will call each participant (a dial-out conference) or provide participants with a toll free or local number for them to call at a certain time (a dial-in conference). In an unattended or automated conference, we provide the customer with a dial-in telephone number and a PIN code to allow the customers to arrange their own conferences on our bridging equipment. We can connect audioconference participants to a conference call from their office, home, project site or any mobile phone.

We generate revenues by charging clients a fee-per-minute for bridging, call management and various additional conferencing services, as well as charges related to long distance transmission.

Videoconferencing Services. We offer videoconferencing services through multipoint video bridging centers worldwide. In October 2001 we acquired the videoconferencing services business of PictureTel Corporation which included video operations centers in the United States, United Kingdom and Singapore; and secondary network operating facilities in other locations.

Our videoconferencing offerings include full-service advanced technical management features such as:

We generate revenues from videoconferencing in the same manner as audioconferencing, but at higher per-minute rates. Recent decreases in per-minute rates for video bridging and long distance transmission driven by improved technology and competition among the long distance companies, have stimulated the market for videoconferencing and are expected to continue to do so.

The introduction of affordable small-group systems greatly expanded the use of videoconferencing. We believe that the growing base of users with in-house systems, combined with the greater bandwidth now available through the integrated services digital network (ISDN) and improved business quality Internet bandwidth, will continue to drive increased usage.

Videoconferencing is a preferred medium in certain conferencing applications. Examples of professional and industry applications include: law (witness depositions), medicine (diagnosis and treatment through telemedicine), business (executive searches, meetings of executives, boards and committees) and education (distance learning discussions). The videoconferencing market nevertheless is smaller than the audioconferencing market because the equipment is more difficult to use than a standard telephone and the

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transmission costs are more expensive. We expect that improvements in equipment, increased familiarity with video, stable or declining transmission and equipment costs, and Internet technology will drive growth in video.

Internet Telephony Conferencing Services. An important next step in expanding the use of teleconferencing is to enable conference participants to participate in an interactive conference in which the participants can speak to each other using Internet telephony services at a similar level of quality as existing full duplex conferences conducted today over the public switched telephone network (PSTN). We have begun marketing of this service under the ClarionCall^SM name. Although we have successfully completed product testing, we presently derive no significant revenues from Internet telephony conferencing.

Internet telephony revenues have been included with video revenue in related segment information.

Web conferencing. Our customers use web conferencing to broadcast, share, review and edit data. Web conferencing enhances the audio or videoconference by simultaneously transmitting data over the Internet. Internet streaming broadcasts are especially useful in large conferences for training and presentations. Our revenues from web conferencing services are not yet significant. Web conferencing revenues have been included with video revenue in related segment information.

Total Conferencing Services Market. We operate in a niche of the teleconferencing services market. Our focus is on high-value added services for large, multinational customers and large telecommunications providers with global operations. We estimate that these presently account for approximately two percent of the worldwide market for teleconferencing services, based on various market studies summarized as follows:

Sources: (1) Frost & Sullivan, “Introduction to the Audio, Document, and Web Conferencing Markets,” 2001 Frost & Sullivan; (2) Wainhouse Research, LLC, “Teleconferencing Market & Strategies,” Volume 3, Publication No. 936; (3) Telespan, “Forecast of the Demand for Audio Conference Calls,” 2001 Telespan Publishing Corporation.

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Audioconferencing Services Market. Based on the above research and our own estimates, we are planning our growth on the expectation that the audioconferencing services market will continue growing at or above that documented in the above table through year 2004.

Videoconferencing Services Market. We believe, based on industry sources and independent research, that the overall videoconferencing market could grow at or above the rate indicated in the above table through year 2004 reflecting mainly the small existing customer base, the adoption of more user-friendly equipment and lower costs for videoconferencing.

Web Conferencing and Internet Telephony Services Market. We are cautious in our approach to Internet conferencing. We envision Internet telephony conferencing to be an incremental service rather than a replacement for our existing teleconferencing solutions, but we believe that Internet-based services will comprise an important portion of the next generation of conferencing services. Currently, the Internet telephony market is dominated by consumer voice calling. Despite the attraction of lower costs and more convenience, consumers and businesses have been reluctant to embrace Internet telephony on a large scale; however we expect that adoption by business customers will follow improvements in quality and usability. We expect our customers to migrate toward Internet conferencing just as they are moving from fully-attended conferences to automated conferences. Web conferencing is a faster-growing market, and we will continue to participate in this market as it develops.

Strategy. Our strategy is to:

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Service Quality and Client Care

We train all employees in the principles of client care management which include: continuous service quality monitoring and the development of positive relationships with clients. We pursue a philosophy of continuous process improvement, and we consistently measure our performance and endeavor to improve it. We actively monitor, analyze and control all facets of a conference including: reservations, conference execution and billing and follow up with customer satisfaction surveys.

We also review our performance with our customers on a regular basis, set specific performance improvement goals and modify our operations accordingly. Feedback from our customers indicates that these factors contribute to a high customer retention rate.

Sales and Marketing

Our sales and marketing strategy involves two steps. First, we attract customers through various channels. Once the relationship has been established we cross-sell services throughout each customer’s organization worldwide.

We attract our customers through direct and indirect sales efforts such as customer referrals, telemarketing, trade show promotions and advertising. Our direct sales force focuses on multinational and mid-market accounts. We also leverage outsourcing relationships with large telecommunications providers. Our range of service offerings allows us to cross-sell our services once we have initially established an account.

We have built a customer base of approximately 3,000 established accounts ranging from small manufacturing firms to Fortune 500 companies. Our records contain detailed information of the schedulers, administrative staff and managers employed by these customers who are responsible for requesting or arranging conferences with us.

We have targeted the following customer groups for our conferencing services and applications:

Global Accounts. Our global account managers are responsible for some 30 multinational accounts. We focus on the home country or headquarters of these multinationals as a base for developing our global business relationships. Each account manager deals with the customer’s home country office or headquarters when establishing service.

The Company’s largest customer accounted for 7%, 25%, and 21%, of consolidated revenues and the Company’s second largest customer accounted for 7%, 9%, and 17% of consolidated revenues for the years ended December 31, 2002, 2001, and 2000, respectively. All other customers individually amounted to less than 5% of total consolidated revenues in any one year.

Midmarket Accounts. Our direct sales staff targets medium to large companies with a high volume of teleconferencing, as well as smaller companies with lower demand for our services. As in any business, purchasers of higher-volume sales benefit from volume discounts. While we continue to promote sales to our global accounts, we seek situations in which we can provide competitive services to mid-sized companies at higher margins.

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Our direct sales effort manages each of our midmarket accounts through contacts with our customers’ upper management and also with their administrative staff who are responsible for scheduling and travel. Once we have become a repeat provider of services for a customer, we stress personal contact with the call organizers, conference chairpersons and members of senior management within our customers’ organizations.

Outsourced and Co-Marketing Relationships. We participate in outsourcing and co-marketing relationships with major telecommunications companies. Our independence from other network providers allows us to serve these customers without making them feel that we would compete for their customers’ other telecommunications business.

Intellectual Property

We seek to protect our proprietary information and business practices as trade secrets. We have developed customized software which we consider proprietary for our service and quality control functions and have also developed in depth technical know-how with respect to the operation of telecommunications equipment and the coordination of large-volume conference calls. We currently have two provisional patent applications pending before the United States Patent and Trademark Office. We also require each of our employees to execute a nondisclosure agreement for the protection of confidential information.

We (or one of our subsidiaries) own the following United Kingdom trademark registrations (some of which include words that are intentionally repeated): ACT and design; ACTIONCAST ACTIONCAST; ACTIONCALL ACTIONCALL; ACTIONSHOW ACTIONSHOW; ACTION FAX ACTION FAX and ACTION VIEW. A subsidiary owns a Benelux trademark registration for ACT TELECONFERENCING. We own three pending U.S. trademark applications for the terms: MEETINGS ON CALL; CLARION CALL and READY CONNECT. We do not own a federal trademark registration for the term ACT in the United States. Since a wide variety of companies use the term in their corporate name or advertising, the trademark registration could be prohibitively expensive. We do claim a number of common law marks that use the terms ACT or ACTION as a part of such marks. We also believe that we are the only enterprise currently using ACT in the teleconferencing industry.

Suppliers

We are not dependent on any single carrier or supplier for any of the services we sell. We have negotiated volume discounts with our primary long distance carriers and believe we could negotiate similar arrangements at similarly competitive prices with one or more other carriers should our current carriers be unable to continue to provide service at competitive prices. For example, we have a three-year agreement to purchase the bulk of our network services from AT&T. However, we have the right to negotiate our commitments down to the level of actual usage — without penalty — in the event of a business downturn or volume reductions beyond our control.

The equipment we purchase for use in our operations is also available from a variety of suppliers, some of which compete in the teleconferencing services business. We have historically purchased most of our equipment from Compunetix, a supplier based in Pittsburgh, Pennsylvania. According to Compunetix, it accounts for approximately 30

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percent of the worldwide market for conferencing bridges. Compunetix is a supplier of conferencing platforms to U.S. government agencies such as the National Aeronautics and Space Administration, the Federal Aviation Administration Emergency Management Platform and the U.S. Department of Defense, as well as major telecommunications providers. We recently added Spectel/Multilink, Polycom, Octave/Voyant and Accord to our list of major equipment suppliers.

Competition

We compete with major long distance companies, independently-owned conferencing companies, in-house services such as company-operated bridges and private-branch exchange equipment.

The principal competitive factors in the conferencing market are: service, quality, reliability, price, name recognition, value added features and available capacity. The location of an operations center can also be a competitive factor, as a local presence will reduce transmission costs and reflect the language, accent or business practices of local customers. In certain cities and countries we have opened local sales offices to ensure that marketing is more personal and effective.

Our competition comes from large companies such as British Telecom, AT&T, Bell Canada, France Telecom, Deutsche Telekom, Telstra, Hong Kong Tel, Worldcom and Sprint. We also face competition from independent conferencing companies similar to us including: Premiere Technologies, Intercall, V-Span, Raindance and Genesys. In the United States we may also face additional competition from the regional carriers which, under the Telecommunications Act of 1996, eventually will be allowed to provide long distance services nationwide under certain conditions, and whose long distance customers would expect access to conferencing services. This may become an additional opportunity for us, as certain carriers may choose to outsource their customers’ needs to independent conferencing providers.

Although the major long distance carriers hold a large share of the conferencing services market, conferencing is not a primary focus of their business. We have been able to compete with the conferencing divisions of long distance companies on the basis of quality of service for the large-volume business of prestigious companies such as investment banks, accounting and consulting firms, and law firms. Excess long distance line capacity enables the long distance companies to offer discounted prices to high-volume conferencing customers, but they generally charge higher conferencing prices to smaller- and medium-volume customers. This creates a pricing structure that enables us and others to compete on a price-and-service basis for the conferencing business of the medium and smaller businesses.

There are few regulatory barriers in the countries in which we operate, but new entrants into the conferencing business will face various economic barriers. The complex planning, installation and operation of a global conferencing platform involving multiple facilities and office locations such as ours, together with the implementation of network technology and coordination of operations would likely require extensive funding, management, and time to replicate.

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Some companies own and operate their own conferencing bridges, but many companies find that the costs of operating their own bridge outweigh the benefits and prefer to outsource their conferencing services. Technology is available to enhance private branch exchange conferencing capability (usually up to six calls), but private branch exchange-handled conference calls typically have poor sound quality, and each additional line weakens the overall sound volume. Additional competition may also develop from more sophisticated telephone sets and other centralized switching devices. These alternative techniques may enable our customers to conduct some of their own conferences, but we believe they will continue to outsource larger conferences particularly if their distance meetings require a collaboration of audio, video, data and Internet conferencing techniques.

Regulation

Although the telecommunications industry has historically been subject to extensive regulation, deregulation in the countries in which we currently operate has resulted in no material regulatory impact on the delivery of our teleconferencing services.

All of our foreign subsidiaries are established as statutory reporting companies incorporated under the laws of their local jurisdiction. We operate each foreign subsidiary in the local currency. All material subsidiaries are subject to statutory audits once a year, and these statutory results are reconciled to Generally Accepted Accounting Principles for consolidated reporting in the United States. We also pay excise taxes, import duties, sales taxes, payroll taxes and other taxes as required in each jurisdiction. We are in good standing in all the countries in which we operate.

Apart from company administration, tax laws and telecommunications laws the major other area of legislation that impacts us is labor legislation. Labor laws, especially in Europe, are particularly complex and expensive to administer in comparison to the flexibility of the United States labor markets. From time to time we incur a significant cost when there is a need to reduce our personnel in overseas jurisdictions. This cost is dependent upon the particular employee’s status, the employee’s history with us and the reason for dismissal, retrenchment or layoff.

Employees

As of December 31, 2002 we had a total of 416 full-time equivalent employees worldwide. Our entry into new markets eventually will require new employees, but we expect growth in the number of employees to be slow. We do not anticipate any material change in the number of employees in the near future. None of our employees are represented by labor unions. We have not experienced any work stoppages and consider our employee relations to be good.

Item 2. Facilities

Our development of local facilities serves the dual purpose of providing local language, local currency and local time zone services to the areas served by each service delivery center, as well as backup and overflow capacity among other centers in the event all or part of a conference needs to be re-routed from a service delivery center that is at full capacity.

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We currently lease office and service delivery space at our locations in: Denver (CO), Andover (MA), Burlington (VT); Toronto (ONT.); Ottawa (ONT.); London; Slough; Amsterdam; Heerlen; Paris; Frankfurt; Sydney; Adelaide; Hong Kong and Singapore—all of which we have listed in the table below.