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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

Commission file number: 000-25475

LATITUDE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

2121 Tasman Drive, Santa Clara, CA 95054
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (408) 988-7200

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value

        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 preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

        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. ý

        Indicate by check mark if whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) YES o NO ý

        The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $25,579,463 as of June 30, 2002, based upon the closing sale price on the Nasdaq National Market reported for such date. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

        There were 19,389,670 shares of the registrant's Common Stock issued and outstanding as of February 28, 2003.

Documents Incorporated by Reference

        Part III incorporates information by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held on June 5, 2003.

PART I

ITEM 1. BUSINESS.

Overview

        We are a leading provider of secure, enterprise voice and web conferencing products and services that enable geographically dispersed organizations to collaborate in real time. The company's MeetingPlace system is designed for enterprise-wide deployment to improve the ability of employees, partners, and customers to meet and work. With MeetingPlace, participants can schedule and attend a meeting, view, share and edit documents, and record and play back meeting content. MeetingPlace is designed to be an enterprise-wide resource and to leverage existing telephony and data network infrastructure and collaborative applications.

        MeetingPlace improves collaboration efficiency and the user's experience through tight integration of voice and web conferencing. Advanced integration with Microsoft Outlook and Lotus Notes enables people to easily set up, send notices for, and attend meetings. MeetingPlace incorporates many easy-to-use features that allow participants to emulate a face-to-face meeting, such as private breakout sessions and roll calls.

        MeetingPlace is available as an outsourced service (either at a Latitude hosting facility or managed by Latitude on the customer's site), typically offered for a usage-based fee billed on a monthly basis. Alternatively, for an up front license fee, MeetingPlace may be purchased as an on-premises platform that an enterprise can manage itself. Under either deployment method, customer dedicated systems and extensive integration into a company's own information technology (IT) infrastructure enable companies to provide a highly secure meeting environment while also lowering overall conferencing costs.

        We began commercial shipment of MeetingPlace products and services in December 1994 and, as of December 31, 2002, had sold MeetingPlace to over 430 enterprise customers. In addition to enterprise-wide general deployment, customers have purchased and used MeetingPlace for a variety of specific business applications, including morning brokerage calls, crisis management, training and education, customer and client services, supply chain management and merger integration. Furthermore, a significant number of our customers have purchased additional products or services after their initial system installations. MeetingPlace has been installed in some of the world's leading enterprises, including 3Com, Aetna, Agilent, Cisco, Credit Suisse First Boston, Fidelity Investments, Honeywell, Intuit, Lockheed Martin, Oracle, Union Pacific Railroad and the U.S. Federal Reserve Bank.

Industry Background

        The proliferation of communications technologies is revolutionizing the way people conduct business. Today, businesses of all sizes are empowering their employees with a diverse array of communications tools to facilitate information flow and improve productivity. From voicemail, fax machines and cellular phones to e-mail, laptop computers and handheld devices, businesses have demonstrated their continued willingness to adopt technologies that enable their employees, vendors and customers to communicate more efficiently across disparate geographies and time zones.

        An enterprise's willingness to adopt a new communications technology depends largely on the technology's ability to efficiently replace or enhance an existing business process. Voicemail is a more convenient and cost effective substitute for the traditional pad-and-paper answering service. E-mail provides a similar improvement over traditional inter-office mail. Cellular phones and laptop computers provide added flexibility for mobile workers over the traditional telephone and desktop computer. In addition, enterprises have sought to enhance their competitive advantage by creating a virtual presence

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with their customers and vendors through such means as e-commerce and extranets. Each of these technologies has increased productivity by extending the workplace beyond the physical office.

        We believe that no single, widely deployable technology, however, has been able to effectively provide the integrated voice and data collaboration that occurs in a face-to-face meeting in a cost effective manner. To have a meeting today, a business typically must have everyone present in a conference room or invest in limited and often expensive technologies or services that allow people to communicate. For example, audio conferencing, although widely used and available, can be expensive and does not enable participants to share and modify documents. Standalone web conferencing solutions often require incorporating a third party service for voice. Video conferencing systems enable participants to see each other but have technical limitations, such as minimum bandwidth requirements, and are not widely available to users. Collaborative software applications, such as Microsoft Outlook and Lotus Notes, focus on workflow improvements rather than sharing documents real-time and allowing users to speak with other participants.

        To address this need for efficient, real-time voice and data communication, organizations have resorted to using a patchwork of these technologies, including conferencing, fax, e-mail and collaborative software applications. While these technologies have been widely implemented, they do not allow an enterprise to create a comprehensive network for real-time collaboration throughout the organization to promote information flow and effective decision-making. We believe that the growing geographic dispersion and mobility of workers further compounds this problem.

        As a consequence, we believe there is a market for an integrated, secure, cost-effective and easy-to-use product that enables simultaneous real-time voice communication and document collaboration irrespective of geographic location. Furthermore, we believe that such a product can deliver both cost savings and secure, rich-media communications by leveraging the existing voice and data infrastructure within the enterprise. Finally, the system must provide incremental capabilities to improve the meeting itself.

MeetingPlace—The Latitude Solution

        MeetingPlace allows companies to conduct meetings that extend real-time decision-making processes irrespective of the geographic locations of participants. With MeetingPlace, users can schedule and attend a meeting, share and edit documents, and record and access meeting content. Attendees can participate in a meeting using widely available communications devices such as telephones, cellular phones, laptop computers and desktop computers. MeetingPlace is designed to be an enterprise-wide resource and to integrate seamlessly into widely deployed enterprise software environments, including corporate intranets and collaborative software environments such as Microsoft Exchange and Outlook and Lotus Domino and Notes.

        Key benefits of MeetingPlace include:

        ENHANCED PRODUCTIVITY AND FASTER DECISION MAKING.    MeetingPlace increases productivity by enhancing the ability of employees, partners and customers to easily and effectively meet when people are in different locations. MeetingPlace accelerates decision-making by getting the right people involved in the decision process, regardless of location.

        POWERFUL WEB CONFERENCING.    MeetingPlace web conferencing provides a highly productive user experience. From a firewall-friendly browser console, you can share any application, document, web site, whiteboard or presentation for participants to view, annotate and discuss in real time. Chat and polling capabilities enable private communication and group feedback.

        TIGHTLY INTEGRATED VOICE AND WEB CONFERENCING.    MeetingPlace tightly integrates voice and web conferencing to facilitate meeting control. Without disrupting the meeting, you

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know who's in your meeting, who's speaking and who's sharing. Users can control web conferencing permissions, speaking ability, recording and private discussions.

        MORE COST EFFECTIVE WAY TO MEET.    MeetingPlace saves money by reducing the need to travel and lowering a company's overall cost of conferencing. The cost of a voice and web conference using a third-party service bureau typically ranges between $0.20 and $0.50 per minute per participant for voice and web conferencing within the United States. As such, either by deploying MeetingPlace as a service or as an on-premises purchased solution, a typical customer can often realize significant cost savings. Moreover, as IT organizations move to build their IP networks to handle voice traffic, conferencing is one of the most important applications that can deliver additional cost reductions by moving global telephony traffic from more expensive PSTN backbone trunks to lower cost IP trunks.

        SECURITY AND CONTROL.    MeetingPlace provides an architecture and functionality that enables an enterprise to securely manage web conferencing behind its corporate firewall, consistent with its other information technology strategies. Additionally, MeetingPlace eliminates several risks associated with third party conferencing service bureaus, such as competitors guessing meeting ID's and eavesdropping on meetings.

        EASE OF USE.    MeetingPlace allows users to easily schedule, attend and review meetings from their telephones or familiar desktop environments such as Internet browsers, Microsoft Outlook or Lotus Notes.

        MEETING RECORDING AND PLAYBACK.    MeetingPlace provides an integrated ability to record and archive meeting conversations and shared documents, enabling information generated during a meeting to be efficiently passed on to those unable to attend.

        SCALABILITY AND CONFIGURABILITY.    The MeetingPlace architecture scales easily and flexibly. Large deployments can be supported with a single system, while global and distributed servers are connected through MeetingPlace networking capabilities. In addition, high reliability and component redundancies ensure its availability for critical communication. Administration is made simple by automated system tools and comprehensive reports. MeetingPlace can also be configured in a variety of ways to satisfy specific business applications, such as training and supply chain management.

        DEPLOYMENT FLEXIBILITY.    MeetingPlace can be deployed to meet the unique needs of any organization. You can have Latitude host and manage a system for you or buy a system outright and manage it yourself. Either way MeetingPlace is deployed, it is dedicated to a single enterprise and deployed on its network, enabling IT organizations to further leverage their infrastructure investment.

MeetingPlace Services

        MeetingPlace Services are meeting the requirements of many IT organizations as they move to a mix of outsourced services as part of their plan to focus their IT investments. Voice and web conferencing are available as needed and paid for on a usage basis. We provide extensive follow-on consulting and support services to our customers to ensure successful deployment of MeetingPlace in organizations. And, we offer implementation and customization services on an individual engagement basis, as well as full care support and managed services on an ongoing recurring basis.

        MANAGED SERVICES.    Managed services are designed for customers that desire on-site MeetingPlace systems but wish to outsource MeetingPlace's administration and management. Managed services include all user profile management, help desk support, rollout, capacity planning, technical support and monthly usage reporting.

        HOSTED SERVICES.    Hosted services are designed for customers that desire to fully outsource their conferencing needs. Hosted services include all of the services offered with managed services plus

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the long distance voice telephony. This service is provided using MeetingPlace systems located at a Latitude data center.

        IMPLEMENTATION SERVICES.    Implementation services include turnkey project management, database design, specific business application development, training and on-site installation. These services target seamless integration with a wide variety of telephone systems, local area network configurations, web servers and messaging systems.

        CUSTOMIZATION SERVICES.    Customization services include customization of web interfaces to MeetingPlace, custom programming of telephone access menus through the MeetingPlace Flex Menu Option, custom reporting and billing, customization of MeetingPlace into non-standard voice or data networking infrastructures and advanced application support and training. These services are designed for customers with special application or customization needs.

        FULL CARE SUPPORT.    Full care support is an annual or multi-year service plan that provides telephone-based technical support to system managers. In addition, participating customers receive a software subscription service for new releases, access to a standby conference server and onsite hardware maintenance.

MeetingPlace Products

The MeetingPlace system consists of these components:

        MEETINGPLACE CONFERENCE SERVER.    At the core of the MeetingPlace system is the MeetingPlace conference server, an integrated hardware and software platform. The MeetingPlace server is a carrier grade platform built around an Intel Pentium processor and incorporates standard trunk interfaces to digital phone systems, an Ethernet interface for local area networks and IP telephony, and a storage system to manage internal database functions and conference recordings. In addition, the platform utilizes our advanced high-performance digital signal processing cards to manage voice communications. A single MeetingPlace server can scale to 1,152 concurrent users in any combination of different sized conferences, enabling customers to configure the MeetingPlace server on a concurrent user basis. An enterprise can further increase scalability and reliability through MeetingPlace networking capabilities.

        MEETINGPLACE SOFTWARE.    The MeetingPlace conference server includes system software necessary to schedule, conduct and manage real-time voice and data conferences. This software includes an operating system and a structured query language, or SQL, relational database, as well as integrated voice processing, conference scheduling and conference bridging software. The MeetingPlace system software also includes an optional simple network management protocol, or SNMP, agent for centralized network management. Enterprise customers can configure their MeetingPlace systems by choosing any of the following software options:

        MEETINGPLACE WEB CONFERENCING.    Server-based software that facilitates real-time data collaboration using Java-compatible web browsers such as Microsoft Internet Explorer and Netscape Navigator.

        MEETINGNOTES.    Software that facilitates the capture, management and playback of meeting voice recordings and integrated web and voice recording agendas and attached electronic documents.

        MeetingPlace provides additional capabilities to enhance the value of the solution. These include components to ease administration, to ease the work of scheduling and attending meetings, and to

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enable the integration of MeetingPlace with other strategic communications tools used by the enterprise:

        MEETINGTIMECLIENT.    Software that enables users to administer MeetingPlace and to schedule, configure and monitor advanced meeting functions such as lecture style meetings and Question & Answer functionality.

        MEETINGPLACE WEB USER INTERFACE.    Windows server software that integrates MeetingPlace with an enterprise's web server to provide end-users with browser-based scheduling and management of conferences. WebPublisher also integrates with Streaming Media software to provide streaming audio playback of conference recordings.

        MEETINGPLACE FOR OUTLOOK.    Windows server software that integrates MeetingPlace with Microsoft Exchange to facilitate conference scheduling and delivery of notifications through the Microsoft Outlook calendaring interface from the user's desktop.

        MEETINGPLACE FOR NOTES.    Windows server software that integrates MeetingPlace with Lotus Domino to facilitate conference scheduling and delivery of notifications through the Lotus Notes calendaring interface from the user's desktop.

        MEETINGPLACE E-MAIL GATEWAY.    Windows server software that integrates MeetingPlace with popular e-mail systems for automated e-mail delivery of conference notifications and meeting materials.

        MEETINGPLACE DIRECTORY SERVICES.    Windows server software that leverages corporate databases to authenticate and synchronize user information.

Technology

        MeetingPlace incorporates a wide variety of internally developed and third party licensed technologies. Key aspects of our technology platform include:

        HIGH-PERFORMANCE DIGITAL SIGNAL PROCESSING ENGINE.    To meet the needs of a highly scalable conferencing system, we use a general purpose digital signal processing card based on a reduced instruction set computing, or RISC, microprocessor and programmable Texas Instruments digital signal processing chips. MeetingPlace configurations can contain up to 12 digital signal processing cards to deliver up to five billion instructions per second of processing power in a single server. Our software leverages the power of these digital signal processing cards to provide high quality conference bridging that integrates digital signal processing algorithms for echo cancellation, automatic gain control, background noise suppression, voice compression and speaker and dial tone detection.

        CONFERENCE SCHEDULING ENGINE.    A sophisticated conference scheduling engine efficiently allocates MeetingPlace system resources, including conference licenses, access ports, recording space and meeting identification numbers. The scheduling agent utilizes a structured query language, or SQL, relational database to manage transactions originating internally or externally from either the voice or data network. The software allows for sufficient flexibility to encompass real-world scenarios including early arrivals, unexpected participants, conference no-shows and meetings that run over their scheduled times.

        CONFERENCE RECORDING AND PLAYBACK.    To record and play back conferences, MeetingPlace enables voice compression and decompression in addition to a proprietary voice file system.

        The integration of conference scheduling, bridging and recording enables MeetingPlace to facilitate impromptu recording and playback of voice conferences without operator intervention or external equipment.

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        ROBUST SERVER SOFTWARE ARCHITECTURE.    MeetingPlace utilizes a robust set of internally developed application programming interfaces, or API's, that are designed to integrate with a variety of external applications, including web servers, e-mail systems and fax servers.

        DISTRIBUTED NETWORK ARCHITECTURE.    MeetingPlace enables the centralized administration and management of multiple servers distributed over an enterprise's local or wide area network. The system also incorporates an internal database replication engine, system-wide redundancy for MeetingPlace network servers and fault tolerance to network outages.

Customers

        We began commercial shipment of MeetingPlace products and services in December 1994 and, as of December 31, 2002, had sold MeetingPlace to over 430 enterprise customers. Our typical customers are medium to large businesses with geographically diverse employees, suppliers, customers and other constituents. In addition to enterprise-wide general deployment, customers have purchased and used MeetingPlace for a variety of specific business applications, including crisis management, training and education, customer and client services, supply chain management and merger integration. Furthermore, a significant number of our existing customers have purchased additional products or services after their initial system installations.

        Our largest customer, Hewlett-Packard Company (HP), accounted for approximately 22% of our total revenue in 2002. HP accounted for approximately 14% of our total revenue in 2001. No single customer accounted for more than 10% of our total revenue in 2000.

        In August 2002, we announced that HP, following its merger with Compaq, had decided to pursue alternative vendor solutions for its voice conferencing needs. Accordingly, HP has now begun its reduction in usage of MeetingPlace. We currently expect some HP usage to continue through the middle of 2003, although any future usage levels and rates of change in such usage levels are uncertain. See "Factors That May Affect Future Results—Our revenues could be significantly reduced by the loss of a major customer." We continue to increase the number of customers under managed and hosted service contracts, which we expect will offset the anticipated decrease of Hewlett-Packard service revenues.

Marketing and Sales

        Marketing.    To create awareness, market demand and sales opportunities for our products, we engage in a number of marketing activities which include public relations activities with trade and business press, exhibiting products and applications at industry trade shows and on our web site, direct marketing, advertising in selected publications aimed at targeted markets and web directories and search engines, distribution of sales literature, technical specifications and documentation. Our marketing efforts focus on educating the significant influencers within enterprises, targeting IT executives and IT managers to build a business case and closing on initial deployment applications. In addition, we cultivate relationships with major network and telecommunications equipment providers.

        Sales.    Our distribution strategy is to sell our products and services to medium to large businesses with geographically dispersed employees, suppliers, customers and other constituents. We employ a direct sales force in the United States as our primary distribution channel to market to these enterprises. Latitude uses a consultative sales approach, working closely with customers to understand and define their needs and to determine how they can be addressed by our products and services. This strategy continues after the initial product implementation, the successful completion of which is typically a prerequisite to full-scale deployment. While the sales cycle varies from customer to customer, it typically lasts between six and twelve months. See "Factors That May Affect Future Results—Our sales cycle is lengthy and unpredictable."

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        In addition to our direct sales force in the United States, the United Kingdom and Singapore, we use indirect channels to extend our marketing effort. Traditionally, our indirect channels have included resellers that target specific geographic regions and vertical markets, as well as usage-based resellers who offer access to MeetingPlace services on a per-minute basis. During 2002, we also increased our reseller base to cover both mid-sized businesses as well as global accounts. As of December 31, 2002, we had 10 domestic resellers and 6 international resellers. We intend to continue to grow our reseller channels. See "Factors That May Affect Future Results—If we fail to expand and develop our distribution channels, our business could suffer" and "—Our ability to expand into international markets is uncertain."

Competition

        We compete in a market that is highly competitive and rapidly changing. We expect competition to persist and intensify in the future. We believe the principal competitive factors in our market include, or are likely to include, overall cost of conferencing, product performance and features such as the ability to integrate voice and web, security, reliability, ease of use, size of customer base, quality of service and technical support, sales and distribution capabilities and strength of brand name. Additionally, cross-subsidization by service providers who bundle conferencing with long distance transport could increasingly affect our business. A description of our principal competitors and the risks associated with the competitive nature of our market are discussed in greater detail in "Factors That May Affect Future Results—Our market is highly competitive."

        We cannot be certain that we will be able to compete successfully with existing or new competitors. If we fail to compete successfully against current or future competitors, our business could suffer.

Patents and Intellectual Property Rights

        Our success is heavily dependent upon protecting our proprietary technology. We rely primarily on a combination of patents, copyright, trademark, trade secrets, non-disclosure agreements and other contractual provisions to protect our proprietary rights. As of December 31, 2002, we had four issued U.S. patents relating to voice processing interfaces, recording and retrieval of audio conferences and graphical computer interfaces for teleconference systems. We cannot be certain that these patents will provide us with any competitive advantages or will not be challenged, invalidated or circumvented by third parties or that the patents of others will not have an adverse effect on our ability to do business.

        The laws of many foreign countries do not protect our intellectual property to the same extent as the laws of the United States, and many U.S. companies have encountered substantial enforcement problems in protecting their proprietary rights against infringement in such countries, some of which are countries in which we have sold and continue to sell products. If we fail to protect our intellectual property, it would be easier for our competitors to sell competing products.

        A discussion of risks associated with the protection of our patents and intellectual property rights and potential infringement by us of the patents and intellectual property rights of others is presented in "Factors That May Affect Future Results—We may be unable to adequately protect our proprietary rights, and we may be subject to infringement claims."

Manufacturing

        We currently outsource the manufacturing of all of the subassemblies and components of the MeetingPlace server to third parties. This strategy allows us to reduce costly investments in manufacturing capital and to leverage the expertise of our vendors. Our manufacturing operation consists primarily of final assembly and testing of fully-configured MeetingPlace servers. Some of the components and parts used in our products are procured from sole sources, including the processor and digital signal processing device used in our MeetingPlace server. We typically obtain components from

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only one vendor even where multiple sources are available to maintain quality control and enhance the working relationship with suppliers. These purchases are made under existing contracts or purchase orders. The failure of any sole source suppliers to deliver on schedule could delay or interrupt our delivery of products and adversely affect our business. See "Factors That May Affect Future Results—Any interruption in supply of components from outside manufacturers and suppliers could hinder our ability to ship products in a timely manner."

Employees

        As of December 31, 2002, we had a total of 177 (10 outside the U.S.) employees, of which 29 were in research and development, 125 were in sales, marketing and customer support and 23 were in finance, administration and operations. Our future performance depends in significant part upon our ability to attract new personnel and the continued service of existing personnel in key areas including engineering, technical support and sales. Competition for qualified personnel is intense and there can be no assurance that we will be successful in attracting or retaining employees in the future. None of our employees are subject to a collective bargaining agreement. We consider our relations with our employees to be good. See "Factors That May Affect Future Results—Our business could suffer if we lose the services of our current management team."

ITEM 2. PROPERTIES.

        We lease approximately 56,000 square feet for our headquarters facility in Santa Clara, California. The current lease for the Santa Clara facility expires in December 2005. We also lease space at twelve other locations in the U.S. and two outside the U.S. Each of these other offices is leased on a month-to-month basis or under a lease with a term of 12 months or less, except for the lease for our San Francisco facility which expires in June 2005.

ITEM 3. LEGAL PROCEEDINGS.

        In November 2001, a series of securities class actions were filed in the United States District Court for the Southern District of New York against certain underwriters for Latitude's initial public offering ("IPO"), Latitude Communications Inc., and Emil C. Wang and Rick M. McConnell, who were officers of Latitude at the time of the IPO. The complaints were consolidated into a single action, and a consolidated amended complaint against Latitude was filed in April 2002. The amended complaint alleges, among other things, that the underwriter defendants violated the securities laws by failing to disclose alleged compensation arrangements in the initial public offering's registration statement and by engaging in manipulative practices to artificially inflate the price of Latitude's common stock after the initial public offering. The amended complaint also alleges, among other things, that Latitude and the named officers violated section 11 of the Securities Act of 1933 and section 10(b) of the Securities Exchange Act of 1934 on the basis of an alleged failure to disclose the underwriters' alleged compensation arrangements and manipulative practices. No specific amount of damages has been claimed. Similar complaints have been filed against more than 300 other issuers that have had initial public offerings since 1998, and all of these actions have been included in a single coordinated proceeding.

        Mr. McConnell and Mr. Wang have subsequently been dismissed from the action without prejudice pursuant to a tolling agreement. Furthermore, in July 2002, Latitude and the other issuers in the consolidated cases filed motions to dismiss the amended complaint for failure to state a claim. The motion to dismiss claims under section 11 was denied as to virtually all the defendants in the consolidated actions, including Latitude. However, the claims against Latitude under section 10(b) were dismissed.

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        Latitude will defend itself vigorously against the claims in this lawsuit. Due to the inherent uncertainties of litigation and because the litigation is still at a preliminary stage, the ultimate outcome of the matter cannot be predicted.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

        Latitude Communications made its initial public offering on May 6, 1999. Our common stock is traded on the Nasdaq National Market under the symbol LATD. The following table sets forth, for the fiscal periods indicated, the high and low sales prices per share of our common stock as reported on the Nasdaq National Market.

        As of February 28, 2003, there were approximately 134 registered holders of record of our common stock. We believe that a significant number of beneficial owners of our common stock hold shares in street name.

        We have never paid cash dividends on our common stock. We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying any cash dividends for the foreseeable future.

        On May 6, 1999, in connection with Latitude's initial public offering, a Registration Statement on Form S-1 (No. 333-72935) was declared effective by the Securities and Exchange Commission, pursuant to which 3,125,000 shares of Latitude's common stock were offered and sold for the account of Latitude at a price of $12.00 per share, generating gross offering proceeds of $37.5 million. The managing underwriters were Credit Suisse First Boston Corporation, Hambrecht & Quist LLC and Dain Rauscher Wessels. After deducting approximately $2.6 million in underwriting discounts and $1.1 million in other related expenses, the net proceeds of the offering were approximately $33.8 million. No direct or indirect payments were made to officers or directors or holders of ten percent or more of any class of equity securities of Latitude or any of their affiliates. Latitude has invested in investment grade, interest-bearing securities. As of December 31, 2002, $25.2 million of the net proceeds were invested in cash and cash equivalents and short-term investments and approximately $8.6 million had been used for working capital, including capital investments of $2.7 million in 2002, $3.1 million in 2001 and $3.2 million in 2000. Latitude intends to use the remaining proceeds for capital expenditures, including the acquisition of computer and communication systems and for general corporate purposes.

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Equity Compensation Plan Information

        The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2002, including the 1993 Stock Plan, the 1999 Stock Plan, the 1999 Directors' Stock Option Plan, the 1999 Employee Stock Purchase Plan and the 2001 Employee Stock Option Plan.

(1)

Represents shares available for future issuance under the 1999 Stock Plan (the "1999 Plan") as of December 31, 2002. The 1999 Plan includes an "evergreen" feature, which provides for an automatic annual increase in the number of shares available for future issuance under the plan on the first day of each of the our fiscal years through 2006, equal to the lesser of 4% of our outstanding common stock on the last day of the immediately preceding fiscal year, 1,500,000 shares or a lesser number of shares determined by the Board of Directors.

(2)

Excludes purchase rights accruing under the 1999 Employee Stock Purchase Plan (the "ESPP"). Under the ESPP, eligible employees may purchase shares of common stock at semi-annual intervals at a purchase price per share equal to 85% of the lower of (i) the closing selling price per share of common stock on an employee's entry date into an offering period in which that semi-annual purchase date occurs or (ii) the closing selling price per share on the semi-annual purchase date.

(3)

Represents shares currently available for future issuance under the ESPP as of December 31, 2002. The ESPP, designed to comply with Internal Revenue Code Section 423, includes an "evergreen" feature, which provides for an automatic annual increase in the number of shares available for future issuance under the plan on the first day of each of the our fiscal years through 2004, equal to the lesser of 1% of our outstanding common stock on the last day of the immediately preceding fiscal year, 200,000 shares or such lesser number of shares as is determined by the Board of Directors.

(4)

Available for issuance under the 2001 Employee Stock Option Plan (the "2001 Plan"). A description of the 2001 Plan follows.

2001 Employee Stock Option Plan

        In February, 2001, our Board of Directors approved the 2001 Plan pursuant to which non-qualified stock options may be granted to our employees who are not officers or directors. This plan has not

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been submitted to our stockholders for approval. As of December 31, 2002, options to acquire 526,686 shares were outstanding under this plan, out of the 800,000 shares originally reserved for issuance.

        The purpose of the plan is to promote our success by linking the personal interests of our non-executive employees to those of our stockholders and by providing participants with an incentive for outstanding performance. The plan authorizes the granting of non-qualified stock options to our non-executive employees and consultants. Options will have an exercise price per share equal to the fair market value per share of common stock on the grant date. No option may have a term of more than ten years. Options that are issued under the plan typically vest over a four-year period beginning at the grant date and expire ten years from the date of grant. The options will vest on an accelerated basis in the event the Company is acquired and those options are not assumed or replaced by the acquiring entity. The Board of Directors or the Compensation Committee may amend or terminate the plan without stockholder approval, but no amendment or termination of the plan or any award agreement may adversely affect any award previously granted under the plan without the written consent of the participant.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.

        The tables that follow present portions of our consolidated financial statements and are not complete. You should read the following selected financial data in conjunction with our Consolidated Financial Statements and the Notes to these financial statements and with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report on Form 10-K. The historical results presented below are not necessarily indicative of the results to be expected for any future fiscal year.

Five-Year Summary

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Certain Forward-Looking Information

        This Management's Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Form 10-K include a number of forward-looking statements that reflect our current views with respect to future events and financial performance. We use words such as "anticipates," "believes," "expects," "future," and "intends," and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks are described in "Factors That May Affect Future Results" and elsewhere in this Annual Report on Form 10-K. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Overview

        We are a leading provider of integrated, secure voice and web conferencing solutions that enable geographically dispersed organizations to work better through real-time collaboration. Our MeetingPlace system integrates with standard communications infrastructures enabling people to share and edit live documents to work together productively from any location. With MeetingPlace, participants can schedule and attend a meeting, view, share and edit documents, and capture and retrieve meeting content. MeetingPlace is designed to be an enterprise-wide resource and to leverage existing technologies such as telephones, cellular phones and personal computers.

        We were incorporated in April 1993. From inception until December 1994, our operations consisted primarily of basic start-up activities, such as research and development and recruiting personnel. We first recognized revenue from product sales in December 1994 and generated revenue of $40.5 million, $33.9 million, and $43.4 million in 2002, 2001, and 2000, respectively. We generated net losses of $18.5 million in 2002 and $7.4 million in 2001 and net income of $1.7 million in 2000. The net loss in 2002 includes the effect of a $5.4 million restructuring charge and a tax valuation allowance of $11.2 million. The net loss in 2001 includes the effect of an $870,000 restructuring charge. We cannot be assured that our revenues will grow or that we will achieve profitability in the future.

        We generate revenue from sales of our MeetingPlace products and services, and from related customer support and consulting services. Revenue derived from services constituted 70%, 60%, and 32% of our total revenue in 2002, 2001, and 2000, respectively. Service revenue includes revenue from our usage and subscription based managed and hosted MeetingPlace services, implementation and customization services, consulting services, warranty coverage and customer support. Revenue from managed, hosted and implementation services is recognized as the services are performed, revenue from customization services is recognized upon project completion, while revenue from warranty coverage and customer support is recognized ratably over the period of the underlying contract. In 2001, we significantly enhanced our service offerings to include managed and hosted deployment options. Our MeetingPlace services offerings allow companies to acquire MeetingPlace on a usage-based pricing model and have Latitude manage their MeetingPlace capacity. Accordingly, revenue from this new service offering increased the proportion of total revenue derived from services. Revenues pursuant to our hosted services agreement are recognized as the related services are delivered.

        Revenue derived from product sales constituted 30%, 40%, and 68% of our total revenue in 2002, 2001, and 2000, respectively. During this period, product sales have become increasingly difficult due to decreases in capital spending by our customers, and we expect this environment to continue for the foreseeable future. Product revenue is generally recognized upon shipment if a signed contract exists,

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the fee is fixed or determinable, collection of the resulting receivable is probable, product returns are reasonably estimable and, if applicable, acceptance has been obtained. We calculate an allowance for returns based on historical rates. To the extent that prospective customers elect to purchase the hosted service rather than an on-premises MeetingPlace system, our product revenue could be adversely affected.

        We sell our MeetingPlace products and services primarily through our direct sales force and, to a lesser extent, through indirect distribution channels. The majority of our revenue is derived from Fortune 1000 companies, many of which initially purchase MeetingPlace servers and later expand deployment of our products as they require additional capacity for voice and web conferencing.

        Total cost of revenue consists of component and materials costs, direct labor costs, amortization of capitalized software, warranty costs, royalties and overhead related to the manufacturing of our products, as well as long distance services resold to our customers, materials, travel and labor costs related to personnel engaged in our service operations. Product gross margin is impacted by the proportion of product revenue derived from software sales, which typically carry higher margins than hardware sales, and from indirect distribution channels, which typically carry lower margins than direct sales. Service gross margin is impacted by the mix of services we provide, which have different levels of profitability, usage levels by our customers and the efficiency with which we provide support to our customers. We reduce the carrying value of excess and obsolete inventory by identifying inventory components either considered excess based on estimates of future usage or obsolete due to changes in our products offerings. As a result of technological changes, our products may become obsolete or we could be required to redesign our products.

        During 2002 and 2001, we recorded significant accruals in connection with our restructuring programs. These accruals include estimates pertaining to employee separation costs and the settlements of contractual obligations related to excess leased facilities and other contracts. Although we do not currently anticipate significant changes, the actual costs may differ from these estimates, particularly the costs surrounding the excess leased facilities (for example, increased common area maintenance fees).

Critical Accounting Policies and Estimates

        Latitude's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates, including those related to revenue recognition, bad debts, and restructuring. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

        We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:

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Revenue Recognition. We recognize revenue in accordance with accounting standards for software companies including Statement of Position 97-2 ("SOP 97-2"), "Software Revenue Recognition", as amended by SOP 98-4, SOP 98-9, and related interpretations including Technical Practice Aids. We follow very specific and detailed guidelines in measuring revenue; however, certain judgments affect the application of our revenue policy. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our

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operating results to vary significantly from quarter to quarter and could result in future operating losses.

Latitude generates revenues through two primary sources: (a) product revenues and (b) service revenues. Product revenues are generated from the sale of hardware and from licensing the rights to use our products directly to end-users and indirectly through Valued Added Resellers ("VAR's"). Service revenues are generated from our usage and subscription based managed and hosted MeetingPlace services, implementation and customization services, customer support services (including maintenance contracts), consulting services and training services.

Latitude recognizes product revenues generally upon shipment if a signed contract or purchase order exists, the fee is fixed or determinable, collection of the resulting receivable is probable, product returns are reasonably estimatable and, if applicable, acceptance has been obtained.

In product arrangements that include rights to multiple software products and/or services we allocate the total arrangement fee among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on vendor-specific objective evidence of fair value of such undelivered elements and the residual amounts of revenue are allocated to the delivered elements. Elements included in multiple element arrangements could consist of software products, maintenance (which includes customer support services and unspecified upgrades), or consulting services. Vendor-specific objective evidence is based on the Company's established history of selling prices of the element when sold separately or for maintenance services a contracted stipulated renewal rate.

Standard terms for license agreements call for payment within 30 days. Probability of collection is based upon the assessment of the customer's financial condition through the review of their current financial statements or credit reports. For follow-on sales to existing customers, prior payment history is also used to evaluate probability of collection. Revenues from distribution agreements with VAR's are recognized upon the earlier of receipt of cash from the VAR or identification of an end-user. In the latter case, probability of collection is evaluated based upon the credit worthiness of the VAR. Our agreements with customers and VAR's do not contain product return rights.

Revenue from managed and implementation services is recognized as the services are performed, revenue from customization services is recognized upon project completion, while revenue from warranty coverage and customer support is recognized ratably over the period of the underlying contract. Revenues from consulting and training services are also recognized as services are performed. Standard terms for customer support contracts, consulting services and training services call for payment within 30 days.

Revenue from hosted services is recognized as the service is performed.

Fees from licenses sold together with implementation, customization or consulting services are generally recognized upon shipment of the software, provided that the above criteria are met, payment of the license fees are not dependent upon the performance of the services, and the services are not essential to the functionality of the licensed software. If the services are essential to the functionality of the software, or payment of the license fees are dependent upon the performance of the services, both the software license and services are recognized under the percentage of completion method of contract accounting.

If the fee is not fixed or determinable, revenue is recognized as payments become due from the customer. If a nonstandard acceptance period is required, revenues are recognized upon the earlier of customer acceptance or the expiration of the acceptance period.

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Allowance for Doubtful Accounts. A considerable amount of judgment is required when we assess the ultimate realization of receivables, including assessing the probability of collection and

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