SOURCE: GENESYS

May 15, 2007 01:10 ET

GENESYS REPORTS FIRST QUARTER 2007 EARNINGS

VIENNA, VA and MONTPELLIER, FRANCE -- (MARKET WIRE) -- May 15, 2007 -- Vienna, Virginia, and Montpellier, France - May 15, 2007 - Genesys Conferencing (Euronext Eurolist: FR0004270270) (NASDAQ: GNSY), a global multimedia collaboration service leader, today reported unaudited financial results for the first quarter ended March 31, 2007. All results are reported under International Financial Reporting Standards (IFRS).

Volume and Revenue

Total volume increased by 25.7% to 694.3 million minutes in the first quarter of 2007 compared to 552.2 million minutes the first quarter of 2006. The volume increase was primarily driven by strong quarterly growth for Genesys Meeting Center services, which increased by 27.6% to 660.9 million minutes in the first quarter of 2007.

Total revenue in the first quarter of 2007 was 36.2 million euros compared to 36.4 million euros in the first quarter 2006 revenue. Genesys Meeting Center revenue was 29.1 million euros in the first quarter of 2007, an increase of 0.4 million euros compared to 28.6 million euros in the first quarter of 2006. Revenue from legacy attended conferencing services was down 0.6 million euros for the first quarter of 2007 compared to last year.

Gross Margin and Operating Expenses

Gross margin was 62.3% in the first quarter of 2007 compared to 63.3% in the first quarter of 2006. The decline in gross margin largely reflects the impact of price erosion, partially offset by a reduction in telecommunication costs per minute and an absolute reduction in operations costs, due to the expected decline of legacy attended conferencing services.

Selling, general and administrative expenses in the first quarter of 2007 were 18.8 million euros down 1.8 million euros or 8.7%, compared to 20.5 million euros in the first quarter of 2006. The decline in operating expenses reflects the company's efforts to further improve the cost effectiveness of its operations. As expected, total operating expenses in the first quarter of 2007 included a 0.5 million euro restructuring charge related to continuing management initiatives aimed at reducing the company's overall cost structure.

EBITDA and Net Income

EBITDA1, excluding stock-based compensation, improved to 6.1 million euros, or a 16.8% EBITDA margin, for the first quarter of 2007, compared to 4.8 million euros, or a 13.3% EBITDA margin, for the first quarter of 2006. The improvement in EBITDA primarily reflects the reduction of operating expenses.

Net income in the first quarter of 2007 increased to 1.2 million euros compared to a net loss of (0.7) million euros in the first quarter of 2006. The improvement in net income reflects not only lower operating costs but also lower interest expense.

Liquidity

As of March 31, 2007, the company's net cash2 was 8.1 million euros, an increase of 1.7 million euros during the quarter when compared to 6.4 million euros of net cash as of December 31, 2006.

The company's net debt2 position as of March 31, 2006, was 21.7 million euros compared to 23.1 million euros as of December 31, 2006. Shareholders' equity was 50.9 million euros compared to 49.9 million euros as of December 31, 2006.

"The efficiency of our Genesys Meeting Center business together with further decreases in operating costs this quarter resulted in improving cash flow," stated Andrew Lazarus, Executive Vice President and Chief Financial Officer. "Additionally, we believe that our voluntary SEC deregistration will greatly simplify our public reporting process and, as a result, improve our corporate finance structure."

Conference Call and Webcast

Chairman and Chief Executive Officer François Legros and Executive Vice President and Chief Financial Officer Andrew Lazarus will host a conference call on Tuesday, May 15, 2007 at 5:30 p.m. Central European Time or 11:30 a.m. Eastern Time to discuss first quarter 2007 financial results.

The conference call will be web cast live and may be accessed at

http://events.webeventservices.com/genesys/2007/05/15

A replay of the call will be available at the same URL or at http://www.genesys.com

(1) See attached note to consolidated statements of operations for reconciliation of Operating Income and EBITDA. The company believes that EBITDA is a meaningful measure of performance, because it presents the company's results of operations without the non-cash impact of depreciation and amortization. EBITDA is reported excluding stock-based compensation expense.

(2) Net cash includes cash and cash equivalents less bank overdrafts. Net debt includes current and long-term portions of long-term debt and capitalized lease obligations, less net cash.

FINANCIAL TABLES TO FOLLOW

Impact of Exchange Rates

The company serves large enterprises on a worldwide basis. As a result, it has extensive international operations and, thus, significant exposure to exchange rate fluctuations, in particular those of the U.S. dollar. In 2006, and continuing through the first quarter of 2007, the U.S. dollar has fluctuated compared to the euro. As a result, the comparability of the company's revenues and results of operations expressed in euros were affected.

Forward-Looking Statements

This release contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements of current condition. These statements appear in a number of places in this release and include statements concerning the parties' intent, belief or current expectations regarding future events and trends affecting the parties' financial condition or results of operations.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. Some of these factors are described in the Form 20-F that was filed by Genesys Conferencing with the Securities and Exchange Commission on May 18, 2006.

Although Genesys Conferencing's management believe that their expectations reflected in the forward-looking statements are reasonable based on information currently available to them, they cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date of this release. Except to the extent required by law, the parties undertake no obligation to revise or update any of them to reflect events or circumstances after the date of this release, or to reflect new information or the occurrence of unanticipated events.

Genesys Conferencing--Connecting the World for 20 Years

Founded in 1986, Genesys Conferencing is a leading provider of converged collaboration and communication services to thousands of organisations worldwide, including more than 200 of the Fortune Global 500. The company's flagship product, Genesys Meeting Center, provides an integrated multimedia conferencing solution that is easy to use and available on demand. With offices in more than 20 countries across North America, Europe and Asia Pacific, the company offers an unmatched global presence and strong local support. Genesys Conferencing is publicly traded on Euronext Eurolist C in France (FR0004270270) and on the NASDAQ in the U.S. (GNSY). Additional information is available at www.genesys.com.

At Genesys Conferencing

Andrew G. Lazarus

Executive Vice President, Chief Financial Officer

Phone: +1 703-749-2500

andrew.lazarus@genesys.com

Marine Pouvreau

Investor Relations Manager

Phone: +1 703-749-2500

marine.pouvreau@genesys.com

GENESYS CONFERENCING

Consolidated Balance Sheets

(Unaudited IFRS, in thousands of euros, except share data)

+-------------------------+-------------------+----------------+
|                         |  December 31, 2006|  March 31, 2007|
+-------------------------+-------------------+----------------+
|ASSETS                   |                   |                |
+-------------------------+-------------------+----------------+
|Non current assets       |                   |                |
+-------------------------+-------------------+----------------+
|Goodwill, customer lists |             34,887|          34,100|
|and technology           |                   |                |
+-------------------------+-------------------+----------------+
|Other intangible assets, |              6,939|           6,678|
|net                      |                   |                |
+-------------------------+-------------------+----------------+
|Tangible assets, net     |             15,402|          14,522|
+-------------------------+-------------------+----------------+
|Financial assets, net    |              1,579|           1,558|
+-------------------------+-------------------+----------------+
|Deferred tax assets      |             10,829|          10,550|
+-------------------------+-------------------+----------------+
|Total non current assets |             69,636|          67,408|
+-------------------------+-------------------+----------------+
|Current assets           |                   |                |
+-------------------------+-------------------+----------------+
|Accounts receivable, less|             24,464|          26,013|
|allowances (EUR 1,316    |                   |                |
| and EUR 1,225 at        |                   |                |
+-------------------------+-------------------+----------------+
|December 31, 2006 and    |                   |                |
|March 31, 2007,          |                   |                |
|respectively)            |                   |                |
+-------------------------+-------------------+----------------+
|Prepaid expenses and     |              9,352|          10,275|
|other current assets     |                   |                |
+-------------------------+-------------------+----------------+
|Cash and cash equivalents|              8,083|           9,846|
+-------------------------+-------------------+----------------+
|Total current assets     |             41,899|          46,134|
+-------------------------+-------------------+----------------+
|TOTAL ASSETS             |            111,535|         113,542|
+-------------------------+-------------------+----------------+
|LIABILITIES AND          |                   |                |
|SHAREHOLDERS' EQUITY     |                   |                |
+-------------------------+-------------------+----------------+
|Shareholders' equity     |                   |                |
|(deficit)                |                   |                |
+-------------------------+-------------------+----------------+
|Ordinary shares, nominal |             69,798|          69,883|
|value of EUR 1 per share |                   |                |
|69,798,286 shares issued |                   |                |
|and outstanding at       |                   |                |
|December 31, 2006 and    |                   |                |
|69,882,837 shares issued |                   |                |
|and outstanding at March |                   |                |
|31, 2007                 |                   |                |
+-------------------------+-------------------+----------------+
|Common shares to be      |                135|             134|
|issued                   |                   |                |
+-------------------------+-------------------+----------------+
|Additional paid-in       |            179,706|         179,757|
|capital                  |                   |                |
+-------------------------+-------------------+----------------+
|Additional paid-in       |              3,735|           3,701|
|capital to be issued     |                   |                |
+-------------------------+-------------------+----------------+
|Reserve for stock-based  |              3,410|           3,637|
|compensation             |                   |                |
+-------------------------+-------------------+----------------+
|Accumulated deficit      |          (218,411)|       (212,115)|
+-------------------------+-------------------+----------------+
|Net income               |              6,421|           1,241|
+-------------------------+-------------------+----------------+
|Currency translation     |              5,095|           4,659|
|adjustments              |                   |                |
+-------------------------+-------------------+----------------+
|Total shareholders'      |             49,889|          50,897|
|equity (deficit)         |                   |                |
+-------------------------+-------------------+----------------+
|Provisions for risks and |                434|             457|
|charges                  |                   |                |
+-------------------------+-------------------+----------------+
|Deferred tax liability   |              1,297|           1,289|
+-------------------------+-------------------+----------------+
|Long-term debt           |                   |                |
+-------------------------+-------------------+----------------+
|Long-term portion of     |             20,127|          19,974|
|long-term debt           |                   |                |
+-------------------------+-------------------+----------------+
|Long-term portion of     |                183|             176|
|capitalized lease        |                   |                |
|obligations              |                   |                |
+-------------------------+-------------------+----------------+
|Total long-term debt and |             22,041|          21,896|
|other liabilities        |                   |                |
+-------------------------+-------------------+----------------+
|Current liabilities      |                   |                |
+-------------------------+-------------------+----------------+
|Bank overdrafts          |              1,673|           1,702|
+-------------------------+-------------------+----------------+
|Accounts payable and     |             12,436|          12,292|
|accrued liabilities      |                   |                |
+-------------------------+-------------------+----------------+
|Taxes payable and        |             11,144|          12,152|
|deferred compensation    |                   |                |
+-------------------------+-------------------+----------------+
|Current portion of       |              1,601|           1,443|
|provision for risks and  |                   |                |
|charges                  |                   |                |
+-------------------------+-------------------+----------------+
|Current portion of       |              9,085|           9,620|
|long-term debt           |                   |                |
+-------------------------+-------------------+----------------+
|Current portion of       |                125|              90|
|capitalized lease        |                   |                |
|obligations              |                   |                |
+-------------------------+-------------------+----------------+
|Other current liabilities|              3,540|           3,450|
+-------------------------+-------------------+----------------+
|Total current liabilities|             39,605|          40,749|
+-------------------------+-------------------+----------------+
|LIABILITIES AND          |            111,535|         113,542|
|SHAREHOLDERS' EQUITY     |                   |                |
+-------------------------+-------------------+----------------+
+--+
|  |
+--+
GENESYS CONFERENCING

Consolidated Statements of Operations

(Unaudited IFRS, in thousands of euros, except share data)

+-------------------------+--------------------+--------------------+
|                         |Three months ended  |Three months ended  |
|                         |March 31,           |March 31,           |
+-------------------------+--------------------+--------------------+
|                         |                2006|                2007|
+-------------------------+--------------------+--------------------+
|Revenue                  |              36,377|              36,174|
+-------------------------+--------------------+--------------------+
|Cost of revenue          |            (13,357)|            (13,638)|
+-------------------------+--------------------+--------------------+
|Gross profit             |              23,020|              22,536|
+-------------------------+--------------------+--------------------+
|Operating expenses       |                    |                    |
+-------------------------+--------------------+--------------------+
|Research and development |               1,203|               1,580|
+-------------------------+--------------------+--------------------+
|Selling and marketing    |              11,495|               9,279|
+-------------------------+--------------------+--------------------+
|General and              |               7,847|               7,373|
|administrative           |                    |                    |
+-------------------------+--------------------+--------------------+
|Restructuring charge     |                   -|                 520|
+-------------------------+--------------------+--------------------+
|Amortization of          |                 747|                 573|
|intangibles              |                    |                    |
+-------------------------+--------------------+--------------------+
|                         |              21,292|              19,325|
+-------------------------+--------------------+--------------------+
|Operating income         |               1,728|               3,211|
+-------------------------+--------------------+--------------------+
|Interest income          |                  51|                  53|
+-------------------------+--------------------+--------------------+
|Interest expense         |             (1,214)|               (803)|
+-------------------------+--------------------+--------------------+
|Foreign exchange gain    |                 563|                  73|
|(loss)                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Other income (expense)   |               (494)|               (361)|
+-------------------------+--------------------+--------------------+
|Income tax credit        |             (1,368)|               (932)|
|(expense)                |                    |                    |
+-------------------------+--------------------+--------------------+
|Net income               |               (734)|               1,241|
+-------------------------+--------------------+--------------------+
|Basic net income per     |              (0.02)|                0.02|
|share                    |                    |                    |
+-------------------------+--------------------+--------------------+
|Diluted net income per   |              (0.02)|                0.02|
|share                    |                    |                    |
+-------------------------+--------------------+--------------------+
|Number of outstanding    |          40,163,460|          69,923,712|
|shares used in computing |                    |                    |
|basic net income per     |                    |                    |
|share                    |                    |                    |
+-------------------------+--------------------+--------------------+
|Number of outstanding    |          40,163,460|          69,950,197|
|shares used in computing |                    |                    |
|diluted net income per   |                    |                    |
|share                    |                    |                    |
+-------------------------+--------------------+--------------------+
GENESYS CONFERENCING

Note to the Consolidated Financial Statements

(Unaudited IFRS, in thousands of euros, except share data)

+-------------------------+--------------------+--------------------+
|                         |Three months ended  |Three months ended  |
|                         |March 31,           |March 31,           |
+-------------------------+--------------------+--------------------+
|NOTE A- EBITDA           |                2006|                2007|
|calculation              |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating income         |               1,728|               3,211|
+-------------------------+--------------------+--------------------+
|Amortization of          |                 747|                 573|
|identifiable intangible  |                    |                    |
|assets                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Depreciation             |               2,048|               2,046|
+-------------------------+--------------------+--------------------+
|EBITDA                   |               4,523|               5,830|
+-------------------------+--------------------+--------------------+
|Stock-based compensation |                 293|                 228|
+-------------------------+--------------------+--------------------+
|EBITDA before stock-based|               4,816|               6,058|
|compensation             |                    |                    |
+-------------------------+--------------------+--------------------+
GENESYS CONFERENCING

Consolidated Statements of Cash Flows

(Unaudited IFRS, in thousands of euros, except share data)

+-------------------------+--------------------+--------------------+
|                         |Three months ended  |Three months ended  |
|                         |March 31,           |March 31,           |
+-------------------------+--------------------+--------------------+
|                         |                2006|                2007|
+-------------------------+--------------------+--------------------+
|Cash flows from operating|                    |                    |
|activities:              |                    |                    |
+-------------------------+--------------------+--------------------+
|Net (loss) income        |               (734)|               1,241|
+-------------------------+--------------------+--------------------+
|Adjustments to reconcile |                    |                    |
|net (loss) income to net |                    |                    |
|cash provided by         |                    |                    |
|operating activities:    |                    |                    |
+-------------------------+--------------------+--------------------+
|Depreciation and         |               2,048|               2,046|
|amortization of property |                    |                    |
|and equipment            |                    |                    |
+-------------------------+--------------------+--------------------+
|Amortization of other    |                 747|                 573|
|intangibles              |                    |                    |
+-------------------------+--------------------+--------------------+
|Allowance (recovery) for |               (125)|                (90)|
|bad debt                 |                    |                    |
+-------------------------+--------------------+--------------------+
|Stock‑based        |                 293|                 228|
|compensation             |                    |                    |
+-------------------------+--------------------+--------------------+
|Loss on disposal of      |                   9|                  48|
|property and equipment   |                    |                    |
+-------------------------+--------------------+--------------------+
|Deferred taxes           |                 539|                 253|
+-------------------------+--------------------+--------------------+
|Changes in operating     |               (576)|               (725)|
|assets and liabilities   |                    |                    |
+-------------------------+--------------------+--------------------+
|Net cash provided by     |               2,201|               3,574|
|operating activities     |                    |                    |
+-------------------------+--------------------+--------------------+
|Cash flows from investing|                    |                    |
|activities:              |                    |                    |
+-------------------------+--------------------+--------------------+
|Acquisition of a         |             (3,338)|                   -|
|business, net of cash    |                    |                    |
|acquired                 |                    |                    |
+-------------------------+--------------------+--------------------+
|Purchases of property and|             (2,699)|             (1,333)|
|equipment                |                    |                    |
+-------------------------+--------------------+--------------------+
|Net cash used in         |             (6,037)|             (1,333)|
|investing activities     |                    |                    |
+-------------------------+--------------------+--------------------+
|Cash flows from financing|                    |                    |
|activities:              |                    |                    |
+-------------------------+--------------------+--------------------+
|Increase (decrease) in   |               (203)|                  47|
|bank overdrafts          |                    |                    |
+-------------------------+--------------------+--------------------+
|Increase (decrease) in   |                 260|                (95)|
|factored receivables     |                    |                    |
|borrowing                |                    |                    |
+-------------------------+--------------------+--------------------+
|Proceeds from the        |              47,436|                   -|
|issuance of common stock |                    |                    |
+-------------------------+--------------------+--------------------+
|Borrowings from credit   |               4,880|                   -|
|facility revolver        |                    |                    |
+-------------------------+--------------------+--------------------+
|Principal payments on    |            (46,783)|                   -|
|long‑term debt     |                    |                    |
+-------------------------+--------------------+--------------------+
|Interest paid            |             (1,119)|                   -|
+-------------------------+--------------------+--------------------+
|Net cash provided by     |               4,471|                (48)|
|(used in) financing      |                    |                    |
|activities               |                    |                    |
+-------------------------+--------------------+--------------------+
|Effect of foreign        |               (960)|               (430)|
|exchange rate changes on |                    |                    |
|cash and cash equivalents|                    |                    |
+-------------------------+--------------------+--------------------+
|Increase (decrease) in   |               (325)|               1,763|
|cash and cash equivalents|                    |                    |
+-------------------------+--------------------+--------------------+
|Cash and cash            |               5,915|               8,083|
|equivalents, beginning of|                    |                    |
|period                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Cash and cash            |               5,590|               9,846|
|equivalents, end of      |                    |                    |
|period                   |                    |                    |
+-------------------------+--------------------+--------------------+
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