SOURCE: GENESYS

April 17, 2007 01:11 ET

GENESYS REPORTS FOURTH QUARTER AND FULL YEAR 2006 EARNINGS

VIENNA, VA and MONTPELLIER, FRANCE -- (MARKET WIRE) -- April 17, 2007 -- Genesys Conferencing

(Euronext Eurolist: FR0004270270) (NASDAQ: GNSY), a global multimedia collaboration service leader, today reported unaudited financial results for the fourth quarter and year ended December 31, 2006. All results are reported under International Financial Reporting Standards (IFRS).

"2006 has been another year of strong volume growth for Genesys Conferencing, clearly demonstrating the value of our unified collaboration service", says Francois Legros, Chairman and Chief Executive Officer. "Delivered as a Software as a Service and providing a high level of integration with enterprise applications, Genesys Meeting Center is fast becoming a core component of large enterprises' unified communications strategy."

Volume and Revenue

Total volume increased by 311.3 million minutes in 2006, of which over one- third was generated in the fourth quarter of 2006. This increase was driven by the year's strongest quarterly volume growth for Genesys Meeting Center which grew by 23.3% to 572 million minutes in the fourth quarter of 2006. Additionally, over 30.0% of fourth quarter 2006 incremental volume growth was attributable to new customers. Genesys Meeting Center's strong volume growth offset the continuing price erosion and partially offset the expected decline in revenue from legacy attended conferencing services.

As a result, total revenue in 2006 was 141.6 million euros compared to 2005 revenue of 141.9 million euros. Revenue for the fourth quarter of 2006 was 35.2 million euros compared to 35.5 million euros in the fourth quarter of 2005. Genesys Meeting Center revenue was 111.5 million euros in 2006, up 1.7 million euros from 109.8 million euros in 2005. In the fourth quarter of 2006, Genesys Meeting Center revenue was 28.1 million euros, up from 27.8 million euros in the fourth quarter of 2005 and represented 80.0% of the company's total revenue.

Gross Margin and Operating Expenses

Gross margin was 63.8% in 2006 and 62.8% in the fourth quarter of 2006, compared to 64.8% in 2005 and 63.6% in the fourth quarter of 2005. The decline in gross margin largely reflects the impact of price erosion, partially offset by less operating costs related to the reduction of legacy attended conferencing services. Additionally, gross margin for 2006 reflects a U.S. federal excise tax credit, as previously reported.

Selling, general and administrative expenses in 2006 were 78.6 million euros compared to 77.1 million euros in 2005. In the fourth quarter of 2006, selling, general and administrative expenses were 21.0 million euros compared to 19.1 million euros in the fourth quarter of 2005. The increase in operating expenses primarily reflects a 1.4 million euro restructuring charge recorded in the fourth quarter of 2006 due to initiatives taken to streamline the company's sales and finance senior management.

EBITDA and Net Income

EBITDA1, excluding stock-based compensation, was 21.6 million euros in 2006, compared to 24.8 million euros in 2005. For the fourth quarter of 2006, EBITDA was 4.1 million euros compared to 5.9 million euros in fourth quarter of 2005. The decrease in fourth quarter EBITDA largely reflects the 1.4 million euro restructuring charge.

Net income was 6.4 million euros in 2006 and 6.0 million euros in the fourth quarter of 2006, compared to 4.5 million euros in 2005 and 0.8 million euros in fourth quarter of 2005. As of December 31, 2006, the company determined that it expects to utilize certain of its net operating losses over the next few years. As a result, in the fourth quarter, the company recorded a 9.4 million euro non-cash, deferred tax credit, benefiting net income. Total 2006 net income also included a 3.5 million euro non-cash, negative exchange rate impact and 1.9 million euros in financial charges related to the company's credit facility.

Liquidity

As of December 31, 2006, the company's net cash2 was 6.4 million euros, an increase of 2.3 million euros compared to 4.1 million euros as of December 31, 2005, including 4.1 million euros of additional capital expenditures made in 2006 compared to 2005.

The company's net debt position as of December 31, 2006, was 23.1 million euros compared to 71.9 million euros as of December 31, 2005. Shareholders' equity was 49.9 million euros compared to (8.3) million euros as of December 31, 2005. This improvement largely reflects the recapitalization transaction completed by the company in early 2006.

"Genesys Conferencing enters 2007 with a significantly improved working capital and cash position as well as a low degree of leverage," stated Andrew Lazarus, Executive Vice President and Chief Financial Officer. "In the coming months, we will comprehensively review our corporate structure and expenses and identify new corporate finance alternatives to support our long-term growth strategy."

2007 Outlook

The following contains forward-looking information regarding Genesys Conferencing's financial outlook, based on current expectations and a fixed currency rate of exchange of EUR 1.00 < > = USD 1.26, similar to the average exchange rate for 2006. Actual results may differ materially and the company may not update any forward-looking statements made in this press release.

In 2007, Genesys Conferencing plans to continue its development strategy by offering enterprise-class, multimedia collaboration services to the largest companies worldwide, while also concentrating on key priorities such as technology, customer service and cost efficiency. To that extent, the company expects to deploy Genesys Meeting Center as a Software as a Service to better position Genesys Conferencing in the fast-evolving unified communications market and to further propel the adoption of its services among large enterprises.

For the full-year 2007, the company expects revenue to be in the range of 138 million to 142 million euros. The company notes that 2007 revenue will continue to be impacted by price erosion and the further decline in legacy attended conferencing services. Additionally, the company expects to initiate further initiatives aimed at improving the company's cost of operations which may result in restructuring costs similar to those recorded in 2006.

Genesys Conferencing expects that its first quarter 2007 volume growth, revenue and operating expenses, excluding restructuring charges, to be consistent with the fourth quarter of 2006. Genesys Conferencing will publish its first quarter 2007 earnings on May 15, 2007, prior to market opening in France.

Conference Call and Webcast

Chairman and Chief Executive Officer François Legros and Executive Vice President/Chief Financial Officer Andrew Lazarus will host a conference call on Tuesday, April 17, 2006 at 5:30 p.m. Central European Time or 11:30 a.m. Eastern Time to discuss 2006 financial results.

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

http://events.webeventservices.com/genesys/2007/04/17

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.

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

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

+-------------------------+-------------------+-------------------+
|                         |  December 31, 2005|  December 31, 2006|
+-------------------------+-------------------+-------------------+
|                         |                   |          Unaudited|
+-------------------------+-------------------+-------------------+
|ASSETS                   |                   |                   |
+-------------------------+-------------------+-------------------+
|Non current assets       |                   |                   |
+-------------------------+-------------------+-------------------+
|Goodwill, customer lists |             33,330|             34,887|
|and technology           |                   |                   |
+-------------------------+-------------------+-------------------+
|Other intangible assets, |              5,663|              6,939|
|net                      |                   |                   |
+-------------------------+-------------------+-------------------+
|Tangible assets, net     |             16,011|             15,402|
+-------------------------+-------------------+-------------------+
|Financial assets, net    |             1,336 |              1,579|
+-------------------------+-------------------+-------------------+
|Deferred tax assets      |              2,488|             10,829|
+-------------------------+-------------------+-------------------+
|Investments in affiliated|                278|                  -|
|companies                |                   |                   |
+-------------------------+-------------------+-------------------+
|Total non current assets |             59,106|             69,636|
+-------------------------+-------------------+-------------------+
|Current assets           |                   |                   |
+-------------------------+-------------------+-------------------+
|Accounts receivable, less|             27,692|             24,506|
|allowances (EUR  1,547 and EUR |             |                   |
|1,316 at                 |                   |                   |
+-------------------------+-------------------+-------------------+
|December 31, 2005 and    |                   |                   |
|December 31, 2006,       |                   |                   |
|respectively)            |                   |                   |
+-------------------------+-------------------+-------------------+
|Prepaid expenses and     |              8,811|              9,233|
|other current assets     |                   |                   |
+-------------------------+-------------------+-------------------+
|Cash and cash equivalents|              5,914|              8,083|
+-------------------------+-------------------+-------------------+
|Total current assets     |             42,417|             41,822|
+-------------------------+-------------------+-------------------+
|TOTAL ASSETS             |            101,523|            111,458|
+-------------------------+-------------------+-------------------+
|LIABILITIES AND          |                   |                   |
|SHAREHOLDERS' EQUITY     |                   |                   |
|(DEFICIT)                |                   |                   |
+-------------------------+-------------------+-------------------+
|Shareholders' equity     |                   |                   |
|(deficit)                |                   |                   |
+-------------------------+-------------------+-------------------+
|Ordinary shares, nominal |             18,308|             69,798|
|value of EUR 1 per share |                   |                   |
|18,307,756 shares issued |                   |                   |
|and outstanding at       |                   |                   |
|December 31, 2005 and    |                   |                   |
|69,798,286 shares issued |                   |                   |
|and outstanding at       |                   |                   |
|December 31, 2006        |                   |                   |
+-------------------------+-------------------+-------------------+
|Common shares to be      |                139|                135|
|issued                   |                   |                   |
+-------------------------+-------------------+-------------------+
|Additional paid-in       |            185,080|            179,706|
|capital                  |                   |                   |
+-------------------------+-------------------+-------------------+
|Additional paid-in       |              3,831|              3,735|
|capital to be issued     |                   |                   |
+-------------------------+-------------------+-------------------+
|Reserve for stock-based  |              2,605|              3,410|
|compensation             |                   |                   |
+-------------------------+-------------------+-------------------+
|Accumulated deficit      |          (223,429)|          (218,411)|
+-------------------------+-------------------+-------------------+
|Net income               |              4,544|              6,383|
+-------------------------+-------------------+-------------------+
|Currency translation     |                655|              5,095|
|adjustments              |                   |                   |
+-------------------------+-------------------+-------------------+
|Total shareholders'      |            (8,267)|             49,851|
|equity (deficit)         |                   |                   |
+-------------------------+-------------------+-------------------+
|Provisions for risks and |                720|                434|
|charges                  |                   |                   |
+-------------------------+-------------------+-------------------+
|Deferred tax liability   |                 72|              1,226|
+-------------------------+-------------------+-------------------+
|Long-term debt           |                   |                   |
+-------------------------+-------------------+-------------------+
|Long-term portion of     |             62,474|             19,921|
|long-term debt           |                   |                   |
+-------------------------+-------------------+-------------------+
|Long-term portion of     |                 39|                183|
|capitalized lease        |                   |                   |
|obligations              |                   |                   |
+-------------------------+-------------------+-------------------+
|Total long-term debt and |             63,305|             21,764|
|other liabilities        |                   |                   |
+-------------------------+-------------------+-------------------+
|Current liabilities      |                   |                   |
+-------------------------+-------------------+-------------------+
|Bank overdrafts          |              1,851|              1,673|
+-------------------------+-------------------+-------------------+
|Accounts payable and     |             13,254|             12,433|
|accrued liabilities      |                   |                   |
+-------------------------+-------------------+-------------------+
|Other taxes payable and  |              9,493|              9,455|
|deferred compensation    |                   |                   |
+-------------------------+-------------------+-------------------+
|Income taxes payable     |              3,148|              1,720|
+-------------------------+-------------------+-------------------+
|Current portion of       |                907|              1,601|
|provision for risks and  |                   |                   |
|charges                  |                   |                   |
+-------------------------+-------------------+-------------------+
|Current portion of       |             13,483|              9,292|
|long-term debt           |                   |                   |
+-------------------------+-------------------+-------------------+
|Current portion of       |                  4|                125|
|capitalized lease        |                   |                   |
|obligations              |                   |                   |
+-------------------------+-------------------+-------------------+
|Other current liabilities|              4,345|              3,544|
+-------------------------+-------------------+-------------------+
|Total current liabilities|             46,485|             39,843|
+-------------------------+-------------------+-------------------+
|LIABILITIES AND          |            101,523|            111,458|
|SHAREHOLDERS' EQUITY     |                   |                   |
+-------------------------+-------------------+-------------------+
GENESYS CONFERENCING

Consolidated Statements of Operations

(IFRS, in thousands of euros, except share and per share data)

+-------------------------+--------------------+--------------------+
|                         |                    |3 months ended      |
|                         |                    |December 31, 2005   |
+-------------------------+--------------------+--------------------+
|                         |3 months ended      |         (Unaudited)|
|                         |December 31, 2005   |                    |
+-------------------------+--------------------+--------------------+
|Revenue                  |              35,452|              35,219|
+-------------------------+--------------------+--------------------+
|Cost of revenue          |            (12,899)|            (13,090)|
+-------------------------+--------------------+--------------------+
|Gross profit             |              22,553|              22,129|
+-------------------------+--------------------+--------------------+
|Operating expenses       |                    |                    |
+-------------------------+--------------------+--------------------+
|Research and development |             (1,064)|             (1,110)|
+-------------------------+--------------------+--------------------+
|Selling and marketing    |            (10,672)|            (10,540)|
+-------------------------+--------------------+--------------------+
|General and              |             (7,397)|             (7,962)|
|administrative           |                    |                    |
+-------------------------+--------------------+--------------------+
|Restructuring charge     |                    |             (1,408)|
+-------------------------+--------------------+--------------------+
|Amortization of          |               (721)|               (577)|
|intangibles              |                    |                    |
+-------------------------+--------------------+--------------------+
|                         |            (19,854)|            (21,597)|
+-------------------------+--------------------+--------------------+
|Operating income         |               2,699|                 532|
+-------------------------+--------------------+--------------------+
|Interest income          |                 172|                 492|
+-------------------------+--------------------+--------------------+
|Interest expense         |             (1,502)|               (846)|
+-------------------------+--------------------+--------------------+
|Foreign exchange gain    |                (94)|             (1,316)|
|(loss)                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Other income (expense)   |             (1,283)|             (1,594)|
+-------------------------+--------------------+--------------------+
|Equity in income of      |                  11|                   -|
|affiliated companies     |                    |                    |
+-------------------------+--------------------+--------------------+
|Income tax credit        |                 763|               8,770|
|(expense)                |                    |                    |
+-------------------------+--------------------+--------------------+
|Net income               |                 766|               6,038|
+-------------------------+--------------------+--------------------+
|Basic and diluted net    |                 .04|                 .09|
|income per share         |                    |                    |
+-------------------------+--------------------+--------------------+
|Number of outstanding    |          18,424,005|          69,912,022|
|shares used in computing |                    |                    |
|basic and diluted net    |                    |                    |
|income per share         |                    |                    |
+-------------------------+--------------------+--------------------+

+-------------------------+--------------------+--------------------+
|                         |                    |12 months ended     |
|                         |                    |December 31, 2006   |
+-------------------------+--------------------+--------------------+
|                         |12 months ended     |          (Unaudited|
|                         |December 31, 2005   |                    |
+-------------------------+--------------------+--------------------+
|Revenue                  |             141,929|             141,633|
+-------------------------+--------------------+--------------------+
|Cost of revenue          |            (49,913)|            (51,230)|
+-------------------------+--------------------+--------------------+
|Gross profit             |              92,016|              90,403|
+-------------------------+--------------------+--------------------+
|Operating expenses       |                    |                    |
+-------------------------+--------------------+--------------------+
|Research and development |             (3,266)|             (4,007)|
+-------------------------+--------------------+--------------------+
|Selling and marketing    |            (40,749)|            (42,356)|
+-------------------------+--------------------+--------------------+
|General and              |            (32,805)|            (30,854)|
|administrative           |                    |                    |
+-------------------------+--------------------+--------------------+
|Restructuring charge     |               (256)|             (1,375)|
+-------------------------+--------------------+--------------------+
|Amortization of          |             (2,823)|             (2,536)|
|intangibles              |                    |                    |
+-------------------------+--------------------+--------------------+
|                         |            (79,899)|            (81,128)|
+-------------------------+--------------------+--------------------+
|Operating income         |              12,117|               9,275|
+-------------------------+--------------------+--------------------+
|Interest income          |                 297|                 571|
+-------------------------+--------------------+--------------------+
|Interest expense         |             (6,624)|             (3,373)|
+-------------------------+--------------------+--------------------+
|Foreign exchange gain    |               (357)|             (3,527)|
|(loss)                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Other income (expense)   |             (1,254)|             (2,877)|
+-------------------------+--------------------+--------------------+
|Equity in income of      |                  68|                   -|
|affiliated companies     |                    |                    |
+-------------------------+--------------------+--------------------+
|Income tax credit        |                 297|               6,314|
|(expense)                |                    |                    |
+-------------------------+--------------------+--------------------+
|Net income               |               4,544|               6,383|
+-------------------------+--------------------+--------------------+
|Basic and diluted net    |                 .25|                 .10|
|income per share         |                    |                    |
+-------------------------+--------------------+--------------------+
|Number of outstanding    |          18,424,005|          62,576,917|
|shares used in computing |                    |                    |
|basic and diluted net    |                    |                    |
|income per share         |                    |                    |
+-------------------------+--------------------+--------------------+
GENESYS CONFERENCING

Note to the Consolidated Financial Statements

Unaudited

(In thousands of euros)

+-------------------------+--------------------+--------------------+
|NOTE A- EBITDA           |                    |3 months ended      |
|calculation              |                    |December 31, 2005   |
+-------------------------+--------------------+--------------------+
|                         |3 months ended      |         (Unaudited)|
|                         |December 31, 2005   |                    |
+-------------------------+--------------------+--------------------+
|Operating income         |               2,699|                 532|
+-------------------------+--------------------+--------------------+
|Amortization of          |                 721|                 577|
|identifiable intangible  |                    |                    |
|assets                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Depreciation             |               2,195|               2,641|
+-------------------------+--------------------+--------------------+
|EBITDA                   |               5,615|               3,750|
+-------------------------+--------------------+--------------------+
|Stock-based compensation |                 306|                 385|
+-------------------------+--------------------+--------------------+
|EBITDA before stock-based|               5,921|               4,135|
|compensation             |                    |                    |
+-------------------------+--------------------+--------------------+

+-------------------------+--------------------+--------------------+
|NOTE A- EBITDA           |                    |12 months ended     |
|calculation              |                    |December 31, 2006   |
+-------------------------+--------------------+--------------------+
|                         |12 months ended     |          (Unaudited|
|                         |December 31, 2005   |                    |
+-------------------------+--------------------+--------------------+
|Operating income         |              12,117|               9,275|
+-------------------------+--------------------+--------------------+
|Amortization of          |               2,823|               2,536|
|identifiable intangible  |                    |                    |
|assets                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Depreciation             |               8,662|               8,935|
+-------------------------+--------------------+--------------------+
|EBITDA                   |              23,602|              20,746|
+-------------------------+--------------------+--------------------+
|Stock-based compensation |               1,172|                 805|
+-------------------------+--------------------+--------------------+
|EBITDA before stock-based|              24,774|              21,551|
|compensation             |                    |                    |
+-------------------------+--------------------+--------------------+
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