Genesys Conferencing (Euronext Eurolist:FR0004270270)
(NASDAQ:GNSY), a global multimedia conferencing leader, today
reported financial results for the fourth quarter and year ended
December 31, 2005. All results are reported under International
Financial Reporting Standards (IFRS). 2005 versus 2004 Highlights
-- Total volume increased 30.5% to 2.0 billion minutes -- Genesys
Meeting Center volume increased 34.9% to 1.8 billion minutes --
Revenue(1) was up 2.1% to EUR 141.9 million -- EBITDA(2) increased
to EUR 24.8 million in 2005 compared to EUR 19.9 million in 2004 --
Net income was EUR 3.5 million in 2005 compared to a net loss of
EUR (60.3) million in 2004 Q4 2005 versus Q4 2004 Highlights --
Total volume increased 22.9% to 498.1 million minutes -- Genesys
Meeting Center volume increased 25.1% to 464.1 million minutes --
Revenue(1) was up 4.8% to EUR 35.5 million -- EBITDA(2) was EUR 5.9
million in Q4 2005 compared to EUR 7.1 million in Q4 2004 -- Net
income was EUR (0.9) million in Q4 2005 compared to net income of
EUR 2.4 million in Q4 2004 "In 2005, Genesys Conferencing
implemented sales, customer support and training programs that have
resulted in greater penetration of Genesys Meeting Center
multimedia collaboration services among large enterprises," stated
Francois Legros, Chairman and Chief Executive Officer. "These
initiatives have produced volume growth for Genesys that is among
the highest organic rates in the industry." Operating Performance
Total revenue(1) in 2005 increased 2.1% to EUR 141.9 million
compared to EUR 139.0 million for 2004. In U.S. dollars, total
revenue(1) in 2005 was USD 176.6 million compared to USD 172.9
million in 2004. In the fourth quarter of 2005, revenue was up 4.8%
to EUR 35.5 million compared to revenue of EUR 33.8 million in the
fourth quarter of 2004. Fourth quarter 2005 revenue in U.S. dollars
was USD 42.1 million compared to USD 43.9 million in the fourth
quarter of 2004. Despite the previously announced loss of a major
customer in the fourth quarter of 2005, revenue and volume from
Genesys Meeting Center services were flat compared to the third
quarter of 2005. The increase in Genesys Meeting Center volume
enabled the company to gain greater scale, enhance its cost
competitiveness and improve gross margins to 64.8% in 2005 from
61.8% in 2004. Gross margin for the fourth quarter of 2005 was
63.6% compared to 63.7% in the fourth quarter of 2004. Selling,
general and administrative expenses in 2005 were EUR 77.1 million
compared to EUR 78.2 million in 2004. In the fourth quarter of
2005, selling, general and administrative expenses increased to EUR
19.2 million compared to EUR 17.2 million in the fourth quarter of
2004. As planned, in 2005, the company reduced general and
administrative expenses to EUR 33.2 million down from EUR 36.1
million in 2004. The reduction of general and administrative
expenses was partially offset by additional legal and advisory
expenses incurred in connection with the company's Genesys Iberia
arbitration. In the fourth quarter of 2005, general and
administrative expenses decreased to EUR 7.5 million compared to
EUR 8.9 million in the fourth quarter of 2004. Also as planned, in
2005, the company concentrated more resources on sales and
marketing initiatives while it was reducing overhead expenses.
Selling and marketing expenses were EUR 40.7 million in 2005
compared to EUR 36.0 million in 2004. The increase primarily
reflects the expansion of the company's large enterprise sales and
customer support teams into new markets that contain a high number
of potential multi-national and large enterprise customers. Selling
and marketing expenses increased to EUR 10.7 million in the fourth
quarter of 2005 from 7.9 million in the fourth quarter of 2004.
EBITDA(2), excluding stock-based compensation, increased in 2005 to
EUR 24.8 million compared to EBITDA of EUR 19.9 million in 2004.
EBITDA(2) was EUR 5.9 million for the fourth quarter of 2005
compared to EUR 7.1 million in fourth quarter of 2004 largely as a
result of expenses incurred in the second half of 2005 in
connection with the company's sales initiatives. Stock-based
compensation expense, as reported under IFRS, was EUR 321,000 and
EUR 358,000 for the fourth quarters of 2005 and 2004, respectively.
Net income in 2005 was EUR 3.5 million compared to a net loss of
EUR (60.3) million for 2004. The annual net loss in 2004 is largely
the result of non-cash reductions in the carrying value of
intangible and other long-lived assets of EUR 62.2 million. Net
income was EUR (0.9) million for the fourth quarter of 2005
compared to a net income of EUR 2.4 million in the fourth quarter
of 2004. The decline in 2005 fourth quarter net income is primarily
attributable to an increase in reported income tax expenses and to
additional bank related fees. "Genesys has now substantially
reduced its debt and enhanced its sales platform. It is well
positioned to gain even greater share of the growing multimedia
collaboration industry," remarked Legros. Liquidity As of December
31, 2005, the company's net cash(3) was EUR 4.1 million. This
amount reflects the October 31, 2005, semi-annual principal and
interest payments made by the company under its senior credit
facility. On this same date the company also fully repaid the
remaining principal due under its convertible bonds. During 2005,
the company used cash flow from operations to repay approximately
EUR 13.0 million of debt and to make interest payments of EUR 4.8
million. On February 22, 2006, the company announced that it
successfully completed a EUR 53.6 million equity offering, the
proceeds of which were used to repay a majority of its outstanding
debt. On a pro forma basis, adjusting for the net proceeds from the
equity offering, the company's net debt position as of December 31,
2005, was approximately EUR 31.7 million and shareholders' equity
approximately EUR 31.7 million. Under its existing and amended
credit facility, the company will have less than EUR 1.0 million of
scheduled debt repayments in 2006. "During 2005, the company funded
a significant amount of debt service costs with cash from
operations while maintaining a high level of reinvestment in our
sales force, global expansion and technology development
initiatives," stated Michael Savage, Executive Vice President and
Chief Financial Officer. "The company enters 2006 with
significantly less leverage, positive shareholders equity and much
greater financial flexibility." Guidance The following contains
forward-looking guidance regarding Genesys' financial outlook and
is based on current expectations and a fixed currency rate of
exchange of EUR 1.00 = USD 1.25, similar to the average exchange
rate for 2005. Actual results may differ materially, and the
company may not update any forward-looking statements made in this
press release. In 2006, the company expects full-year revenue and
EBITDA, excluding stock-based compensation, to remain essentially
flat compared to 2005 full-year results. These estimates primarily
reflect the impact on revenue from the previously disclosed loss of
a major customer. The company expects in 2006: -- Revenue in the
range of EUR 140 to EUR 144 million -- EBITDA(2) in the range of
EUR 22 to EUR 25 million Conference Call and Webcast Chairman and
Chief Executive Officer Francois Legros and Executive Vice
President/Chief Financial Officer Michael E. Savage will host a
conference call on Wednesday April 5, 2006, at 5:30 p.m. Central
European Time or 11:30 a.m. Eastern Time to discuss fourth quarter
2005 financial results. The conference call will be web cast live
and may be accessed at
http://events.webeventservices.com/genesys/2006/04/05/ A replay of
the call will be available at the same URL. -0- *T (1) Please refer
to the paragraph "Impact of Exchange Rates" below for information
regarding the calculation of U.S. dollar amounts. (2) 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. (3) Cash includes cash and cash
equivalents less bank overdrafts. *T Financial Tables to Follow
Adoption of International Financial Reporting Standards Effective
January 1, 2005, the company, like many companies organized in
France and other European countries, adopted the new International
Financial Reporting Standards (IFRS) for reporting of its financial
results. The company previously reported under French GAAP. For
comparison purposes, results for the fourth quarter ended December
31, 2004, have been stated under IFRS and may differ from the
results previously reported for these periods under French
Generally Accepted Accounting Principles (GAAP). Impact of Exchange
Rates The company serves large enterprises on a worldwide basis. As
a result, the company has extensive international operations and,
thus, significant exposure to exchange rate fluctuations, in
particular those of the U.S. dollar. In 2003, the U.S. dollar
declined significantly compared to the euro, and its value further
fluctuated during 2004 and 2005. As a result, the comparability of
the company's revenues and results of operations expressed in euros
were significantly impacted. The company prepares its consolidated
financial statements in euros. In order to demonstrate the impact
of the volatility of the U.S. dollar on its revenues from the
fourth quarter of 2004 to the fourth quarter of 2005, the company
has recalculated its revenues as if its functional currency had
been the U.S. dollar rather than the euro. For this purpose, the
company has used the average for each quarter of 2004 and 2005, and
for all of 2004 and 2005, of the daily euro/U.S. dollar exchange
rate which are the rates it uses for translation purposes in its
consolidated income statement. 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 with the Securities and
Exchange Commission on May 2, 2005. Although management of the
parties 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. About Genesys Conferencing Genesys Conferencing is a
leading provider of integrated Web, audio and video conferencing
services to thousands of organizations worldwide, including more
than 200 of the Fortune Global 500. The company's services are
designed to meet the full range of communication needs within the
large enterprise, from collaborative team meetings to high-profile
online events. The company's flagship product, Genesys Meeting
Center, provides a single-platform 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 in
France (ISIN FR0004270270) and on the NASDAQ in the U.S. (GNSY).
Additional information is available at www.genesys.com. -0- *T
GENESYS CONFERENCING, Consolidated Balance Sheets At December 31,
At December 31, 2004 2005 --------------- --------------- (In
thousands of euros, except share Unaudited Unaudited data) IFRS
IFRS --------------- --------------- ASSETS Fixed assets Goodwill,
net 21,042 21,403 Customer lists and technology 13,027 11,927 Other
intangible assets, net 5,057 5,663 Tangible assets, net 17,098
16,011 Financial assets, net 1,216 1,894 Deferred tax assets 448
583 Investments in affiliated companies 212 278 ---------------
--------------- Total non current assets 58,100 57,759 Current
assets Accounts receivable, less allowances (EUR 2,100 and EUR
1,547 at December 31, 2004 and December 31, 2005, respectively)
27,783 27,692 Prepaid expenses and other current assets 8,880 7,115
Income tax receivable 385 724 Marketable securities, short terms
invest. 6 35 Cash at bank 8,559 5,879 ---------------
--------------- Total current assets 45,613 41,445 ---------------
--------------- TOTAL ASSETS 103,713 99,204 ===============
=============== LIABILITIES AND SHAREHOLDERS' DEFICIT Shareholders'
deficit Ordinary shares, nominal value of EUR 1 per share
18,307,756 shares issued and outstanding at December 31, 2004 and
December 31, 2005 18,308 18,308 Common shares to be issued 139 139
Additional paid-in capital 185,080 185,080 Additional paid-in
capital to be issued 3,852 3,832 Reserve for Stock-based
compensation 1,433 2,663 Accumulated deficit (167,510) (227,300)
Net income (loss) for the period (60,288) 3,503 Currency
translation adjustments 6,715 81 --------------- ---------------
Total shareholders' deficit (12,271) (13,694) Provisions for risks
and charges 940 1,627 Deferred tax liabilities 3,927 3,697
Long-term debt Long-term portion of long term debt - 62,473
Long-term portion of capitalized lease obligations 60 39
--------------- --------------- Total non current debt and other
liabilities 4,927 67,836 Current liabilities Long-term portion of
long term debt classified as short-term in compliance with IAS 1
64,713 - Current portion of long-term debt 12,690 13,483 Bank
overdrafts 2,173 1,851 Short-term portion of provision for risks
and charges 2,592 - Accounts payable and accrued liabilities 13,839
13,254 Other taxes payable and deferred compensation 10,181 9,070
Income tax payable 2,966 3,053 Current portion of capitalized lease
obligations 407 4 Other current liabilities 1,496 4,347
--------------- --------------- Total current liabilities 111,057
45,062 --------------- --------------- LIABILITIES AND
SHAREHOLDERS' DEFICIT 103,713 99,204 ===============
=============== GENESYS CONFERENCING, Consolidated Statements of
Operations Three months Twelve months ended December 31, ended
December 31, ----------------------- -----------------------
Unaudited Unaudited Unaudited Unaudited IFRS IFRS IFRS IFRS
----------- ----------- ----------- ----------- (In thousands of
euros, except share data) 2004 2005 2004 2005 -----------
----------- ----------- ----------- Revenue Services 33,785 35,439
138,763 141,850 Products 50 13 275 79 ----------- -----------
----------- ----------- 33,835 35,452 139,038 141,929 Cost of
revenue Services (12,241) (12,880) (52,961) (49,842) Products (35)
(19) (83) (70) ----------- ----------- ----------- -----------
(12,276) (12,899) (53,044) (49,912) ----------- -----------
----------- ----------- Gross profit 21,559 22,553 85,994 92,017
Operating expenses Research and development (704) (1,064) (3,832)
(3,026) Selling and marketing (7,872) (10,672) (35,980) (40,678)
General and administrative (8,887) (7,454) (36,123) (33,174)
Restructuring charge 304 - (2,242) (256) Impairment of goodwill and
other intangibles 1,035 - (62,154) - Amortization of intangibles
(709) (721) (4,610) (2,823) ----------- ----------- -----------
----------- (16,833) (19,911) (144,941) (79,957) -----------
----------- ----------- ----------- Operating income (loss) 4,726
2,642 (58,947) 12,060 Interest income 28 173 173 297 Interest
expense (878) (1,504) (4,321) (6,624) Other income (expense)
(2,788) (1,376) (3,699) (1,610) Equity in income of affiliated
companies 22 10 71 67 Income tax (expense) credit 1,280 (835) 6,436
(687) ----------- ----------- ----------- ----------- Net income
(loss) 2,390 (890) (60,287) 3,503 =========== ===========
=========== =========== Basic net income (loss) per share 0.13
(0.05) (3.27) 0.19 =========== =========== =========== ===========
Diluted net income (loss) per share 0.13 (0.05) (3.27) 0.19
=========== =========== =========== =========== Number of
outstanding shares used in computing basic net income (loss) per
share 18,446,451 18,446,451 18,446,451 18,446,451 Number of
outstanding shares used in computing diluted net income (loss) per
share 18,446,451 18,446,451 18,446,451 18,446,451 GENESYS
CONFERENCING, Notes to the Consolidated Financial Statements Three
months Twelve months ended December 31, ended December 31,
------------------- ------------------- Unaudited Unaudited
Unaudited Unaudited (In thousands of euros) IFRS IFRS IFRS IFRS
--------- --------- --------- --------- NOTE A - EBITDA calculation
2004 2005 2004 2005 --------- --------- --------- ---------
Operating income (loss) 4,726 2,642 (58,947) 12,060 Impairment of
goodwill and intangible assets (1,035) - 62,154 - Amortization of
identifiable intangible assets 709 721 4,610 2,823 Depreciation
2,353 2,195 10,698 8,661 --------- --------- --------- ---------
EBITDA (2) 6,753 5,558 18,515 23,544 --------- --------- ---------
--------- Stock-based compensation 358 321 1,433 1,292 ---------
--------- --------- --------- EBITDA before stock-based
compensation 7,111 5,879 19,948 24,836 ========= =========
========= ========= Three months Twelve months ended December 31,
ended December 31, ------------------- -------------------
Unaudited Unaudited Unaudited Unaudited (In thousands of euros)
IFRS IFRS IFRS IFRS --------- --------- --------- --------- NOTE B
- DETAIL OF FINANCIAL INCOME (EXPENSE), NET 2004 2005 2004 2005
--------- --------- --------- --------- Interest and other
financial income 28 173 173 297 Foreign exchange gains 901 1,598
4,238 3,093 --------- --------- --------- --------- Total financial
income 929 1,771 4,411 3,390 Interest and other financial expenses
1,445 2,786 5,742 7,877 Foreign exchange losses 3,122 1,692 6,516
3,450 --------- --------- --------- --------- Total financial
charges 4,567 4,478 12,258 11,327 --------- --------- ---------
--------- Financial expense, net (3,638) (2,707) (7,847) (7,937)
========= ========= ========= ========= Three months Twelve months
ended December 31, ended December 31, -------------------
------------------- Unaudited Unaudited Unaudited Unaudited (In
thousands of euros) IFRS IFRS IFRS IFRS --------- ---------
--------- --------- NOTE C - DETAIL OF INCOME TAX EXPENSE 2004 2005
2004 2005 --------- --------- --------- --------- Deferred tax
credit (expense) 1,426 360 9,093 989 Income tax credit (expense)
(146) (1,195) (2,657) (1,676) --------- --------- ---------
--------- Total income tax credit (expense) 1,280 (835) 6,436 (687)
========= ========= ========= ========= At December 31,
-------------------- Unaudited Unaudited (In thousands of euros)
IFRS IFRS --------- --------- NOTE D - DETAIL OF ACCOUNTS
RECEIVABLE, NET 2004 2005 --------- --------- Billed portion of
accounts receivable, net 21,523 24,226 Un-billed portion of
accounts receivable, net 6,260 3,466 --------- --------- Total
accounts receivable, net 27,783 27,692 ========= ========= *T
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