Genesys Conferencing Reports Third Quarter Results for 2005

Operating Highlights: Q3 2005 versus Q3 2004

-- Total volume increased 33.7% to 499.4 million minutes

-- Genesys Meeting Center automated services volume increased 37.2% to 463.5 million minutes

-- Volume utilizing Multimedia Minute pricing increased 272.6% to 124.3 million minutes

-- Revenue(1) was up 8.4% to EUR 36.1 million

-- Gross margin increased to 66.1% up from 58.8% in the third quarter of 2004

-- EBITDA(2) was EUR 6.0 million compared to EUR 4.0 million in the third quarter of 2004

-- Net income was EUR 2.0 million compared to a net loss of EUR (1.1) million in the third quarter of 2004

"Our flagship service, Genesys Meeting Center, holds one of thehighest organic volume growth rates in the industry and continues togain market share," stated Francois Legros, Chairman and ChiefExecutive Officer. "Overall, large enterprises around the world areturning more and more to multimedia collaboration services.Traditional users of stand-alone audio and web conferencing solutionsare increasingly recognizing the benefits our multimedia collaborationtools and the value proposition of our Multimedia Minute. As such,Genesys is well positioned to lead an expected phase of mass end-useradoption of multimedia collaboration solutions."

Third Quarter 2005 Operating Performance

In the third quarter of 2005, revenue(1) was EUR 36.1 million, up8.4% compared with revenue of EUR 33.3 million in the third quarter of2004. In U.S. dollars, third quarter 2005 revenue was $44.0 million,up 8.2% compared to $40.7 million in the third quarter of 2004. On asequential basis, Genesys Meeting Center volume and revenue were eachdown by approximately 2% due principally to seasonality. Revenue fromGenesys Meeting Center services accounted for 76.1% of total revenuedown sequentially from 77.4% in the second quarter of 2005 primarilyas a result of greater than expected revenue from Genesys EventServices, the company's premium managed service. Long-term, thecompany continues to expect revenue from Genesys Meeting Centerservices will account for approximately 80% of total revenue.

Gross margin for the third quarter of 2005 was 66.1% compared to58.8% for the third quarter of 2004. Gross margin continues to meetthe company's target of greater than 60%. Overall, the company's coststructure continues to benefit from improved economies of scale whileallowing the company to manage the greater migration of existingcustomers to Multimedia Minute-based services. Gross profit increasedby EUR 4.3 million, or 21.9%, in the third quarter of 2005 up to EUR23.9 million.

Selling, general and administrative expenses were EUR 20.2 millionin the third quarter of 2005 up EUR 1.5 million, or 8.2%, compared toEUR 18.7 million in the third quarter of 2004. The increase is due to:the increase of sales personnel during the second quarter of 2005; therecent implementation of marketing programs designed to promotegreater customer adoption of Multimedia Minute-priced services; andadditional legal and advisory expenses that were incurred thisquarter, particularly in connection with the previously describedGenesys Iberia arbitration process.

Earnings before interest, taxes, depreciation and amortization(EBITDA(2)) and before stock-based compensation expenses was EUR 6.0million for the third quarter 2005, a 16.7% EBITDA margin compared toEUR 4.0 million and 12.0%, respectively, for the third quarter of2004. Stock-based compensation expenses, as reported under IFRS, wereEUR 306,000 and EUR 302,000 for the third quarters of 2005 and 2004,respectively.

Net income was EUR 2.0 million, or EUR 0.11 per diluted share, forthe third quarter of 2005 compared to a net loss of EUR (1.1) millionor EUR (0.06) per share in the third quarter of 2004. Net incomegrowth is primarily the result of improved income from operations.Earnings before interest and taxes (EBIT) increased to EUR 2.9 millionin the third quarter of 2005 from EUR 0.1 million in the third quarterof 2004. Net income also benefited by nearly EUR 0.6 million indeferred tax credits.

"Third quarter results reflect our ability to achieve positive netincome while we increase growth initiatives in operational areas, suchas sales and marketing, technology development and global expansion,"stated Michael Savage, Executive Vice President, and Chief FinancialOfficer. "The company expects to continue to reinvest in efforts topromote volume growth while managing through price competition."

Liquidity

As of September 30, 2005, the company's cash(3) was EUR 8.6million after deducting bank overdrafts. On October 31, 2005, thecompany made semi-annual principal and interest payments under itsexisting senior credit facility. Additionally, on October 31, 2005,the company fully repaid the remaining principal due under itsconvertible bonds. Today, following the October repayments, thecompany's cash and cash equivalents total more than EUR 6.0 million.

"Our 2005 debt repayments represent important steps in thecompany's ability to improve shareholder value," followed Savage. "Onan enterprise value basis the repayment of debt this year translatesinto a meaningful increase of equity value per share."

Guidance

The following contains forward-looking guidance regarding GenesysConferencing's financial outlook and is based on expectations as ofNovember 15, 2005. Actual results may differ materially and thecompany may not update any forward-looking statements made in thispress release. Guidance continues to be based on a fixed rate ofexchange of EUR 1.00 = USD 1.25.

The company noted the recent departure of one of its largest audioconferencing customers in connection with this customer's merger witha company that utilizes an in-house audio conferencing solution.Revenue and volume from this customer is expected to declinesignificantly over the next few months. Overall, this customer isexpected to account for approximately 5.5% of 2005 revenue.

The company however, projects that revenue for the full-year 2005will continue to be within the range of its previously disclosedguidance of EUR 140 to EUR 145 million and EBITDA will be within therange of its previously disclosed guidance of EUR 23 million to EUR 26million.

Conference Call and Webcast

Chairman and Chief Executive Officer Francois Legros and ExecutiveVice President/Chief Financial Officer Michael E. Savage will host aconference call on Tuesday, November 15, 2005, at 5:30 p.m. CentralEuropean Time or 11:30 a.m. Eastern Time to discuss third quarter 2005financial results.

The conference call will be web cast live and may be accessed atwww.genesys.com/investors. A replay of the call will be available atwww.genesys.com/investors.

(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.

Financial Tables to Follow

Adoption of International Financial Reporting Standards

Effective January 1, 2005, the company, like many companiesorganized in France and other European countries, adopted the newInternational Financial Reporting Standards (IFRS) for reporting ofits financial results. The company previously reported under FrenchGAAP.

Impact of Exchange Rates

The company serves large enterprises on a worldwide basis. As aresult, the company has extensive international operations and, thus,significant exposure to exchange rate fluctuations, in particularthose of the U.S. dollar. In 2003, the U.S. dollar declinedsignificantly compared to the euro, and its value further fluctuatedduring 2004 and 2005. As a result, the comparability of the company'srevenues and results of operations expressed in euros wassignificantly impacted. The company prepares its consolidatedfinancial statements in euros. In order to demonstrate the impact ofthe volatility of the U.S. dollar on its revenues from the thirdquarter of 2004 to the third quarter of 2005, the company hasrecalculated its revenues as if its functional currency had been theU.S. dollar rather than the euro. For this purpose, the company hasused the average for each quarter of the daily euro/U.S. dollarexchange rate for the third quarters of 2004 and 2005, respectively,which are the rates it used for translation purposes in itsconsolidated income statement.

Forward-Looking Statements

This release contains statements that constitute forward-lookingstatements within the meaning of the U.S. Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements arestatements other than historical information or statements of currentcondition. These statements appear in a number of places in thisrelease and include statements concerning the parties' intent, beliefor current expectations regarding future events and trends affectingthe parties' financial condition or results of operations.

Forward-looking statements are not guarantees of futureperformance and involve risks and uncertainties, and actual resultsmay differ materially from those in the forward-looking statements asa result of various factors. Some of these factors are described inthe Form 20-F that was filed by Genesys with the Securities andExchange Commission on May 2, 2005.

Although management of the parties believe that their expectationsreflected in the forward-looking statements are reasonable based oninformation currently available to them, they cannot assure you thatthe expectations will prove to have been correct. Accordingly, youshould not place undue reliance on these forward-looking statements.In any event, these statements speak only as of the date of thisrelease. Except to the extent required by law, the parties undertakeno obligation to revise or update any of them to reflect events orcircumstances after the date of this release, or to reflect newinformation 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 organizationsworldwide, including more than 200 of the Fortune Global 500. Thecompany's services are designed to meet the full range ofcommunication needs within the large enterprise, from collaborativeteam meetings to high-profile online events. The company's flagshipproduct, Genesys Meeting Center, provides a single-platform multimediaconferencing solution that is easy to use and available on demand.With offices in 24 countries across North America, Europe and AsiaPacific, the company offers an unmatched global presence and stronglocal support. Genesys Conferencing is publicly traded on Euronext inFrance (ISIN FR0004270270) and on the Nasdaq in the U.S. (GNSY).Additional information is available at www.genesys.com.

GENESYS CONFERENCING
Consolidated Balance Sheets
(Unaudited, in thousands of euros, except share data)


At December 31, At September 30,
2004 2005
---------------- ----------------
(Unaudited) (Unaudited)
IFRS IFRS
---------------- ----------------
ASSETS
Fixed assets
Goodwill, net EUR 21,042 EUR 21,043
Customer lists and technology 13,028 12,770
Other intangible assets, net 5,057 5,683
Tangible assets, net 17,098 16,753
Financial assets, net 1,215 1,876
Deferred tax assets 448 460
Investments in affiliated
companies 212 269
---------------- ----------------
Total non current assets EUR 58,100 EUR 58,854
Current assets
Accounts receivable, less
allowances (EUR 2,100 and EUR
1,912 at December 31, 2004 and
September 30, 2005,
respectively) 27,783 30,694
Prepaid expenses and other
current assets 8,880 8,787
Income tax receivable 385 552
Marketable securities, short
terms invest. 15 480
Cash at bank 8,550 9,907
---------------- ----------------
Total current assets 45,613 50,420
---------------- ----------------
TOTAL ASSETS EUR 103,713 EUR 109,274
================ ================

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
September 30, 2005 EUR 18,308 EUR 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 3,840
Reserve for Stock-based
compensation 1,433 2,353
Accumulated deficit (167,510) (227,324)
Net income (loss) for the
period (60,288) 4,393
Currency translation
adjustments 6,715 1,469
---------------- ----------------
Total shareholders' deficit EUR (12,271) EUR (11,742)
Provisions for risks and charges 940 1,035
Deferred tax liabilities 3,927 3,391
Long-term debt
Long-term portion of long term
debt - 68,865
Long-term portion of
capitalized lease obligations 61 50
---------------- ----------------
Total non current debt and other
liabilities EUR 4,928 EUR 73,341
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 14,838
Bank overdrafts 2,173 1,823
Short-term portion of provision
for risks and charges 2,592 1,737
Accounts payable and accrued
liabilities 13,840 12,293
Other taxes payable and
deferred compensation 10,180 12,434
Income tax payable 2,966 1,885
Current portion of capitalized
lease obligations 407 4
Other current liabilities 1,495 2,661
---------------- ----------------
Total current liabilities EUR 111,056 EUR 47,675
---------------- ----------------
LIABILITIES AND SHAREHOLDERS'
DEFICIT EUR 103,713 EUR 109,274
================ ================


GENESYS CONFERENCING
Consolidated Statements of Operations
(Unaudited, in thousands of euros, except share data)


Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
IFRS IFRS IFRS IFRS
----------- ----------- ----------- -----------
2004 2005 2004 2005
----------- ----------- ----------- -----------
Revenue
Services 33,272 36,080 104,978 106,411
Products 24 29 226 66
----------- ----------- ----------- -----------
EUR 33,296 EUR 36,109 EUR105,204 EUR106,477
Cost of revenue
Services 13,714 12,222 40,717 36,962
Products 6 16 49 52
----------- ----------- ----------- -----------
EUR 13,720 EUR 12,238 EUR 40,766 EUR 37,014
----------- ----------- ----------- -----------
Gross profit EUR 19,576 EUR 23,871 EUR 64,438 EUR 69,463
Operating expenses
Research and
development 1,000 632 3,128 1,962
Selling and
marketing 9,045 10,351 28,108 30,006
General and
administrative 8,210 9,261 27,236 25,684
Restructuring
charge 457 - 2,546 292
Impairment of
goodwill and other
intangibles - - 63,189 -
Amortization of
intangibles 750 718 3,901 2,102
----------- ----------- ----------- -----------
EUR 19,462 EUR 20,962 EUR128,108 EUR 60,046
----------- ----------- ----------- -----------
Operating income
(loss) EUR 114 EUR 2,909 EUR(63,670) EUR 9,418
Interest income 87 83 160 124
Interest expense (1,246) (1,746) (4,021) (5,123)
Other income (expense) 521 369 (349) (233)
Equity in income of
affiliated companies 12 21 49 57
Income tax (expense)
credit (614) 346 5,156 149
----------- ----------- ----------- -----------
Net income (loss) EUR (1,126) EUR 1,982 EUR(62,675) EUR 4,392
=========== =========== =========== ===========
Basic net income
(loss) per share EUR (0.06) EUR 0.11 EUR (3.40) EUR 0.24
=========== =========== =========== ===========
Diluted net income
(loss) per share EUR (0.06) EUR 0.11 EUR (3.40) EUR 0.24
=========== =========== =========== ===========
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 18,567,897 18,446,451 18,567,897


GENESYS CONFERENCING
Notes to the Consolidated Financial Statements
(Unaudited, in thousands of euros)


Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
IFRS IFRS IFRS IFRS
----------- ----------- ----------- -----------
NOTE A- EBITDA
calculation 2004 2005 2004 2005
----------- ----------- ----------- -----------
Operating income
(loss) 114 2,909 (63,670) 9,418
Impairment of goodwill
and intangible assets - - 63,189 -
Amortization of
identifiable
intangible assets 750 718 3,901 2,102
Depreciation and
provisions 2,835 2,088 8,348 6,466
----------- ----------- ----------- -----------
EBITDA (2) EUR 3,699 EUR 5,715 EUR 11,768 EUR 17,986
----------- ----------- ----------- -----------
Stock-based
compensation 302 306 1,074 920
----------- ----------- ----------- -----------
EBITDA before stock-
based compensation EUR 4,001 EUR 6,021 EUR 12,842 EUR 18,906
=========== =========== =========== ===========


Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
IFRS IFRS IFRS IFRS
----------- ----------- ----------- -----------
NOTE B- DETAIL OF
FINANCIAL INCOME
(EXPENSE), NET 2004 2005 2004 2005
----------- ----------- ----------- -----------
Interest and other
financial income 145 83 146 124
Foreign exchange gains 538 289 3,337 1,496
----------- ----------- ----------- -----------
Total financial income EUR 683 EUR 372 EUR 3,483 EUR 1,620

Interest and other
financial expenses 1,246 1,666 4,299 5,094
Foreign exchange
losses 75 - 3,394 1,758
----------- ----------- ----------- -----------
Total financial
charges EUR 1,321 EUR 1,666 EUR 7,693 EUR 6,852
----------- ----------- ----------- -----------
Financial expense, net EUR (638) EUR (1,294) EUR (4,210) EUR (5,232)
=========== =========== =========== ===========


Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
IFRS IFRS IFRS IFRS
----------- ----------- ----------- -----------
NOTE C - DETAIL OF
INCOME TAX EXPENSE 2004 2005 2004 2005
----------- ----------- ----------- -----------

Deferred tax credit
(expense) 397 571 7,665 629
Income tax credit
(expense) (1,013) (225) (2,509) (480)
----------- ----------- ----------- -----------
Total income tax
credit (expense) EUR (614) EUR 346 EUR 5,156 EUR 149
=========== =========== =========== ===========


At December 31, At September 30,
---------------- ----------------
NOTE D - DETAIL OF ACCOUNTS
RECEIVABLE, NET IFRS IFRS
---------------- ----------------
2004 2005
---------------- ----------------

Billed portion of accounts
receivable, net 21,523 20,464
Un-billed portion of accounts
receivable, net 6,260 10,230
---------------- ----------------
Total accounts receivable, net EUR 27,783 EUR 30,694
================ ================