Genesys Reports Record Revenues and Earnings for First Quarter 2000; Net Income Increases More than 64% - Company Financial Information

Cambridge Telcom Report, Oct 25, 1999

Genesys Telecommunications Laboratories, Inc. (Nasdaq:GCTI), Tuesday reported revenues of $45.9 million for the first quarter ended September 30, 1999, an increase of 58% compared to revenues of $29.0 million for the same period of fiscal 1999.

Revenues for the first quarter of fiscal 2000 increased on a sequential basis by 9% compared to $42.0 million reported in the fourth quarter of fiscal 1999.

The Company reported net income of $6.3 million, or $0.21 per share, for the quarter, compared to net income of $3.8 million, or $0.15 per share, for the same period of the prior fiscal year. Compared sequentially, net income increased 11% from $5.7 million, excluding one-time charges, reported in the fourth quarter of fiscal 1999.

Ori Sasson, chief executive officer, commented, "We are very pleased to report another strong quarter of record performance. The combination of our platform and applications products as well as our services continued to receive strong market acceptance throughout the quarter. We are very well positioned in a strong growth market, with an outstanding global organization, strong partnerships and effective world-wide execution.

"On September 28th, 1999, Genesys announced that it entered into a definitive agreement to be acquired by Paris-based Alcatel SA. This transaction will allow Genesys to operate as an independent subsidiary of Alcatel, while providing the leverage to accelerate our global growth in the enterprise and service provider markets and further solidify our leadership position in the customer interaction marketplace," concluded Mr. Sasson.

Genesys Telecommunications Laboratories, Inc. (Nasdaq:GCTI) pioneered the field of Computer Telephony Integration (CTI) and Tuesday is the market-leader in Enterprise Interaction Management software. The Company's interaction management solutions help enterprises reduce costs, increase revenues, and transform the way they manage interactions in the call/contact center and across the enterprise. Genesys' open, scalable framework and interaction management applications enable the broadest range of contact solutions in the industry, including: internet contact center capabilities, integrated screen pop, load balancing, workforce management, outbound dialing, network routing, and enterprise routing. Genesys' solutions architecture grows with the enterprise and supports customer preference in communications channels -- voice, Internet, E-mail etc. Headquartered in San Francisco, Genesys serves more than 650 customers around the world from its 43 direct sales offices and through a select group of industry partners. FMI: http://www.genesyslab.com or call 1-888-GENESYS (in the U.S).

         GENESYS TELECOMMUNICATIONS LABORATORIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands)

                            ASSETS

                                         September 30,   June 30,
                                              1999         1999
                                          (Unaudited)

CURRENT ASSETS:
  Cash and cash equivalents                $  65,081    $  44,271
  Short-term investments                       7,628       17,426
  Accounts receivable, net                    52,165       44,802
  Prepaid expenses and other                   7,794        8,229
                                           ---------    ---------
Total current assets                         132,668      114,728

PROPERTY AND EQUIPMENT, net                   16,679       17,026

GOODWILL, net                                  7,832        8,190

OTHER ASSETS                                   8,260        7,563
                                           ---------    ---------
                                           $ 165,439    $ 147,507
                                           =========    =========

 LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Note payable                             $      --    $      --
  Current portion of long-term obligations        66           65
  Accounts payable                             4,482        3,328
  Accrued payroll and related benefits         5,399        5,585
  Other accrued liabilities                   11,409        7,236
  Deferred revenues                           22,132       21,259
                                           ---------    ---------
Total current liabilities                     43,488       37,473
                                           ---------    ---------

LONG-TERM OBLIGATIONS                             57           66
                                           ---------    ---------

SHAREHOLDERS' EQUITY:
  Common stock                               116,903      111,956
  Shareholder notes receivable                  (631)        (686)
  Cumulative translation adjustment               74         (572)
  Retained earnings                            5,548         (730)
                                           ---------    ---------
  Total shareholders' equity                 121,894      109,968
                                           ---------    ---------
                                           $ 165,439    $ 147,507
                                           =========    =========


           GENESYS TELECOMMUNICATIONS LABORATORIES
             CONSOLIDATED STATEMENTS OF OPERATIONS
           (In thousands, except per share amounts)

                                                 Quarter Ended
                                                 September 30,
                                               1999         1998
                                                  (Unaudited)

 REVENUES:
  License                                    $36,606      $23,662
  Service                                      9,272        5,346
                                             -------      -------
Total revenues                                45,878       29,008
                                             -------      -------

COST OF REVENUES:
  License                                      1,568        1,052
  Service                                      6,158        4,055
                                             -------      -------
Total cost of revenues                         7,726        5,107
                                             -------      -------

GROSS MARGIN                                  38,152       23,901
                                             -------      -------

OPERATING EXPENSES:
  Research and development                     6,847        5,403
  Sales and marketing                         17,918       10,403
  General and administrative                   4,275        2,703
                                              ------       ------
Total operating expenses                      29,040       18,509
                                              ------       ------

INCOME FROM OPERATIONS                         9,112        5,392

INTEREST AND OTHER INCOME, NET                   547          484
                                              ------       ------

INCOME BEFORE PROVISION FOR
  INCOME TAXES                                 9,659        5,876
PROVISION FOR INCOME TAXES                     3,381        2,057
                                              ------       ------

NET INCOME                                   $ 6,278      $ 3,819
                                             =======      =======

BASIC NET INCOME PER SHARE                   $  0.25      $  0.17
                                             =======      =======

DILUTED NET INCOME PER SHARE                 $  0.21      $  0.15
                                             =======      =======

BASIC WEIGHTED AVERAGE COMMON SHARES          25,178       22,628
                                             =======      =======

DILUTED WEIGHTED AVERAGE COMMON SHARES        29,936       25,779
                                             =======      =======