Genesys Conferencing Reports Second Quarter 2004 Results; Centralization of Major Functional Groups and Senior Management in North America

Business Wire, August 19, 2004

RESTON, Va. & MONTPELLIER, France -- Under the section entitled Credit Facility Amendment, first paragraph should read: Last week, the company amended its $125 million credit facility entered in April 2001 and rescheduled its principal repayments for the fourth quarter...(sted: Last week, the company amended its $125 million credit facility entered in April 2001 and rescheduled its principal repayments for the third quarter...). Also, in the table entitled, "Repayment Installments," the 2008 Amended Installments should read: 49.7 (sted: 56.3).

The corrected release reads:

GENESYS CONFERENCING REPORTS SECOND QUARTER 2004 RESULTS; CENTRALIZATION OF MAJOR FUNCTIONAL GROUPS AND SENIOR MANAGEMENT IN NORTH AMERICA

Increased Financial Flexibility Through Amendment to Existing Credit Facility

Genesys Conferencing (Euronext 3955) (NASDAQ: GNSY), a global multimedia conferencing leader, today reported financial results (unaudited) for the second quarter ended June 30, 2004. All results are reported under French Generally Accepted Accounting Principles (GAAP). Genesys also announced the centralization of its global operations and senior management at the company's Reston operations center near Washington, D.C., and the modification of the principal repayment schedules for 2004 to 2008 under its existing credit facility.

"Over the past two years, we have taken the major steps necessary to compete effectively in the global conferencing marketplace. Our centralization of senior management in North America marks a milestone in our evolution towards a more efficient and functionally aligned structure. It also increases our proximity to the greatest number of large enterprises we are targeting and to the many Fortune 500 companies which are already our customers," stated Francois Legros, Chairman and Chief Executive Officer. "In addition, the reduction of our principal repayments through 2006 provides us with additional financial flexibility to successfully execute our growth strategy."

Second Quarter 2004 Operating Results
-------------------------------------

                     (in millions)      USD(1)          EUR
                                        ------          ---
                      Revenue
                          Q2 2004        $43.0    EUR  35.7
                          Q2 2003        $48.1    EUR  42.3

                          Change %       -10.6%       -15.6%

                      EBITDA(2)
                          Q2 2004        $ 7.0    EUR   5.8
                          Q2 2003        $12.5    EUR  11.0

                        Change %         -44.3%       -47.4%

Total call volume increased to 361.1 million minutes in the second quarter of 2004, up 6.6% from the prior year. Automated services call volumes were up 15.4% from the second quarter of 2003, representing approximately 73.7% of total revenue in the second quarter of 2004 compared to 64.6% in the second quarter of 2003.

For the second quarter of 2004, revenue was EUR 35.7 million, a 15.6% decrease compared to 2003 second quarter revenue of EUR 42.3 million. In U.S. dollars, revenue was $43.0 million, a 10.6% decrease compared to $48.1 million of revenue in the second quarter of 2003. Gross margin declined to 62.8% in the second quarter of 2004 compared to 66.4% in the previous year's second quarter. Revenue and gross margin results reflected price erosion and the continued migration to lower-priced, automated conferencing services. Although automated conferencing services generate higher margins, this was partially offset by the increase in volumes generated by large enterprise customers, which traditionally have lower margins.

Selling, general and administrative expenses, excluding non-recurring charges, were EUR 19.1 million in the second quarter of 2004 compared to EUR 20.3 million in the second quarter of 2003.

Earnings before interest, taxes, depreciation and amortization (EBITDA(2)), before non-recurring charges in the second quarter of 2004, were EUR 5.8 million as compared to EUR 11.0 million in the same period last year. In U.S. dollars, EBITDA, before non-recurring charges, was $7.0 million for the second quarter of 2004 compared to $12.5 million in the same period last year. EBITDA for the second quarter of 2004 excludes non-recurring charges of approximately EUR 2.0 million primarily incurred with the concentration of major functional groups at the company's operating center in the Dulles Technology Corridor near Washington, D.C.

The company on a regular basis re-evaluates the carrying value of its long-lived assets, consisting primarily of goodwill and intangible assets. Reflecting the current industry environment, including price erosion, a non-cash reduction of EUR 57.3 million in the carrying value of intangible and other long-lived assets was recorded in the second quarter of 2004 as a result of this assessment. This includes the complete write-off of goodwill associated with North America. Primarily as a result of this non-cash reduction, the company reported a net loss of EUR 61.4 million in the second quarter of 2004 as compared to net income of EUR 0.9 million in the second quarter of 2003.