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Genesys Conferencing Reports Q4 and 2004 Financial Results
RESTON, Virginia & MONTPELLIER, France --(Business Wire)-- April 6, 2005 -- Genesys Conferencing (Euronext: FR0004270270)(NASDAQ: GNSY), a global multimedia conferencing service leader, today reported financial results for the fourth quarter and fiscal year ended December 31, 2004. All results are reported under French Generally Accepted Accounting Principles (GAAP).
Q4 2004 Highlights
-- Revenue was EUR 33.8(1) million stable with Q4 2003, based on a fixed currency rate of exchange
-- In US dollars, revenue was $43.9 million up 4.5% compared to Q4 2003
-- Total volume up 25.1% compared to Q4 2003, to 404.5 million minutes
-- Genesys Meeting Center volume up 31.8% compared to Q4 2003, to 370.8 million minutes
-- Volume based on Multimedia Minute pricing up 70.3% from Q3 2004, to 56.8 million minutes
-- Gross margin was 63.7%
-- EBITDA(2), excluding restructuring and non-recurring charges, was EUR 6.9 million
-- EBITDA margin was 20.3%
"Genesys is uniquely positioned to drive the fast-moving and expanding market for multimedia conferencing services," stated Francois Legros, Chairman and CEO. "Our advanced multimedia services, unmatched global presence and competitive Multimedia Minute flat-rate, usage-based pricing strategy make our value proposition highly compelling to large enterprise customers." -0- *T Revenue & Volume Summary (millions) Revenue Revenue Revenue Revenue USD(1) EUR USD(1) EUR --------- --------- --------- ----------- Q4 2004 $33.9 EUR 33.8 Full Year 2004 $173.9 EUR 139.0 Q4 2003 $42.0 EUR 35.3 Full Year 2003 $180.4 EUR 159.5 Change % 4.5% -4.1% -3.6% -12.8% (millions of minutes) Genesys Genesys Meeting Center Total Meeting Center Total Volume Volume Volume Volume -------------- -------- -------------- -------- Q4 2004 370.8 404.5 Full Year 2004 1,356.2 1,507.9 Q4 2003 281.4 323.4 Full Year 2003 1,094.6 1,308.1 Change % 31.8% 25.1% 23.9% 15.3% *T
Fourth Quarter 2004 Operating Performance
In the fourth quarter of 2004, revenue was EUR 33.8 million. Adjusting fourth quarter 2004 for the same exchange rate as in the fourth quarter of 2003, revenue was EUR 35.4 million and, as expected, stable with revenue of EUR 35.3 in the fourth quarter of 2003. During the fourth quarter, revenue from Genesys Meeting Center services reached 79.4% of total sales compared to 72.4% in the fourth quarter of 2003. Full year 2004 revenue was EUR 139.0 million compared to full year 2003 revenue of EUR 159.5 million.
Gross margin for the fourth quarter of 2004 was 63.7% compared to 65.1% for the fourth quarter of 2003 and reflects a higher percentage of revenue from high-volume, large enterprise customers which traditionally have lower margins. Full year 2004 gross margin was 61.9% compared to 64.3% in 2003.
Selling, general and administrative expenses, excluding restructuring and non-recurring charges, were EUR 17.0 million in the fourth quarter of 2004, down 12.8% compared to EUR 19.5 million in the fourth quarter of 2003. The improvement in selling, general and administrative expenses was largely attributable to the company's cost-reduction initiatives completed in the second half of 2004.
Earnings before interest, taxes, depreciation and amortization (EBITDA(2)), before restructuring and non-recurring charges, was EUR 6.9 million for the fourth quarter 2004 and was stable compared to EBITDA in the fourth quarter of 2003. As expected, the EBITDA margin was 20.3% for the fourth quarter, a slight increase from the EBITDA margin of 19.8% in the fourth quarter of 2003. The full year 2004 EBITDA margin was 17.4% compared to 22.9% in 2003.
Net loss for the fourth quarter of 2004 was down to EUR 45,000 compared to a net loss of EUR 34.3 million for the fourth quarter of 2003. For the twelve months ended December 31, 2004, the company reported a net loss of EUR 67.4 million compared to a net loss of EUR 36.5 million in 2003. Annual net losses include non-cash reductions in the carrying value of intangible and other long-lived assets of EUR 57.3 million and EUR 33.0 million in the second quarter of 2004 and in the fourth quarter of 2003, respectively.
As of December 31, 2004, net cash(3) was EUR 6.4 million, down from EUR 12.9 million at September 30, 2004, primarily due to scheduled semi-annual payments of principal and interest under the company credit facility. For the full year, the company repaid EUR 19.9 million of total debt.
"Operating margins reached their highest level in twelve months, a direct result of our increased volume growth in the second half of 2004 and the benefits of our highly cost-efficient Genesys Meeting Center multimedia technology platform," stated Mike Savage, Executive Vice President and Chief Financial Officer.
Guidance 2005
The following contains forward-looking guidance regarding Genesys Conferencing's financial outlook and is based on current expectations. Actual results may differ materially, and the company may not update any forward-looking statements made in this press release.
In 2005, the company expects the following:
- Revenue will be in the range of EUR 140 to EUR 145 million
- EBITDA will be in the range of EUR 23 million to EUR 26 million
"We expect 2005 results will positively reflect our competitive differentiation within the large enterprise market," added Legros. "Large enterprise customers will further benefit from our planned expansion of our geographical distribution and the introduction of customizable multimedia conferencing solutions."
Guidance is based on a fixed currency rate of exchange of EUR 1.00 = USD 1.25, similar to the average exchange rate for 2004. In 2005, the Company is required to transition to International Financial Reporting Standards (IFRS). The Company does not believe there will be a significant difference between these standards and French GAAP for revenue and EBITDA, excluding stock-based compensation expense.
Conference Call and Webcast
Chief Executive Officer Francois Legros and Executive Vice President/Chief Financial Officer Michael E. Savage will host a conference call on Wednesday, April 6, 2005, at 5:30 p.m. Central European Time or 11:30 a.m. Eastern Time to discuss 2005 financial results.
The conference call will be webcast live and may be accessed at www.genesys.com. A replay of the call will be available at www.genesys.com. -0- *T (1) Amounts were calculated using the average quarterly exchange rate. (2) EBITDA and EBITDA before restructuring and non-recurring expenses. See attached note to consolidated statements of operations for reconciliation of Operating Income and EBITDA. We believe that EBITDA and EBITDA before restructuring and non-recurring expenses are meaningful measures of performance, because they present our results of operations without the potentially volatile impact (which can be substantial) of goodwill impairment, the non-cash impacting nature of depreciation and amortization, and the restructuring and non-recurring charges incurred with events that do not reflect normal operations. (3) Net cash is equivalent to cash and cash equivalents less bank overdrafts. *T
Financial Tables to Follow
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 declined during 2004. 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 decline of the U.S. dollar on its revenues from the fourth quarter of 2003 to the fourth quarter of 2004, 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 the daily euro/U.S. dollar exchange rate for the fourth quarters of 2003 and 2004, respectively, which are the rates it used 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 April 28, 2004. 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, voice and video conferencing services to over 500,000 users worldwide, including users at nearly 200 of the Global Fortune 500 companies. The company's services are designed to meet the full range of communication needs within the global enterprise, from small, collaborative team meetings to large, 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 21 countries across North America, Europe and Asia Pacific, the company offers an unmatched global presence and strong local support. Genesys Conferencing is listed on the Nouveau Marche in Paris (Euronext FR0004270270) and Nasdaq (GNSY). Additional information is available at www.genesys.com. -0- *T At Genesys Conferencing Michael E. Savage Marine Pouvreau Executive Vice President and Chief Investor Relations Manager Financial Officer Phone: +1 703 733-2140 Phone: +1 703 736-7100 marine.pouvreau@genesys.com michael.savage@genesys.com Genesys Conferencing French GAAP Consolidated Balance Sheets (in thousands of Euros) ASSETS At December 31, ------------------------ 2003 2004 ----------- ----------- Fixed assets Goodwill, net EUR 54 992 EUR 16 608 Intangible assets, net 47 504 19 461 Tangible assets, net 22 014 17 097 Financial assets, net 1 255 1 215 Investments in affiliated companies 141 212 ----------- ----------- Total fixed assets 125 906 54 593 Current assets Inventory 29 21 Accounts receivable, less allowances (EUR 2,537 and EUR 2,100 at December 31, 2003 and 2004, respectively) 30 206 27 783 Deferred tax assets 840 448 Other current assets 10 600 6 002 Prepaid expenses and deferred charges 4 858 3 242 Marketable securities 9 614 15 Cash at bank 12 094 8 550 ----------- ----------- Total current assets 68 241 46 061 ----------- ----------- Total assets EUR 194 147 EUR 100 654 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY At December 31, ------------------------ 2003 2004 ----------- ----------- Shareholders' Equity Ordinary shares, nominal value of EUR 1 per share at Dec. 31, 2003 and 2004, 18,307,756 shares issued and outstanding at Dec. 31, 2003 and 2004. EUR 18 308 EUR 18 308 Common shares to be issued 140 139 Additional paid-in capital 185 080 185 080 Additional paid-in capital to be issued 3 844 3 852 Accumulated deficit (137 950) (174 472) Net loss for the period (36 544) (67 416) Currency translation adjustments 15 945 23 417 ----------- ----------- Total shareholders' equity 48 823 (11 092) Provisions for risks and charges 5 558 3 520 Long-term debt Long-term portion of long term debt 82 445 64 713 Long-term portion of capitalized lease obligations 298 61 ----------- ----------- Total long-term debt 82 743 64 774 Current liabilities Bank overdrafts 3 850 2 173 Accounts payable and accrued liabilities 14 353 13 840 Tax payable and deferred compensation 15 611 13 146 Current portion of long-term debt 19 144 12 391 Current portion of capitalized lease obligations 572 407 Deferred revenue 88 30 Other liabilities 3 405 1 465 ----------- ----------- Total current liabilities 57 023 43 452 ----------- ----------- Total liabilities and shareholders' equity EUR 194 147 EUR 100 654 ============ ============ Genesys Conferencing French GAAP Consolidated Statements of Operations (in thousands of Euros, except share data) Three Months Twelve Months ended ended December 31, December 31, ------------------------ ------------------------- 2003 2004 2003 2004 ------------------------ ------------------------- Revenue Services EUR 35 233 EUR 33 784 EUR 159 155 EUR 138 762 Products 50 50 345 276 ------------------------ ------------------------- 35 283 33 834 159 500 139 038 Cost of Revenue Services 12 320 12 242 56 736 52 961 Products 8 34 207 83 ------------------------ ------------------------- 12 328 12 276 56 943 53 044 ------------------------ ------------------------- Gross Profit 22 955 21 558 102 557 85 994 Operating expenses Research and development expenses 1 055 798 4 183 3 750 Selling and marketing expenses 8 934 8 029 37 394 35 839 General and administrative expenses 9 858 8 677 39 032 35 713 Restructuring charge 540 (304) 2 147 2 242 Amortization of identifiable intangible assets 24 631 815 31 805 26 884 ------------------------ ------------------------- 45 018 18 015 114 561 104 428 ------------------------ ------------------------- Operating income/(loss) (22 063) 3 543 (12 004) (18 434) Financial expense, net (1 436) (3 358) (7 201) (6 991) Equity in income of affiliated companies 12 22 22 71 Income tax credit (expense) 594 599 (1 982) (2 458) Amortization of goodwill (11 370) (851) (15 379) (39 604) ------------------------ ------------------------- Net loss EUR (34 263) (45) EUR (36 544) EUR (67 416) ======================== ========================= Basic and diluted net loss per share EUR (1.87) EUR 0.00 EUR (2.20) EUR (3.67) ------------------------ ------------------------- Number of outstanding shares used in computing basic and diluted net loss per share 18 364 462 18 372 841 16 579 986 18 372 841 Genesys Conferencing Notes to French GAAP Consolidated Statements of Operations (in thousands of Euros) NOTE A: EBITDA Three Months Twelve Months CALCULATION ended December 31, ended December 31, ---------------------- ----------------------- 2003 2004 2003 2004 ---------------------- ----------------------- Operating income/(loss) EUR(22 063) EUR 3 543 EUR(12 004) EUR(18 434) Amortization of identifiable intangible assets 24 631 816 31 805 26 886 Amortization of deferred acquisition and deferred financing costs 384 279 1 570 856 ---------------------- ----------------------- Operating income (loss) restated for the above items 2 952 4 638 21 371 9 308 ---------------------- ----------------------- Depreciation and operating provision 3 477 2 268 12 498 10 290 ---------------------- ----------------------- EBITDA 6 429 6 906 33 869 19 598 ---------------------- ----------------------- Restructuring charge 540 (304) 2 147 2 242 Other non-recurring expenses 8 256 150 2 380 ---------------------- ----------------------- EBITDA before non- recurring expenses EUR 6 977 EUR 6 858 EUR 36 166 EUR 24 220 ====================== ======================= NOTE B: DETAIL OF FINANCIAL EXPENSES, Three Months Twelve Months NET ended December 31, ended December 31, ---------------------- ----------------------- 2003 2004 2003 2004 ---------------------- ----------------------- Interest and other financial income EUR 35 EUR 38 EUR 124 EUR 718 Foreign exchange gains 621 901 2 698 4 238 ---------------------- ----------------------- Total financial income 656 939 2 822 4 956 Interest and other financial expenses 1 500 1 175 7 005 5 431 Foreign exchange losses 592 3 122 3 018 6 516 ---------------------- ----------------------- Total financial charges 2 092 4 297 10 023 11 947 Financial expense, net EUR(1 436) EUR(3 358) EUR(7 201) EUR(6 991) ====================== ======================= NOTE C: DETAIL OF Three Months Twelve Months INCOME TAX EXPENSE ended December 31, ended December 31, ---------------------- ----------------------- 2003 2004 2003 2004 ---------------------- ----------------------- Deferred tax (expense) credit EUR 781 595 EUR 548 EUR 49 Income tax expense (187) 4 (2 530) (2 507) ---------------------- ----------------------- Total income tax (expense) credit EUR 594 EUR 599 EUR(1 982) EUR(2 458) ====================== ======================= NOTE D: DETAIL OF ACCOUNTS RECEIVABLE, NET At December 31, ----------------------------------------------- 2003 2004 ---------------------- ----------------------- Billed portion of accounts receivable, net 23 462 21 523 Un-billed portion of accounts receivable, net 6 744 6 260 ---------------------- ----------------------- Total accounts receivable, net 30 206 27 783 ====================== ======================= *T
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