Genesys Conferencing Reports First Quarter Results for 2006

Genesys Conferencing (Euronext Eurolist: FR0004270270)
(NASDAQ: GNSY), a global multimedia conferencing service leader, today
reported financial results for the first quarter ended March 31, 2006.
All results are reported under International Financial Reporting
Standards (IFRS).
In the first quarter of 2006, revenue(1) increased 6.6% to EUR
36.4 million, compared to revenue of EUR 34.1 million in the first
quarter of 2005. In U.S. dollars, revenue was USD 43.7 million
compared to USD 44.8 million in the first quarter of 2005. Total
volume increased 19.0% to 552.2 million minutes. Genesys Meeting
Center volume increased 21.1% to 517.8 million minutes of which over
50% was generated under the Multimedia Minute program.
"Volume continues to grow at significant levels and we have
absorbed the impact from the loss of a major customer in the fourth
quarter of 2005," said Francois Legros, Chairman and Chief Executive
Officer. "We are very pleased with the effectiveness of the Multimedia
Minute program in helping to drive customer adoption of our services
as a core, enterprise-wide application. Additionally, we are excited
about the new Genesys VoIP services which will be available for
enterprise deployment later in 2006."
Gross margin for the first quarter of 2006 was 63.3% down from
64.0% in the first quarter of 2005. The expected decline is largely a
result of the major customer loss in the fourth quarter of 2005 which
on average accounted for a higher level of direct contribution. Gross
profit for the first quarter of 2006 was EUR 23.0 million compared to
EUR 21.8 million in the first quarter of 2005. The increase is the
result of year-over-year revenue growth.
Selling, general and administrative expenses were EUR 20.5 million
in the first quarter of 2006, up EUR 2.6 million, or 14.5%, compared
to EUR 17.9 million in the first quarter of 2005. The change is the
net result of a EUR 2.3 increase in selling and marketing expenses and
a EUR 0.6 million increase in research and development expenses,
offset by a EUR 0.3 million one-time restructuring charge that was
recorded in the first quarter of 2005. The increase in selling and
marketing expenses continues to reflect the initiatives begun in the
second quarter of 2005 to expand efforts targeted towards the large
enterprise market and the greater adoption of the Multimedia Minute
program. The increase in research and development expenses relates to
the company's development of VoIP conferencing functionalities which
include a Genesys soft-phone technology that is presently being
introduced in a beta test phase to several large customers. Research
and development expenses also include efforts related to the company's
development of a next generation IP collaboration platform that is
expected to be introduced later in 2006. In the first quarter of 2006,
general and administrative expenses were EUR 7.8 million and
consistent with spending levels in the first quarter of 2005.
Earnings before interest, taxes, depreciation and amortization
(EBITDA(2)) and before stock-based compensation expenses were EUR 4.8
million for the first quarter 2006, a 13.2% EBITDA margin compared to
EUR 6.3 million and 18.7%, respectively, for the first quarter of
2005. Stock-based compensation expenses were EUR 0.3 million and EUR
0.3 million for the first quarters of 2006 and 2005, respectively. The
decline in EBITDA primarily reflects the company's further
reinvestment in sales and technology development.
Earnings before interest and taxes (EBIT) declined to EUR 1.7
million in the first quarter of 2006 from EUR 3.2 million in the first
quarter of 2005. The company reported a net loss of EUR (0.7) million
for the first quarter of 2006 compared to net income of EUR 1.5
million in the first quarter of 2005. The net loss this quarter is
partially due to non-cash charges of approximately EUR 0.8 million
which include a EUR 0.5 million provision for deferred income tax
expense (see Income Taxes note below).

Liquidity

As previously announced, the company successfully completed on
February 22, 2006, a EUR 53.6 million equity offering, the proceeds of
which were used to repay a majority of its outstanding debt. As a
result of this recapitalization, the company's net debt as of March
31, 2006 improved to EUR 28.6 million and its shareholders' equity
improved to EUR 37.2 million compared to EUR 72.0 million and EUR
(8.3) million as of December 31, 2005, respectively. As of March 31,
2006, the company's net cash(3) was EUR 3.8 million.

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 line with its previously issued financial outlook for 2006
revenue and EBITDA, excluding stock-based compensation, the company
expects that its full-year 2006 net income will be positive despite
the additional non-cash, deferred income tax expense that is excepted
to impact 2006 results.

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 Monday, May 15, 2006, at 5:30 p.m. Central European
Time or 11:30 a.m. Eastern Time to discuss first quarter 2006
financial results.
The conference call will be web cast live and may be accessed at:
http://events.webeventservices.com/genesys/2006/05/15/
A replay of the call will be available at http://www.genesys.com

(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.

Income Taxes

Subsequent to its prior release of unaudited financial statements
under International Financial Reporting Standards for the year ended
December 31, 2005, on April 5, 2006, based on the historical earnings
and projected income related to its Canadian subsidiary, management
has concluded it is more likely than not that it will fully benefit
from its Canadian net operating losses.
Accordingly, at December 31, 2005, the Company reduced its
valuation allowance against deferred tax assets generated in Canada.
Such reduction in valuation allowance reduced its provision for income
tax expense by approximately EUR 1.9 million in 2005. Additionally, in
2006, as the Company realizes the benefits of net operating losses
carried forward, it will recognize a non-cash provision for deferred
income tax expense.

Adoption of International Financial Reporting Standards

Effective in 2005, the Company, like all public companies
organized in France and other European Union countries, adopted the
new International Financial Reporting Standards (IFRS) for reporting
of its financial results. The Company previously reported under French
GAAP.
At present, established practice in forming opinions regarding
interpretation and application of IFRS continues to evolve. Based upon
its final review, the company has determined that deferred tax
liabilities arising from previous acquisitions should be de-recognized
in its opening balance sheet at January 1, 2004 under IFRS. This
modification primarily results in a net increase in equity of EUR 4.5
million, a reduction of deferred tax liabilities of EUR 3.6 million
and a EUR 0.9 million non-cash increase in provision for income taxes
as of and for the year ended December 31, 2005.
The company is not aware of any additional modifications that are
necessary in connection with the application of IFRS.

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 first quarter of 2005 to the
first quarter of 2006, 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
2005 and 2006 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 Eurolist in France (ISIN FR0004270270) and on the NASDAQ in
the U.S. (GNSY). Additional information is available at
www.genesys.com.
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GENESYS CONFERENCING
Consolidated Balance Sheets
(Unaudited, in thousands of euros, except share data)

December 31, March 31,
2005 2006
------------ ------------
IFRS IFRS
--------------------------
ASSETS
Fixed assets
Goodwill, customer lists and technology 33,330 35,780
Other intangible assets, net 5,662 5,914
Tangible assets, net 16,011 15,842
Financial assets, net 1,894 2,159
Deferred tax assets 2,489 1,899
Investments in affiliated companies 278 -
------------ ------------
Total non current assets 59,664 61,594
Current assets
Accounts receivable, less allowances (EUR
1,547 and EUR 1,303 at December 31,
2005 and March 31, 2006, respectively) 27,692 29,169
Deferred tax assets 724 841
Other current assets 7,529 8,653
Marketable securities 35 32
Cash at bank 5,879 5,557
------------ ------------
Total current assets 41,859 44,252
------------ ------------
TOTAL ASSETS 101,523 105,846
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Shareholders' equity (deficit)
Ordinary shares, nominal value of EUR 1
per share 18,307,756 shares issued and
outstanding at December 31, 2005 and
69,798,286 shares issued and
outstanding at March 31, 2006 18,308 69,798
Common shares to be issued 139 139
Additional paid-in capital 185,080 179,885
Additional paid-in capital to be issued 3,831 3,831
Reserve for Stock-based compensation 2,605 2,898
Accumulated deficit (223,429) (218,885)
Net income (loss) for the period 4,544 (734)
Currency translation adjustments 668 263
------------ ------------
Total shareholders' equity (deficit) (8,254) 37,195
Provisions for risks and charges 720 524
Deferred tax liabilities 59 59
Long-term debt
Long-term portion of long-term debt 62,474 30,607
Long-term portion of capitalized lease
obligations 39 32
------------ ------------
Total long-term debt 63,292 31,222
Current liabilities
Bank overdrafts 1,851 1,766
Accounts payable and accrued liabilities 13,254 15,876
Other taxes payable and deferred
compensation 9,493 10,789
Income taxes payable 3,147 2,334
Current portion of provision for risks
and charges 908 896
Current portion of long-term debt 13,483 1,745
Current portion of capitalized lease
obligations 4 5
Other current liabilities 4,345 4,018
------------ ------------
Total current liabilities 46,485 37,429
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY 101,523 105,846
============ ============

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

Three months ended March 31,
----------------------------
IFRS IFRS
-------------- -------------
2005 2006
-------------- -------------
Revenue
Services 34,122 36,377
-------------- -------------

Cost of Revenue
Services 12,289 13,357
-------------- -------------
Gross Profit 21,833 23,020
Operating expenses
Research and development 650 1,203
Selling and marketing 9,202 11,495
General and administrative 7,771 7,847
Restructuring charge 326 -
Amortization of intangibles 698 747
-------------- -------------
18,647 21,292
-------------- -------------
Operating income 3,186 1,728
Financial expense, net (1,755) (1,094)
Equity in income of affiliated companies 4 -
Income tax credit (expense) 19 (1,368)
-------------- -------------
Net income (loss) 1,454 (734)
-------------- -------------
Basic and diluted net income (loss) per
share 0.08 (0.02)
============== =============
Number of outstanding shares used in
computing basic and diluted net income
(loss) per share 18,372,841 40,186,897

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

Three months ended March 31,
----------------------------
IFRS IFRS
-------------- -------------
NOTE A- EBITDA calculation 2005 2006
-------------- -------------
Operating income 3,186 1,728
Amortization of identifiable intangible
assets 698 747
Depreciation 2,175 2,048
-------------- -------------
EBITDA (2) 6,059 4,523
-------------- -------------
Stock-based compensation 306 293
EBITDA before stock-based compensation 6,365 4,816
============== =============

Three months ended March 31,
----------------------------
IFRS IFRS
-------------- -------------
NOTE B- DETAIL OF FINANCIAL INCOME
(EXPENSE), NET 2005 2006
-------------- -------------
Interest and other financial income 313 201
Foreign exchange gains 558 3,756
-------------- -------------
Total financial income 871 3,957

Interest and other financial expenses (2,261) (1,858)
Foreign exchange losses (365) (3,193)
-------------- -------------
Total financial charges (2,626) (5,051)
Financial expense, net (1,755) (1,094)
============== =============

Three months ended March 31,
----------------------------
IFRS IFRS
-------------- -------------
NOTE C - DETAIL OF INCOME TAX EXPENSE 2005 2006
-------------- -------------

Deferred tax credit (expense) - (551)
Income tax credit (expense) 19 (817)
-------------- -------------
Total income tax credit (expense) 19 (1,368)
============== =============

At December 31, At March 31,
--------------- ------------
NOTE D - DETAIL OF ACCOUNTS RECEIVABLE,
NET IFRS IFRS
--------------- ------------
2005 2006
--------------- ------------

Billed portion of accounts receivable,
net 21,332 19,019
Unbilled portion of accounts receivable,
net 6,360 10,150
--------------- ------------
Total accounts receivable, net 27,692 29,169
=============== ============
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