SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Month of August 2004
GENESYS S.A.
(Exact name of registrant as specified in its charter)
L'Acropole, 954-980 avenue Jean Mermoz, 34000 Montpellier,
FRANCE (Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as
permitted by Regulation S-T Rule 101(b)(1):____
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as
permitted by Regulation S-T Rule 101(b)(7):____
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______________.
[Genesys Conferencing Logo]
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
Reston, Virginia, and Montpellier, France - August 10, 2004 - 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 (euro) 35.7
Q2 2003 $ 48.1 (euro) 42.3
Change % -10.6% -15.6%
EBITDA(2)
Q2 2004 $ 7.0 (euro)5.8
Q2 2003 $ 12.5 (euro)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 (euro)35.7 million, a 15.6% decrease
compared to 2003 second quarter revenue of (euro)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 (euro)19.1 million in the second quarter of 2004 compared to (euro)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 (euro)5.8
million as compared to (euro)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
(euro)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
(euro)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 (euro)61.4 million in the second quarter of 2004 as
compared to net income of (euro)0.9 million in the second quarter of 2003.
As of June 30, 2004, the company's net cash(3) was (euro)14.2 million, down from
(euro)21.2 million of net cash at March 31, 2004. The change in net cash
included (euro)7.3 million of scheduled principal repayments in April 2004 made
under the company's $125 million credit facility.
Centralization of Senior Management in North America
In connection with its overall strategy to enhance productivity, manage costs
and maximize opportunities for growth in the global enterprise market, Genesys
announced that it will complete a multi-phase operational restructuring in the
fourth quarter of 2004. Senior executives, along with the majority of the
company's finance, legal and administration departments, will be centralized in
the Dulles Technology Corridor near Washington, D.C., at its global production
center in Reston, Virginia. Over 60% of the company's volume is generated in
North America and nearly 55% percent of its 1,000 employees are based in North
America. Genesys' local sales and technology presence will remain unchanged in
the 21 countries in which the company serves its customers.
Credit Facility Amendment
Last week, the company amended its $125 million credit facility entered in April
2001 and rescheduled its principal repayments for the third quarter of 2004 and
the years 2005 and 2006 to defer approximately $26.8 million to 2008.
Annual principal repayments will now be made as follows:
----------------------------------------------------------------------------
Term Repayment Repayment Installments
(USD Million)
----------------------------------------------------------------------------
Current Amended
----------------------------------------------------------------------------
2004 (October semi-annual payment) $11.0 $8.3
----------------------------------------------------------------------------
2005 22.0 12.0
----------------------------------------------------------------------------
2006 30.0 16.0
----------------------------------------------------------------------------
2007 22.3 22.3
----------------------------------------------------------------------------
2008 23.0 56.3
----------------------------------------------------------------------------
The interest rate under the credit facility remains unchanged with the exception
of the $26.8 million repayment postponed to October 31, 2008, for which the
margin will be increased by 50 basis points on December 31, 2004.
The credit facility's financial ratios, now including consolidated EBITDA
ratios, were amended to reflect the company's revised business plan and cash
flow projections. Further, in the event the company falls short of certain
financial ratio levels, it was provided with the additional flexibility to
implement one or more curative actions. These curative actions may include, but
are not limited to, a capital increase or rights offering, new financial
indebtedness, a bond issuance or other debt or hybrid securities, merger
transactions or divestitures, or a tender offer for the shares of the company if
approved by the company's board of directors and the senior secured lenders. All
measures would also require any necessary authorizations of the company's board
and shareholders in accordance with French law.
Guidance
Due to the competitive and rapidly changing business environment, Genesys is
withdrawing its previously issued revenue and EBITDA guidance for fiscal 2004.
The company currently expects revenue and EBITDA to be seasonally weak during
the third quarter of 2004. In the fourth quarter of 2004, the company expects
revenue to be stable as compared with the revenue in the fourth quarter of 2003,
excluding any volatility in foreign exchange rates. The company further expects
EBITDA margins for the fourth quarter of 2004 to be approximately twenty
percent.
____________
(1) USD amounts were calculated using the average quarterly exchange rate.
(2) See attached note to consolidated statements of operations for
reconciliation of operating income and EBITDA. (French GAAP)
(3) Net cash is equivalent to cash and cash equivalents less bank
overdrafts.
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 Tuesday,
August 10, 2004, at 5:30 p.m. Central European Time or 11:30 a.m. Eastern
Daylight Time to discuss second quarter 2004 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.
Impact of Exchange Rates
Our acquisitions have expanded our international operations and thus increased
our exposure to exchange rate fluctuations, in particular the U.S. dollar. In
2003, the U.S. dollar declined significantly compared to the euro, and its value
has remained weak during 2004. As a result, the comparability of our revenues
and results of operations expressed in euros were significantly impacted.
We prepare our consolidated financial statements in euros. In order to
demonstrate the impact of the decline of the U.S. dollar on our revenues from
the second quarter 2003 to the second quarter 2004, we have recalculated our
revenues as if our functional currency had been the U.S. dollar rather than the
euro. For this purpose, we have used the average for each quarter of the daily
euro/U.S. dollar exchange rates for the second quarters of 2003 and 2004,
respectively, which are the rates we used for translation purposes in our
consolidated income statement.
We believe that this analysis is useful because the majority of our revenues
were actually earned in U.S. dollars. However, the change in our U.S. dollar
revenues also reflects the mechanical impact of exchange rate differences on the
portion of our consolidated revenues earned in euros.
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 18,000 clients worldwide, including 200 of the
Fortune 500. 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: 3955) and Nasdaq (GNSY).
Additional information is available at www.genesys.com.
At Genesys Conferencing
Michael E. Savage Tricia Heinrich
Executive Vice President and Chief Financial Officer Senior Director of Global Public Relations
Phone: +1 703 736 7100 Phone: +1 415 608 6651
mike.savage@genesys.com tricia.heinrich@genesys.com
GENESYS CONFERENCING
Consolidated Balance Sheets (French GAAP)
(In thousands of euros, except share data)
------------------------------------------
December 31, June 30,
2003 2004
unaudited
------------------------------------------
ASSETS
Fixed assets
Goodwill, net (euro) 54,992 (euro) 18,210
Intangible assets, net 47,504 21,736
Tangible assets, net 22,014 20,258
Financial assets, net 1,255 1,488
Investments in affiliated companies 141 178
---------------- -----------------
Total fixed assets 125,906 61,870
Current assets
Inventory 29 22
Accounts receivable, less allowances ((euro)2,537 and
(euro)2,417 at December 31, 2003 and June 30, 2004,
respectively) 30,206 29,051
Deferred tax assets 840 236
Other current assets 10,600 6,988
Prepaid expenses and deferred charges 4,858 4,332
Marketable securities 9,614 5,556
Cash at bank 12,094 11,516
---------------- -----------------
Total current assets 68,241 57,701
---------------- -----------------
Total assets (euro) 194,147 (euro) 119,571
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Ordinary shares, nominal value of(euro)1 per share
18,307,756 shares issued and outstanding
at December 31, 2003 and June 30, 2004 (euro) 18,308 (euro) 18,308
Common shares to be issued 140 140
Additional paid-in capital 185,080 185,080
Additional paid-in capital to be issued 3,844 3,809
Accumulated deficit (137,950) (174,470)
Net loss for the period (36,544) (65,478)
Currency translation adjustments 15,945 14,754
---------------- ------------------
Total shareholders' equity 48,823 (17,857)
Provisions for risks and charges 5,558 5,044
Long-term debt
Long-term portion of long term debt 82,445 80,407
Long-term portion of capitalized lease obligations 298 114
---------------- ------------------
Total long-term debt 82,743 80,521
Current liabilities
Bank overdrafts 3,850 2,904
Accounts payable and accrued liabilities 14,353 14,395
Tax payable and deferred compensation 15,611 15,746
Current portion of long-term debt 19,144 15,407
Current portion of capitalized lease obligations 572 470
Deferred revenue 88 108
Other liabilities 3,405 2,833
---------------- ------------------
Total current liabilities 57,023 51 863
---------------- ------------------
Total liabilities and shareholders' equity (euro) 194,147 (euro) 119,571
======= =======
GENESYS CONFERENCING
Unaudited Consolidated Statements of Operations (French GAAP)
(Unaudited - in thousands of euros, except share data)
Three months ended June 30, Six months ended June 30,
------------------------------------- --------------------------------------
2003 2004 2003 2004
------------------------------------- --------------------------------------
Revenue:
Services (euro) 42 125 35 667 (euro) 87 696 (euro) 71.707
Products 145 23 228 201
------------------------------------- --------------------------------------
42 270 35 690 87 924 71 908
Cost of revenue:
Services 14 113 13 275 30 860 27 005
Products 85 15 144 43
------------------------------------- --------------------------------------
14 198 13 290 31 004 27 048
------------------------------------- --------------------------------------
Gross Profit 28 072 22 400 56 920 44 860
Operating expenses:
Research and development 1 053 962 2 085 2 083
Selling and marketing 10 484 10 021 19 160 18 987
General and administrative 9 186 8 799 20 987 18 850
Restructuring charge - 1 550 - 2 089
Amortization and impairment
of intangible assets 2 390 23 625 4 784 25 249
------------------------------------- --------------------------------------
23 113 44.957 47 016 67 258
------------------------------------- --------------------------------------
Operating income / (loss) 4 959 (22.557) 9 904 (22.398)
Financial expenses, net (2 099) (1 035) (3 829) (3 068)
Equity in income of affiliated companies 11 6 15 37
Income tax expense (1 101) (1 152) (2 041) (2 105)
Amortization and impairment of goodwill
(908) (36.617) (2 506) (37.944)
------------------------------------- --------------------------------------
Net income/(loss) (euro) 862 (61.355) (euro)1 543 (euro) (65.478)
========== ======= =========== ==============
Basic net income/(loss) per share (euro) 0.06 (euro) (3.34) (euro) 0.10 (euro) (3.56)
Diluted net income/(loss) per share (euro) 0.05 (euro) (3.34) (euro) 0.10 (euro) (3.56)
=========== ============ =========== ==============
Number of outstanding shares used in
computing basic net income/(loss)
per share 15 547 280 18 372 841 15 547 280 18 372 841
Number of outstanding shares used in
computing diluted net income/(loss)
per share 16 099 468 18 372 841 16 099 468 18 372 841
GENESYS CONFERENCING
Notes to the Consolidated Financial Statements (unaudited)
(In thousands of Euros)
NOTE A- EBITDA calculation Three months ended Six months ended
June 30, June 30,
2003 2004 2003 2004
-------------- ------------ -------------- -------------
Operating income (loss) (euro) 4 959 (euro)(22 557) (euro) 9 904 (euro) (22.398)
Amortization of deferred acquisition
and deferred financing costs 382 257 777 504
Amortization of intangible assets 2 390 23 625 4 784 25 249
Depreciation and provisions 3 324 2 453 6 628 5 378
-----------------------------------------------------------------------
EBITDA (1) (euro) 11 055 (euro) 3 778 (euro) 22 093 (euro) 8 733
Restructuring charge 1 550 2 089
Other non recurring charges 22 476 22 1 881
-----------------------------------------------------------------------
EBITDA before non-recurring items (euro) 11 077 (euro) 5 804 (euro) 22 115 (euro 12 703
=======================================================================
NOTE B- DETAIL OF FINANCIAL Three months ended Six months ended
EXPENSES, NET June 30, June 30,
2003 2004 2003 2004
-------------- ------------ -------------- -------------
Interest and other financial income (euro) 16 (euro) 32 (euro) 478 (euro) 286
Foreign exchange gains 12 735 2 362 2 795
-----------------------------------------------------------------------
Total financial income 28 767 2 840 3 081
Interest and other financial expenses 1 286 1 312 4 228 2 826
Foreign exchange losses 841 490 2 441 3 323
-----------------------------------------------------------------------
Total financial charges 2 127 1 802 6 669 6 149
-----------------------------------------------------------------------
Financial expenses, net (euro) (2 099) (euro) (1 035) (euro) (3 829) (euro) (3 068)
=======================================================================
NOTE C- DETAIL OF INCOME Three months ended Six months ended
TAX EXPENSE June 30, June 30,
2003 2004 2003 2004
-------------- ------------ -------------- -------------
Deferred tax expense (euro) 17 (euro) (27) (euro) (31) (euro) (546)
Income tax expense (1 118) (1 125) (2 010) (1 559)
-----------------------------------------------------------------------
Total income tax expense (euro) (1 101) (euro) (1 152) (euro) (2 041) (euro) (2 105)
=======================================================================
NOTE D- DETAIL ACCOUNTS December 31, June
RECEIVABLES, NET 2003 30,
2004
----------------- -----------------
Billed portion of accounts receivables, net
(euro) 23,462 (euro) 23,701
Un-billed portion of accounts receivables, net
6,744 5,350
----------------- -----------------
Total accounts receivables, net (euro) 30,206 (euro) 29,051
================= =================
(1) We believe that EBITDA is a meaningful measure of performance, because it
presents our results of operations without the potentially volatile impact
(which can be substantial) of goodwill impairment and the non-cash impacting
nature of depreciation and amortization.
ANNEX I:
US GAAP FINANCIAL STATEMENTS
GENESYS SA
U.S. GAAP CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, June 30,
2003 2004
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents (euro)15,574 (euro)12,269
Short-term portion of restricted cash 3,371 3,157
Un-billed accounts receivable 6,744 5,350
Other accounts receivable, less allowances of(euro)2,537 at December
31, 2003 and (euro)2,417 at June 30, 2004 23,462 23,701
Inventory 29 22
Prepaid expenses 2,286 2,201
Other current assets 8,856 5,272
----- -----
Total current assets 60,322 51,972
Property and equipment, net 27,284 25,804
Goodwill, net 75,047 21,940
Customer lists, net 42,774 17,622
Technology and other intangibles, net 352 212
Investment in affiliated company 141 178
Deferred tax assets 840 235
Deferred financing costs, net 2,531 2,096
Other assets 1,824 1,875
Long-term portion of restricted cash 2,722 1,632
----- -----
Total assets (euro)213,837 (euro)123,566
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts (euro)3,850 (euro)2,904
Accounts payable 8,676 9,821
Accrued liabilities 6,627 5,343
Accrued compensation 6,519 7,320
Tax payable 9,092 8,426
Deferred revenue 88 108
Current portion of long-term debt 18,564 14,942
Current portion of capitalized lease obligations 55 15
Current portion of deferred tax liability 2,143 1,401
Current portion of other long-term liability 1,740 2,035
Other current liabilities 3,242 2,822
----- -----
Total current liabilities 60,596 55,137
Long-term portion of long-term debt 82,814 80,710
Long-term portion of capitalized lease obligations 107 114
Long term portion of deferred tax liability 11,504 5,683
Other long-term liability 3,173 1,828
Shareholders' equity:
Ordinary shares:(euro)1.00 nominal value and 18,307,756 shares issued and
outstanding at December 31, 2003 and June 30, 2004, 18,308 18,308
Common shares to be issued:(euro)1.00 nominal value and 65,067 shares at December
31, 2003 and June 30, 2004 65 65
Additional paid-in capital 197,611 197,130
Accumulated other comprehensive income 15,372 15,630
Deferred compensation (322) --
Accumulated deficit (174,640) (250,288)
-------- --------
56,394 (19,155)
Less cost of treasury shares: 22,131 shares at Dec. 2003 and June 30, 2004 (751) (751)
Total shareholders' equity 55,643 (19,906)
Total liabilities and shareholders' equity (euro)213,837 (euro)123,566
============= =============
See notes to financial statements
GENESYS SA
U.S. GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except share data)
Three months ended June 30, Six months ended June 30,
2003 2004 2003 2004
Revenue:
Services (euro)42,125 (euro)35,667 (euro)87,696 (euro)71,706
Products 145 24 228 202
--- -- --- ---
42,270 35,691 87,924 71,908
Cost of revenue:
Services 14,177 13,288 30,990 27,059
Products 85 15 144 43
-- -- --- --
14,262 13,303 31,134 27,102
------ ------ ------ ------
Gross profit 28,008 22,388 56,790 44,806
Operating expenses:
Research and development 1,053 963 2,085 2,083
Selling and marketing 10,484 10,021 19,160 18,987
General and administrative 8,862 8,542 20,331 18,186
Restructuring charge -- 1,076 -- 2,090
Impairment of goodwill and other intangibles -- 75,401 -- 75,401
Amortization of intangibles 2,611 1,734 5,226 3,483
----- ----- ----- -----
Total operating expenses 23,010 97,737 46,802 120,230
Operating income (loss) 4,998 (75,349) 9,988 (75,424)
Interest income 120 28 179 101
Interest expense (1,253) (1,367) (3,705) (2,571)
Foreign exchange gain (loss) 642 (216) 5,330 (1,845)
Other financial expense, net (482) (15) (770) (433)
---- --- ---- ----
Financial income (expense), net (973) (1,570) 1,034 (4,748)
Equity in income of affiliated company 11 5 15 37
---- ----- ---- -----
Income (loss) before taxes 4,036 (76,914) 11,037 (80,135)
Income tax (expense) credit (328) 4,616 (494) 4,460
---- ----- ---- -----
Net income (loss) (euro)3,708 (euro)(72,298) (euro)10,543 (euro)(75,675)
=========== ============= ============ =============
Basic net income (loss) per share (euro)0.24 (euro)(3.94) (euro)0.68 (euro)(4.13)
========== =========== ========== ===========
Diluted net income (loss) per share (euro)0.23 (euro)(3.94) (euro)0.66 (euro)(4.13)
========== =========== ========== ===========
Number of shares used in computing basic net 15,547,280 18,372,841 15,547,280 18,372,841
income (loss) per share
Dilution effect on convertible notes 552,188 -- 552,188 --
Number of shares used in computing diluted net 16,099,468 18,372,841 16,099,468 18,372,841
income (loss) per share
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: August 10, 2004
GENESYS SA
By: /s/ Francois Legros
------------------------------
Name: Francois Legros
Title: Chairman and Chief Executive
Officer