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Genesys Conferencing Reports Fourth Quarter and Year-End Results for 2005
Wednesday April 5, 1:00 am ET
2005 Volume Up 30% To 2.0 Billion Minutes
EBITDA Increased to EUR 24.8 Million


RESTON, Va. & MONTPELLIER, France--(BUSINESS WIRE)--April 5, 2006--Genesys Conferencing (Euronext Eurolist:FR0004270270) (NASDAQ:GNSY - News), a global multimedia conferencing leader, today reported financial results for the fourth quarter and year ended December 31, 2005. All results are reported under International Financial Reporting Standards (IFRS).
2005 versus 2004 Highlights

Total volume increased 30.5% to 2.0 billion minutes
Genesys Meeting Center volume increased 34.9% to 1.8 billion minutes
Revenue(1) was up 2.1% to EUR 141.9 million
EBITDA(2) increased to EUR 24.8 million in 2005 compared to EUR 19.9 million in 2004
Net income was EUR 3.5 million in 2005 compared to a net loss of EUR (60.3) million in 2004
Q4 2005 versus Q4 2004 Highlights

Total volume increased 22.9% to 498.1 million minutes
Genesys Meeting Center volume increased 25.1% to 464.1 million minutes
Revenue(1) was up 4.8% to EUR 35.5 million
EBITDA(2) was EUR 5.9 million in Q4 2005 compared to EUR 7.1 million in Q4 2004
Net income was EUR (0.9) million in Q4 2005 compared to net income of EUR 2.4 million in Q4 2004
"In 2005, Genesys Conferencing implemented sales, customer support and training programs that have resulted in greater penetration of Genesys Meeting Center multimedia collaboration services among large enterprises," stated Francois Legros, Chairman and Chief Executive Officer. "These initiatives have produced volume growth for Genesys that is among the highest organic rates in the industry."

Operating Performance

Total revenue(1) in 2005 increased 2.1% to EUR 141.9 million compared to EUR 139.0 million for 2004. In U.S. dollars, total revenue(1) in 2005 was USD 176.6 million compared to USD 172.9 million in 2004. In the fourth quarter of 2005, revenue was up 4.8% to EUR 35.5 million compared to revenue of EUR 33.8 million in the fourth quarter of 2004. Fourth quarter 2005 revenue in U.S. dollars was USD 42.1 million compared to USD 43.9 million in the fourth quarter of 2004. Despite the previously announced loss of a major customer in the fourth quarter of 2005, revenue and volume from Genesys Meeting Center services were flat compared to the third quarter of 2005.

The increase in Genesys Meeting Center volume enabled the company to gain greater scale, enhance its cost competitiveness and improve gross margins to 64.8% in 2005 from 61.8% in 2004. Gross margin for the fourth quarter of 2005 was 63.6% compared to 63.7% in the fourth quarter of 2004.

Selling, general and administrative expenses in 2005 were EUR 77.1 million compared to EUR 78.2 million in 2004. In the fourth quarter of 2005, selling, general and administrative expenses increased to EUR 19.2 million compared to EUR 17.2 million in the fourth quarter of 2004.

As planned, in 2005, the company reduced general and administrative expenses to EUR 33.2 million down from EUR 36.1 million in 2004. The reduction of general and administrative expenses was partially offset by additional legal and advisory expenses incurred in connection with the company's Genesys Iberia arbitration. In the fourth quarter of 2005, general and administrative expenses decreased to EUR 7.5 million compared to EUR 8.9 million in the fourth quarter of 2004.

Also as planned, in 2005, the company concentrated more resources on sales and marketing initiatives while it was reducing overhead expenses. Selling and marketing expenses were EUR 40.7 million in 2005 compared to EUR 36.0 million in 2004. The increase primarily reflects the expansion of the company's large enterprise sales and customer support teams into new markets that contain a high number of potential multi-national and large enterprise customers. Selling and marketing expenses increased to EUR 10.7 million in the fourth quarter of 2005 from 7.9 million in the fourth quarter of 2004.

EBITDA(2), excluding stock-based compensation, increased in 2005 to EUR 24.8 million compared to EBITDA of EUR 19.9 million in 2004. EBITDA(2) was EUR 5.9 million for the fourth quarter of 2005 compared to EUR 7.1 million in fourth quarter of 2004 largely as a result of expenses incurred in the second half of 2005 in connection with the company's sales initiatives. Stock-based compensation expense, as reported under IFRS, was EUR 321,000 and EUR 358,000 for the fourth quarters of 2005 and 2004, respectively.

Net income in 2005 was EUR 3.5 million compared to a net loss of EUR (60.3) million for 2004. The annual net loss in 2004 is largely the result of non-cash reductions in the carrying value of intangible and other long-lived assets of EUR 62.2 million. Net income was EUR (0.9) million for the fourth quarter of 2005 compared to a net income of EUR 2.4 million in the fourth quarter of 2004. The decline in 2005 fourth quarter net income is primarily attributable to an increase in reported income tax expenses and to additional bank related fees.

"Genesys has now substantially reduced its debt and enhanced its sales platform. It is well positioned to gain even greater share of the growing multimedia collaboration industry," remarked Legros.

Liquidity

As of December 31, 2005, the company's net cash(3) was EUR 4.1 million. This amount reflects the October 31, 2005, semi-annual principal and interest payments made by the company under its senior credit facility. On this same date the company also fully repaid the remaining principal due under its convertible bonds. During 2005, the company used cash flow from operations to repay approximately EUR 13.0 million of debt and to make interest payments of EUR 4.8 million.

On February 22, 2006, the company announced that it successfully completed a EUR 53.6 million equity offering, the proceeds of which were used to repay a majority of its outstanding debt. On a pro forma basis, adjusting for the net proceeds from the equity offering, the company's net debt position as of December 31, 2005, was approximately EUR 31.7 million and shareholders' equity approximately EUR 31.7 million. Under its existing and amended credit facility, the company will have less than EUR 1.0 million of scheduled debt repayments in 2006.

"During 2005, the company funded a significant amount of debt service costs with cash from operations while maintaining a high level of reinvestment in our sales force, global expansion and technology development initiatives," stated Michael Savage, Executive Vice President and Chief Financial Officer. "The company enters 2006 with significantly less leverage, positive shareholders equity and much greater financial flexibility."

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 2006, the company expects full-year revenue and EBITDA, excluding stock-based compensation, to remain essentially flat compared to 2005 full-year results. These estimates primarily reflect the impact on revenue from the previously disclosed loss of a major customer.

The company expects in 2006:

Revenue in the range of EUR 140 to EUR 144 million
EBITDA(2) in the range of EUR 22 to EUR 25 million
 

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