As filed with the Securities
  and Exchange Commission on May 15, 2003



UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

---

Form 20-F

| | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 or
| | ---------------------------------------------------------------------------------------------------

| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | ANNUAL REPORT PURSUANT TO
        SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2002
| | or                                                                                                                                     

| | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from  to 
| | -----------------------------------------------------------------------------------------------------------------------------

Commission File Number: 001-16451

---

Genesys S.A.(Exact name of Registrant as specified in its charter)

|N/A                                                     | lAcropole,
      954-980 Avenue Jean Mermoz
34000
      Montpellier
France | Republic
        of France
|------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------
|(Translation
        of Registrants name into English) | (Jurisdiction
      of incorporation) or organization                      
|                                                        | (Address
        of principal executive offices)                            |                           



Securities registered or to be registered pursuant to Section 12(b) of the Act: None






Securities registered or to be registered pursuant to Section 12(g) of the Act:




|Title
        of each class:                                                                                               | Name
        of each exchange on which registered:
|-------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------
|Ordinary
        shares, nominal value €5 per share*                                                                       | Nasdaq
        National Market                    
|                                                                                                                           |                                                   
|American Depositary
        Shares, each representing one half of one ordinary share, nominal
          value €5 per share | Nasdaq
        National Market                    



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None


(December 31, 2002)


Ordinary shares, nominal value€5 per share: 15,471,204

Indicate by check mark whether the registrant (1)
  has filed all reports required to be filed by Section 13 or 15(d) of the Securities
  Exchange Act of 1934 during the preceding 12 months (or for such shorter period
  that the registrant was required to file such reports), and (2) has been subject
  to such filing requirements for the past 90 days: Yes    
  NoIndicate by check mark which financial statement item the registrant has elected to follow:

Item 17 
     Item 18

|* | Listed, not for trading or quotation purposes, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Back to Contents

TABLE OF CONTENTS

|         |                                                                                      | Page
|-------- | ------------------------------------------------------------------------------------ | ----
|         | PART
        I                                                                       |     
|Item 1.  | Identity
        of Directors, Senior Management and Advisers                        |     
|Item 2.  | Offer
        Statistics and Expected Timetable                                      |     
|Item 3.  | Key
        Information                                                              |     
|         | A.
        Selected Financial Data                                                   |     
|         | B.
        Capitalization and Indebtedness                                           |     
|         | C.
        Reasons for Offer and Use of Proceeds                                     |     
|         | D.
        Risk Factors                                                              |     
|Item 4.  | Information
        on the Company                                                   |     
|         | A.
        History and Development of the Company                                    |     
|         | B.
        Business Overview                                                         |     
|         | C.
        Organizational Structure                                                  |     
|         | D.
        Property, Plants and Equipment                                            |     
|Item 5.  | Operating
        and Financial Review and Prospects                                 |     
|Item 6.  | Directors,
        Senior Management and Employees                                   |     
|         | A.
        Directors and Senior Management                                           |     
|         | B.
        Compensation                                                              |     
|         | C.
        Board Practices                                                           |     
|         | D.
        Employees                                                                 |     
|         | E.
        Share Ownership                                                           |     
|Item 7.  | Major
        Shareholders and Related Party Transactions                            |     
|         | A.
        Major Shareholders                                                        |     
|         | B.
        Related Party Transactions                                                |     
|         | C.
        Interests of Experts and Counsel                                          |     
|Item 8.  | Financial
        Information                                                        |     
|Item 9.  | The
        Offer and Listing                                                        |     
|         | A.
        Offer and Listing Details                                                 |     
|         | B.
        Plan of Distribution                                                      |     
|         | C.
        Markets                                                                   |     
|         | D.
        Selling Shareholders                                                      |     
|         | E.
        Dilution                                                                  |     
|         | F.
        Expenses of the Issue                                                     |     
|Item 10. | Additional
        Information                                                       |     
|         | A.
        Share Capital                                                             |     
|         | B.
        Memorandum and Articles of Association                                    |     
|         | C.
        Material Contracts                                                        |     
|         | D.
        Exchange Controls                                                         |     
|         | E.
        Taxation                                                                  |     
|         | F.
        Dividends and Paying Agents                                               |     
|         | G.
        Statement by Experts                                                      |     
|         | H.
        Documents on Display                                                      |     
|         | I.
        Subsidiary Information                                                    |     
|Item 11. | Quantitative
        and Qualitative Disclosures about Market Risk                   |     
|Item 12. | Description
        of Securities other than Equity Securities                       |     
|         | PART
        II                                                                      |     
|Item 13. | Defaults,
        Dividend Arrearages and Delinquencies                              |     
|Item 14. | Material
        Modifications to the Rights of Security Holders and Use of Proceeds |     
|Item 15. | Controls
        and Procedures                                                      |     
|Item 16. | [Reserved]                                                                           |     
|         | PART
        III                                                                     |     
|Item 17. | Financial
        Statements                                                         |     
|Item 18. | Financial
        Statements                                                         |     
|Item 19. | Exhibits                                                                             |     



1/128

---



Back to Contents

PRESENTATION OF FINANCIAL INFORMATION

The financial information in this annual report is
  presented in accordance with United States Generally Accepted Accounting Principles
  (U.S. GAAP). In France, which is the principal trading market for our shares,
  we communicate our results of operations in accordance with French Generally
  Accepted Accounting Principles. As a result, the financial information in this
  annual report is different from the financial information that we have communicated
  in France, often in significant respects. We submit English versions of our
  material French public communications to the Securities and Exchange Commission
  on Form 6-K, but those submissions are not incorporated by reference in this
  annual report.





2/128

---



Back to Contents

|      
|------
|PART I

|                                                             
|-------------------------------------------------------------
|Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.



|Item 2. Offer Statistics and Expected Timetable
|-----------------------------------------------

Not applicable.





3/128

---



Back to Contents

|                       
|-----------------------
|Item 3. Key Information

|   |                        
|-- | -----------------------
|A. | Selected Financial Data

You should read the following selected financial data
  together with Item 5 Operating and Financial Review and Prospects
  and our financial statements included under Item 18. Our financial statements
  have been prepared in accordance with U.S. GAAP. Our results of operations have
  been significantly impacted in recent years by business combinations, which
  make it difficult to compare our revenues, operating income and net income from
  one year to the next. See Item 5 Operating and Financial Review and Prospects
  for a discussion of business combinations that affect the comparability of the
  information provided below.



For your convenience, we have translated the 2002
  euro amounts into U.S. dollars, using the rate of $1.00 = €0.8696,
  which was the noon buying rate in New York City for cable transfers in foreign
  currencies as certified for customs purposes by the Federal Reserve Bank of
  New York (the Noon Buying Rate) on May 13, 2003. This does not mean
  that we actually converted such amounts into U.S. dollars. For periods presented
  prior to January 1, 2000, the selected financial data presented below have been
  prepared in French francs and translated into euro using the official fixed
  exchange rate of €1 = FF6.55957, applicable since January 1, 1999.



|                                                                      |  | As
      of and for the year ended December 31, |          
|--------------------------------------------------------------------- |  | ----------------------------------------------- | ---------
|                                                                      |  |                                                 |          
|                                                                      |  | 1998                                            |          
|                                                                      |  |                                                 |          
|                                                                      |  | (in thousands,
      except share data)         |          
|Consolidated
        statement of operations data:                    |  |                                                 |          
|Revenue:                                                              |  |                                                 |          
|Services                                                              |  | €                                               | 18,311   
|Products                                                              |  |                                                 | 910      
|                                                                      |  |                                                 |          
|Total
        revenues                                                |  |                                                 | 19,221   
|Cost
        of revenue:                                              |  |                                                 |          
|Services                                                              |  |                                                 | 7,517    
|Products                                                              |  |                                                 | 656      
|                                                                      |  |                                                 |          
|Total
        cost of revenues                                        |  |                                                 | 8,173    
|                                                                      |  |                                                 |          
|Gross
        profit                                                  |  |                                                 | 11,048   
|Operating
        expenses:                                           |  |                                                 |          
|Research
        and development                                      |  |                                                 | 910      
|Selling
        and marketing                                         |  |                                                 | 5,747    
|General
        and administrative                                    |  |                                                 | 4,004    
|Restructuring
        charge                                          |  |                                                 |         
|Amortization
        and impairment of goodwill and other intangibles |  |                                                 | 1,396    
|                                                                      |  |                                                 |          
|Total
        operating expenses                                      |  |                                                 | 12,057   
|                                                                      |  |                                                 |          
|Operating
        loss                                                |  |                                                 | (1,009   
|Financial
        income (expense), net                               |  |                                                 | (335     
|Equity
        in loss of affiliated company                          |  |                                                 |         
|                                                                      |  |                                                 |          
|Loss
        before income taxes and minority interest                |  |                                                 | (1,344   
|Income
        tax (expense) credit                                   |  |                                                 | (293     
|Net
        loss                                                      |  | €                                               | (1,637   
|                                                                      |  |                                                 |          
|Basic
        and diluted net (loss) per share                        |  | €                                               | (0.39    
|Weighted
        average number of ordinary shares outstanding        |  |                                                 | 4,209,669
|                                                                      |  |                                                 |          

| | 
| | 

|(1) | In 2001, €61.3 million represents impairment of goodwill and other intangible assets in accordance with SFAS No. 121.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(2) | In 2002, €93.6 million represents impairment charges, which consists of impairment of goodwill in accordance with SFAS No. 142 (81.7 million) and impairment of identifiable intangible assets in accordance with SFAS No. 144 (€11.9 millions).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



4/128

---



Back to Contents

|                                                              |  | As
      of and for the year ended December 31, |                       
|------------------------------------------------------------- |  | ----------------------------------------------- | ----------------------
|                                                              |  |                                                 |                       
|                                                              |  | 1998                                            |                       
|                                                              |  |                                                 |                       
|                                                              |  | (in
      thousands )                           |                       
|Consolidated
        balance sheet data:                      |  |                                                 |                       
|Total
        current assets                                  |  |                                                 | €               25,408
|Total
        assets                                          |  |                                                 | 51,620                
|Total
        current liabilities                             |  |                                                 | 8,172                 
|Total
        long-term liabilities                           |  |                                                 | 7,382                 
|Total
        shareholders equity                            |  |                                                 | 36,066                
|Cash
        flow statement data:                             |  |                                                 |                       
|Cash
        flows provided by (used in) operating activities |  |                                                 | (28                   
|Cash
        flows used in investing activities               |  |                                                 | (5,932                
|Cash
        flows provided by financing activities           |  |                                                 | €18,468               



5/128

---



Back to Contents

EXCHANGE RATE INFORMATIONAND THE EUROPEAN MONETARY SYSTEM

|The European Monetary System
|----------------------------

Under the provisions of the Treaty on European Union
  negotiated at Maastricht in 1991 and signed by the then 11 member states of
  the European Union in early 1992, a European Monetary Union, known as EMU, was
  implemented on January 1, 1999 and a single European currency, known as the
  euro, was introduced. As of December 31, 2002, the following 12 member states
  have adopted the euro as their national currency: Austria, Belgium, Finland,
  France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal
  and Spain. The legal rate of conversion between the French franc and the euro
  was fixed on December 31, 1998 at 1.00 = €1.00 FF 6.55957, and we
  have translated French francs into euro at that rate for periods before we adopted
  the euro for purposes of preparing our consolidated financial statements.



|Exchange Rates
|--------------

The following table sets forth, for the periods and dates indicated, certain information concerning the exchange rates for the French franc for 1998, expressed in French francs per U.S. dollar, and for the euro from 1999 through April 30, 2003, expressed in U.S. dollar per euro.  The information concerning the U.S. dollar exchange rate is based on the Noon Buying Rate. We provide the exchange rates below solely for your convenience. We do not represent that French francs or euro were, could have been, or could be, converted into U.S. dollars at these rates or  at any other rate. The Federal Reserve Bank of New York has ceased publishing the Noon Buying Rates for French francs and other constituent currencies of the euro. For information regarding the effect of currency fluctuations on our results of operations, see Item 5 Operating and  Financial Review and Prospects.



|     |  | Period-end
      Rate               |      | Average
      Rate(1) |  | High |  | Low |     
|---- |  | ----------------------------------- | ---- | --------------------- |  | ---- |  | --- | ----
|     |  |                                     |      |                       |  |      |  |     |     
|     |  | French
      francs per U.S. dollar |     
|1998 |  |                                     | 5.59 |                       |  | 5.90 |  |     | 6.21

| | 
| | 

|(1) | The average of the Noon Buying Rates on the last business day of each month (or portion thereof) during the relevant period.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|                                    |  | Period-end
      Rate      |      | Average
      Rate(1) |  | High |  | Low |     
|----------------------------------- |  | -------------------------- | ---- | --------------------- |  | ---- |  | --- | ----
|                                    |  |                            |      |                       |  |      |  |     |     
|                                    |  | U.S.
      dollar per euro |     
|1999                                |  |                            | 1.01 |                       |  | 1.06 |  |     | 1.18
|2000                                |  |                            | 0.94 |                       |  | 0.92 |  |     | 1.03
|2001                                |  |                            | 0.89 |                       |  | 0.89 |  |     | 0.95
|2002                                |  |                            | 1.05 |                       |  | 0.95 |  |     | 1.05
|2003
        (through May 14, 2003) |  |                            | 1.15 |                       |  | 1.09 |  |     | 1.16
|                                    |  |                            |      |                       |  |      |  |     |     
|2002                                |  |                            |      |                       |  |      |  |     |     
|November                            |  |                            | 1.01 |                       |  | 1.00 |  |     | 1.01
|December                            |  |                            | 1.05 |                       |  | 1.02 |  |     | 1.05
|                                    |  |                            |      |                       |  |      |  |     |     
|2003                                |  |                            |      |                       |  |      |  |     |     
|January                             |  |                            | 1.07 |                       |  | 1.06 |  |     | 1.09
|February                            |  |                            | 1.08 |                       |  | 1.08 |  |     | 1.09
|March                               |  |                            | 1.09 |                       |  | 1.08 |  |     | 1.10
|April                               |  |                            | 1.12 |                       |  | 1.09 |  |     | 1.12
|May
        (through May 14, 2003)  |  |                            | 1.15 |                       |  | 1.14 |  |     | 1.16

| | 
| | 

|(1) | The average of the Noon
        Buying Rates on the last business day of each month (or portion thereof)
        during the relevant period for year average; on each business day of the
        month (or portion thereof) for monthly average. On May 14, 2003 the Noon
        Buying Rate was $1 = €0.87 ($1.15 per €1).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6/128

---



Back to Contents

|B. | Capitalization and Indebtedness
|-- | -------------------------------

Not applicable.



|C. | Reasons for the Offer and Use of Proceeds
|-- | -----------------------------------------

Not applicable.





7/128

---



Back to Contents

|D. | Risk Factors
|-- | ------------

|                             
|-----------------------------
|Risks Relating to Our Company

|                                                           
|-----------------------------------------------------------
|Our high level of debt may limit our operating flexibility.

We are highly leveraged. As of December 31, 2002,
  we had €121.6 million of financial debt, the bulk of which was incurred
  under a $125 million credit facility agreement that we entered into in April
  2001 and thereafter amended. This credit facility requires us to comply with
  certain covenants, including the maintenance of financial ratios relating to
  leverage, interest cover and cash coverage, and limits on our capital expenditures.
  This credit facility is described in more detail under Item 5 Operating
  and Financial Review and Prospects  Liquidity and Capital Resources
  and is included as an exhibit under Item 19. If we fail to comply with our covenants,
  our lenders could require us to repay the entire amount outstanding under our
  credit facility immediately.

Our high degree of leverage can have important consequences for our business, such as:



| |  | limiting our ability to make capital investments in order to expand our business;
| | - | ---------------------------------------------------------------------------------

| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements or other purposes;

| |   |                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limiting our ability to invest operating cash flow in our business, because we use a substantial portion of these funds to pay debt service and because our covenants restrict the amount of our investments;

| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limiting our ability to withstand business and economic downturns, because of the high percentage of our operating cash flow that is dedicated to servicing our debt; and

| |   |                                       
| | - | --------------------------------------
| |  | limiting our ability to pay dividends.

If we cannot pay our debt service or if we fail to meet our covenants, we could have substantial liquidity problems. In those circumstances, we might have to sell assets, delay planned investments, obtain additional equity capital or restructure our debt. Depending on the  circumstances at the time, we may not be able to accomplish any of these actions on favorable terms or at all.

On April 30, 2003, we signed an amendment to our $125
  million credit facility agreement with our lenders to extend the principal repayment
  schedule under our credit facility, which is described under Item 5 Operating
  and Financial Review and Prospects  Recent Developments. That agreement
  requires us to satisfy a number of conditions, including completing a rights
  offering by August 31, 2003, obtaining shareholder approval of a capital reduction
  necessary to permit that rights offering, and obtaining the approval of our
  3% convertible bond holders to a partial extension of the maturity of those
  bonds. If any of those conditions is not satisfied, the extension of the principal
  repayment schedule under our credit facility in years subsequent to 2003 will
  become void, we will be required to make significant principal payments beginning
  in January 2004, and we will need to negotiate with our lenders or obtain alternative
  financing (which might not be available) in order to avoid significant liquidity
  problems.



|We may not grow as quickly as we hope because the markets for data conferencing and Web conferencing, which we target for a substantial part of our future growth, are in very early stages of development and may not develop as expected.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A significant part of our growth strategy relies on expansion in the data conferencing and Web conferencing businesses. While we believe these markets are growing and have tremendous potential, they are currently very small, and we cannot assure you that they will continue  to develop significantly or at all. If these markets do not continue to develop, or if they develop more slowly than we anticipate, then we will not grow as quickly or profitably as we hope.



|Web conferencing services will compete with our traditional audio and video services, which may cause us to lose market share and to experience lower margins.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------

If Web conferencing services are perceived as an equal quality but lower-cost alternative to our traditional audio and video conferencing services, and if other companies capture a greater share of the Web conferencing market than we do, we may lose market share for virtual  communications services or experience lower margins. If high quality Internet-based services are offered by third parties for free or at significantly lower cost than our traditional audio and video conferencing services, any positive effect on our results of operations resulting from our  newer Internet-based services may be outweighed by negative effects on our traditional business. If we are unable to successfully respond to changes in Web conferencing technology and pricing models, we may lose customers or experience declining margins.





8/128

---



Back to Contents

|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|If we are unable to keep up with rapid changes in technology, our products and services could become obsolete.

The market for our products and services is marked by rapid technological change, frequent new product introductions and technology enhancements, changes in client demands and evolving industry standards. New products and services based on new or improved  technologies or new industry standards can render existing products and services obsolete and unmarketable. To succeed, we will need to enhance our current products and service offerings and develop new products and services on a timely basis to keep pace with developments related  to interactive communication technology and to satisfy the increasingly sophisticated requirements of our clients. If we fail to do so, our products and services could become unmarketable, which would adversely affect our business, financial condition and results of operations.

The process of developing our products and services is extremely complex and requires significant continuing development efforts. Our investments in research and development are significant and are likely to increase. Any delays in developing and releasing enhanced or new  products and services or in keeping pace with continuous technological change could harm our business, financial condition and results of operations.



|Our services may be interrupted by technological problems or affected by human error, which may cause us to lose customers.
|---------------------------------------------------------------------------------------------------------------------------

We depend on the performance of our sophisticated information systems to deliver services to our customers. This dependence will increase as we offer more complex data and Web-based services. Heavy usage of the systems or technological failures could cause delays or  could cause the system to break down for a period of time. Although we have backup systems and perform regular maintenance with a view to minimizing the occurrences of technical failures, we cannot eliminate all risk of technical problems, which are likely to occur from time to time.

In addition to our technology, we also depend on operators and other employees in connection with the provision of our non-automated services. Notwithstanding the existence of strict security procedures and operating procedures in our call centers, mistakes can arise. In May  2001, an operator in our Denver, Colorado call center inadvertently connected analysts dialing in for an earnings call to a board meeting where a possible acquisition was discussed. This human error necessitated the disclosure of confidential information regarding the proposed  acquisition to the public market. If technical problems or human errors occur with regularity or disrupt a significant number of customer communications, or if we experience technical problems or breach security with greater frequency than our competitors, then we might lose customers  or incur liability.



|We depend on the continued services of a few key executives, and only a limited number of those key executives have service contracts.
|--------------------------------------------------------------------------------------------------------------------------------------

Our future success depends upon the continued service of our executive officers and other key personnel, including our Chairman and Chief Executive Officer, François Legros. If we lose the services of one or more of our executive officers or key employees, or if one or more  of them decide to join a competitor or otherwise compete directly or indirectly with us, we may lose business to competitors or may have difficulty implementing our strategy.



|Because we have made several significant acquisitions in recent years, our consolidated financial statements are not comparable from period to period, which may make it more difficult for you to evaluate our business.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Since the beginning of 1997, we have made a number of significant acquisitions. Companies acquired during 2001 accounted for 76.0% of our revenue growth in 2001 and for a significant portion of our revenue growth in 2002, and companies acquired during 2000 accounted  for 4.4% of our revenue growth in 2001 and 5.7% of our revenue growth in 2000. Our acquisitions have changed the nature of our business by substantially increasing the proportion of our revenues earned in the United States and the share of our revenues derived from lower margin,  operator assisted services. As a result of these acquisitions, our consolidated financial statements included in this annual report are not comparable from period to period.



|Merger and acquisition related accounting charges may delay and reduce our profitability.
|-----------------------------------------------------------------------------------------

Our operating profit was significantly impacted in
  2001 and 2002 by accounting charges relating to our prior acquisitions, and
  our future operating profit may continue to be impacted by such charges. In
  2001, when we had an operating loss of €91.3 million, we recorded charges
  for amortization and impairment of goodwill and other intangibles of €92.0
  million, including an impairment charge of €61.3 million. In 2002, when
  we had an operating loss of €109.8 million, we recorded charges for amortization
  and impairment of goodwill and other intangibles of €107.5 million,
  including an impairment charge of €91.3 million. At the end of 2002, we
  had €80.0 million of goodwill and €78.2 million of other acquisition-related
  intangible assets on our balance sheet. Under current accounting standards,
  we are required to test our goodwill for impairment on at least an annual basis
  under relevant accounting standards. Further impairment charges could have a
  significant impact on our future operating results.





9/128

---



Back to Contents

|We have historically
        incurred and may continue to incur net losses, which may adversely affect
        the trading price of our ordinary shares and ADSs.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------

In the year ended December 31, 2002, we incurred a
  net loss of €113.8 million. As of December 31, 2002, we had an accumulated
  deficit of €225.2 million. To date, we have funded our operations and
  acquisitions primarily from the sale of equity securities, convertible bonds
  and bank borrowings. We expect to continue to incur significant acquisition-related
  amortization charges and development, sales and marketing and administrative
  expenses and, as a result, will need to generate significant revenues to achieve
  and maintain profitability. We cannot be certain that we will be able to achieve
  a revenue level sufficient to allow us to achieve profitability. Even if we
  do achieve profitability, we may not be able to sustain or increase profitability
  on a quarterly or annual basis in the future.



|Fluctuations in currency exchange rates could adversely affect our revenues and results of operations.
|------------------------------------------------------------------------------------------------------

Because we conduct our business in 19 different countries, our results of operations can be adversely affected by fluctuations in currency exchange rates. Our results of operations are particularly sensitive to movements in exchange rates between the euro and the U.S. dollar.  Our revenues in the United States (including those of our Canadian subsidiary, which uses the U.S. dollar) represented approximately 65.5% of our total 2002 revenues, approximately 63.4% of our total 2001 revenues, and approximately 45.6% of our 2000 revenues. Our results of  operations are also sensitive to movements in exchange rates of the euro against the British pound.

Between the introduction of the euro in January 1999 and December 31, 2001, its value declined substantially against the U.S. dollar and the British pound. As a result of this decline, our revenues stated in euros were greater than they would have otherwise been. However,  during the year ended December 31, 2002, the euro strengthened substantially against the U.S. dollar and the British pound. As a result of this increase, our revenues stated in euros have been lower than they would have otherwise been. Although the impact of exchange rate movements  on our results of operations is somewhat mitigated by the fact that we incur costs and borrow in the currencies of a number of countries in which we operate, currency exchange rate movements can nonetheless have a considerable impact on our results of operations.

When deemed appropriate, we enter into transactions to hedge our exposure to foreign exchange risks incurred in connection with borrowings. These efforts, when undertaken, may fail to offset the effect of adverse currency exchange rate fluctuations on our results of  operations. For more information concerning our exchange rate exposure, see Item 11 Quantitative and Qualitative Disclosures About Market Risk.



|Challenges to our intellectual property rights could cause us to incur costly litigation and, if we are not successful, could result in the loss of a valuable asset and market share.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our success depends, in part, upon our technology and other intellectual property rights. To date, we have relied primarily on a combination of copyright, trade secret and nondisclosure and other contractual restrictions on copying and distribution to protect our proprietary  technology. Litigation to enforce intellectual property rights or protect our trade secrets could result in substantial costs and may not be successful. If we are unable to protect our intellectual property rights, our business, financial condition and results of operations may suffer. The means  available to protect our intellectual property rights in France, the United States or any other country in which we operate may not be adequate to fully protect our intellectual property rights. In addition, not all foreign countries protect intellectual property rights to the same extent as do  the laws of France or the United States. Similarly, if third parties claim that we infringe on their intellectual property rights, we might be required to incur significant costs and to devote substantial resources to the defense of such claims. If we are not able to defend such claims  successfully, we might lose rights to technology that we need to develop our business, which may cause us to lose market share, or we might be required to pay significant license fees for the use of such technology.



|If third parties using or claiming prior rights to the name Genesys were to successfully prevent us from using the name Genesys or Genesys Conferencing in some markets, we might be required to establish new or alternative brand names in those markets.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We do not hold a registered trademark for the name Genesys or Genesys Conferencing in all jurisdictions where we operate, and in several jurisdictions, including France, third parties have filed objections to our applications for trademarks on Genesys Conferencing.  In particular, in June 2000, following our trademark application to register the trademark Genesys Conferencing in France, Alcatel filed an objection to the claim alleging a risk of confusion with a prior trademark registered in the name of a company acquired by Alcatel in 2000, for  the name Genesys. Alcatel has also filed claims opposing our European Union and German trademark applications for Genesys Conferencing. Since that time, Vivendi Water has also marketed Genesys as a concept for pre-treatment of industrial water. If Alcatel, Vivendi Water  or other third parties that use or own prior registered trademarks for the name Genesys were to successfully prevent us from using the name Genesys or Genesys Conferencing in some of our markets, this would impair our ability to build a worldwide brand and could require us to  spend substantial resources to establish new or alternative brand names in markets where we are unable to use our name.





10/128

---



Back to Contents

|We use third-party
        technology in providing our products and services, and our business would
        be harmed if we were not able to continue using this third-party technology.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In providing our products and services, we use third-party technology that we license or otherwise obtain the right to use, including teleconferencing platforms, software packages and software development tools. There are inherent limitations in the use and capabilities of the  technology that we license from third parties. Our business would be seriously harmed if the providers from whom we license software and technology ceased to deliver and to support reliable products, to enhance their current products in a timely fashion or to respond to emerging  industry standards. In addition, third-party technology may not continue to be available to us on commercially reasonable terms or at all. The loss of, or inability to maintain or obtain, this technology could result in significant delays or reductions in services we provide. Furthermore, we  might be forced to limit the features available in our current or future product and service offerings.

In addition, we rely on external service providers for a number of important services, including data conferencing, billing and Web streaming. Some of the companies we use for data conferencing and Web streaming services are small and have not yet reached profitability, and  they may be unable to keep pace with the rapid technological changes that characterize these sectors of the industry. If our third party service suppliers are unable to continue to provide quality services to us, we may be required to find alternative suppliers, which may lead to service  interruptions or entail additional cost.



|Risks Relating to Our Industry
|------------------------------

|                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------
|We may not be able to compete effectively with our competitors, which include some of the largest telecommunications companies in each country in which we operate.

The market for conferencing services is rapidly changing and intensely competitive. We expect competition to increase as the industry grows. We may not be able to compete successfully against current or future competitors.

Our principal competitors include major telecommunications companies, including France Telecom in France, British Telecom in the United Kingdom and operators such as AT&T, MCI Conferencing and Global Crossing in the United States. These companies are much  larger than us, and have substantially greater financial and other resources than us. Many of the voice and data communications customers of the major telecommunications companies use the conferencing services of those companies without considering alternative service providers. In  order to compete with these larger companies, we must offer better service, lower prices or both. While we believe that we successfully do so today, we cannot assure you that we will continue to be able to do so, particularly if substantial financial investments are required to maintain the  highest quality standards.

We also face significant competition from new and existing local and regional telecommunications companies. Such companies often view conferencing, data transmission and Web-based services as essential components of their future growth, and as a result they invest  heavily in developing and promoting such services. Unlike us, these companies offer a broad range of telecommunications services in addition to conferencing. Customers might prefer to use companies that provide multiple services, rather than specialist providers. If so, then we might  lose customers to multiple service providers, and our results of operations might be adversely affected.

There are also numerous other teleconferencing specialists, and the relatively low barriers to entry in the teleconferencing market means that there might be additional teleconferencing specialists in the future. The presence of other specialists in the market and low barriers to  entry mean that we must provide superior service to differentiate ourselves from our competitors, expand internationally to win contracts with customers seeking international services, and ensure that our prices are competitive.

In addition, Internet-based services are being increasingly offered by large software companies, such as Microsoft and Oracle, that are larger than us and have greater financial resources than we do. These companies can offer conferencing services as parts of packages that  include other business related software, including basic operating system software.



|The telecommunications and Internet sectors are experiencing low valuations compared to recent years, and raising capital in these sectors has become difficult.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------

Our share price and our ability to raise capital depends in part on the state of the market for shares of telecommunications companies, which in recent years has been characterized by low valuations and difficult conditions for raising new capital. If these market conditions  continue, then our share price could be adversely affected, and we could have difficulties if we were to require additional capital to fund our development.





11/128

---



Back to Contents

|Risks Relating to Our
        ADSs and Our Ordinary Shares
|----------------------------------------------------------

|                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------
|The market prices of our ordinary shares and ADSs have been volatile, and may continue to be volatile in the future.

Since our initial public offering in October 1998
  through April 30, 2003, the closing price of our ordinary shares ranged
  from a high of €79.50 per share ($83.36 per share using the December 31,
  2002 Noon Buying Rate) to a low of €1.10 per share ($1.15 per share using
  the December 31, 2002 Noon Buying Rate), and since April 26, 2001 through April
  30, 2003, the closing price of our ADSs ranged from a high of $15.29 per ADS
  to a low of $0.59 per ADS. Over the past two years, the stock market in general
  and the shares of technology and telecommunications companies in particular
  have experienced significant price fluctuations. The market prices of our ordinary
  shares and ADSs may continue to fluctuate significantly in response to various
  factors, including:



| |  | quarterly variations in operating results or growth rates;
| | - | ----------------------------------------------------------

| |   |                                               
| | - | ----------------------------------------------
| |  | the announcement of technological innovations;

| |   |                                                            
| | - | -----------------------------------------------------------
| |  | the introduction of new products by us and our competitors;

| |   |                                             
| | - | --------------------------------------------
| |  | changes in estimates by securities analysts;

| |   |                                   
| | - | ----------------------------------
| |  | market conditions in the industry;

| |   |                                          
| | - | -----------------------------------------
| |  | announcements and actions by competitors;

| |   |                                     
| | - | ------------------------------------
| |  | regulatory and judicial actions; and

| |   |                             
| | - | ----------------------------
| |  | general economic conditions.

|                                                                                
|--------------------------------------------------------------------------------
|Our stock option plan includes provisions that could have anti-takeover effects.

Under our stock option plan, if any shareholder or group of shareholders acquires ownership of more than 25% of our outstanding share capital, our board of directors will have the right to accelerate the vesting of employee stock options granted under our 1998, 1999, 2000  and 2001 stock option plans. As of April 30, 2003, options on up to 289,343 shares, representing approximately 1.87% of our share capital, are subject to potential accelerated vesting. The ability of the board of directors to accelerate the vesting of stock options could have the effect of  deterring a potential bidder from making an offer to acquire our company without the approval of our board.



|Exchange rate fluctuations may adversely affect the U.S. dollar value of our ADSs and our dividends (if any).
|-------------------------------------------------------------------------------------------------------------

As a holder of ADSs, you may face some exchange rate risk. Although we have no current plans to pay dividends, if and when we do pay dividends, they would be denominated in euro. Fluctuations in the exchange rate between the euro and the U.S. dollar will affect the U.S.  dollar amounts received by owners of our ADSs on conversion of dividends, if any. Moreover, these fluctuations may affect the dollar price of our ADSs on the Nasdaq National Market, whether or not we pay dividends.



|We have not yet distributed any dividends to our shareholders, and do not anticipate doing so in the near future.
|-----------------------------------------------------------------------------------------------------------------

We currently intend to use all of our operating cash flow to finance our business and service our debt for the foreseeable future. We have never distributed dividends to our shareholders, and we do not anticipate distributing dividends in the near term. Although we may in the  future distribute a portion of our earnings as dividends to shareholders, the determination of whether to declare dividends and, if so, the amount of such dividends will be based on facts and circumstances existing at the time of determination. In addition, our credit agreement prohibits us  from paying dividends. Accordingly, we cannot assure you that any dividends will be paid for the foreseeable future.





12/128

---



Back to Contents

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. We may also make written or oral forward-looking statements in our periodic reports to the Securities and Exchange Commission on Form 6-K, in our annual report to shareholders, in our proxy statements, in our  offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to third parties. Examples of such forward-looking statements include:



| |  | projections of operating revenues, net income, net earnings per share, capital expenditures, dividends, capital structure or other financial items or ratios;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | statements about the future performance of the conferencing industry;

| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | statements about our future economic performance or that of France, the United States or any other countries in which we operate; and

| |   |                                                      
| | - | -----------------------------------------------------
| |  | statements of assumptions underlying such statements.

Words such as believe, anticipate, plan, expect, intend, target, estimate, project, predict, forecast, guideline, should and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such  statements.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such factors, some of which are discussed under  Item 3 Key Information  Risk Factors beginning on page  of this annual report, include but are not limited to:



| |  | uncertainties regarding the market for data conferencing and Web conferencing, and the pricing for these services;
| | - | ------------------------------------------------------------------------------------------------------------------

| |   |                                     
| | - | ------------------------------------
| |  | the effects of technological change;

| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | fluctuations in the value of our ordinary shares and ADSs and in the value of the Internet and telecommunications sectors; and

| |   |                                               
| | - | ----------------------------------------------
| |  | competition from telecommunications providers.

We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements.

Forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update them in light of new information or future developments.





13/128

---



Back to Contents

|Item 4. Information on
        the Company
|------------------------------------------

|   |                                       
|-- | --------------------------------------
|A. | History and Development of the Company

The legal and commercial name of our company is Genesys S.A. We are a French société anonyme, a form of limited liability stock company, formed in 1986 pursuant to the French Commercial Code for a term of 99 years. Our registered office is located at LAcropole,  954-980 Avenue Jean Mermoz, 34967 Montpellier Cedex 2, France. Our phone number is +33 4 99 13 27 67.



Our agent in the United States is:
  Margie Medalle, Chief Executive Officer and Managing Director of Genesys North
  America,
  9139 South Ridgeline Blvd,
  Highlands Ranch, CO 80129

|Development of Our Business
|---------------------------

Our company was established in Montpellier, France in 1986. We launched our first major service, TeleMeeting, a fully automated conferencing service, in 1989. From 1990 to 1994, we concentrated our efforts on establishing our presence in the French market, and once  achieved, we concentrated on expansion and penetration of the European market from 1994 to 1997. During this time, we launched our Multi-Conference Manager software, which was used to monitor teleconferences. By 1997, we had become the leading conference specialist in Europe  in terms of revenue. We subsequently expanded the geographic scope of our business to include the Asia/Pacific Rim and North American regions.

In 1999, we added video conferencing and data conferencing to complete our product line. In 2000, we created our Web event unit, Genesys Open Media, which is now part of our principal French operating company, Genesys Conferencing France. In January 2001, we  launched two new Web-based services: PowerShare, our automated data conferencing service, and Multi-Conference Manager browser, the browser version of our Multi-Conference Manager software.

In October 2001, we launched Genesys Meeting Center, the conferencing industrys first fully integrated audio and Web conferencing platform. Genesys Meeting Center is a platform that incorporates our fully automated TeleMeeting audio conferencing, the Multi-Conference  Manager browser, our PowerShare Web conferencing and Astounds conference center, resulting in a Web-based platform that gives users access to a virtual conference room, available 24 hours per day, 7 days per week. In May 2002, we added integrated multipoint desktop video toGenesys Meeting Center, as well as MSN Messenger integration.



|Acquisitions
|------------

In recent years, our business has grown significantly through acquisitions. Our largest acquisition occurred in April 2001, when we acquired Vialog Corporation, a leading independent provider of conferencing services in North America, which was formed in January 1996. At  the time of the acquisition, Vialog was the largest company in North America focused solely on conferencing services. The acquisition of Vialog doubled our customer base and made us the leading conferencing specialist in North America. Following the acquisition, Vialog was merged  into our principal U.S. subsidiary, Genesys Conferencing Inc.

In March 2001, we also acquired the Canadian company
  Astound Incorporated, which developed and marketed online services for data
  collaboration, application sharing and personalized information delivery.

Even before the Vialog and Astound acquisitions, we
  grew significantly as a result of acquisitions. In 1999, we acquired Aloha Conferencing
  from Cable & Wireless and the conferencing services unit of Williams Communications.
  In 2000, we acquired the European audio and video conferencing business of Cable
  & Wireless, as well as three Web event and Web streaming companies in France,
  an audio and video conferencing company in Germany and a video conferencing
  company in Australia.

Our acquisitions have had a significant impact on our consolidated results of operations and financial condition. The financial implications of our acquisitions are described under Item 5 Operating and Financial Review and Prospects.



|Our Shares
|----------

In October 1998, we conducted our initial public offering in France, and our ordinary shares were listed on the Nouveau Marché of Euronext Paris. In April 2001, in connection with our acquisition of Vialog, our shares were listed on the Nasdaq National Market in the form of  American Depositary Shares, each representing one half of one ordinary share.





14/128

---



Back to Contents

|B. | Business Overview
|-- | -----------------

|            
|------------
|INTRODUCTION

We are the worlds leading independent specialist
  provider of interactive group communications services and applications, based
  on 2002 revenues. Since 2000, our revenues have grown significantly as a result
  of our acquisitions and, to a lesser extent, through organic growth, increasing
  from €92.4 million in 2000 to €179.0 million in 2001, to €200.7
  million in 2002. Our acquisitions have also shifted our revenue base from Europe,
  which was our largest market in 2000 (accounting for 49.5% of our total revenues),
  to North America, which was our largest market in 2002 (accounting for 68.6%
  of our total revenues).



We believe we provide the most innovative and technologically advanced portfolio of group communications services, as well as customized, value-added conferencing. With services that range from simple conference calls to large-scale Internet broadcasts, and from audio to  video, data and rich media, we provide group conferencing and managed event conferencing services that link remote participants and audiences at any time, enabling them to work, discuss and exchange ideas and information. We group our services into three categories of interactive  group communications:



| |  | Genesys Meeting Center:
        our fully integrated audio, video and Web conferencing platform accessible
        on demand through the Web and over the phone. The Genesys Meeting Center
        platform allows users to conduct a conference by telephone while exchanging
        information and monitoring the call over the Internet, providing our customers
        complete access to a virtual conference room 24 hours per day, seven
        days per week. This service is highly collaborative.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Genesys Events and Managed
        Services: for higher-profile corporate announcements, training sessions,
        and large-audience presentations. Our Genesys Events and Managed Services
        team offers our customers professional assistance in managing all aspects
        of their conference calls and other audio presentations. We believe that
        our hands-on assistance and global network help our customers achieve
        their conferencing goals. These services are specific to events. We group
        our fully operator-assisted Web-based audio and video streaming applications,
        TeleEvent, EventStream and PowerStream, under our Events and Managed Services
        category.

| |   |                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Video services:to complement our audio and Web conferencing services. Video conferencing is similar to audio conferencing except that generally one or more participants are viewing the video broadcast from select video-point locations. Genesys has a full staff of professionally trained operators available at all times to help schedule, arrange and manage the video session.

We believe that we have the broadest global presence among all full-service independent group communications specialists, with more than 1,100 employees in 19 countries in Europe, North America, and the Asia/Pacific Rim region providing service to approximately 18,000  businesses as of December 31, 2002. Our global presence, comprehensive product offering and commitment to innovation have allowed us to attract the business of some of the worlds largest users of group communications services.

STRATEGY

We
  aim to be the world’s leading provider of interactive group communications
  and applications in terms of market share, service innovation and operating
  profitability. In pursuing this goal, we intend to:

| |  | Leverage global presence
        and infrastructure to meet needs of multinational customers. We
        use our locally based, knowledgeable sales force to market and service
        customers in one or more markets. The physical presence of our capabilities
        in major North American, European and Asian Pacific markets has created
        a unique geographical coverage and recognized quality of service that
        is attractive to major multinational organizations seeking global coverage
        of their interactive group communications needs delivered by a local means.
        We leverage these differentiation elements in actively pursuing major
        new international contracts offered in global requests for proposals.                                                                                                                                                                                                                                                                                                                                                 
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Optimize sales and marketing capabilities
      in order to capture new accounts and foster usage.We
      have reorganized our sales teams into a direct sales «field»
      force and an indirect sales «sedentary» force in order to create
      a more focused effort for pursuing new major customer opportunities and
      for increasing the utilization of and penetration of existing accounts.
      Our direct sales force is comprised of high-level representatives who are
      responsible for establishing long-term relationships with the key communications
      services decision makers at major customers. Our indirect sales force works
      on a day to day basis to identify, register and train new individual users
      throughout a customer’s organization and then to increase the utilization
      of each existing user. We believe that these efforts will further result
      in our ability to develop a highly consistent and growing base of corporate
      users.                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Continue to provide a comprehensive
      suite of integrated communication services.We offer
      a full array of integrated real-time group communications services, from
      traditional audio and video conferencing services to the latest in multimedia
      collaboration over the Internet and Web streaming technology. We believe
      that offering a comprehensive suite of conferencing services and collaboration
      applications is essential to winning the business of our target multinational
      and multi-site national corporations, who are increasingly seeking to rationalize
      and centralize their communication needs.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Expand contribution margins and stimulate
      usage by migrating customers to automated conferencing and newer collaboration
      services. We continually migrate customers from operator-assisted
      services to fully automated conferencing and newer collaboration services.
      Utilizing the strong customer education capabilities of our indirect sales
      team, we are broadening customers’ understanding of the cost effectiveness,
      ease-of-use and expanded feature functionality of automated conferencing
      and newer collaborative services. As revenues are more significantly comprised
      of these less labor intensive automated conferencing and newer collaboration
      services, we expect our gross margins to strengthen. Additionally, as a
      benefit of our increasing long distance purchasing power and our exploration
      of new digital transport technology, contribution margins are expected to
      further strengthen as our underlying telecommunication long distance costs
      continue to decline as a percent of total cost of services.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





15/128

---



Back to Contents

| |  |  | Utilize proprietary research and development
      capabilities to create innovative applications for a global customer base. We develop and acquire innovative services and systems designed
      to ensure that our offerings respond to the expanding needs of customers’
      interactive group communications requirements. Additionally, we seek to
      effectively utilize our proprietary knowledge and capabilities in a manner
      that responds to changes in the global marketplace. As we move forward in
      developing and marketing innovative services that can accommodate the needs
      of a global customer base, we intend to focus on systems based on universal
      standards and open systems, in order to facilitate ease of use by a broad
      customer base.
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |  | Increase usage by delivering customers
      greater service value. We deliver service offerings that provide
      customers improved features and functionality in a cost effective solution.
      We intend to continue introducing innovative applications as well as innovative
      price methodologies that respond to customers’ desire for value based
      service offerings. We expect to implement pricing methodologies that promote
      greater customer usage, penetration and adoption of new services including,
      the bundling of our full suite of integrated multimedia group communications
      services and flat-rate pricing models.                                                                                                                               
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |  | Improve operating effectiveness and
      cost efficiency. We implemented a call center integration and overhead
      rationalization program designed to eliminate redundant infrastructure and
      administrative costs and to provide higher levels of customer service and
      management responsiveness. A major component of our plan included the closure
      and consolidation of six call centers throughout North America and Europe
      and the centralization of certain marketing, finance and administrative
      functions. We intend to further centralize and automate additional finance,
      administrative and customer marketing, service and billing functions by
      leveraging our recent development of a more unified management information
      system.   
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





|Our Communication and
        Collaboration Services
|----------------------------------------------------

As a leading global provider of comprehensive audio, Web, and video conferencing services, we enable businesses to conduct real-time, interactive group meetings and presentations via the telephone and the Internet. Our services are designed to enhance business  communications and often overcome many of the limitations posed by more traditional communication modes such as telephone calls, e-mail, fax, and even face-to-face meetings. We believe our services are particularly beneficial for efficiently addressing disparate audiences located in  multiple geographical locations. From simple conference calls to large-scale Web broadcasts, we provide our customers the flexibility of conducting their sessions with either our Web-based Genesys Meeting Center service or employing our professional event services team.



We group our services into three categories of interactive communications: Genesys Meeting Center, Event & Managed Services, and Video Conferencing. The services we offer range from fully automated, self-managed conferences, to high-touch  professionally managed and customized meetings. They are all based on one or more of three types of communication modes: audio conferencing, video conferencing, or Web conferencing.



|Genesys Meeting Center
|----------------------

Genesys Meeting Center is a fully integrated
  audio, video and Web conferencing platform accessible on demand through the
  Web and over the phone. Our innovative, automated service takes virtual communication
  to the next level and permits true real-time, multimedia collaboration. The
  Genesys Meeting Centerplatform allows users to conduct a conference
  by telephone while exchanging information and monitoring the call over the Internet.
  Our current release integrates our fully automated Genesys Meeting Center
  audio conferencing, Web conferencing and multipoint desktop video conferencing
  solutions into a single, automated service, providing our customers complete
  access to a virtual conference room 24 hours per day, seven days per week.



Genesys Meeting Center enables the moderator to fully manage all aspects of the meeting via the Internet with a simple click of the mouse. Genesys Meeting Center represented approximately 54.7% of our revenues in 2002.



Some of the key features and capabilities of the Web-based Genesys Meeting Center include:



| |  | Real-time interactive meetings with rich visual content. Genesys Meeting Center allows presenters to deliver dynamic multimedia presentations, collaborate and share any application running on their computers, conduct follow-me Web tours (which can be either pre-scripted or conducted ad hoc) and alternate between applications at any time during the meeting.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Scheduling, invitation
        and calendaring. Scheduling and invitation features enable authorized
        users to quickly and easily schedule Web conferences and generate meeting-specific
        invitations and reminders to send to audience members.

| | 
| | 



16/128

---



Back to Contents

| |  | Web-based audio management
        controls. This Web interface enables the moderator to fully manage
        the audio portion of the meeting via the Web from start to finish. One
        can view all the participants names as well as monitor their status,
        including mute, un-mute, and ejection from a meeting. In addition, there
        is the capability to manage larger-sized audiences with waiting rooms
        and sub-conference sessions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Integration with Microsoft.
        Genesys Meeting Center features a comprehensive invitation wizard
        with Microsoft Outlook® integration to leverage Microsoft contacts
        and to facilitate the management of invitations, personal scheduling and
        calendaring. In addition,Genesys Meeting Center is integrated
        with MSN Instant Messenger to directly start meetings with active members
        on the contact list.

| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Recording and archives.The audio and visuals of any meeting can be recorded for later on-demand playback by those who could not attend the original live session. In addition, live conferences can be economically streamed to reach broader audiences throughout the Web.

| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Detailed meeting reports.Users can obtain online meeting reports, including reports for individual meetings and summary level reports on meetings scheduled, users, attendance, capacity utilization and future reservations. In addition, reports can be generated to track the responses to audience surveys, polls and quizzes.

| |   |                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Desktop video support. We offer multi-point, Web cam-video conferencing capability, enabling a video connection between two or more sites. The moderator can choose the composition of the images shown on each screen: all sites, the site speaking or any combination of screens. These screen formats can be changed at any time during the meeting.

| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | No plug-ins required.Genesys Meeting Center is a Java-based application that functions
        with both Microsoft Explorer and Netscape browsers. There are no special
        plug-ins or downloads required for meeting guests and participants, making
        it convenient to invite audience members from behind most firewalls.

Genesys Meeting Centeris hosted on our global
  network with multiple bridge locations across the 19 countries in which we operate.
  We originally launched Genesys Meeting Center in October 2001 in North
  America and in the United Kingdom and progressively deployed it throughout the
  Asia/Pacific Rim region and Europe by the beginning of 2002. Localized versions
  of the service are available in English, French, German, Swedish, Spanish, Italian
  and Danish.



We generate revenues from Genesys Meeting Centerin three different ways. We charge for the Web-based conferencing services
  in Genesys Meeting Center based upon the number of individually identified
  participants available in the virtual conference room, offer a concurrent-seat subscription, which allows a customer to purchase a
  subscription based on the number of concurrent users rather than individually
  identified subscribers. In addition, we also earn revenues from the fully automated
  audio conferencing services in Genesys Meeting Center on a per-participant-minute
  basis.



|Genesys Events and Managed Services
|-----------------------------------

For higher-profile corporate announcements, training sessions, and large audience presentations, our Genesys Events and Managed Services team offers our customers professional assistance in managing all aspects of their conference calls and other audio presentations. We  believe that our hands-on assistance and global network help our customers achieve their conferencing goals. Genesys Events and Managed Services represented approximately 40.0% of our revenues in 2002.



From a traditional telephone conference to a cutting-edge,
  rich media Webcast, our managed event services provide our customers with multiple
  possibilities to help achieve their desired impact. We group our fully operator-assisted
  Web-based audio and video streaming applications, TeleEvent, and the
  add-ons EventStream and PowerStream, under our Genesys Events
  and Managed Services category.



| |  | TeleEvent. TeleEventis a fully operator-managed audio conference service designed specifically for large event-style conference calls, which can include several thousand participants. Participants may dial in from any location, or the operator may dial out to them. An operator takes full control of the conference. TeleEvent is frequently used for investor relations calls, new product launches or other announcements by top management of our customers.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Due to the complex and highly specific nature of TeleEvent, we assign a dedicated cross-functional team to each TeleEventclient. Our service begins with guidance in the initial planning of the event to maximize the events impact. During the event, specialized operators manage all aspects of the conference, including branded greetings, recording of participant information and question and answer sessions, which helps to control speaking time and maintain focus. This allows the presenter to focus on conveying the desired message to the audience.



17/128

---



Back to Contents

| |  | We also offer our customers
        a wide range of enhanced services for an additional fee. These services
        include transcripts of calls, real-time translation services, broadcast
        fax transmission of documents to conference participants, recording and
        rebroadcast of conferences and participant polling. Our operators can
        also assist customers in integrating our other services, including data
        collaboration and Webcasting, into their events.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | EventStream and PowerStream. EventStream and PowerStream are services designed to augment traditional audio conference calls by adding high-impact visual presentations and live video streams. Both services are based on our rich media technology, a powerful interface that enables the synchronization of video and/or audio with texts, images, slides, graphic animation and interactive modules. All elements can be packaged in an interface that reflects the corporate identity of our clients, including the customers logo, corporate graphics and colors.

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Participants can easily join an audio call via telephone and/or click onto a Web presentation with audio or video over any standard Internet connection. The client chooses how to broadcast the event but can allow participants to choose how they would prefer to view it. For example, participants may choose to listen in via telephone or through an audio stream over the Internet. For the convenience of participants who are unable to attend the original, live session, these events are recorded and archived for later, on-demand viewing.

|                  
|------------------
|Video Conferencing

To complement our audio and Web conferencing services, we also offer a full suite of video conferencing capabilities. Video conferencing is similar to audio conferencing except that generally one or more participants are viewing the video broadcast from select video-point  locations. We have a staff of professionally trained operators available at all times to help schedule, arrange and manage the video session. Video services represented approximately 4.5% of our revenues in 2002.



Our video services include the following:



| |  | Direct:Our direct video service is our basic automated service, which we believe offers our clients a low-touch, no-frills service at a competitive price.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Classic Service: Our classic service provides for basic remote operator support. Our classic service allows for certification of sites prior to a call, meeting set-up through an operator and off-site monitoring by our operators during a live meeting.

| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Premium Service:This package provides a complete suite of personalized support by our operators, including certification of sites prior to a call, meeting set-up through an operator and status screen display, as well as on-site monitoring by our operators during a live meeting.

| |   |                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Additional Options:A number of service offerings are available to add to the above options to enhance the service delivery the client may require. These include but are not limited to: helpdesk support, outside broadcast support, off-call diagnostics, and recording.

|                                 
|---------------------------------
|Group Communications Technologies

The services that we offer in our three categories are derived from three group communications technologies: audio conferencing, video conferencing, Web-based conferencing.



| |  | Audio conferencing. Audio conferencing connects multiple parties on a single telephone call through specialized telephone equipment known as a bridge. Each bridge has multiple ports, which allow conference participants to connect to a conference call. We offer two types of audio conferencing: fully automated, which is part of our Genesys Meeting Center, and our operator-assisted services.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Video conferencing.Video conferencing is similar to audio conferencing except that one or more callers may be viewed on a video monitor by the other participants.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Web-based conferencing.
        Web-based conferencing is conferencing using the Internet as the media
        for communication. We offer two types of Web-based conferencing services:
        data collaboration applications and Web streaming. Data collaboration
        applications help customers to enhance their audio conferences by allowing
        graphics, animation and audience participation through a simple Internet
        connection. Genesys Meeting Center allows conference participants
        to share and jointly edit or view documents in real time, or to access
        conference archives or learning sessions at their own pace. Web-based
        applications enable multiple users to conference and collaborate using
        both visuals and voice over the Internet.



18/128

---



Back to Contents

| |  | Genesys Meeting Center
        enables customers to monitor and manage their virtual conference room
        over the Internet. Our EventStream and PowerStream Web streaming
        applications described above are two of our other Web-based conferencing
        services.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|         
|---------
|Suppliers

We purchase three main types of products and services from outside suppliers:



| |  | Infrastructure/networks
        services. A significant portion of our direct costs are attributable
        to the purchase of local and long distance telephone services. We purchase
        telecommunications services from multiple suppliers in most of our markets
        and believe that multiple suppliers will continue to compete for our business.
        Direct costs also include the cost of hosting some of our infrastructure
        in co-location facilities. For example, the Genesys Meeting Center
        Web conferencing infrastructure is co-located in several Internet Data
        Centers, also known as IDCs, located around the world. The advantages
        of using an IDC are that it provides high availability facilities for
        operating Internet based services, including redundant power, air conditioning,
        fire containment systems and connectivity to the Internet, as well as
        physical security and other services.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Tele- and Videoconferencing Bridges and Technology. We purchase our bridges and related technology from a limited number of suppliers in each market in which we operate. We believe that there are a sufficient number of suppliers in this market so that we should be able to find alternative sources if the need were to arise.

| |   |                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Data Collaboration and Web Streaming. We buy hardware, software and development tools to develop and deploy proprietary and innovative Web-based collaboration and streaming services. We have multiple suppliers, or the potential to have multiple suppliers, for these products.

|                   
|-------------------
|Sales and Marketing

We seek to attract customers through multiple distribution channels and acquisitions. Once the relationship has been established, we attempt to cross sell multiple services throughout the customers organization worldwide.



|Sales
|-----

We maintain sales, marketing and customer service teams in most of the 19 countries in which we operate, and tailor our sales organization, marketing and advertising efforts to each individual market. At the end of December 2002, we had a total of 185 sales personnel,  including 69 based in Europe, 97 based in the North America and 19 based in Asia Pacific. We compensate our sales force with a base salary plus commission.



|Direct Sales
|------------

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Large Accounts.In each market, we focus our sales and marketing efforts primarily on large multinational companies and domestic companies with multiple sites, because these are the heaviest users of group communications services. To target these accounts, our direct sales staff focuses on the home country, city or headquarters of these multinationals as a base for developing global business relationships. In approaching large accounts, we seek to establish strong relationships and to position our company as a long-term partner and solution provider. We have made a concerted effort to win global contracts by emphasizing our global presence, and in 2002, won global contracts with companies such as Alfa Laval, Frost & Sullivan and Lufthansa.

| |   |                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Small Accounts.We also actively target small and medium size businesses using our inside sales force. Our inside sales team targets small and mid-size businesses through advertising in specialized magazines, telemarketing calls and direct mail.



19/128

---



Back to Contents

|                                            
|--------------------------------------------
|Indirect Sales and Distribution Arrangements

To broaden demand for our services, we actively pursue
  opportunities to respond to the needs of alternative telecommunications providers,
  business-oriented Web sites and business-to-business exchanges, marketplaces
  and other distribution partners that seek a provider who can offer group communications
  services to their users. These relationships, under which we typically provide
  our services under the brand name of the distributor, broaden our presence in
  the market and are particularly helpful in targeting small and mid-size companies.
  We currently serve as the exclusive out-sourced provider for Cable & Wireless
  in the United States and Western Europe, have distribution relationships with
  Optus and Tele1. We also have a PC bundling relationship with Hewlett Packard
  where Hewlett Packard has agreed to integrate and deliver a trial offer of Genesys
  Meeting Center on its HP Jornada 928 WDA. Additionally, we have a Webcam
  partnership with Philips, under which it has agreed a joint offer of Genesys
  Meeting Center2.0 with a Philips Webcam to its corporate accounts.



|Marketing
|---------

|       
|-------
|General

We target our marketing efforts on an industry by industry basis (vertical marketing) as well as on a geographic basis. We promote our services through both online and offline media. Online, we advertise on numerous sites, including Yahoo, Lycos, Google and Alta Vista  where we run banner ads, including ads that are displayed when users enter searches using the conferencing keyword. Our conferencing Web site, www.genesys.com, provides access to Genesys Meeting Center and allows non-customers to sign up to open an account. Offline, we  primarily advertise in specialized industry publications as well as attend key industry trade shows.



Customer communication programs are a critical component of our customer retention strategy. Our programs include an HTML client newsletter and e-mail campaigns informing clients about new services, upgrades and promotions. We also run a series of online seminars,  inviting high profile speakers from key vertical sectors to participate. Customers are invited to attend the events, which are delivered using our own services.



|Service Quality and Customer Care
|---------------------------------

We train employees in the principles of customer care management, which include service quality monitoring and the development of positive relationships with clients. We pursue a philosophy of continuous performance improvement, meaning we consistently measure our  performance and endeavor to improve it. We tie the bonus of our non-sales personnel to these measurements of service quality. We actively manage and analyze all facets of a conference call, including reservation, call execution, billing and follow up with customer satisfaction surveys.  We pride ourselves on our commitment to quality and customer satisfaction. We also review our performance with our customers on a regular basis, continually set specific performance improvement goals, and modify our operations accordingly. Feedback from our customers indicates  that these factors contribute to our high customer retention rate.



|Billing and Management Information Systems
|------------------------------------------

Our operating centers presently perform the billing and collection process for their respective customer bases. The data needed to develop an invoice is captured by each telecommunications bridge, stored on a database and entered into the billing system automatically. An  automated mediation platform coordinates and manages the information that circulates between the reservation software, the bridging hardware and the billing software. This platform facilitates the automated pull and push of information from one part of the system to another. This  means that information collected during the reservation process, by a reservationist or via the Web-based reservation system, is automatically transferred to the bridge to ensure that the correct number of ports is available as well as the relevant value added features. This extends to the  billing process, where the platform automatically pushes the call detail record collected by the telecommunications bridge software from the bridge to the billing software. The call detail record includes the account number, which identifies the entity paying for the call, the moderator  number, which identifies the person who organized the call and statistics about the length of the call, number of participants and value added features used. The automation of this process reduces the errors and increased costs associated with human intervention. Billing is primarily on a  second increment basis for the duration of each connected line. The frequency with which invoices are delivered to the customer for payment varies by operating center and by customer.



Each of our operating centers validates its invoices against its telephone bills to verify billing accuracy. In addition, each operating center generates reports and files that provide detailed customer activity including usage and rate profiles, payments, adjustments, accounts  receivable aging, credit status and commission summaries. Our billing system is built to take into account local customer demands as well as the legal specifications of each market. All of these files are input into centralized databases we are implementing regionally to provide  management with the ability to monitor customer value and make informed marketing, sales, financial and operational decisions.





20/128

---



Back to Contents

The flexibility and capabilities of our billing systems
  enhance its ability to serve our customers needs by allowing us to customize
  invoices according to a number of variables such as detail level, frequency
  of billing, class of service and local legal requirements. We have developed
  proprietary software used in the billing services provided to long distance
  service carriers and other telecom resellers that outsource their conferencing
  function to us. We are currently in the process of implementing a common back
  office system across all regions. This system, which is an upgrade to
  one of our existing systems, supports customer registration, reservations, call
  record processing and pricing, billing and reporting for all of our services.
  This common back office system will enhance our ability to respond to requests
  from customers for customized billing and reporting. The system has already
  been rolled out throughout Europe and partially in North America and we currently
  expect to have it implemented worldwide by the end of the third quarter of 2003.



|Customers
|---------

As of December 31, 2002, we had over 18,000 customers worldwide ranging in size from major multinational corporations and Fortune 500 companies, to small business, professional organizations and public institutions. We focus our sales and marketing efforts primarily on  the major multinational companies that are the worlds largest users of group conferencing services. We have experienced strong growth in the number of customers in recent years as a result of both internal growth and acquisitions. No one customer accounted for more than 5% of our  revenues during the year ended December 31, 2002. Our top 20 customers accounted for 29.6% of our revenues during the year ended December 31, 2002. Some of our top customers in 2002 were Cable & Wireless, CIGNA Corp., Citibank, Deutsche Bank, the Gartner Group and JP  Morgan.



Through March 2003, we had an agreement with Cable
  & Wireless USA, Inc. that it would purchase from our company at least 95%
  of all of its purchases of conferencing (audio, data and video) services for
  its own use or resale to its customers, with the exception of limited affiliate
  provided services. This agreement was entered into in April 1999 in connection
  with our acquisition of Aloha. In September 2002, Cable & Wireless USA Inc.
  sold its voice business, including its conferencing segment, to Primus Telecommunications.
  Subsequently, we signed a one-year agreement with Primus Telecommunications
  in October 2002 to provide conferencing services for the former Cable &
  Wireless USA, Inc customer base and Primus Telecommunications traffic. Unless
  we otherwise agree, the agreement will automatically renew at the end of its
  initial one year term.



On July 31, 1999, as a condition to our acquisition
  of the conferencing unit of Williams Communications, we and Williams Communications
  agreed that our company would be the third party preferred provider of audio
  and data conferencing services, and video services (that use ISDN as a transport
  protocol) to WilTel (formerly Williams Group Communications). The agreement
  is for an initial term of three years and there are limited exceptions where
  Williams Communications has internal capabilities. We are currently discussing
  the renewal of this agreement with WilTel.



|Global Presence
|---------------

As of December 2002, we offer our services in 19 countries
  in Europe, North America, and the Asia/Pacific Rim region. The countries in
  which we have facilities include:



|Australia | France    | Norway    | Taiwan         
|--------- | --------- | --------- | ---------------
|Belgium   | Germany   | Portugal  | The Netherlands
|Canada    | Hong Kong | Singapore | United Kingdom 
|Denmark   | Italy     | Spain     | United States  
|Finland   | Malaysia  | Sweden    |                

Our global presence is a key competitive strength
  that enhances our ability to serve the needs of our multinational clients and
  to win global contracts. With the exception of our video division, we are organized
  and managed on a market basis. We have an Executive Vice President for each
  of Europe, North America and Asia/Pacific Rim respectively, each of whom in
  turn reports to the Chief Executive Officer. In 2002, we reorganized our European
  operating structure in an effort to realize economies of scale and standardize
  our approach across the region. We created the positions of Vice President for
  Northern Europe and Vice President for Southern Europe, each of whom manages
  our activities in these territories. Local advertising and marketing decisions
  are made on a country-by-country basis and are coordinated by Group marketing.
  We also have sales teams that report to each regional Executive Vice President
  and focus on major multinational and global accounts.

Over the past three years, we have expanded our operations
  significantly, particularly in the United States, the worlds largest market
  for group communications services, most notably with our 2001 acquisition of
  Vialog. In 2000, 2001 and 2002 we earned 46%, 63% and 65% of our revenues in
  the United States respectively.



| | 
| | 
|

21/128

---



Back to Contents

The following tables break down our revenues in euros and as a percentage of total revenues by category of activity and geographic market for each of the years ended December 31, 2000, 2001 and 2002.



|                                            |  | Year ended December 31, |        
|------------------------------------------- |  | ----------------------- | -------
|                                            |  |                         |        
|                                            |  | 2001                    |        
|                                            |  | in thousandsof €        |        
|                                            |  |                         |        
|Genesys Meeting Center                      |  |                         | 72,656 
|Genesys
        Events and Managed Services |  |                         | 93,520 
|Video conferencing                          |  |                         | 10,944 
|Products                                    |  |                         | 1,831  
|                                            |  |                         |        
|Total revenues                              |  |                         | 178,951
|                                            |  |                         |        

|               |  | Year ended December 31, |       
|-------------- |  | ----------------------- | ------
|               |  |                         |       
|               |  | 2000                    |       
|               |  |                         |       
|               |  | in thousandsof €        |       
|               |  |                         |       
|North America  |  |                         | 40,357
|Europe         |  |                         | 35,781
|Asia-Pacific   |  |                         | 4,044 
|Video(1)       |  |                         | 12,237
|               |  |                         |       
|Total revenues |  |                         | 92,419
|               |  |                         |       
|               |  |                         |       

| | 
| | 

|(1)  Our Global
        Video Division was created in 2002. For 2000 and 2001, we have reallocated
        revenues from our geographic areas to our global video division for purposes
        of comparison with 2002. Absent such reallocation, in 2001, North America
        represented €113,481 thousand (63.4%), Europe represented €59,125
        thousand (33.0%) and Asia-Pacific €6,345 thousand (3.6%).
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          
|----------
|Technology

Our audio and video conferencing services are provided using equipment known as telecommunications bridges. Conferencing capacity is measured in ports, which can be networked in whole or in part to accommodate large calls. Currently, one port is needed for each  conference participant, but with the arrival of new conferencing technologies, this one-to-one scheme could change in the future. At the end of 2002, 64.2% of our audio and video conferencing ports were located in North America, 32.6% in Europe, and 3.1% in the Asia Pacific/Rim  region.



In order to ensure sufficient growth capacity, we employ structured planning methods to determine current and future capacity requirements. The automated bridges are currently run at a capacity of 4 000 minutes per port per month. We base our advance capacity planning on  annual corporate volume forecasts, daily peak capacity monitoring and individual major client (both new and existing) usage forecasting plans. We have also implemented regional bridge redundancy plans, in order to ensure that there is always additional redundant capacity that can be  brought into the bridge network when necessary. Additionally, we move toll free and toll number pairings between common bridges to assist in the optimization of existing capacity. By maintaining a close relationship with our bridge suppliers and carriers we have been able to  encourage innovation in areas such as bridge port capacity and number routing.



Our automated audio services are managed by proprietary software developed by us that organizes telephone connections and automatically interacts with the telecommunications bridge to control the various teleconference functions. Each subscriber to the Genesys Meeting  Center service is assigned a permanent call number that is assigned to a particular bridge. In an operator-managed conference, call numbers are assigned by an operator.



Through consistent investment in new technologies, we aim to continue to minimize and mitigate the risk of service outages. Together with our suppliers, we employ a range of technologies to enhance the global infrastructure of the bridging and telecommunications networks.  Such technologies include Sonet ring technology, dynamic transport routing tools, state of the art redundant servers and redundant bridges. We use the Operations Monitoring Environment Network (OMEN) software to monitor the various systems 24 hours a day, 7 days a week as it  provides instantaneous alerts for individual system component failures. A strict regimen of routine daily, weekly and monthly maintenance procedures helps to ensure a minimum of service outages.



Through our global presence, we benefit from multiple carriers in each region, which, with the dynamic number routing tools, enables us to re-route traffic in the event of bridge/network failures. Our global deployment of our multiple technology centers also enhances the  resilience of our infrastructure.





22/128

---



Back to Contents

We have also implemented a Network Operations Center that is designed to be proactive in the continued development, enhancement and implementation of preventative maintenance programs. The responsibility of our Network Operations Center includes the active review  of server components and network appliances on a scheduled basis, while performing routine analysis and maintenance of these devices in order to detect potential problems before they become actual problems.



|Research and Development
|------------------------

Our industry is currently experiencing a period of
  rapid technological change, driven in particular by the increase in Internet-based
  applications. We consider effective research and development essential to our
  success. In 2002, we spent €4.7 million, or 2.3% of our total revenues,
  on research and development. We consider that our ability to develop innovative
  applications such as Genesys Meeting Center and Genesys Event and Managed
  Servicessoftware have been instrumental to our growth and our ability to
  retain customers. Our research and development team, including management information
  systems development, included around 60 researchers at the end of December 2002.
  Our research and development team is managed by our Group President who oversees
  management information systems, including customer reporting and billing systems.
  We are currently focusing our research and development efforts on:



Genesys Events and Managed Services:



| |  | Call center automated bridge provisioning, one-call event reservation tools;
| | - | ----------------------------------------------------------------------------

| |   |                                                                        
| | - | -----------------------------------------------------------------------
| |  | Simple event interface customization tools for non-technical users; and

| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | Web registration tools to decrease operator assistance for participants joining events.

Genesys Meeting Center:



| |  | Total quality initiative to provide broader compatibility with a wide range of proxy servers, increased stability of the application, performance improvements to application sharing, and user interface modifications designed to provide simplified customization for every level of customer expertise;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Integration with Microsoft applications, including tighter link with Outlook Calendar scheduling, launch from Windows Messenger, instant meeting initialization from all Office applications;

| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | New client technologies to eliminate reliance on Java, open up new performance and interface capabilities; and

| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Implementation of enhanced meeting security options, enabling security-conscious clients to more effectively enforce and monitor individual users.

Next-generation collaborative platform:



| |  | Enabling the ability to provide rapid feature development and deployment;
| | - | -------------------------------------------------------------------------

| |   |                              
| | - | -----------------------------
| |  | Centralization of production;

Online provisioning and account management tools:



| |  | Establish online provisioning through debit/credit card transactions for account subscriptions, pay-per-view;
| | - | -------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | Web front-office capabilities for large customers and third party service providers, to offload account creation and configuration; and

| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | Enablement of individual users to edit account privileges and services, and for us to bill for services used on an individual account basis.

Alternative clients for online meetings:



| |  | Wireless clients enable users to manage resources and moderate or participate using connected personal digital assistants or mobile phones.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | HTML clients for go-anywhere capabilities, meaning that the client can receive service using an ordinary Web browser and therefore does not need to install anything on his or her computer to run the service.

We have also made and intend to continue to make selective acquisitions and have entered and will continue to enter into licensing arrangements to accelerate our research and development efforts.



|Intellectual Property
|---------------------

We have developed proprietary copyrighted software for our service and quality control functions, and have also developed in-depth technical know-how with respect to the operation of telecommunications equipment and the coordination of large volume conference calls. We  seek to protect our proprietary information and business practices as trade secrets.





23/128

---



Back to Contents

We hold one U.S. patent, which we acquired through
  our acquisition of Astound, and which pertains to the synchronization of multi-media
  events on a computer. We currently have four patent applications pending, two
  in the U.S. and two in Europe. One patent application (filed in both Europe
  and the U.S.) relates to the synchronization of transmitted and received data,
  and the other patent application (filed in both Europe and the U.S.) relates
  to remotely modifying presentations in a multimedia conference. We require our
  key employees to execute a non-disclosure agreement for the protection of our
  confidential information.



We have registered the trademark Genesys in several countries including France, where we first filed an application to register the trademark Genesys in June 1988, and have filed applications to register this and other trademarks in other jurisdictions. In June 2000,  following a trademark application by Genesys to register the trademark Genesys Conferencing in France, Alcatel filed an objection to the claim alleging a risk of confusion with a prior trademark registered in the name of a subsidiary of Alcatel, for the name Genesys. Alcatel has  also filed claims opposing our European Union and German applications for Genesys Conferencing. We are currently involved in negotiations with Alcatel regarding the use of the mark Genesys. Additionally, at the end of 2001, Vivendi Water began marketing Genesys as a  concept for pre-treatment of industrial water.



|Competition
|-----------

The market for group communications services is rapidly evolving and competitive. In almost all of the countries in which we operate, major telecommunications operators dominate the group communications market. Additionally, large software companies are increasingly  offering Internet-based services. Each of these companies has greater financial and operating resources than we do and many of them are owned by the governments of the countries in which they operate or, if privatized, have significant political and economic importance in their home  countries. Despite their large share of the group communications services market, group communications services account for a small percentage of the revenues of most major telecommunications operators, and based on our experience marketing group communications services, we  believe they frequently view the activity as non-strategic. We believe this provides an opportunity for specialists that focus entirely on group communications services.



We believe that the principal competitive factors affecting the market for our services are:



| |  | quality, reliability and
        security of service offerings;
| | - | ---------------------------------------------------------------
| |   |                                                                
| |  | innovation;                                                    
| |   |                                                                
| |  | brand awareness;                                               

| |   |                                                       
| | - | ------------------------------------------------------
| |  | responsivness and quality
        of customer service;

| |   |                         
| | - | ------------------------
| |  | ease of use of services;

| |   |                  
| | - | -----------------
| |  | geographic scope;

| |  | 
| |  | 

| |  | compatibility with new and
        existing communication formats and everyday tools;
| | - | -------------------------------------------------------------------------------------

| |   |       
| | - | ------
| |  | price.

Our failure to adequately address any of the above factors could harm our business.

|Our Principal Competitors
|-------------------------

We divide our principal competitors into three groups based on revenues.



| |  | Companies with conferencing revenues of approximately U.S. $200 million or more per annum: AT&T and MCI Conferencing, part of MCI;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | Companies with conferencing revenues of over U.S. $100 million to U.S. $199 million per annum: Intercall, Global Crossing, Webex, Premiere; and

| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Companies with conferencing revenues of below U.S. $100 million per annum: ACT, Raindance, British Telecom, France Telecom, Deutsche Telekom and Sprint.

Although we compete with each of these groups of competitors, we believe that those companies with large conferencing capacity, a diverse geographic scope and a broad range of services, such as our company, are best positioned to successfully bid for large conferencing  contracts.





24/128

---



Back to Contents

|Regulation
|----------

In general, the telecommunications industry is subject to extensive regulation by national, state and local governments. Although there is little or no direct regulation of the core group communications offered by us in any of the countries in which we operate, various  government agencies, including the U.S. Federal Communications Commission, or FCC, and the French Autorité de Regulation des Telecommunications, have jurisdiction over some of our current and potential suppliers of telecommunications services. Government regulation of those  services has a direct effect on the cost of our communications services. We cannot assure you that the FCC, Autorité de Regulation des Telecommunications or any other governmental agencies will not seek to regulate us as a common carrier, or seek to regulate the prices, conditions or  other aspects of the group communications services that we offer. Additionally, government regulations in countries other than the United States and France vary widely and may restrict our ability to offer our services in those countries. We believe that we are currently in material  compliance with all applicable communications laws and regulations.



|C. | Organizational Structure
|-- | ------------------------

The table below sets forth our significant subsidiaries and affiliates as of December 31, 2002.



|Significant
        Subsidiary or Affiliate |  | Country of
      Incorporation |                      | Ownership
      Interest | 
|------------------------------------------- |  | ------------------------------ | -------------------- | ------------------------ | 
|                                            |  |                                |                      |                          | 
|Genesys
        Conferencing, Inc           |  |                                | United
      States  |                          | 
|                                            |  |                                |                      |                          | 
|Genesys
        Conferencing Ltd            |  |                                | United
      Kingdom |                          | 

|   |                               
|-- | ------------------------------
|D. | Property, Plants and Equipment

Our development of local facilities serves the dual
  purposes of providing local language, local currency, and local time zone services
  to the areas served by each operations center, as well as backup and overflow
  capacity among other centers in the event all or part of a conference needs
  to be re-routed from an operations center that is at full capacity. Our administrative
  headquarters are located in Montpellier, France. At December 31, 2002, our principal
  operational facilities were the locations listed in the table below.



|North
        America         |  |  | Size (m2) |  |  | Europe              |  |  | Size (m2) |  |  | Asia/Pacific         |  |  | Size (m2) | 
|----------------------------- |  |  | --------- |  |  | ------------------- |  |  | --------- |  |  | -------------------- |  |  | --------- | 
|                              |  |  |           |  |  |                     |  |  |           |  |  |                      |  |  |           | 
|Headquarters:                 |  |  |           |  |  | Headquarters:       |  |  |           |  |  | Headquarters:        |  |  |           | 
|Denver,
        Colorado      |  |  | 4,117     |  |  | Montpellier, France |  |  | 3,750     |  |  | Singapore            |  |  | 282       | 
|                              |  |  |           |  |  |                     |  |  |           |  |  |                      |  |  |           | 
|Call
        Centers:         |  |  |           |  |  | Call Center         |  |  |           |  |  | Call Center          |  |  |           | 
|Reston,
        Virginia      |  |  | 4,141     |  |  | Croydon, England    |  |  | 1,693     |  |  | Melbourne, Australia |  |  | 400       | 
|Chanhassen,
        Minnesota |  |  | 3,288     |  |  |                     |  |  |           |  |  |                      |  |  |           | 

All operations are in office locations close to the city center or in nearby suburbs. These leases expire or are renegotiable within the next ten years and are adequate for our expansion plans. Forward lease commitments are not significant in relation to total ongoing operating  expenses and all lease costs are consistent with generally available market rentals. We believe we could obtain comparable facilities at similar market rates if necessary. Our operations centers provide us with a high degree of redundancy. We can reroute most of our conferences from  one operations center to another if necessary. By networking our operations centers in different time zones, we can use idle evening and nighttime capacity in one center to fulfill daytime demand at another center.

In February 2002, we announced plans to consolidate our North American and
    European call centers to provide higher levels of customer service and improve
    operating efficiencies. In March 2002, we announced the execution of the first
    phase of this consolidation, with the closure of our Bedford, Massachusetts
    call center on March 20, 2002. We next closed our Denver, Colorado call center
    in June, 2002. In October 2002 we closed our Montgomery, Alabama call center,
    and in December 2002 we finalized our U.S. call center consolidation with
    the closure of our Honolulu, Hawaii call center. All traffic generated through
    the closed sites has been successfully re-routed to our remaining North American
    call centers in Reston, Virginia and Chanhassen, Minnesota. In October 2002,
    we closed our Roedermark, Germany (near Frankfurt) call center. Traffic generated
    through that site has been re-routed to our Croydon, England call center.
  Throughout2002, we also undertook some internal
    restructuring of our business operations. In January 2002, we merged our former
    U.S. operating subsidiary Genesys Conferencing Inc., into Genesys Conferencing
    of Massachussets, Inc. (formerly Vialog). We then merged the combined company
    into a newly formed Delaware corporation, Genesys Conferencing Inc., in order
    to reincorporate our consolidated U.S. operations in Delaware. In June 2002,
    following the approval of our shareholders, we contributed all of the conferencing
    activities we conducted in France to our subsidiary, Genesys Conferencing
    France S.A., in order to become a holding company. The French restructuring
    was retroactive to January 2002.

25/128

---



Back to Contents

|Item 5. Operating and
        Financial Review and Prospects
|------------------------------------------------------------

|        
|--------
|Overview

|       
|-------
|General

We were founded in Montpellier, France in 1986
    to develop automated audio conferencing services. Since then, we have expanded
    through internal growth and acquisitions to become the world's leading specialist
    provider of interactive group communications services and applications, based
    on annual revenues. We have significantly expanded our global presence and
    the scope of our service offering over the last several years. We have evolved
    from a regional audio conferencing provider generating 94.9% of our revenues
    within Europe in 1998 to become a global company earning 68.6% of our revenues
    outside Europe in 2002. We have also diversified the scope of our products
    and services.


In 2001, we completed two major acquisitions.
    In March 2001, we acquired Astound Incorporated, a leading provider of Web
    conferencing and data collaboration software. In April 2001, we acquired Vialog
    Corporation, a leading independent provider of conferencing services in the
    United States. Our income statements for 2001 include the results of Astound
    for nine months and the results of Vialog for eight months. The results of
    both companies are included for the full year in 2002.


In 2002, we undertook a major consolidation of
    our operations, integrating the activities of Vialog and responding to the
    significant increase of automated services as a percentage of our activities.
    The shift to automated services has reduced our revenue growth, but should
    increase our gross margin percentage following the implementation of our consolidation
    process, as automated services are priced lower than operator-assisted services
    but carry higher gross margin percentages. The consolidation resulted in the
    closure of five call centers, including the closing of our Germany call center,
    and was the main driver in the reduction in the number of our employees from
    1,530 as of December 31, 2001 to 1,119 as of December 31, 2002. We have also
    streamlined and reorganized our senior management as a result of our more
    simplified operational structure. We expect to realize the full benefits of
    the consolidation beginning in 2003.


In connection with our
  acquisition of Vialog, we incurred a significant amount of debt under a $125
  million credit facility that we signed in April 2001. The credit facility requires
  us to comply with financial ratios on a quarterly basis and to make principal
  repayments on a semi-annual basis. On April 30, 2003, we signed an amendment
  to this agreement with our creditors to reschedule principal payments under
  our credit facility and to modify our financial ratio requirements. Some of
  the provisions of that amendment are subject to conditions, including obtaining
  approval from the holders of our 3% convertible bonds of a rescheduling of principal
  under their bonds, and the completion of a rights offering by August 31, 2003.
  See “Liquidity and Capital Resources” below for more details.


Impact of Acquisitions

Our recent results of operations have been significantly
    affected by a number of acquisitions that we undertook in 2000 and 2001 to
    expand our global presence and service offering. Although we did not acquire
    any company in 2002, the effect of Vialog and Astound acquisitions are significant
    because our financial statements for 2002 include the results of Astound and
    Vialog for the full year, whereas our financial statements for 2001 include
    the results of Astound and Vialog for only nine months and eight months, respectively.


Among the most significant effects of our acquisitions
    have been:


| |  | Increased revenues. During the three
      year period ended December 31, 2002, our revenues grew from €92.4 million
      in 2000 to €200.7 million in 2002. Companies we acquired during 2001
      accounted for €65.7 million in revenues, or approximately 76.0% of
      our total annual revenue growth, in 2001. An additional €3.8 million,
      or 4.4% of total annual revenue growth in 2001, was due to the impact of
      including a full year of revenues in 2001 from companies that were consolidated
      for less than the full year in 2000. Our 2002 revenue growth was significantly
      impacted by including a full year of revenue for companies that were acquired
      during 2001. Although we have integrated the revenues of the companies acquired
      in 2001 within the applicable reporting business segments, these companies
      generated €31.5 million of revenue in 2001 prior to date of acquisition,
      which was not included in our 2001 revenues.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | Change in composition of revenue. Most
      of the companies that we have acquired, such as Vialog, historically generated
      a significant proportion of their revenues from operator-assisted services.
      These services entail higher labor costs than automated conferencing services.
      We position operator assisted services as a complement to our core automated
      service, and have been migrating existing customers of our acquired companies
      from operator assisted services to automated services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | Global presence. Our acquisitions
      have enabled us to expand our geographic coverage from 5 European countries
      at the beginning of 1998 to 19 countries in North America, Europe and the
      Asia Pacific region at the end of 2002. Our April 2001 acquisition of Vialog
      alone nearly tripled the size of our North American operations. One of the
      effects of our expansion into new markets has been to increase our exposure
      to exchange rate fluctuations, and in particular, the U.S. dollar. In 2002,
      the U.S. dollar declined significantly compared to the euro. The impact
      of exchange rate fluctuations is discussed in more detail below.                                                                                                                                                                                                                                                                                                           

26/128

---




Back to Contents



| |  | Increased acquisition-related charges.
      We have recorded significant goodwill in connection with our acquisitions.
      Until the end of 2001, we amortized our goodwill. Beginning in 2002, in
      accordance with Statement of Financial Accounting Standards No. 142, Goodwill
      and Other Intangible Assets, we stopped amortizing our goodwill and
      instead test goodwill at least annually for impairment. We have recorded
      significant charges for impairment of goodwill and other intangible assets
      in 2001 and 2002, as discussed further below. We have also recorded significant
      restructuring expenses resulting from the integration of Vialog's operations
      with ours and the related reduction of workforce and consolidation of call
      centers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |  | Increased Indebtedness and Financial Expenses.
      We incurred significant amounts of debt in connection with our acquisition
      of Vialog under a $125 million credit facility that we signed in April 2001,
      which has been amended on several occasions. Our increased debt has resulted
      in a significant increase in our financial expenses. In addition, we have
      had to negotiate with our lenders waivers of and amendments to certain terms
      of that credit facility, including financial ratio covenants and our principal
      repayment schedule in order to maintain compliance with the credit facility
      and to give us the financial flexibility to develop our business. See “Liquidity
      and Capital Resources” below for more detail.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Segments

We have four reportable
  business segments, including three geographic segments (North America, Europe
  and Asia Pacific) that cover our services other than video conferencing, as
  well as a global video segment that we segregated from our other services beginning
  in 2002 (we have restated our segment information for prior years to reflect
  the separation of our global video segment). We make key decisions and evaluate
  operating performance on the basis of these segments. Our results of operations,
  broken down among our segments, are set forth in Note 18 to our consolidated
  financial statements included in this annual report.


Key Factors Affecting Results of Operations

Revenues


We generate our revenues primarily from fees
    charged to our customers for conferencing and related services. In our geographic
    segments, we earn services revenues from our Genesys Meeting Center and Genesys
    Events and Managed Services platforms, while in our global video segment we
    earn revenues from video conferencing services. The key drivers of our revenues
    in each of these areas are described below:


| |  | Genesys Meeting Center. This is our
      platform for automated services, providing fully integrated audio, video
      and web conferencing accessible on demand through the web and over the phone.
      We bill services associated with our Genesys Meeting Center platform on
      a per-user, per-minute basis and, in the case of the Web conferencing service
      available in Genesys Meeting Center, primarily on a monthly subscription
      basis, under which subscribing customers pay a monthly fee for a certain
      number of concurrent users in a virtual conference room. We launched Genesys
      Meeting Center in October 2001. For comparability with 2002, we have
      grouped the revenues and related costs for prior years of our fully automated
      audio conferencing service, TeleMeeting, and our fully automated Web conferencing
      service, Powershare, and the related web browser, Multi Conference Manager,
      under our Genesys Meeting Center platform.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Genesys Events & Managed Services.
      This platform provides for our managed event services, which consists of
      a fully operator managed audio conference service and our web-based audio
      and video streaming applications. In connection with our events and managed
      services platform, we bill our attended audio conferencing services on a
      per-line, per-minute basis, and we charge for Web streaming services on
      a per event basis that takes into account the size and complexity of the
      services requested. We launched Genesys Events & Managed Services
      in May 2002. For comparability with 2002, we have grouped the revenues and
      related costs for prior years of our fully operated-assisted audio conference
      service, TeleEvent, and our Web-based audio and video streaming applications,
      EventStream and PowerStream, under our Genesys Events & Managed Services
      Platform.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Video conferencing. Video conferencing
      is similar to audio conferencing except that generally one or more participants
      are viewing the video broadcast from select video-point locations. We bill
      our video conferencing services on a per-line, per-minute basis.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to our services,
  we also earn other revenues from the sale of audio and video conferencing equipment,
  which we record under “Products.” We offer conferencing equipment
  for sale to promote the use of our services and as an added benefit to those
  customers that seek to purchase both their conferencing equipment and their
  conferencing services from a single supplier.


We generally recognize revenue upon completion
    of conferencing services or at the time of shipment of equipment, unless we
    have future obligations for installation or have to obtain customer acceptance,
    in which case we defer revenue recognition until these obligations are met.
    We include amounts billed in excess of revenue recognized as deferred revenue
    in our consolidated balance sheet.


Cost of Revenue and Gross Profit

Our cost of revenue consists
  of long distance telephone and network costs, operator and technical support
  wages and benefits, office expenses for operations staff, depreciation and maintenance
  on our teleconferencing bridges and telecommunications equipment and equipment
  product costs.


27/128

---




Back to Contents

Of these costs, operator and technical support wages and benefits is the largest cost in delivering our managed event services and video conferencing services.  For our automated services provided under Genesys Meeting Center, long distance telephone and network costs is the largest costs category.  Our automated services carry higher gross margin percentages than our attended services and, as a result we expect our gross margin percentage to increase if the percentage of total revenue from automated services continues to increase.  We also expect that the costs savings from the consolidation of our North American call centers will have a positive impact on our gross margin percentage beginning in 2003.



Operating income



Our operating income depends on our revenue, our cost of revenue, and the level of our other operating expenses, which include the following:



| |  | Research and development costs, which consist
      primarily of salaries and benefits for research and development personnel,
      depreciation of research and development equipment and related expenses;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Selling and marketing expenses, which consist
      primarily of the costs of advertising and marketing materials and salaries
      and benefits paid to sales personnel;

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | General and administrative expenses, which
      consist primarily of personnel costs and costs for general corporate functions,
      including finance, accounting, facilities and administration and human resources,
      and fees for professional services such as consulting, legal and accounting
      services. Expenses relating to software and information system network maintenance
      and development are classified as general and administrative expenses rather
      than research and development expenses. In 2001 and 2002, some costs relating
      to development of an integrated reservation and billing system were capitalized.

In 2002, we also had a restructuring charge relating to our call center consolidation, which is shown as a separate component of our operating expenses.  In addition, impairment of goodwill and other intangible assets, and amortization of intangible assets (and goodwill, prior to 2002) are recorded as operating expenses.



Seasonality of Business

Our volume of business is primarily driven by the usage of our services during regular business days. However, our volume level is impacted by seasonality mainly from decreased use of conferencing services by businesses during significant vacation periods, particularly in the months of July, August and December. However, in spite of this seasonality, our volume of conferencing minutes sold increased in each quarter of 2002 on both a comparative and quarterly sequential basis.



Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

We use EBITDA as an important measure of the performance
  of our business. 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 impact of depreciation
  and amortization. We define EBITDA as earnings (loss) before interest, income
  taxes, depreciation, amortization charges and impairment of goodwill and other
  intangibles. Our depreciation charges are divided among the line items of cost
  of revenue, research and development, selling and marketing and general and
  administrative expenses, based on the use of the assets being depreciated. EBITDA
  is not a measurement of operating performance calculated in accordance with
  accounting principles generally accepted in the United States, and should not
  be considered a substitute for operating income (loss), net income (loss), cash
  flows from operating activities or other statement of operations or cash flow
  statement data prepared in accordance with generally accepted accounting principles,
  or GAAP. Because all companies do not calculate EBITDA identically, the presentation
  of EBITDA contained in this annual report may not be comparable to similarly
  named measures of other companies.



We also measure EBITDA excluding the impact of certain non-recurring charges.  These are charges that we incur as a result of unusual events that are not likely to be repeated, such as our call center consolidation or the termination of a contract.  We believe it is useful to measure EBITDA excluding non-recurring charges because it permits us to measure the relative performance of the recurring aspects of our business from year to year.



We believe that the most directly comparable GAAP measure to EBITDA is operating income (loss).  The following table reconciles EBITDA to operating loss for the periods indicated.



28/128

---




Back to Contents

|                                               | 2000                          |   | 2001    |   | 2002     |  
|---------------------------------------------- | ----------------------------- | - | ------- | - | -------- | -
|                                               | (in thousands
      of euros) |  
|                                               |                               |  
|Operating loss                                 | (2,962                        | ) | (91,266 | ) | (109,814 | )
|Depreciation                                   | 7,474                         |   | 15,862  |   | 15,728   |  
|Amortization of goodwill and
      intangibles | 7,015                         |   | 30,768  |   | 13,888   |  
|Impairment of goodwill and intangibles         |                              |   | 61,269  |   | 93,613   |  
|                                               |                               |   |         |   |          |  
|EBITDA                                         | 11,527                        |   | 16,633  |   | 13,415   |  
|                                               |                               |   |         |   |          |  
|Non-recurring charges                          | 202                           |   | 294     |   | 13,337   |  
|                                               |                               |   |         |   |          |  
|EBITDA before non-recurring
      charges      | 11,729                        |   | 16,927  |   | 26,752   |  

EBITDA included non-recurring charges of €13.3
  million in 2002, as follows: €4.3 million in restructuring charges for
  call center consolidation in North America and Germany, €3.2 million for
  the early termination of a Rich Media contract, €1.6 million of duplicate
  costs and retention bonuses associated with the consolidation of call centers
  in North America, €1.2 million for severance of General and Administrative
  staff, €1.2 million for early fulfillment of a U.S. long distance contract,
  €0.9 million for streamlining the senior management, €0.9 million
  for separation costs of selling and marketing staff. EBITDA included non-recurring
  charges of €0.3 million in 2001. Before non-recurring
  charges, EBITDA increased, from €16.9 in 2001 to €26.7 million in
  2002.There were no non-recurring charges recorded in 2000.



Year ended December 31, 2002 compared with year ended December 31, 2001

Impact of Call Center Consolidation

In 2002, our results of
  operations were significantly affected by the closure of five call centers,
  four in the United States and one in Germany. We consolidated our call center
  operations in North America from six call centers to two, by closing call centers
  in Bedford, Massachusetts (March), Denver, Colorado (June), Montgomery, Alabama
  (October) and Honolulu, Hawaii (December). In addition, we closed a call center
  in Roedermark, Germany in October 2002. We recorded an accrual of €7.7
  million for restructuring costs relating to the U.S. closures and €0.6
  million relating to the German closure, primarily for unusable future facility
  lease commitments, the write-off of certain leasehold improvements and equipment,
  employee severance as well as other miscellaneous costs. Of the €7.7 million
  accrued restructuring costs relating to the U.S. closures, €3.8 million
  was recorded as a restructuring charge, which is shown as a separate line item
  in our consolidated statements of operations. The remaining €3.9 million
  of the accrual was recorded as an increase to goodwill as prescribed by U.S.
  GAAP, because it related to two of the call centers obtained with the Vialog
  acquisition and their closing was a result of the excess capacity we had as
  a result of the acquisition. The accrual for closing the Roedermark, Germany
  call center was recorded as a restructuring charge. For a detailed discussion
  of our restructuring costs associated with the call center closures, see Note
  13 to our consolidated financial statements included in this annual report.



Revenue

Total revenues increased from €179.0 million
  in 2001 to €200.7 million in 2002, an increase of 12.1%. Our revenues were
  significantly impacted by the inclusion of a full year of revenues from Vialog
  and to a lesser extent, Astound, and by exchange rates. Although we have integrated
  the revenues for the companies acquired during 2001 into the respective operating
  segments, these companies generated €31.5 million of revenues in 2001 prior
  to the date of acquisition. On the other hand, our revenues were adversely affected
  by a decline of 5.3% in the annual average translation rate of the U.S. dollar
  expressed in euros in 2002. As a result of this decline, our revenues in North
  America were €6.5 million lower than they would have been if the 2001 average
  translation rates had remained unchanged in 2002.



Operationally, we realized significant volume increases,
  as call volume minutes increased from 727 million in 2001 (or 868 million in
  2001 when combined with Vialog's minutes for the first four months of 2001),
  to 1,162 million in 2002. The revenue impact of the volume increase was offset
  by reduced prices due to competitive pressures and favorable prices provided
  on large contracts, and the migration of our customers from assisted services
  to lower-priced, automated services.



29/128

---




Back to Contents

We experienced significant volume increases in each
  of our operating segments. Additionally, in North America, we reported a significant
  increase in revenues, due principally to the full year consolidation of Vialog
  and, to a lesser extent, Astound, partially offset by the unfavorable impact
  of the U.S. dollar exchange rate. European revenues grew by 8.3%, led by a €2.0
  million increase in revenues from the development of our Scandinavian business.
  Video revenues declined due to the decline of the U.S. dollar exchange rate
  and the launch of automated, lower-priced video service.



The following table breaks down our revenues by segments for each of 2001 and 2002 in euros and expressed as a percentage of total revenues:



|               |  | Year ended December

      31, | 
|-------------- |  | ------------------------------ | 
|               |  |                               
|               |  | 2001                           | 
|               |  | in thousandsof €               | 
|               |  |                                | 
|North America  |  | 108,035                        | 
|Europe         |  | 53,762                         | 
|Asia-Pacific   |  | 6,210                          | 
|Global Video   |  | 10,944                         | 
|               |  |                                | 
|Total revenues |  | 178,951                        | 
|               |  |                                | 

Among our services, we experienced a significant shift
  from our assisted events and managed services to our automated Genesys Meeting
  Center services. The following table sets forth our revenues for 2001 and 2002
  by category and expressed as a percentage of total revenues.



|                                       |  | Year ended December
      31, | 
|-------------------------------------- |  | ----------------------------- | 
|                                       |  |                               | 
|                                       |  | 2001                          | 
|                                       |  |                               | 
|                                       |  | in thousandsof €              | 
|                                       |  |                               | 
|Genesys Meeting Center(1)              |  | 72,656                        | 
|Genesys Events and Managed Services(1) |  | 93,520                        | 
|Video conferencing                     |  | 10,944                        | 
|Products                               |  | 1,831                         | 
|                                       |  |                               | 
|Total revenues                         |  | 178,951                       | 
|                                       |  |                               | 

|                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)For
      periods prior to October 2001 and January 2002, revenues set forth under
      the headings “Genesys Meeting Center” and “Genesys Events
      and Managed Services”, respectively, relate to predecessor services.
      See “Overview — Key Factors Affecting Results of Operations
      — Revenues” above.

Revenues from our automated Genesys Meeting Center
  platform (or its predecessor) increased by 51.2%, from €72.7 million during
  2001 to €109.9 million during 2002. Call volume minutes more than doubled,
  from 393 million in 2001 (or 441 million in 2001 when combined with Vialog’s
  minutes for the first four months of 2001), to 831 million in 2002. Expressed
  in value and volume, this increase was mainly attributable to the continuous
  migration of our customers from assisted services to automated services in 2002,
  particularly in North America where the attended services portion in total revenues
  was high in 2001(as most of Vialog’s customers used that service before
  we acquired Vialog).



Conversely, revenues from our Genesys Events &
  Managed Services platform (or its predecessor)decreased
  by 14.2%, from €93.5 million during 2001 to €80.2 million during 2002,
  primarily due to the migration of customers to automated services, as mentioned
  above. Call volume minutes also decreased by 1.2%, from 330 million in 2001
  (or 422 million in 2001 when combined with Vialog’s minutes for the first
  four months of 2001), to 326 million in 2002.



Video conferencing revenues decreased by 18.3%, from €10.9 million during 2001 to €9.0 million during 2002.  The reasons for this decrease are described above, as this service represents our Global Video segment.  Call volume minutes increased, from 4 million in 2001 to 5 million in 2002.



Gross Profit

Our gross profit increased by 10.1%, from €102.8
  million in 2001 to €113.2 million in 2002. This increase of €10.4
  million primarily resulted from a full year of gross profit from Vialog, partially
  offset by the negative impact of the U.S. dollar exchange rate, which reduced
  gross profit by approximately €3.4 million. In addition, gross profit was
  adversely impacted by the reduction in the unit price of minutes sold, discussed
  above, as well as two categories of non-recurring costs, which were a €1.2
  million charge relating to the early fulfillment of our obligations under a
  U.S. long distance supplier contract, and a € 1.6 million charge for duplicate
  personnel costs related to the North American call center consolidation in 2002,
  which are not permitted to be included in the separate restructuring charge
  line on the Income Statement under U.S. GAAP.



As a percentage of revenues, gross profit decreased
  from 57.4% in 2001 (or 56.8% in 2001 when combined with Vialog for the first
  four months of 2001) to 56.4% in 2002. The non-recurring items cited above had
  an impact of 1.0% of revenues. The cost reduction from the consolidation of
  call centers performed in 2002 is expected to increase the gross margin, starting
  in 2003.



30/128

---




Back to Contents

The following table sets forth our gross profit by segment for 2001 and 2002, both as an absolute amount and as a percentage of segment revenues.



|                         |  | Year
      ended December 31, | 
|------------------------ |  | ----------------------------- | 
|                         |  |                               | 
|                         |  | 2001                          | 
|                         |  |                               | 
|                         |  | in
      thousandsof €        | 
|                         |  |                               | 
|North America            |  | 58,134                        | 
|Europe                   |  | 39,556                        | 
|Asia-Pacific             |  | 3,138                         | 
|Global Video             |  | 1,947                         | 
|                         |  |                               | 
|Total gross
      profit |  | 102,775                       | 
|                         |  |                               | 

Our gross margin in 2002 was impacted by the increase
  in the proportion of our revenues earned in North America, as our gross margin
  is significantly higher in Europe than in North America. We expect the savings
  from the consolidation of call centers completed in 2002 to have a favorable
  impact on our gross margin, starting in 2003. Excluding the non-recurring costs
  described above, the gross margin for North America decreased from 53.8% in
  2001 to 52.5% in 2002. In Europe, our gross margin increased, principally as
  a result of a shift from attended to automated services in the United Kingdom.



Operating Loss and operating expenses

Our operating loss increased from €91.3 million in 2001 to €109.8 million in 2002. This increase was primarily a result of the increased impairment charge partly offset by the elimination of goodwill amortization as a result of the application of Statement of Financial Accounting Standards No 142, as discussed above.  Excluding the impact of amortization and impairment of goodwill and other intangibles, our operating income would have been €0.8 million in 2001, and we would have recorded an operating loss of  €2.3 million in 2002. The principal reason for this operating loss was the impact of the restructuring charge of €4.3 million relating to our call center closings.  The following table breaks down our operating costs and expenses that are not included in cost of revenue for 2001 and 2002 by major category.



|                                                     |  | Year ended
      December 31, | 
|---------------------------------------------------- |  | ----------------------------- | 
|                                                     |  |                               | 
|                                                     |  | 2001                          | 
|                                                     |  |                               | 
|                                                     |  | in thousandsof €              | 
|                                                     |  |                               | 
|Research and
      development                       |  | 5,366                         | 
|Selling and
      marketing                          |  | 42,718                        | 
|General and
      administrative                     |  | 53,920                        | 
|Restructuring
      charge                           |  |                              | 
|Impairment
      of goodwill and other intangibles   |  | 61,269                        | 
|Amortization
      of goodwill and other intangibles |  | 30,768                        | 
|                                                     |  |                               | 
|Total operating
      expenses                       |  | 194,041                       | 
|                                                     |  |                               | 

Research and Development

Our research and development expenses decreased, from €5.4 million in 2001 to €4.7 million in 2002. They also decreased as a percentage of our total revenues from 3.0% in 2001 to 2.4% in 2002.  Our major development activities have been the development and enhancement of our Genesys Meeting Center platform and, to a lesser extent, our Genesys Event and Managed Services platform.



Selling and Marketing

Our selling and marketing expenses increased, from €42.7 million in 2001 to €50.0 million in 2002, and increased by 1% as a percentage of our total revenues from 23.9% in 2001 to 24.9% in 2002. Selling and marketing expenses of Vialog and Astound before our acquisition amounted to €6.1 million in 2001. The remaining amount of increase mainly related to the expansion of our global marketing team. Our selling and marketing efforts are focused on further penetrating the market and increasing global brand awareness. Additionally, selling and marketing expenses included € 0.9 million of employee separation costs in 2002.



31/128

---

Back to Contents
  General and Administrative

Our general and administrative
  expenses increased, from €53.9 million in 2001 to €56.5 million in
  2002. General and administrative expenses of Vialog and Astound before our acquisition
  amounted to €6.9 million in 2001. Additionally, general and administrative
  expenses included €4.0 million of non-recurring items in 2002, including
  €2.5 million related to the termination of a rich media contract, €0.9
  million for the senior management realignment and streamlining decided in December
  2002 and €0.6 million of separation costs, partly relating to our North
  America restructuring. In 2001, general and administrative expenses included
  €0.3 million of non-recurring items. Excluding these non-recurring items,
  our general and administrative expenses would have decreased, from €53.6
  million in 2001 to €52.5 million in 2002. This decrease is due to cost
  reduction efforts implemented throughout 2002 and the favorable impact of currency
  exchange rate movements, as the dollar depreciated against the euro. Our general
  and administrative expenses decreased as a percentage of total revenues from
  30.1% in 2001 to 28.2% in 2002.
  Impairment of Goodwill and Other
    Intangibles

Impairment of goodwill
  and other intangibles increased from €61.3 million in 2001 to €93.6
  million in 2002. These impairment charges resulted from our review, done with
  the assistance of an independent valuation consulting company, of the carrying
  value of our goodwill and certain identifiable intangible assets that were recorded
  in connection with our various acquisitions. In 2001, the impairment charge
  was mainly associated with the 2001 acquisition of Astound (€32.8 million)
  and our 1999 and 2000 acquisitions relating to video-conferencing (€20.6
  million). In 2002, the impairment charge was mainly related to our North America
  operating segment (€93.3 million). For additional information regarding
  this impairment charge, see Note 3 to our consolidated financial statements
  included in this annual report.
  Amortization of Goodwill and
    Other Intangibles

Amortization of goodwill
  and other intangibles decreased from €30.8 million in 2001 to €13.9
  million in 2002. The decrease of amortization charges by €16.9 million
  in 2002 is mainly the combined result of the impairment recorded in December
  31, 2001 and October 1, 2002, and the adoption of Statement of Financial Accounting
  Standards No 142, which prohibits the amortization of goodwill and indefinite-lived
  intangible assets.
  Operating loss by segment
  The following table breaks down our operating
      loss by segment for each of 2001 and 2002.
  2001
      
      2002(in thousands
        of euros)North America
      (62,611
      )
      (103,520
      )Europe
      (7,986
      )
      15,904Asia-Pacific
      (618
      )
      (232
      )Global Video
      (24
      )
      (1,131
      )Corporate(1)
      (20,027
      )
      (20,835
      )Total operating loss
      (91,266
      )
      (109,814
      )(1)
      Corporate includes primarily non-operating
        charges and expenses and research and development expenses.In Europe, the favorable
  change of €23.9 million is mainly the result of an impairment charge of
  €19.4 in 2001, compared to no impairment charge in 2002.
  EBITDA
  Our EBITDA decreased from €16.6 million,
    or 9.3% of revenue in 2001, to €13.4 million, or 6.7% of revenue in 2002.
    EBITDA in 2002 included non-recurring charges of €13.3 million in 2002,
    as follows: €4.3 million restructuring charge for call center consolidation
    in North America and Germany, €3.2 million for the termination of a Rich
    Media contract, €1.6 million of duplicate costs and retention bonus associated
    with the consolidation of call centers in North America, €1.2 million
    for severance of General and Administrative staff, partly associated with
    the North America consolidation, €1.2 million for the early fulfillment
    of our obligations under a U.S. long distance contract, €0.9 million
    for streamlining the senior management and €0.9 million for separation
    costs of selling and marketing staff. EBITDA included non-recurring charges
    of €0.3 million in 2001. Excluding the impact of non-recurring charges,
    our EBITDA increased from €16.6 million, or 9.3% of revenue, in 2001,
    to €26.7 million, or 13.3% of revenue, in 2002.
  32/128
  
  Back to Contents
  For a reconciliation of EBITDA to operating
      loss, see “Overview  EBITDA” above.
  The following table sets forth our EBITDA,
      including non-recurring charges, by segment for 2001 and 2002, both as an
      absolute amount and as a percentage of segment revenues.
  Year ended
        December 31,2001
      
      2002in thousandsof €
      
      % of segmentrevenues
      
      in thousandsof €
      
      % of segmentrevenuesNorth America
      12,532
      
      11.6
      %
      12,808
      
      10.1
      %Europe
      21,116
      
      39.3
      %
      21,601
      
      37.1
      %Asia-Pacific
      472
      
      7.6
      %
      663
      
      10.2
      %Global Video
      1,474
      
      13.5
      %
      10
      
      0.1
      %Corporate
      (18,961
      )
      n.s.
      
      (21,667
      )
      n.s.Total
      16,633
      
      9.3
      %
      13,415
      
      6.7
      %The decline in our EBITDA
  margin in North America in 2002 was due largely to the same factors that caused
  our gross margin in this segment to decline and the restructuring charge of
  €3.8 million, as described above. In Europe, we recorded a reduction in
  EBITDA margin in 2002 despite an increase in gross margin, principally as a
  result of non-recurring charges associated with the termination of a Rich Media
  contract for €1.1 million (the additional €2.1million of the €3.2
  million total charge was reported in our corporate segment) and the closure
  of our German call center for €0.6 million. Our EBITDA margin declined
  substantially in our Global Video segment due to the lower reported revenues
  and similar level of operating expenses, despite the fact that our gross margin
  in this segment improved slightly.
  Financial Income (Expense)
  Net financial expenses
    increased from €6.7 million in 2001 to €9.0 million in 2002, principally
    as a result of the impact of including a full year of the interest expenses
    on our U.S. $125 million credit facility that we signed in April 2001 in connection
    with the Vialog acquisition, as opposed to eight months of interest expense
    on this credit facility in 2001. Additionally, the foreign exchange gain decreased
    from €1.5 million in 2001 to €1.3 million in 2002.
  Income Tax Expense
  We recorded income tax
    expense of €0.5 million in 2001 and an income tax credit of €5.0
    million in 2002. The net change of €5.5 million mainly consists of an
    €8.5 million deferred tax credit relating to the amortization of identifiable
    intangible assets in connection with the acquisition of identifiable intangible
    assets from Astound and Vialog in 2001. This effect was partly offset by €4.8
    million expenses recorded in 2001 for acquisition costs of companies classified
    in goodwill and identifiable intangible assets. The remaining change is mainly
    explained by current tax in the countries where we pay income tax, particularly
    in the United Kingdom and, to a lesser extent, Sweden.
  Net Loss
  For the foregoing reasons,
    we recorded a net loss of €113.8 million in 2002 compared to a net loss
    of €98.5 million in 2001. Excluding the charges for impairment and amortization
    of goodwill and other intangible assets, our net loss would amount to €6.3
    million in 2002, compared to €6.5 million in 2001.
  33/128
  
Back to Contents
Year ended December 31, 2001 compared with year ended December 31, 2000
Revenue
Total revenues increased from €92.4 million in
  2000 to €179.0 million in 2001, an increase of 93.6%. Of the €86.5
  million increase, €65.7 million, or 76.0% of the increase, was principally
  attributable to our April 2001 acquisition of Vialog and, to a lesser extent,
  our March 2001 acquisition of Astound. Approximately €1.3 million, or 1.5%
  of the increase in revenues from 2000 to 2001 was due to the impact of currency
  exchange rate movement, as the euro depreciated against the dollar and other
  non-euro currencies in which we do business. Approximately €3.8 million,
  or 4.4% of the increase in revenues from 2000 to 2001 was due to the impact
  of including a full year of revenues from Genesys Open Media, Telechoice and
  Eureka, three companies that we acquired in 2000, as opposed to including only
  six, three and three months, respectively, in 2000. The remaining €15.7
  million increase in 2001 was driven by organic revenue growth in the United
  States and Europe, particularly in the United Kingdom, France and Sweden. This
  organic growth was mainly attributable to our automated audio-conferencing services.
Operationally, call volume minutes also significantly increased, more than doubling from 305 million in 2000 to 727 million in 2001, or 868 million in 2001 when combined with Vialog's minutes for the first four months of 2001.We experienced significant volume increases in each of our operating segments, particularly in North America following our acquisitions.
In North America, we reported a significant increase
  in revenues, due principally to our acquisitions. European revenues grew by
  50.3%, mainly associated with the impact of including a full year of revenues
  from Genesys Open Media, Telechoice and Eureka in 2001, as opposed to including
  only six, three and three months, respectively, in 2000. Video revenues declined
  due to the loss of maintenance contracts for video equipment that were included
  as part of our acquisition of Cable & Wireless’ European video conferencing
  activities in 2000, as well as the migration of customers from video services
  to our new innovative data and Web streaming services.
The following table breaks down our revenues by segments for each of 2000 and 2001 in euros and expressed as a percentage of total revenues:
Year ended December
      31,2000
    
    2001in thousandsof €
    
    % ofrevenues
    
    in thousandsof €
    
    % ofrevenuesNorth America
    40,357
    
    43.7
    %
    108,035
    
    60.1
    %Europe
    35,781
    
    38.7
    %
    53,762
    
    30.3
    %Asia-Pacific
    4,044
    
    4.4
    %
    6,210
    
    3.5
    %Video

    12,237
    
    13.2
    %
    10,944
    
    6.1
    %Total revenues
    92,419
    
    100.0
    %
    178,951
    
    100.0
    %
Among our services, we experienced a significant increase of our automated Genesys Meeting Center services.  The following table sets forth our revenues for 2000 and 2001 by category and expressed as a percentage of total revenues.
Year ended December
      31,2000
    
    2001in thousandsof €
    
    % ofrevenues
    
    in thousandsof €
    
    % ofrevenuesGenesys Meeting Center
    27,950
    
    30.2
    %
    72,655
    
    40.5
    %Genesys Events and Managed services
    49,148
    
    53.2
    %
    93,520
    
    52.3
    %Video conferencing
    12,238
    
    13.2
    %
    10,944
    
    6.1
    %Products
    3,083
    
    3.3
    %
    1,831
    
    1.1
    %Total revenues
    92,419
    
    100.0
    %
    178,951
    
    100.0
    %
Revenues set forth under
  the headings “Genesys Meeting Center” and “Genesys Events
  and Managed Services” relate to predecessor services. See “Overview
  – Key Factors Affecting Results of Operations – Revenues”
  above.

34/128

Back to Contents
Revenues from the predecessor services to our automated
  Genesys Meeting Center platform increased by 159.6%, from €28.0 million
  during 2000 to €72.7 million during 2001. Of the €44.7 million increase,
  €20.6 million, or 46.1% of the increase, was attributable to our April
  2001 acquisition of Vialog and €4.5 million, or 10.1% of the increase,
  was attributable to our March 2001 acquisition of Astound. The remaining increase
  is due to the internal growth, mainly associated with the migration of our customers
  from assisted services to unattended, automated services.
Revenues from the predecessor services to our Genesys
  Events & Managed Services platform increased by 90.4%, from €49.1 million
  during 2000 to €93.5 million during 2001. Of the €44.4 million increase,
  €41.0 million, or 92.3% of the increase, was attributable to our April
  2001 acquisition of Vialog. The remaining increase is primarily attributable
  to the full year consolidation of Genesys Open Media, a web streaming and managed
  events services company, in 2001, compared to only six months in 2000.
Video conferencing revenues decreased by 10.6%, from €12.2 million during 2000 to €10.9 million during 2001. The reasons for this decrease are described above, as this service represents our Global Video segment.
Gross Profit
Our gross profit increased from €51.7 million
  in 2000 to €102.8 million in 2001. This increase is principally attributable
  to our April 2001 acquisition of Vialog. As a percentage of revenues, gross
  profit increased from 55.9% in 2000 to 57.4% in 2001. The improvement in our
  gross margin resulted from the continued shift toward automated services of
  customers of companies that we acquired in 1999 and 2000, particularly in North
  America. Automated services carry higher gross margins than attended services.
The following table sets forth our gross profit by segment for 2000 and 2001, both as an absolute amount and as a percentage of segment revenues.
Year ended December
      31,2000
    
    2001in thousandsof €
    
    % of segmentrevenues
    
    in thousandsof €
    
    % of segmentrevenuesNorth America
    19,904
    
    49.3
    %
    58,134
    
    53.8
    %Europe
    26,217
    
    73.3
    %
    39,556
    
    73.6
    %Asia-Pacific
    1,993
    
    49.3
    %
    3,138
    
    50.5
    %Global Video
    3,584
    
    29.3
    %
    1,947
    
    17.8
    %Total gross profit
    51,698
    
    55.9
    %
    102,775
    
    57.4
    %The gross profit in North America increased in 2001,
  primarily due to our acquisition of Vialog in April 2001. The gross profit in
  Europe increased in 2001, mainly due to to the impact of including a full year
  of revenues from Genesys Open Media, Telechoice and Eureka in 2001, as opposed
  to including only six, three and three months, respectively, in 2000 and organic
  growth. The gross margin in North America increased in 2001 primarily due to
  the fact that customers of companies that we acquired in 1999 and 2000 shifted
  from attended services to automated services in 2001.
Operating Loss and operating expenses
Our operating loss increased from €3.0 million in 2000 to €91.3 million in 2001. Excluding impairment of goodwill and other intangibles, our operating loss was €30.0 million in 2001. This increase was primarily a result of the increased amortization costs associated with our 2001 acquisitions and the growth in our sales and marketing function. The following table breaks down our operating costs and expenses that are not included in cost of revenue for 2000 and 2001 by major category.
Year ended December
      31,2000
    
    2001in thousands
      
      of €
    
    % ofrevenues
    
    in thousandsof €
    
    % ofrevenuesResearch and development
    2,613
    
    2.8
    %
    5,366
    
    3.0
    %Selling and marketing
    17,867
    
    19.3
    %
    42,718
    
    23.9
    %General and administrative
    27,165
    
    29.4
    %
    53,920
    
    30.1
    %Impairment of goodwill and other
      intangibles
    
    
    
    
    61,269
    
    34.2
    %Amortization of goodwill and
      other intangibles
    7,015
    
    7.6
    %
    30,768
    
    17.2
    %Total operating expenses
    54,660
    
    59.1
    %
    194,041
    
    108.4
    %Research and Development
Our research and development expenses more than doubled
  from €2.6 million in 2000 to €5.4 million in 2001, although they remained
  essentially steady as a percentage of our sales. The increase in research and
  development expenses resulted primarily from the expansion of our workforce
  in connection with our development efforts in Web streaming (Genesys Open Media,
  acquired in July 2000) and data collaboration (Astound, acquired in 2001), as
  well as the development of the Genesys Meeting Center, which we launched
  in the second half of 2001.
Selling and Marketing
Our selling and marketing expenses more than doubled from €17.9 million in 2000 to €42.7 million in 2001, and increased by over 4% as a percentage of our total revenues from 19.3% in 2000 to 23.9% in 2001. Of the €25.0 million increase, €12.1 million, or 48.4%, was primarily attributable to our acquisition of Vialog, which more than doubled our sales force in North America. The remaining amount of increase mainly related to the organic growth of our sales force, particularly in the United States, the expansion of our global marketing team, and, to a lesser extent, expenses in connection with the launch of our Genesys Meeting Center platform.
General and Administrative
Our general and administrative expenses more than doubled, from €27.2 million in 2000 to €53.9 million in 2001, but only slightly increased as a percentage of total revenues from 29.4% in 2000 to 30.1% in 2001. Of the €26.7 million increase, €16.0 million, or 60.0% of the increase, was principally attributable to the inclusion of eight months of expenses of Vialog, and to a lesser degree the inclusion of nine months of expenses of Astound.
35/128

Back to Contents
Approximately €2.2
  million, or 7.9% of the increase from 2000 to 2001 was due to inclusion of a
  full year of expenses of each of Genesys Open Media, Telechoice and Eureka in
  2001, compared to only six, three and three months, respectively, in 2000. The
  remaining increase is mainly attributable to integration expenses in connection
  with the Vialog and Astound acquisitions, as well as increased expenses due
  to the growth of our company (such as increased professional fees and investor
  relations following our listing in April 2001 on the Nasdaq Stock Market).
Impairment of Goodwill and Other
  Intangibles
During
  the period from 1999 to 2001, we acquired numerous businesses using our ordinary
  shares as a major component of the purchase price when our valuation was at
  a significantly higher level. Due to the dramatic downturn in the valuation
  of companies in the telecommunications industry during 2001, and the estimated
  future financial performance of the industry, we evaluated the carrying value
  of our long-lived assets in accordance with Statement of Financial Accounting
  Standards No. 121, Accounting for the impairment of long-lived assets and
  for long-lived assets to be disposed of. As a result of this assessment,
  we recorded an impairment charge amounting to €61.3 million in 2001, which
  is mainly associated with the 2001 acquisition of Astound (€32.8 million)
  and our 1999 and 2000 acquisitions relating to video-conferencing (€20.6
  million). For additional information regarding this impairment loss, see Note
  3 to our consolidated financial statements included under Item 18.
Amortization of Goodwill and Other
  Intangibles
Amortization of goodwill
  and other intangibles more than quadrupled from €7.0 million in 2000 to
  €30.8 million in 2001. Virtually all of the €23.8 million increase
  is attributable to increased amortization expense in connection with our acquisitions
  of Astound (€10.3 million) and Vialog €10.9 million) in 2001. The
  remaining increase primarily reflects the inclusion of a full year of amortization
  expenses for Genesys Open Media, Telechoice and Eureka in 2001, compared to
  only six, three and three months, respectively, during 2000.
Operating loss by segment
The following
    table breaks down our operating loss by segment for each of 2000 and 2001.
2000
    
    2001(in thousands
      of euros)North America
    1,925
    
    (62,611
    )Europe
    4,703
    
    (7,986
    )Asia-Pacific
    43
    
    (618
    )Global Video
    3,584
    
    (24
    )Corporate(1)
    (13,217
    )
    (20,027
    )Total operating loss
    (2,962
    )
    (91,266
    )(1)
    Corporate includes primarily
      non-operating charges and expenses and research and development expenses.EBITDA Margin
Our EBITDA, excluding the impairment loss on
    goodwill and identifiable intangible assets increased from €11.7 million
    in 2000 to €16.6 million in 2001. Excluding the non-recurring charge of
    €0.3 million, our EBITDA amounted to €16.9 in 2001. Our EBITDA margin
    decreased from 12.7% in 2000 to 9.3% in 2001. The decrease in EBITDA margin
    primarily reflects the increased level of selling and marketing expenses,
    general and administrative expenses and research and development expenses
    described above. These negative effects were partially offset by the improvement
    in our gross margins. For a reconciliation of EBITDA to operating loss, see
    “Overview  EBITDA” above.

The following table sets forth our EBITDA, including
    non-recurring charges, by segment for 2000 and 2001, both as an absolute amount
    and as a percentage of segment revenues.
Year ended December
      31,2000
    
    2001in thousandsof €
    
    % of segmentrevenues
    
    in thousandsof €
    
    % of segmentrevenuesNorth America
    5,786
    
    14.3
    %
    12,532
    
    11.6
    %Europe
    13,991
    
    39.1
    %
    21,116
    
    39.3
    %Asia-Pacific
    343
    
    8.5
    %
    472
    
    7.6
    %Global Video
    4,493
    
    36.7
    %
    1,474
    
    13.5
    %Corporate
    (12,884
    )
    n.s.
    
    (18,961
    )
    n.s.Total
    11,729
    
    12.7
    %
    16,633
    
    9.3
    %The decline
    in our EBITDA margin in North America in 2001 is associated with the acquisition
    of Vialog during the transition period before consolidation of business. Our
    EBITDA margin declined substantially in our Global Video segment, for the
    same reason than the decrease of our gross margin in this segment.
Financial Income (Expense)
  We incurred net financial
    expenses of €6.7 million in 2001, after generating net financial income
    of €0.7 million in 2000. The change primarily reflects a significant
    increase in interest expenses due to a significant increase in our long-term
    debt following the Vialog acquisition. As part of the acquisition of Vialog,
    in April 2001, we entered into a U.S. $125 million credit facility that replaced
    our previous U.S. $35 million multi-currency term loan and Vialog’s
    existing long term debt (U.S. $75 million senior notes).
Income Tax Expense
We recorded income tax
  expense of €0.5 million in 2001, compared to €3.6 million in 2000.
  The net decrease of €3.1 million mainly consists of €7.6 million in
  deferred tax income relating to amortization of identifiable intangible assets
  in connection with the acquisition of identifiable intangible assets from Astound
  and Vialog in 2001. This decrease was partially offset by a €1.5 million
  increase for current tax reflecting higher earnings in the countries where we
  pay income tax, particularly in the United Kingdom and, to a lesser extent,
  Sweden, and a €3.6 million increase for tax on acquisition costs of companies
  classified in goodwill and identifiable intangible assets.
Net Loss
For
  the foregoing reasons, we recorded a net loss of €98.5 million in 2001
  compared to a net loss of €6.0 million in 2000. Excluding the charge for
  impairment of goodwill and other intangible assets, our net loss amounted to
  €37.3 million in 2001.
36/128

Back to Contents
Liquidity and Capital Resources
General
Our liquidity
    requirements are driven primarily by our working capital requirements, capital
    expenditures on telecommunications and bridging equipment, servers, computers
    and software, our debt service requirements and, until 2001, our acquisitions.
    To date, we have funded our liquidity requirements through a combination of
    equity offerings, borrowings (including bank financings and convertible debt
    issuances), and operating cash flow.
At December
    31, 2002, our principal sources of liquidity included €10.0 million in
    cash and cash equivalents and a total of €5.1 million of short-term credit
    facilities (of which €3.4 million was used as of December 31, 2002).
    However, the terms of our U.S. $125 million credit facility may limit our
    ability to borrow under our short-term credit facilities.
In connection with the
  acquisition of Vialog in April 2001, we and Vialog entered into a U.S. $125
  million credit facility which was used to refinance the existing debt of our
  company and Vialog and for working capital purposes. This facility, which is
  described in more detail below, was amended on April 30, 2003 to extend the
  repayment schedule. Part of the extension is subject to conditions that are
  described below. We believe that our capital resources are sufficient to meet
  our current working capital needs.
Cash Flows
Cash and
    cash equivalents decreased from €17.5 million at the end of December
    2001 to €10.0 million at the end of December 2002.
We generated cash of €7.2 million in operating
    activities in 2002. This cash was mainly provided from a decrease in accounts
    receivable of €3.5 million and in prepaid expenses of €3.6 million,
    and an increase in other liabilities of €3.8 million, which were partially
    offset by a decrease in accounts payable of €5.6 million. The decrease
    in accounts receivable was the result of enhanced billing and collection processes,
    which lead to a reduction in day sales outstanding as of December 31, 2002
    compared to December 31, 2001 and to the lower reported revenues in the fourth
    quarter of 2002 compared to the fourth quarter of 2001.
We used cash
    of €10.1 million in investing activities, primarily in connection with
    the acquisition of Astound (€4.3 million for an additional acquisition
    price payment in early 2002) and capital expenditures of €6.8 million
    for telecommunications and bridging equipment, servers, computers, software
    (including €2.6 million relating to the capitalized development of an
    integrated reservation and billing system). Our practice is generally to purchase
    additional bridging and streaming capacity when average daily usage reaches
    approximately 70% of available capacity. Our capital expenditures as a percentage
    of revenues were 11.4%, 8.9% and 3.4% of revenues in 2000, 2001 and 2002,
    respectively.
We
  used cash of €3.3 million in financing activities in 2002, mainly due to
  principal payments on long-term debt of €6.5 million, partly offset by
  borrowings under our bank overdraft facilities of €3.4 million. As of December
  31, 2002, we had overdraft facility agreements in place totaling €5.1 million,
  of which €3.4 million was utilized. However, as noted above, we are only
  permitted to have up to the equivalent of U.S.$4.0 million of additional indebtedness
  outstanding.
Contractual Obligations and
  Commercial Commitments
The breakdown of our financial
  indebtedness by principal repayment date set forth in the table below does not
  take into account the amendment of the U.S.$ 125 million credit facility signed
  on April 30, 2003 that modifies the repayment schedule, with the exception of
  a postponement of U.S.$16.0 million (or €15.3 million) of principal payments
  definitively rescheduled from 2003 to 2004. The remainder of the rescheduling,
  as well as the rescheduling of principal under our 3% convertible notes, is
  subject to certain conditions, as described under “Financial Restructuring”
  below.
37/128

Back to Contents
As of December 31, 2002, the repayment schedule
    for all of our contractual obligations and commercial commitments is as follows:
Payments due
      by period2003
    
    2004-2005
    
    2006-2007
    
    2008 andthereafter
    
    TotalTerm loans, variable rate
    €1,106
    
    €59,121
    
    €42,910
    
    
    
    €103,137Revolving loans, variable rate
    
    
    
    
    9,536
    
    
    
    9,536Term loans, fixed rate
    37
    
    37
    
    
    
    
    
    743% Convertible notes
    
    
    8,441
    
    
    
    
    
    8,441Interest free loan from ANVAR
    
    
    84
    
    36
    
    
    
    120Capital lease obligations
    191
    
    81
    
    68
    
    
    
    340Total long-term debt, excluding
      accrued interest
    1,334
    
    67,764
    
    52,550
    
    
    
    121,648Operating leases
    8,723
    
    10,831
    
    4,112
    
    1,609
    
    25,275Other long term liabilities (1)
    
    
    3,039
    
    2,403
    
    1,202
    
    6,644Total contractual cash obligations
    €10,057
    
    €81,634
    
    €59,065
    
    €2,811
    
    €153,567According to the amendment signed on April 30,
    2003, which is subject to certain conditions, as described under “Financial
    Restructuring” below, the amended principal payment schedule on an annual
    basis compared to the prior maturity schedule is as follows:
Original
      repayments
    
    Repayments
      according to amendment signed on April 30, 2003
    
    Difference
      of repayments
    
    Difference
      of repaymentsin
      millions of U.S. dollars
    
    in
      millions of euros2003
    $17.0
    
    $1.0
    
    €(16.0
    )
    €(15,3
    )2004
    22.0
    
    $18.0
    
    (4.0
    )
    (3,8
    )2005
    24.0
    
    $22.0
    
    (2.0
    )
    (1,9
    )2006
    55.0
    
    $30.0
    
    (25.0
    )
    (23,8
    )2007
    
    
    $23,5
    
    23.5
    
    22,42008
    
    
    $23,5
    
    $23.5
    
    €22,4Total
    $118.0
    
    $118.0
    
    
    
    The following breakdown of our financial indebtedness
    by principal repayment date does take into account the amendment of the U.S.
    $125 million credit facility agreement, which is subject to certain conditions,
    as described under “Financial restructuring” below.
Payments due
      by period (as amended on April 30, 2003)2003
    
    2004-2005
    
    2006-2007
    
    2008 andthereafter
    
    TotalTerm loans, variable rate
    €1,106
    
    €38,142
    
    €41,480
    
    €22,409
    
    €103,137Revolving loans, variable rate
    
    
    
    
    9,536
    
    
    
    9,536Term loans, fixed rate
    37
    
    37
    
    
    
    
    
    743% Convertible notes
    
    
    8,441
    
    
    
    
    
    8,441Interest free loan from ANVAR
    
    
    84
    
    36
    
    
    
    120Capital lease obligations
    191
    
    81
    
    68
    
    
    
    340Total long-term debt, excluding
      accrued interest
    1,334
    
    46,785
    
    51,120
    
    22,409
    
    121,648Operating leases
    8,723
    
    10,831
    
    4,112
    
    1,609
    
    25,275Other long term liabilities (1)
    
    
    3,039
    
    2,403
    
    1,202
    
    6,644Total contractual cash obligations
    €10,057
    
    €60,655
    
    €57,635
    
    €25,220
    
    €153,567(1)
    Other long-term liabilities include
      primarily accrued restructuring expenses associated with consolidation of
      call centers and the fair value of our interest-rate swap agreement obligation.Credit Facility
On April 20, 2001, we and Vialog entered into
    a U.S. $125 million credit facility agreement with BNP Paribas, CIBC World
    Markets and Fortis Bank. This credit facility, which was amended thereafter,
    replaced our then outstanding U.S. $35 million multi-currency term loan and
    the long-term debt of Vialog (U.S. $75 million senior notes payable) that
    existed prior to our acquisition of Vialog. Prior to the signature on April
    30, 2003 of the amendment described under “Financial Restructuring”
    below, the U.S. $125 million credit facility included the following terms:

    a U.S. $50 million senior term
      loan facility granted to Vialog, which was used by Vialog to refinance its
      existing debt. This facility matured on April 28, 2006 and bears interest
      at the rate of Libor USD plus a margin of 2.65% per annum.
    a U.S. $30 million senior term
      loan facility granted to Vialog, which was used by Vialog to refinance its
      existing debt. This facility matured on October 31, 2006 and bears interest
      at the rate of Libor USD plus a margin of 3.15% per annum.
    a U.S. $35 million senior term
      loan facility granted to our company, which we used to partially refinance
      our existing debt. This facility matured on April 28, 2006 and bears interest
      at the rate of Libor USD plus a margin of 2.65% per annum.
    a U.S. $5 million revolving loan
      facility granted to Vialog, to be used by Vialog for working capital purposes.
      This facility bears interest at the rate of Libor USD plus a margin of 2.65%
      per annum.
    a U.S. $5 million revolving loan
      facility granted to our company, which we use for working capital purposes.
      This facility bears interest at the rate of Libor USD plus a margin of 2.65%
      per annum.Prior to the financial restructuring, the U.S.
    $50 million and U.S. $35 million term loans granted to Vialog and our company,
    respectively, were to be repaid in semi-annual installments in accordance
    with the schedule set forth in the credit facility agreement. The U.S. $30
    million facility was to be repaid in one payment at maturity. All amounts
    borrowed are repayable at any time in whole or in part at the option of the
    borrower.
38/128

Back to Contents
The U.S. $125 million
  credit facility requires us to comply with certain financial ratios relating
  to leverage, interest cover, cash coverage and limits on capital expenditure.
  Prior to the April 30, 2003 amendment discussed below, we received a waiver
  from the lenders of our non-compliance with certain financial covenants at December
  31, 2002. Thereafter, those covenants were amended in connection with the financial
  restructuring. We are currently in compliance with all of the covenants, as
  amended (although our continued compliance depends on the conditions to the
  effectiveness of the April 30, 2003 amendment being satisfied). In addition,
  the credit facility prohibits our payment of dividends. We have pledged as security
  for our credit facility the shares of our principal subsidiaries, as well as
  the accounts receivable of our principal U.S. subsidiary. If our financial results
  do not reach the levels required by our debt covenants and we are unable to
  obtain a waiver from our lenders, our debt would be in default and subject to
  acceleration by our lenders.
Bank Financing Restructuring
Terms of the Financial Restructuring
On April 11, 2003, we reached an agreement in
    principle with our lenders under the $125 million credit facility, several
    of the holders of our 3% convertible bonds and certain of our shareholders
    (some of who are also bondholders) on a financial restructuring plan that
    is designed to facilitate our continuing growth in the coming years. The agreement
    was negotiated with the assistance of a mediator who had been appointed by
    a French court at our request to facilitate the renegotiation process.
The financial restructuring is essentially comprised
    of:

    various amendments to our April 2001 $125
      million credit facility that would extend the maturity of the remaining
      principal through October 2008;
    deferral of the maturity date for 50% of
      the principal of our outstanding 3% convertible bonds; and
    a €6 to 8 million offering of rights
      to subscribe for our ordinary shares.The various components of the financial restructuring
    plan, which are subject to several conditions precedent and subsequent (including
    receiving shareholder and bondholder approvals), are described in more detail
    below.
Amendments to our April 2001 $125
  Million Credit Facility
On April 30, 2003, we signed an amendment to
    our April 2001 $125 million credit facility with our main bank creditors.
    The amendment provides for the extension of the final maturity of the $118
    million (€112.5 million) remaining principal amount under the credit
    facility from October 2006 to October 2008, and the rescheduling of principal
    repayments, in each case subject to the satisfaction of certain conditions
    subsequent, which are described below. A copy of this amendment is included
    under Item 19 as an Exhibit to this annual report.
Under the amendment, $7 million of principal
    would be payable on April 30, 2004 and $11 million of principal would be payable
    on October 31, 2004, with varying amounts of principal payable every six months
    thereafter until maturity. Interest will continue to be paid according to
    the original schedule (i.e. semi-annually on April 30 and October 31), subject
    to an increase of up to 200 basis points commencing in 2007. We have also
    agreed to prepay the loan if and to the extent our excess cash flows (excluding
    the proceeds of the proposed rights offering described below) exceed certain
    levels.
The amendment requires
  us to use our best efforts to raise at least $3 million (or the Euro equivalent)
  by entering into a factoring arrangement for up to $6 million (or the Euro equivalent)
  of customers receivables by waiving the negative pledge on up to $6 million
  of such receivables and otherwise permitting their sale or disposition. Certain
  other covenants have also been amended, including financial ratios.
39/128

Back to Contents
The amendment provides that the deferral of principal payments originally due in 2003 is definitive, although if the conditions described below are not satisfied, those principal payments will become due on January 10, 2004.  Except for that deferral, the amendment is subject to the following conditions subsequent:

    we must complete a rights offering, which
      must first be approved by our shareholders with gross proceeds of at least
      €6 million by August 31, 2003, and
    we must amend the terms of our 3% convertible
      bonds due September 1, 2004 by June 30, 2003 to provide that 50% of the
      €18.37 of principal per bond will be repayable on the original maturity
      date, (i.e. September 1, 2004) and the remaining 50% of principal per bond
      will be repayable on October 31, 2005.If we fail to meet the conditions subsequent, and if such conditions are not waived by our main bank creditors, then the original maturity schedule and the financial ratios and other covenants, as previously amended, will remain in effect with the exception of the deferral of $16 million in principal repayments originally due in 2003, as discussed above.
Deferral of 50% of Principal Repayment for our 3% Convertible Bonds due 2004
Under the financial restructuring plan, we will propose to holders of our 3% convertible bonds due 2004, that they approve the rescheduling of 50% of the principal repayment (all of which is currently due September 1, 2004).  If the bondholders approve this extension of the maturity date, we will repay 50% of the outstanding principal (€8.4 million as of December 31, 2002, net of unamortized discount of €0.3 million) on September 1, 2004 and the remaining 50% of the outstanding principal  on October 31, 2005. A meeting of our bondholders to vote on such proposal is currently scheduled for May 26, 2003.  A 50% majority is required to approve the proposal.
Part’com S.A. and certain of its affiliates
  and Pechel Industries S.A., who together hold approximately 42.6% of our outstanding
  3% convertible bonds, have agreed to vote in favor of the proposal. Part’com
  S.A. is also a shareholder of our company and has made other undertakings in
  connection with the rights offering, as discussed below.
Subscription Rights Offering
We have agreed to hold a shareholders meeting no
  later than June 30, 2003 to receive authorization for an equity rights offering
  to raise €8 million. In connection with this undertaking, we have called
  a shareholders meeting for May 28, 2003, at which we will ask our shareholders
  to confirm such authorization in the context of the financial restructuring.
We will seek to raise at least €6 million by
  way of a rights offering by August 31, 2003. The planned rights offering will
  permit all of our existing shareholders to subscribe for newly issued shares
  at a price expected to be at least €2.20 per share. We have announced that
  we intend to register a portion of this rights offering in the United States.
Universal Capital Partners, holder of approximately
  11.69% of our shares, and Part’Com S.A. and certain of its affiliates,
  who together hold approximately 6% of our share capital, have agreed that they
  will exercise all of their rights and to subscribe for any new shares that are
  not subscribed for by other shareholders provided that the subscription price
  does not exceed €2.20 per share. Under our agreement with those shareholders,
  the aggregate number of shares to be purchased by Universal Capital Partners,
  which will purchase 70% of the shares, and Part’Com S.A., which will purchase
  30% of the shares, will represent at least enough shares so that we raise at
  least €6 million from the rights offering. Universal Capital Partners has
  provided our main bank creditors a guarantee in respect of its obligation to
  purchase at least 70% of the shares necessary to ensure that we raise a total
  amount of €6 million in the rights offering.
We have agreed to use the proceeds of the rights offering, which we have agreed to deposit in an escrow account, to repay the principal of, or repurchase, our 3% convertible bonds due 2004.
Reduction in Capital
To permit the rights offering described above, we
  will request that our shareholders approve a reduction in the nominal value
  of our ordinary shares to €1 per share at our May 28, 2003, shareholders
  meeting. The current nominal value is €5 per share. Under French law, our
  company cannot offer shares in the rights offering at a price that is less than
  the nominal value of those shares.
Universal Capital Partners, holder of approximately
  11.69% of our shares, and Part’Com S.A. and certain of its affiliates,
  who together hold approximately 6% of our share capital, have agreed to vote
  in favor of that proposal.
40/128

Back to Contents
Factoring Arrangement
We have agreed to use our best efforts to enter into
  a factoring arrangement to seek to raise at least $3 million (or the euro equivalent)
  against up to $6 million (or the euro equivalent) in customers’ receivables.
  Under the amendment to our $125 million credit agreement discussed above and
  included as an Exhibit under Item 19, our main bank creditors have waived the
  negative pledge on up to $6 million of customers’ receivables and the
  other prohibitions on sale under our credit facility to permit this factoring
  arrangement.
Financial Restructuring Fees and Expenses
We have agreed to pay our main bank creditors a $ 295 thousand fee (which represents 0.25% of the principal amount outstanding on April 11, 2003, the date that we agreed with our bank creditors on the terms of the financial restructuring amendment) on December 31, 2004.
Other Commitments
We lease our facilities and some of our equipment under long-term operating leases. Our minimum payments due under operating leases are €8.7 million in 2003, €6.7 million in 2004, €4.1 million in 2005, €2.3 million in 2006, €1.9 million in 2007 and €1.6 million thereafter, for a total of €25.3 million. We also have obligations under capital leases that total approximately €340 thousand, excluding the interest portion.
We have entered into several interest rate swap agreements to hedge our exposure on a portion of our debt. We also enter into foreign currency hedging agreements, principally forward purchase or sale agreements. Our hedging arrangements are described under Item 11 “Quantitative and Qualitative Disclosure About Market Risk.”
We do not have any material guarantees outstanding, nor do we have any securitization or other off balance sheet financing arrangements.
Research and Development, Patents and Licenses, etc.
See Item 4 “Information on the Company 
  Business Overview  Research and Development” and “Information
  on the Company  Business Overview  Intellectual Property.”
Trend Information
On April 24, 2003, we announced that, for internal
  planning purposes, we have targeted revenues between €175 million and €185
  million in 2003. These revenue targets are subject to significant uncertainty,
  and might not be reached for any number of reasons, including those described
  under Item 3 “Key Information  Risk Factors.”
Critical accounting policies
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.
We believe the following critical accounting policies, among others, represent the more significant judgments and estimates used in the preparation of our consolidated financial statements.
Allowance for doubtful accounts
We evaluate the collectibility of our accounts receivable
  based on a combination of factors. In circumstances where we are aware of a
  specific customer’s inability to meet its financial obligations to us
  (e.g., bankruptcy filings, failure to pay amounts due to us or others), we record
  a specific reserve for bad debts against amounts due to reduce the net recognized
  receivable to the amount we reasonably believe will be collected. For all other
  customers, we recognize reserves for bad debts based on past write-off history
  (average percentage of receivables written off historically), and the length
  of time the receivables are past due. If circumstances change (i.e. higher than
  expected defaults or an unexpected material adverse change in a major customer’s
  ability to meet its financial obligations to us), our estimates of the recoverability
  of amounts due us could be reduced by a material amount.
41/128
<<<<<





Back to Contents

Impairment of goodwill and identifiable intangible assets

In reviewing the recoverability of our goodwill and identifiable intangible assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These assumptions require us to exercise significant judgment, often on a subjective basis. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets. During 2001 and 2002, we recorded an impairment charge on these assets of €61.3 million and €93.6 million, respectively.



Effective January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Under SFAS 142, we discontinued amortizing our goodwill, but we are required to review our goodwill for impairment on an annual basis thereafter. Based on the circumstances and underlying assumptions made when the impairment reviews are performed in the future, further impairment charges could be required.



We continue to amortize our identifiable intangible
  assets that have determinable lives. In addition, in accordance with Statement
  of Financial Accounting Standards No. 144, Accounting for the Impairment or
  Disposal of Long-Lived Assets, we are required to review the recoverability
  of these assets whenever events or changes in business circumstances indicate
  that the assets may be impaired. Based on the circumstances and underlying assumptions
  (including the determination of their useful lives) made at the time of these
  reviews, further impairment charges could be required.



Deferred tax assets

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income for each subsidiary and the expected timing of the reversals of existing temporary differences. As a result of this review, we have recorded a deferred tax asset of €0.4 million as of December 31, 2002, and we have established a full valuation allowance on the remaining amount of our deferred tax assets.



42/128

---



Back to Contents

|                                                  
|--------------------------------------------------
|Item 6. Directors, Senior Management and Employees

|   |                                
|-- | -------------------------------
|A. | Directors and Senior Management

|         
|---------
|Directors

In accordance with our bylaws (statuts), we are managed by our Board of Directors (conseil dadministration), which must be composed of a minimum of 3 and a maximum of 18 members. Our Board of Directors is currently composed of four members. Each member of the  Board of Directors is appointed for term of up to six years and we cannot have more than 1/3 of our Directors be older than 70 years of age. Under French law, the Board of Directors has broad authority to take actions in the name of our company within the scope of our corporate purpose  (subject to the authority expressly reserved by law to the shareholders). In accordance with our bylaws, each director must be the direct legal owner of at least one of our shares throughout his or her term of office.



The names and positions of the current members of our Board of Directors, their ages, business experience, dates of initial appointment, the year in which their current term expires and information on their principal business activities outside our company are as follows:



|François
        Legros         |  | Age:                                         |  | 37                                                                                                                                                                                                                                                                
|------------------------------- |  | -------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Chairman
        and            |  | First elected:                               |  | June 1997                                                                                                                                                                                                                                                         
|Chief
        Executive Officer |  | Term expires:                                |  | 2005                                                                                                                                                                                                                                                              
|                                |  | Principal occupation:                        |  | Chairman and Chief Executive
      Officer, Genesys                                                                                                                                                                                                               
|                                |  | Other directorships and business experience: |  | Director of Genesys Conferencing
      Inc., Genesys Conferencing Ltd, Genesys Conferencing Ltd (HK), Genesys Conferencing
      Pte Ltd, Genesys Conferencing Pty Ltd, Maga Fund Ltd and Genesys Conferencing
      Ltd (Canada)
      Chairman of Nextventure SA
|                                |  |                                              |  |                                                                                                                                                                                                                                                                   
|Jean-Jacques
        Bertrand   |  | Age:                                         |  | 50                                                                                                                                                                                                                                                                
|Director                        |  | First elected:                               |  | October 1998*                                                                                                                                                                                                                                                     
|                                |  | Term expires:                                |  | 2005                                                                                                                                                                                                                                                              
|                                |  | Principal occupation:                        |  | Managing Director, BNP Paribas
      Private Equity                                                                                                                                                                                                               
|                                |  | Other directorships and business experience: |  | Former Executive Vice President,
      Head of Communications Industry at Banexi; Director of Multitel (Spain)
      and Musiwave (France)                                                                                                                        
|                                |  |                                              |  |                                                                                                                                                                                                                                                                   
|Jean-Charles
        Bouillet   |  | Age:                                         |  | 56                                                                                                                                                                                                                                                                
|Director                        |  | First elected:                               |  | March 2000*                                                                                                                                                                                                                                                       
|                                |  | Term expires:                                |  | 2003                                                                                                                                                                                                                                                              
|                                |  | Principal occupation:                        |  | Director for Corporate Development,
      Unilog S.A. France                                                                                                                                                                                                      
|                                |  | Other directorships and business experience: |  |                                                                                                                                                                                                                                                                   
|                                |  |                                              |  |                                                                                                                                                                                                                                                                   
|Patrick
        S. Jones        |  | Age:                                         |  | 59                                                                                                                                                                                                                                                                
|Director                        |  | First elected:                               |  | June 2001                                                                                                                                                                                                                                                         
|                                |  | Term expires:                                |  | 2004                                                                                                                                                                                                                                                              
|                                |  | Principal occupation:                        |  | Retired                                                                                                                                                                                                                                                           
|                                |  | Other directorships and business experience: |  | Chairman of the Board, Dione
      Plc; Director of XRT-CERG Smart Trust AB and QRS Corp.; Former Senior Vice
      President, Chief Financial Officer, Gemplus S.A.; Former Vice President
      and Corporate Controller of Intel Corp.                         
|                                |  |                                              |  |                                                                                                                                                                                                                                                                   

| | 
| | 

|* | Mr. Bertrand sat on our
        Board as the representative of Finovectron SA from 1990 to 1998 (except
        from September 1996 to April 1998, when Finovectron had another representative);
        Mr. Bouillet sat on our Board as the representative of STM-Goupil from
        1988 to 1991.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43/128

---



Back to Contents

At our annual shareholders meeting scheduled
  for May 28, 2003, our shareholders will be asked to approve the appointment
  of Thomas Abbott, David Detert, Paul Sfez and Pierre Besnainou (as representative
  of Universal Capital Partners) as directors, each for a term of three years.
  Mr. Sfez and Universal Capital Partners are being proposed as directors in connection
  with our financial restructuring, which is discussed in more detail under Item
  5 Operating and Financial Review and ProspectsLiquidity and Capital
  Resources and Recent Developments. Mr. Bouillet has
  requested that his name not be submitted to the shareholders meeting for
  renewal of his term as a director of our company.

Thomas Abbott (59) is an expert in corporate operations management, re-engineering and system deployment having completed major corporate change projects while an executive with Lucent Technologies, where he served for more than 20 years before retiring in 1999. Mr.  Abbott is a graduate of the Krannert MSIA program and holds a B.S. in Electrical Engineering from Purdue University.

David Detert (64) is currently our Executive Vice President, Chief Strategy Officer, although he has announced his intention to retire on July 1, 2003. Please see Senior Management below for a description of his experience.

Pierre Besnainou (49) started his career in importing
  consumer goods from Asia. In 1981, he created the Kaïsui Group which started
  by importing mass consumption electronic devices and then began producing TV
  sets in France. He served as Chairman of the Board until the company was sold
  to Sagem in 1995. In 1998, he founded Liberty Surf Company which was listed
  on Euronext Paris, and served as Chairman of the Board until February 2001,
  when he sold his shareholding in the company to Tiscali. Mr. Besnainou presently
  sits on or chairs the boards of the following companies: Universal Capital Partners
  (Belgium SA), Pop Corn Pub (French SAS) and Ateliers Modèles (French
  SA) as representative of Universal Capital Partners SA, Financière Multimedia
  Europe (Belgium SA), Euro Mediterranean Investment Fund (Tunisian SICAF).

Paul Sfez (61), has a degree from HEC-Paris (leading
  French business school), and a Masters in Economics and in Sociology. He started
  his career in Brussels in the European Commission Services and then taught economics
  at HEC and at Paris VII University (Dauphine). In 1970, he founded Sorgem and
  then Chaired Sorgem O&D, a consulting company specialized in international
  development, economic policies and international investments. In 2001, he joined
  FM Management as Managing Director, which currently runs the operations of few
  investment funds, including Universal Capital Partners (one of the major shareholders).Paul Sfez presently sits on or chairs the board
  of the following companies: Pop Corn Pub (French SAS), Ateliers Modèles
  (French SA), Sorgem O&D (French SA), FM Management (French SARL), Sud Sud
  International (French SA), Euro Mediterranean Investment Fund (Tunisian SICAF).

Following the acquisition of Vialog, Mr. David Lougee, a former Vialog director, was elected to our Board of Directors of in June 2001. He served on our Board of Directors through the remainder of 2001 and resigned his position in March 2002. In June 2002, at our last  annual shareholders meeting, Mr. Piriou requested that his term not be renewed, and in August 2002, Mr. Senter resigned from his position as a director of our company.

None of our directors, or nominees for director, has any family relationship with any other of our directors or member of our senior management.



|Senior Management
|-----------------

The names, positions and business experience of our senior officers are as follows:

François Legros, Chairman and Chief Executive Officer.Mr. Legros has been our Chairman and Chief Executive Officer since June 1997, and was the first employee to be hired by our company. Mr. Legros started his career at our company as Finance Manager and later  became our Financial and Administrative Director. In 1994, he was appointed Managing Director of Genesys Sweden and Genesys Development Director and became Group Managing Director in 1996.

David Detert, Executive Vice President, Chief Strategy
  Officer. Mr. Detert has been our Executive Vice President and Chief Strategy
  Officer since July 2002. He joined our company in October 1997 as Executive
  Vice President, Business Development, and in 1998 he was appointed to Executive
  Vice President, Research & Development, which he served until becoming our
  Executive Vice President, Networks & Infrastructure in 2001. Prior to joining
  our company, he served as President of the Daretel Group, a consulting firm
  specialized in U.S. and European business development in the area of teleconferencing.
  Mr. Detert has announced his intention to retire from our company on July 1,
  2003. He will be nominated for appointment as a director of our company at our
  May 2003 annual shareholders meeting, see Directors above.

Margie Medalle, Executive Vice President and Chief Executive Officer, North America.Ms. Medalle has been our Executive Vice President and Chief Executive Officer, North America since April 2001.





44/128

---



Back to Contents

Prior to this time, she served as the President and Chief Executive Officer of our North American operating company after joining our company in April 1999 following our acquisition of Aloha Conferencing. Ms. Medalle was formerly President and Managing Director of  Aloha Conferencing and prior to joining Aloha, Ms. Medalle owned her own consulting company specializing in mergers and acquisitions, strategic planning, financial analysis and efficiency studies.

Olivier Fourcade, Executive Vice President, Asia Pacific.Mr. Fourcade, our Executive Vice President, Asia Pacific, joined our company in 1991, and since then has held several positions including Executive Vice President, Marketing Manager Europe and Executive Vice  President, Video Business Unit. Today, Mr. Fourcade serves as our Executive Vice President, Asia Pacific, a position he has held since October 2001.

Jim Huzell, President, Group. Mr. Huzell joined
  our company as Chief Operating Officer in 2000 and was named President, Group
  in June 2002. Prior to joining our company, Mr. Huzell spent eight years as
  Managing Director of Scanmarket AB, a consulting business, working on business
  development projects for mobile telephone companies such as Ericsson and Nokia
  as well as with several other technology ventures. Prior to joining Scanmarket,
  Mr. Huzell served for four years as Chief Executive Officer of Comvik, the first
  independent mobile telephone operator in Europe.

Michael E. Savage, Executive Vice President and Chief Financial Officer. Mr. Savage joined our company as Executive Vice President and Chief Financial Officer in September 2001. Prior to this time, he served as Senior Vice President and Chief Financial Officer of Vialog  Corporation, a position he held from September 1999. Before joining Vialog, Mr. Savage also served as Chief Financial Officer of America Online/Digital City, and prior to that position, as Chief Financial Officer and Vice President of World Corp., the holding company of World  Airways, Inc. and InteliData Technologies Corp.

Marie Capela-Laborde, Executive Vice President, Chief Legal and Human Resources Officer.Ms. Capela-Laborde has served as our Executive Vice President Chief Legal and Human Resources since July 2001. She joined our company in March 1998 as Head of the Legal  Division and later as Group General Counsel & Secretary. Prior to that time she worked as an attorney in her own law firm.

Mark Taverner, Chief Executive Officer Video Division.
  Mr. Taverner has been with our company since 1996. Originally, Mr. Taverner
  worked at Darome (the UK English subsidiary, which were acquired in October
  1997 as New Business Manager for Europe. Mr Taverner then held different positions
  at our company in connection with our expanding sales & marketing operations.
  More recently, Mr Taverner was UK Director of Sales, then Director of Sales
  Operations Europe, Middle East and Africa, and Vice President, Resellers Europe,
  Middle East and Africa. Prior to joining Darome, Mr Taverner worked for a marketing
  consultancy in sales management positions in the European, Middle Eastern, African
  and Asia Pacific regions.

Denise Persson, Executive Vice President of Marketing,Ms Persson joined our company in 1996 as Marketing Manager for our first foreign subsidiary in Sweden. Ms. Persson later joined the marketing team in France as product manager and in 1999, was appointed Marketing  Director, and then later, promoted to Vice President of Marketing in February 2001. She has held her present position since January 2003. Prior to joining our company, Ms. Persson served in various sales and marketing positions at Commodore and Kuwait Petroleum in Sweden.

Shelly Robertson, Executive Vice President Production & Infrastructure. Ms. Robertson entered the teleconferencing industry with employment at ACCESS Teleconferencing Inc in January 1994 (which later became Vialog Corporation in 1998, and which we acquired in  2001). At ACCESS/Vialog she held the following positions: Client Services Director, Operations Director, and Director of Operations Integration. Since acquiring Vialog, Ms. Robertson has held the following positions at our company: General Manager, Montgomery, AL call center;  General Manager, Reston, VA call center; Vice President, North America Operations, and Vice President, Global Operations.

Jim Lysinger, Executive Vice President, Europe.Mr. Lysinger joined our company as a result of our 1999 acquisition of Williams Conferencing. From 1999 until 2002, Mr. Lysinger was our Vice President of Sales for the North American region. At Williams Conferencing  (and previously at ITC, which was acquired by Williams Conferencing), he was responsible for the Channel Sales Group. Prior to ITC/Williams, Mr. Lysinger spent nearly ten years with Sprint Corporation in various sales and sales management positions.

None of these individuals has any principal business activities outside of our company.

None of these individuals has any family relationship with any director or nominee for director or other member of our senior management.

In 2002, Mr. Kailash Ambwani served as our Chief Operating Officer through January 2003, when he left our company. Prior to his position at our company he served as Chairman and Chief Executive Officer of Astound Corp, which we acquired in March 2001. Andrew  Pearce served as Executive Vice President, Europe through January 2003, when he left our company. Prior to his position at our company, he spent 10 years at British Telecom where he held several positions.





45/128

---



Back to Contents

|   |             
|-- | ------------
|B. | Compensation

|            
|------------
|Compensation

In 2002, the aggregate amount of compensation paid
  to our directors and senior management (19 persons in total) for services in
  all capacities, including former directors and senior management who left our
  company during the year, was €3.3 million. Of this amount €99,500
  consisted of attendance fees (jetons de présence) paid to members
  of our Board of Directors, allocated as set forth below.



|Director                      |  | Attendance
      Fees |        
|----------------------------- |  | --------------------- | -------
|                              |  |                       |        
|François
        Legros       |  |                       | €0     
|Jean-Jacques
        Bertrand |  |                       | €12,000
|Jean-Charles
        Bouillet |  |                       | €12,000
|Patrick
        Jones         |  |                       | €37,500
|David
        Lougee*         |  |                       | €10,000
|Philippe
        Piriou**     |  |                       | €8,000 
|Alan
        Senter***        |  |                       | €20,000
|                              |  |                       |        
|Total                         |  |                       | €99,500
|                              |  |                       |        

| | 
| | 

|* | Mr. Lougee resigned from his position in March 2002.
|- | ----------------------------------------------------

|** | Mr Piriou requested that his term not be renewed in 2002.
|-- | ---------------------------------------------------------

|*** | Mr Senter resigned from his position in August 2002.
|--- | ----------------------------------------------------

Our Chairman and Chief Executive Officer received
  €306,372 in compensation in 2002 before
  taxes and other charges, consisting of a base salary of €256,372and
  a €50,000
  bonus.



|Stock Options
|-------------

Under French law, directors may not receive options solely as compensation for service on the board, thus only those directors who are also our employees may receive stock options. During 2002, a total of 23,900 options were granted to François Legros, our Chairman and  Chief Executive Officer. Each option gives the right to purchase one of our ordinary shares at an exercise price of 14.30 per share and expire on January 7, 2010. The other members of our senior management, including those who left our company in 2002, did not receive any stock  options during 2002.

For additional information regarding our stock options,
  see Share Ownership below and Note 12 to our financial statements
  included under Item 18.

On November 19, 2002, we filed a Schedule T-O with
  the SEC for our U.S. employees and sent letters to our other employees in order
  to offer eligible employees world-wide the opportunity to waive the benefit
  of their outstanding stock options for our ordinary shares (or ADSs) in exchange
  for new options to be granted under our existing stock option plans. We offered
  our employees this opportunity because many of our outstanding stock options
  had exercise prices that were significantly higher than the current market prices
  of our ordinary shares and ADSs. By making this offer, we sought to increase
  our employees potential ability to realize value for their options within
  a reasonable period of time, thereby encouraging employees to continue with
  our company and devote their best efforts to maximize value for our shareholders.

At the time of the announcement, there were approximately
  1,130,000 outstanding stock options that were eligible to be surrendered. In
  order to participate in the offer, eligible employees had to waive all of their
  outstanding options. On December 18, 2002, when the offer closed, an aggregate
  of 1,041,511 of our outstanding eligible stock options were contributed. We
  cancelled the outstanding eligible stock options for our Non-U.S. resident employees
  on December 3, 2002, and on December 23, 2002, we cancelled outstanding eligible
  stock options for our U.S. resident employees. In addition to the eligible stock
  options, we cancelled an additional 64,570 options that were granted to employees
  who had left our company prior to exercising their options.

We will grant one new stock option for each waived
  stock option cancelled in the offer, subject to adjustments for any future stock
  splits, stock dividends and similar events, provided, in general, that the employee
  remains employed by our company at the new option grant date. We expect to grant
  the new options on or about the first regularly scheduled meeting of our board
  of directors following the end of the six month and one-day period after the
  date the options were cancelled. The new options to be granted will be under
  the same option plan as the related cancelled options and on substantially the
  same terms and conditions as such options, except that the exercise price (also
  known as the grant price or subscription price) will be based on the market
  value of our ordinary shares (or ADSs) at the time of the grant and will
  be determined in accordance with the terms of the applicable option plan. However,
  in no event can the exercise price of these new options be less than the nominal
  value of one of our ordinary shares.





46/128

---



Back to Contents

The new options to be granted to non-French residents
  will have the same vesting schedule (i.e., will be vested on the date of grant
  to the extent that the related cancelled options would have been vested) and
  maximum term as the related cancelled options. The new options to be granted
  to French residents will have the same vesting schedule as the related cancelled
  options, but postponed to begin on the date of grant of the new options, and
  they will have the same maximum term as the related cancelled options.



|Pension or Retirement Benefits
|------------------------------

The aggregate amount that we set aside or accrued
  to provide pension, retirement or similar benefits for directors and members
  of senior management during 2002 was €0.2 million.



|C. | Board Practices
|-- | ---------------

None of the above directors has entered into a service contract with our company or any of our subsidiaries providing for benefits upon termination of his service as a director.

Our board of directors has established an audit committee, a compensation committee and a disclosure committee. The functions of these committees are described below.



|Audit Committee
|---------------

Our audit committee is responsible for reviewing the propriety and accuracy of our consolidated financial statements. In accordance with the rules of the Nasdaq National Market, all of the members of our audit committee are independent directors and are each able to read and  understand fundamental financial statements. Our audit committee has adopted a charter that sets forth its responsibilities, which include:



| |  | making regular reports to our board of directors;
| | - | -------------------------------------------------

| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewing and reassessing the adequacy of the audit committee charter annually and recommending any proposed changes to the board of directors for approval;

| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | reviewing the annual audited financial statements with management;

| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewing with management and our independent auditor our annual and interim financial statements prior to the filing of such financial statements with the U.S. Securities and Exchange Commission or the French Commission des Opérations de Bourse;

| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | meeting periodically with management to review our major financial risk exposures and the steps management has taken to monitor and control such exposures;

| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | reviewing major changes to our auditing and accounting principles and practices;

| |   |                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | receiving periodic reports from our independent auditor regarding our auditors independence, discussing such reports with our auditor, and if so determined by the audit committee, taking or recommending that the full board of directors take appropriate action to oversee the independence of the auditor;

| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | reviewing the appointment and replacement of any senior internal auditing executive;

| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | reviewing the significant reports to management prepared by the internal auditing department and managements responses;

| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | obtaining reports from management, our senior internal auditing executive and the independent auditor that our subsidiaries and/or foreign affiliated entities are in conformity with applicable legal requirements;

| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewing with our independent auditor any problems or difficulties our auditor may have encountered and any management letter provided by our auditor and our response to that letter;

| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | advising our board of directors with respect to our policies and procedures regarding compliance with applicable laws and regulations; and

| |   |                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewing with our legal counsel legal matters that may have a material impact on our financial statements, our compliance policies and any material reports or inquiries received from regulators or governmental agencies.

In 2002, the members of our audit committee were Mr. Bouillet, Mr. Jones and Mr. Bertrand.





47/128

---



Back to Contents

|                      
|----------------------
|Compensation Committee

Our Board of Directors has established a compensation committee. The compensation committee is responsible for:



| |  | approving the compensation of all elected officers;
| | - | ---------------------------------------------------

| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewing and making recommendations with respect to compensation and benefits for executive officers and taking all related actions that are not reserved for our board; and

| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | administering our stock option plan and other salary, compensation or benefit plans that it is designed to administer.

In 2002, the members of our compensation committee were Mr. Jones, Mr. Bouillet and Mr. Bertrand.



|Disclosure Committee
|--------------------

In 2002, the board established a disclosure committee to review and ensure the accuracy and completeness of our public communications. The disclosure committee is responsible for undertaking or supervising each of the following:



| |  | Checking compliance with the information obligations that our company is subject to, in particular with a view to the requirements of applicable stock exchange and financial regulations, and giving its opinion on our compliance with such obligations;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | Preparing our publications and communications calendar and their model content;

| |   |                                             
| | - | --------------------------------------------
| |  | Preparing and organizing analysts meetings;

| |   |                                            
| | - | -------------------------------------------
| |  | Preparing and organizing press conferences;

| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | Selecting the media used to publish information (press releases, electronic supports, etc.);

| |   |                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Making sure that the internal collection procedures and procedures for supervision of information to be made public by our company are defined, guaranteeing the reliability of such procedures, and overseeing compliance with such procedures;

| |   |                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Regularly assessing, under the supervision of the Chief Executive Officer and the Chief Financial Officer, the internal collection procedures and procedures for supervision of information, recommending modifications to such procedures, if any, and overseeing the implementation any modifications approved by the Chief Executive Officer and the Chief Financial Officer;

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | At least once a year and with our statutory auditors and external consultants, defining and undertaking an assessment of the procedures for internal supervision of financial information, and providing its opinion on any significant problems likely to affect the collection and communication of financial information and/or any identified fraud involving members of the management or other persons having significant responsibilities within our company;

| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Appointing the person(s) in charge of preparing and drafting our reports and communications, who may be, at the disclosure committees discretion, different persons depending on the subject of the reports or communications;

| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | Organizing the training of the persons involved in the process of communicating information about our company;

| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reviewing each draft report or communication of our company, examining the information included therein and providing an opinion on the opportunity to conduct additional diligence or investigations to verify such information;

| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | Providing an opinion on the significance of any event or other information relating to our company;

| |   |                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Providing an opinion on the opportunity to submit the draft report or communication to the statutory auditors, to legal counsel or to any other third party expert for validation of the information included in such report or communication;

| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | Providing an opinion on the necessity of obtaining approval from our Board of Directors on the content of the draft report or communication;



48/128

---



Back to Contents

| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | Approving the final version of any report or communication that we must make public; and

| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Approving the procedures for publication and distribution of reports or communications that have been approved by the disclosure committee, as well as the terms and conditions of filing or registration thereof with the stock exchange authorities.

Our disclosure committee may delegate to one or more of its members the powers listed above, except for the approval of the final version of our annual report (whether under form of a document de référence in France or a Form 20-F in the United States).



The current members of our disclosure committee are: François Legros, Chairman and Chief Executive Officer; Mike Savage, Chief Financial Officer and Investor Relation Officer; Marie Capela, Chief Legal and Human Resources Officer; Jean Marc Albert, Cost Controller Group; John Dion, Vice President Finance; Jim Huzell, President Group; Margie Medalle, Vice President & Chief Executive Office in North America; Jim Lysinger, Executive Vice President Europe; and Olivier Fourcade, Executive Vice President Asia-Pacific.



Denise Persson, Executive Vice President Marketing Group & Strategic Partnership and Kevin Fletcher, Chief Financial Officer in North America also participate in meetings of our Disclosure Committee.



|D. | Employees
|-- | ---------

We had 1,119 employees world-wide as of December 31, 2002. The table below sets forth the breakdown of employees by geographic area and by main category of activity as of December 31, 2000, 2001 and 2002.15



|              |  | As of December 31: |      
|------------- |  | ------------------ | -----
|              |  |                    |      
|              |  | 2002               |      
|              |  |                    |      
|Europe        |  |                    | 413  
|North America |  |                    | 612  
|Asia Pacific  |  |                    | 94   
|              |  |                    |      
|TOTAL         |  |                    | 1,119
|              |  |                    |      

|                                      |  |                          |      
|------------------------------------- |  | ------------------------ | -----
|                                      |  | As
      of December 31: |      
|                                      |  |                          |      
|                                      |  | 2002                     |      
|                                      |  |                          |      
|Sales
        & Marketing             |  |                          | 229  
|Research
        and Development      |  |                          | 61   
|Operators
        and Reservationists |  |                          | 476  
|Administrative
        and Managerial |  |                          | 257  
|MIS
        and Operations            |  |                          | 96   
|                                      |  |                          |      
|TOTAL                                 |  |                          | 1,119
|                                      |  |                          |      

Under French law, all employers of more than 20 employees in France are required to implement a 35-hour work week. Pursuant to this law, we entered into a collective bargaining agreement with our French employees in March 2000. Although the work week is shorter on average and we have not reduced salaries, the agreement allows us greater flexibility than before to organize the use of employee time. For example, employees can work more than 35 hours in some weeks, but in exchange we are required to reduce the number of hours worked in other weeks to ensure that they do not work more than 35 hours per week on an annual basis. We believe this added flexibility partly compensates for the reduction in hours and that the 35-hour week does not have a material adverse effect on our financial condition. We are not a party to any other collective bargaining agreements.



To date we have not experienced any labor movements or work stoppages. We believe our relations with our employees are good.



49/128

---



Back to Contents

|   |                
|-- | ---------------
|E. | Share Ownership

The following table sets forth information known to
  us with respect to the ownership of our ordinary shares as of March 30, 2003
  based on 15,471,204 shares outstanding as of such date by:



| |  | Each of our directors, including
        our nominees for director, and named senior management; and
| | - | ----------------------------------------------------------------------------------------------------

| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | All directors, including our
        nominees for director, and named senior management as a group.

|Name                                                                                                              |  | Shares
      Owned |           | %
      of Outstanding
      Shares | 
|----------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------------------------- | 
|                                                                                                                  |  |                    |           |                                     | 
|François
        Legros                                                                                           |  |                    | 22,599    |                                     | 
|Jean-Jacques
        Bertrand                                                                                     |  |                    | 795,363   | (1)                                 | 
|Jean-Charles
        Bouillet                                                                                     |  |                    | 3,000     |                                     | 
|Patrick
        S. Jones                                                                                          |  |                    | 1,000     | (2)                                 | 
|David
        Detert                                                                                              |  |                    | 648       |                                     | 
|Universal
        Capital Partners                                                                                |  |                    | 1,800,000 |                                     | 
|Paul
        Sfez                                                                                                 |  |                    | 1         |                                     | 
|Thomas
        Abbott                                                                                             |  |                    | 5,000     | (2)                                 | 
|Margie
        Medalle                                                                                            |  |                    | 0         |                                     | 
|Olivier
        Fourcade                                                                                          |  |                    | 574       |                                     | 
|Jim
        Huzell                                                                                                |  |                    | 3,700     |                                     | 
|Michael
        E. Savage                                                                                         |  |                    | 117       |                                     | 
|Marie
        Capela-Laborde                                                                                      |  |                    | 2,152     |                                     | 
|Shelly
        Robertson                                                                                          |  |                    | 147       |                                     | 
|Denise
        Persson                                                                                            |  |                    | 1,000     |                                     | 
|Mark
        Taverner                                                                                             |  |                    | 0         |                                     | 
|Jim
        Lysinger                                                                                              |  |                    | 0         |                                     | 
|                                                                                                                  |  |                    |           |                                     | 
|                                                                                                                  |  |                    |           |                                     | 
|All
        directors, including our nominees for director, and senior management
        as a group (17 persons) |  |                    | 2,632,611 |                                     | 
|                                                                                                                  |  |                    |           |                                     | 
|                                                                                                                  |  |                    |           |                                     | 

| | 
| | 

|* | Less than one percent.
|- | ----------------------

|(1) | Mr. Bertrand may be considered the beneficial owner of 795,362 shares held of record by BNP Europe and Media Fund II L.P., for which shares he disclaims beneficial ownership except to the extent of his pecuniary interest therein.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Shares held as ADSs (which represent one-half of one ordinary share).
|--- | ---------------------------------------------------------------------



50/128

---



Back to Contents

The following table sets forth information with respect to the ownership of options to purchase our ordinary shares as of April 30, 2003 by:



| |  | Each of our named senior management; and
| | - | ----------------------------------------

| |   |                                  
| | - | ---------------------------------
| |  | All senior management as a group.

|Name                                                     |  | Number
      of Shares
      underlying
      options |         | Exercise
      Price |  | Expiration
      
      Date | 
|-------------------------------------------------------- |  | ----------------------------------------------------- | ------- | -------------------- |  | ---------------------------- | 
|                                                         |  |                                                       |         |                      |  |                              | 
|François
        Legros                                  |  |                                                       | 12,363  | (1)                  |  | €15.32                       | 
|                                                         |  |                                                       | 23,900  | (1)                  |  | €14.30                       | 
|Margie
        Medalle                                   |  |                                                       | 10,000  | (1)                  |  | €53.17                       | 
|                                                         |  |                                                       | 15,000  | (2)                  |  | €22.09                       | 
|Michael
        E. Savage                                |  |                                                       | 1,676   | (3)                  |  | €11.93                       | 
|                                                         |  |                                                       | 8,379   | (3)                  |  | €14.92                       | 
|                                                         |  |                                                       | 33,515  | (3)                  |  | €10.63                       | 
|                                                         |  |                                                       | 26,390  | (3)                  |  | €31.33                       | 
|Marie
        Capela-Laborde                             |  |                                                       | 1,021   | (1)                  |  | €15.32                       | 
|                                                         |  |                                                       | 7,000   | (2)                  |  | €53.17                       | 
|Mark
        Taverner                                    |  |                                                       | 5,070   | (1)                  |  | €15.32                       | 
|                                                         |  |                                                       | 1,000   | (1)                  |  | €53.17                       | 
|Denise
        Persson                                   |  |                                                       | 3,000   | (1)                  |  | €15.32                       | 
|                                                         |  |                                                       | 7,000   | (1)                  |  | €53.17                       | 
|Shelly
        Robertson                                 |  |                                                       | 3,351   | (3)                  |  | €10.63                       | 
|                                                         |  |                                                       | 335     | (3)                  |  | €23.87                       | 
|                                                         |  |                                                       | 1,675   | (3)                  |  | €13.80                       | 
|                                                         |  |                                                       | 13,194  | (3)                  |  | €31.33                       | 
|Jim
        Lysinger                                     |  |                                                       | 10,140  | (1)                  |  | €15.32                       | 
|                                                         |  |                                                       | 3,000   | (1)                  |  | €53.17                       | 
|                                                         |  |                                                       | 11,858  | (2)                  |  | €22.90                       | 
|                                                         |  |                                                       |         |                      |  |                              | 
|All
        senior management as a group (8 individuals) |  |                                                       | 198,867 |                      |  |                              | 
|                                                         |  |                                                       |         |                      |  |                              | 
|                                                         |  |                                                       |         |                      |  |                              | 

| | 
| | 

|(1) | Granted pursuant to the 1999 plan.
|--- | ----------------------------------

|(2) | Granted pursuant to the 2000 plan.
|--- | ----------------------------------

|(3) | Granted pursuant to the Vialog stock plans.
|--- | -------------------------------------------

For additional information regarding our stock options
  and stock option plans see Item 10 Additional Information  Memorandum
  and Articles of Association and Note 12 to our financial statements included
  under Item 18.





51/128

---



Back to Contents

|                                                                 
|-----------------------------------------------------------------
|Item 7. Major Shareholders
        and Related Party Transactions

|   |                   
|-- | ------------------
|A. | Major Shareholders

The table below shows the beneficial owners of more
  than 1% or more of our ordinary shares and ADSs, based on 15,471,204 ordinary
  shares outstanding as at March 30, 2003.



|Company                                         |  | Number
      of
      shares |                 | %
      of
      share capital |  | %
      of
      voting rights* |  
|----------------------------------------------- |  | ---------------------------- | --------------- | ------------------------------ |  | ------------------------------- | -
|                                                |  |                              |                 |                                |  |                                 |  
|Universal
        Capital Partners*(1)          |  |                              | 1
      800 000 |                                |  | 11,64                           | %
|IN-COM
        SA*(1)                           |  |                              | 165 185         |                                |  | 1,06                            | %
|PARTCOM*(1)                                    |  |                              | 423 786         |                                |  | 2,74                            | %
|                                                |  |                              |                 |                                |  |                                 |  
|Group
        total                             |  |                              | 2 388 971       |                                |  | 15,44                           | %
|CDC
        Ixis Private Equity*(3)             |  |                              | 187 471         |                                |  | 1,21                            | %
|FCPI
        CDC Innovatech 1                   |  |                              | 50 837          |                                |  | 0,32                            | %
|Banexi
        Communication                    |  |                              | 281 120         |                                |  | 1,81                            | %
|Geneval
        (Societe Générale)              |  |                              | 217 000         |                                |  | 1.40                            | %
|BNP
        Europ Telecom & Media FD II LP*(2)  |  |                              | 795 362         |                                |  | 5,15                            | %
|Intrepid
        Capital Management             |  |                              | 867 000         |                                |  | 5,60                            | %
|Ocean
        Fund c/o Plievier Beleggingen, BV |  |                              | 326 500         |                                |  | 2,13                            | %
|Ring
        Partners, LP                       |  |                              | 210 850         |                                |  | 1,36                            | %
|Michael
        Jesselson c/o Phillip Brothers  |  |                              | 186 500         |                                |  | 1,21                            | %
|SMA
        gestion                             |  |                              | 180 500         |                                |  | 1,17                            | %
|                                                |  |                              |                 |                                |  |                                 |  

| | 
| | 

|*   | Pursuant to our status (bylaws) shares held in registered
      form for more than two years, acquire double voting rights. See Item 10
      “Additional Information  Memorandum and Articles of Association.”                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Universal Capital Partners, PartCom
      S.A. and In-Com S.A. (a wholly-owned subsidiary of PartCom
      S.A.) have entered into a letter agreement to form a group to influence
      the policies of our company. This agreement is described in more details
      below.
|(2) | Mr. Jean-Jacques Bertrand,
        one of our directors, has informed us that he could be deemed to be the
        beneficial owner of the shares held by BNP Europ and Telecom Media Fund
        II L.P. He has disclaimed beneficial ownership of such shares.               
|(3) | PartCom S.A. is a wholly-owned
      subsidiary of CDC Ixis Private Equity, however, CDC Ixis is not a party
      to the letter agreement.                                                                                                                                    



52/128

---



Back to Contents

According to a Schedule 13D filed with the Securities and Exchange Commission on March 19, 2003, to which the most recent amendment is dated April 17, 2003, Universal Capital Partners, PartCom S.A. and In-Com S.A. (the Group) have entered into a letter agreement, effective as of March 24, 2003 (the Letter Agreement), regarding the establishment of a group to influence the policies of our company and to otherwise act in concert in accordance with section L. 233-10 of the French Commercial Code with respect to their shareholdings in our company. According to the amended Schedule 13D, the Letter Agreement provides that it will apply for so long as any of the parties holds at least 3.5% of the share capital or voting rights of our company, subject to a maximum term of twelve months or earlier termination in the event that the parties, either individually or in the aggregate, acquire more than 30.0% of the share capital and/or voting rights of our company. Pursuant to the terms of the Letter Agreement, the Group members reciprocally undertook to inform the other parties of any plan of acquisition, subscription or transfer of our shares prior to the execution of any such transaction on or off the market. In addition, the Group members agreed that the Group could not in any case hold more than 30% of the capital and/or the voting rights of our company, and if, following the acquisition by whatever manner of our shares by one of the parties, the accumulated amount of the respective holdings of the groups comprising the Group becomes greater than 30% of the capital and/or the voting rights of our company, the Group would cease as a matter of law without the need for any formality.



According to the Schedule 13D, as amended, each of
  the Group members holds the number of shares of our company set forth in the
  table above. Universal Capital Partners has disclaimed beneficial ownership
  of the shares owned by PartCom S.A. and In-Com S.A, and each of PartCom
  S.A. and In-Com S.A. has disclaimed beneficial ownership of the shares held
  by Universal Capital Partners. According to the Schedule 13D, as amended, In-Com
  S.A. is a wholly-owned subsidiary of PartCom S.A., which itself is a wholly-owned
  subsidiary of CDC IXIS Private Equity. Although the Schedule 13D states that
  CDC IXIS Private Equity holds the number
  of shares in our company set forth in the table above, CDC IXISPrivate Equity is not a party to the Letter Agreement.



In the Schedule 13D, as
  amended, Universal Capital Partners has indicated that it may seek the appointment
  of one or more persons as members of the board of directors of our company.
  Subject to the foregoing, the Group members stated that they and, to the best
  of their knowledge, their respective related persons have no present plan or
  proposal which relates to or would result in any of the actions or events enumerated
  in clauses (a) through (j) of Item 4 of Schedule 13D. The Group members stated
  that they intend to review their respective investments in our company on a
  continuing basis and may engage in discussions with management and the Board
  of Directors of our company concerning the business, operations and future plans
  of our company. Depending on various factors including, without limitation,
  our financial position and investment strategy, the price levels of our shares,
  conditions in the securities markets and general economic and industry conditions,
  the Group members have stated that they may in the future take such actions
  with respect to their respective investments in our company as they each deem
  appropriate including, without limitation, seeking Board representation, making
  proposals to our company concerning the capitalization and operations of our
  company, purchasing additional shares or selling some or all of their shares
  or changing their intention with respect to any and all matters referred to
  above.



On April 11, 2003, the Group members signed a memorandum of understanding with our company and our bank lenders relating to the restructuring of our financial debt and a rights offering that we plan to undertake in 2003 in connection with that restructuring. The memorandum of understanding is described in detail under Item 5 Operating and Financial Review and Prospects  Recent Developments.



At our April 22, 2003 board meeting, our board of
  directors elected to nominate both Universal Capital Partners and Paul Sfez
  for appointment to our board of directors. Our board of directors agreed to
  nominated two individuals to be selected by Universal Capital Partners due to
  Universal Capital Partners’ shareholding in our company. Our statuts (bylaws)
  currently provide for double voting rights. For more information relating to
  our ordinary shares, see Item 10 Additional Information  Memorandum
  and Articles of Association.



As of March 30, 2003, there were 7,752,498 of our
  ADSs outstanding, representing 3,876,249 of our ordinary shares, or 25.05% of
  our total shares outstanding as of such date. As of March 30, 2003, there were
  59 record holders of our ADSs, of which 39 have registered addresses in the
  United States. In addition, as of March 30, 2003, 32,858 of our ordinary shares
  were held by 39 record holders with registered addresses in the United States.





53/128

---



Back to Contents

|   |                           
|-- | --------------------------
|B. | Related Party Transactions

During 2002, we did not enter into any related party transactions. In April 2003, we entered into a memorandum of understanding with certain of our 3% convertible bondholders, shareholders (including Universal Capital Partners and PartCom S.A.) and our main bank  lenders relating to the restructuring of our April 2001 $125 million credit facility. This agreement, which also includes modifications to the terms of our 3% convertible bonds and the agreement of certain of our shareholders to subscribe for shares that be issued upon the exercise of  rights, is described in detail under Item 5 Operating and Financial Review  Liquidity and Capital Resources.



|C. | Interests of Experts and Counsel
|-- | --------------------------------

Not applicable.





54/128

---



Back to Contents

|                             
|-----------------------------
|Item 8. Financial Information

|   |                                                        
|-- | -------------------------------------------------------
|A. | Consolidated Statements and Other Financial Information

See Item 18  Financial Statements
  and pages F-1 through F-39.



|Legal Proceedings
|-----------------

We are involved in legal proceedings from time to time in the ordinary course of our business. We do not believe that liabilities related to any of these claims and proceedings against us are likely to have, individually or in the aggregate, a material adverse effect on our  consolidated financial condition or results of operations.



|Dividend Distribution Policy
|----------------------------

We have never declared or paid any dividends on our capital stock. We expect to retain our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any dividends in the foreseeable future.

Our ability to pay dividends is also affected by restrictions in existing credit agreements. Our credit facility prohibits us from paying dividends.



|B. | Significant Changes
|-- | -------------------

There have not been any significant changes since the date of our financial statements included under Item 18.





55/128

---



Back to Contents

|                             
|-----------------------------
|Item 9. The Offer and Listing

|   |                          
|-- | -------------------------
|A. | Offer and Listing Details

Our ordinary shares are listed on the Nouveau Marché of Euronext Paris, and since April 26, 2001, our ADSs have traded under the symbol GNSY on the Nasdaq National Market.

The table below sets forth, for the periods indicated, the reported high and low quoted prices of our ordinary shares on the Nouveau Marché of Euronext Paris S.A. and of our ADSs on the Nasdaq National Market.



|                                                         |  | Euronext
      Paris             |       | Nasdaq                 | 
|-------------------------------------------------------- |  | -------------------------------- | ----- | ---------------------- | 
|Period                                                   |  | High                             |       | Low                    | 
|                                                         |  | (ordinary
      shareprice in €) |       | (ADS
      price in $) | 
|                                                         |  |                                  |       |                        | 
|1998                                                     |  |                                  |       |                        | 
|beginning
        (October 1, 1998)                      |  |                                  | 12.04 |                        | 
|1999                                                     |  |                                  | 37.00 |                        | 
|2000                                                     |  |                                  | 79.50 |                        | 
|2001
        (Nasdaq beginning April 26, 2001)           |  |                                  | 53.80 |                        | 
|                                                         |  |                                  |       |                        | 
|First
        Quarter                                    |  |                                  | 53.80 |                        | 
|Second
        Quarter (Nasdaq beginning April 26, 2001) |  |                                  | 35.82 |                        | 
|                                                         |  |                                  |       |                        | 
|Third
        Quarter                                    |  |                                  | 25.60 |                        | 
|                                                         |  |                                  |       |                        | 
|Fourth
        Quarter                                   |  |                                  | 16.94 |                        | 
|2002                                                     |  |                                  | 14.45 |                        | 
|First
        Quarter                                    |  |                                  | 14.45 |                        | 
|Second
        Quarter                                   |  |                                  | 14.33 |                        | 
|Third
        Quarter                                    |  |                                  | 5.32  |                        | 
|Fourth
        Quarter                                   |  |                                  | 3.45  |                        | 
|                                                         |  |                                  |       |                        | 
|2003
        (through April 30, 2003)                    |  |                                  | 3.06  |                        | 
|First
        Quarter                                    |  |                                  | 3.06  |                        | 
|                                                         |  |                                  |       |                        | 
|Second
        Quarter (through April 30, 2003)          |  |                                  | 2.77  |                        | 
|2002                                                     |  |                                  |       |                        | 
|November                                                 |  |                                  | 2.95  |                        | 
|December                                                 |  |                                  | 3.45  |                        | 
|2003                                                     |  |                                  |       |                        | 
|January                                                  |  |                                  | 2.25  |                        | 
|February                                                 |  |                                  | 1.59  |                        | 
|March                                                    |  |                                  | 3.10  |                        | 
|April
        (through April 30, 2003)                   |  |                                  | 2.77  | *                      | 
|                                                         |  |                                  |       |                        | 

| | 
| | 

|* | Source: Euronext Paris and The Bank of New York. Two ADSs represent one ordinary share. Trading of our ADSs on the Nasdaq National Market began on April 26, 2001.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |                     
|-- | --------------------
|B. | Plan of Distribution

Not Applicable.





56/128

---



Back to Contents

|   |        
|-- | -------
|C. | Markets

|                             
|-----------------------------
|Trading On The Nouveau Marché

|       
|-------
|General

On September 22, 2000, ParisBourse(SBF) S.A., Amsterdam Exchange N.V. and the Société de la Bourse de Valeurs Mobilières de Bruxelles S.A. merged to create Euronext N.V., a Dutch holding company and the first pan-European stock exchange. Subsequently,  ParisBourse(SBF) S.A. changed its name to Euronext Paris. Securities quoted on any of the stock exchanges participating in Euronext will be traded through a common Euronext platform, with central clearinghouse, settlement and custody structures. However, these securities will  remain listed on their respective local exchanges. Euronext Paris retains responsibility for the admission of securities to its trading markets, as well as the regulation of these markets.

Securities approved for listing by Euronext Paris
  are traded in one of two regulated markets, the Bourse de Paris, which
  in turn comprises the Premier Marché and the Second Marché,
  and the Nouveau Marché. These markets are all operated and managed
  by Euronext Paris, a market operator (entreprise de marché) responsible
  for the admission of securities and the supervision of trading in listed securities.
  Euronext Paris publishes a daily official price list that includes price information
  on listed securities. The securities of most large public companies are listed
  on the Premier Marché, with the Second Marché available
  for small and medium-sized companies. Trading on the Nouveau Marché
  was introduced in March 1996 to allow small capitalization and start-up companies
  to access the stock market. In addition, the securities of certain other companies
  are traded on a non-regulated, over-the-counter market, the Marché
  Libre OTC.



|Nouveau Marché
|--------------

The Nouveau Marché is a regulated market managed and operated by Euronext Paris. The Nouveau Marché, however, is neither a new section of an existing market nor a stepping stone to the Second Marché. The Nouveau Marché is an electronic market that combines a  central order book with market making to ensure greater liquidity. Member firms of the Nouveau Marché may act in one or more capacities: Listing Advisers/Market-Makers (Introducteurs/Teneurs de Marché); brokers (Négotiateurs pour compte propre); dealers (Négotiateurs pour  compte de tiers); broker-dealers; and/or clearing agents (Adhérent Compensateurs). BNP Paribas Equities France acts as Teneur de Marché with respect to our ordinary shares traded on the Nouveau Marché. Admission to the Nouveau Marché is subject
 to capital adequacy and liquidity  requirements determined by Euronext Paris regulations. In addition, companies listed on the Nouveau Marché are required to publish comprehensive information regularly and to keep the public informed of events likely to affect the market price of their securities. Euronext Paris allows  continuous trading for the most actively traded shares on the Nouveau Marché. Such trading takes place on each business day from 9:00 a.m. to 5:25 p.m., with a pre-opening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:25 p.m. to 5:30 p.m. during which  transactions are recorded but not executed.

For shares that are not traded continuously, retail
  orders on the Nouveau Marché are matched by the central system
  at two daily fixings, at 10:30 a.m. and 4:00 p.m. Between such fixings, Listing
  Advisors/Market Makers display bid/asked spreads for a minimum number of each
  of the securities for which they act as market-makers, and trades with the Listing
  Agents/Market Makers are executed from time to time throughout the day. Our
  shares are traded continuously. Euronext Paris may restrict trading in a security
  listed on the Nouveau Marché if the quoted price of the security
  increase or decreased beyond the specific price limits defined by its regulators
  (réservation à la hausse ou à la baisse). In particular,
  trading is automatically restricted in a security whose quoted price varies
  by more than 10% from the last price determined in an auction or by more than
  5% from the last traded price. If the order that has caused the restriction
  is cancelled within the following minutes, the trading of this security resumes.
  If the order is not cancelled within the following minutes, an auction is organized
  after a call phase of four minutes, during which orders are entered in the central
  order book but not executed. Eurone xt Paris may also suspend trading of a security
  listed on the Nouveau Marché in other limited circumstances (suspension
  de la cotation) in particular to prevent or halt disorderly market conditions.

Trades of securities listed on the Nouveau Marché are settled on a cash basis on the third trading day following the trade. Market intermediaries are also permitted to offer investors a deferred settlement service (service à règlement différé) for a fee. The deferred settlement  service is only available for trades in securities that either:



| |  | are a component of the SBF 120 Index; or
| | - | ----------------------------------------

| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | have both a total market
        capitalization of at least €1 billion and a daily average volume
        of trades of at least €1 million.



57/128

---



Back to Contents

Investors can elect on the determination date (date de liquidation), which is the fifth trading day before the end of the month, either to settle the trade by the last trading day of the month or to pay an additional fee and postpone the settlement decision to the determination date  of the following month. At the date of this annual report, our ordinary shares are eligible for deferred settlement.

Equity securities traded on a deferred settlement
  basis are considered to have been transferred only after they have been registered
  in the purchasers account. Under French securities regulations, any sale
  of a security traded on a deferred settlement basis during the month of a dividend
  payment date is deemed to occur after the dividend has been paid. If the sale
  takes place before, but during the month of, a dividend payment date, the purchasers
  account will be credited with an amount equal to the dividend paid and the sellers
  account will be debited by the same amount.

Prior to any transfer of securities held in registered form on the Nouveau Marché, such securities must be converted into bearer form and inscribed in an account maintained by an accredited intermediary with Euroclear, France, a registered clearing agency. Transactions in  securities are initiated by the owner giving instructions (through an agent, if appropriate) to the relevant accredited intermediary. Trades of securities listed on the Nouveau Marché are cleared and settled through Euroclear, France, using a continuous net settlement system. A fee or  commission is payable to the Listing Advisor/Market Maker or broker-dealer or other agent involved in the transaction.



|Trading by the Company in its Shares
|------------------------------------

Under French law, a company may not issue shares to itself, but it may purchase its own shares in the limited cases described in Item 10 under Additional Information  Memorandum and Articles of Association.



|D. | Selling Shareholders
|-- | --------------------

Not applicable.



|E. | Dilution
|-- | --------

Not applicable.



|F. | Expenses of the Issue
|-- | ---------------------

Not applicable.

58/128

---



Back to Contents

Item 10. Additional Information

A. Share Capital

Share Capital

At December 31, 2002, our share capital amounted to
  €77,011,115, divided into 15,402,223 outstanding shares with a nominal
  value of €5 per share. As of April 30, 2003, our share capital amounted
  to €77,356,020, divided into 15,471,204 outstanding shares with a nominal
  value of €5 per share. The reason for the change in the number of ordinary
  shares outstanding is the exercise of stock options and the conversion of convertible
  notes that we issued on March 27, 2001 in connection with our acquisition of
  Astound.



During 2002, we issued 131,169 ordinary shares, all
  of which were issued as a result of the exercise of stock options and the conversion
  of March 27, 2001 convertible notes, which increased our share capital by €655,795.



All
  of our outstanding shares are of the same class and are fully paid. Our statutsprovide that shares may be held in registered form or in bearer form, at
  the option of the shareholder. Our statuts provide that any fully paid-up
  shares acquire double voting rights if held in registered form for at least
  two years under the name of the same shareholder.



At December 31, 2002, we held 22,131 of our ordinary
  shares as treasury shares. The book value of these shares is €420,225.51
  and their the face value is €110,655 (based on a nominal value of €5
  per share).



At
  our May 28 2003 shareholder’s meeting, we will ask our shareholders to
  authorize a reduction in the nominal value of our shares to €1 per share.
  Based on the number of shares issued and outstanding on March 30, 2003, if this
  resolution had been in effect as of that date, our share capital would have
  been €15,471,204, divided into 15,471,204 outstanding shares. We will account
  for the reduction in our share capital by incorporating our losses. This reduction
  is being proposed in connection with our financial restructuring, which is discussed
  in more detail under Item 5 “Operating and Financial Review and Prospects  Liquidity
  and Capital Resources.”



For
  additional information regarding the evolution of our share capital, see Note
  11 to our financial statements, included under Item 18.



Stock Options

As of December 31, 2002, we had 506,031 stock options
  outstanding under our 1998, 1999, 2000 and 2001 stock option plans, of which
  347,855 were exercisable as of such date. Each of these options gives the right
  to acquire one of our ordinary shares. We also had 788,290 options outstanding
  as of December 31, 2002 that were granted by Vialog under its 1996 and 1999
  stock option plans, of which 788,290 were exercisable as of such date. In accordance
  with the merger agreement, the Vialog stock options remain outstanding and are
  on the same terms and conditions, except the holder now receives a right to
  receive one of our ADSs (which represent one-half of one ordinary share) based
  on the same exchange ratio used in connection with the merger.



In
  December 2002, we cancelled 1,045,511 of our outstanding stock options when
  certain of our employees waived the benefit of their outstanding stock options
  for our ordinary shares (or ADSs) in exchange for new options to be granted
  under our existing stock option plans. This cancellation is described in more
  detail under Item 6 “Directors, Senior Management and Employees  Compensation”
  and in Note 12 to our financial statements included under Item 18. We also cancelled
  an additional 64,570 outstanding stock options that were forfeited when employees
  left of our company.



For
  additional details regarding our stock option plans, see Note 12 to our financial
  statements included under Item 18.



Convertible Bonds and Warrants

On
  August 6, 1999, we issued 1,524,390 3% convertible bonds, each with a principal
  amount of €18.37, for €16.40 each. Each bond is convertible into one
  of our ordinary shares, and unless converted, is due September 1, 2004. We may
  call the bonds at our option. As of December 31, 2002, 476,323 of these 3% convertible
  bonds remain outstanding. The terms of these bonds may be modified in connection
  with our financial restructuring, which is described in more detail under Item
  5 “Operating and Financial Review and Prospects  Liquidity and Capital
  Resources.”



In
  connection with our acquisition of Astound, on March 27, 2001, we issued 1,103,200
  notes, which are convertible into our ordinary shares, each note giving the
  right to one of our ordinary shares. Of these notes, 156,109 and 30,700 were
  issued in exchange for the future exercise of replacement options and special
  options, respectively. As of December 31, 2002, 137,347 of the convertible notes
  remain outstanding, and 98,608 replacement options and 30,700 special options
  have yet to be converted.



We
  have no warrants outstanding.



Share Capital Resolutions

At
  an extraordinary general meeting held on June 28, 2002, our shareholders authorized
  our board of directors to increase our share capital, through the issuance 
  with preferential subscription rights  of shares and/or other securities
  granting access, immediately or in the future, to shares of the company, by
  an aggregate maximum nominal amount of €30 million for a period ending
  26 months from the date of such shareholders’ meeting.



At
  our May 28, 2003 extraordinary general meeting, we will ask our shareholders
  to authorize our board of directors to use the June 28, 2002 resolution to increase
  our share capital, by an aggregate nominal amount of €6 to €8 million.



If
  authorized by the shareholders meeting (and if the shareholders also authorize
  a reduction in the nominal value of our shares as discussed below under “ Share
  Capital”), our board of directors intends to use such authorization to
  conduct an offering of subscription rights to all of our shareholders in connection
  with our financial restructuring. Two of our major shareholders, Universal Capital
  Partners, holder of approximately 11.69% of our shares, and Part’Com S.A.
  and certain of its affiliates, who together hold approximately 6% of our share
  capital, have agreed to exercise all of their rights and to subscribe for any
  new shares that are not subscribed for by other shareholders so long as the
  subscription price does not exceed €2.2 per share. For more information
  regarding our financial restructuring and the planned rights offering, see Item
  5 “Operating and Financial Review and Prospects  Liquidity and Capital
  Resources” and “ Recent Developments.” For more information
  regarding our major shareholders, see Item 7 “Major Shareholders.”



In
  addition, at the extraordinary general meeting held on June 28, 2002, our shareholders
  authorized our board of directors to increase our share capital, through the
  issuance of shares reserved for certain employees, by an aggregate maximum nominal
  amount of €5 million for a period ending 26 months from the date of such
  shareholders’ meeting. At our May 28, 2003 extraordinary general meeting,
  our shareholders will be asked to grant an additional authorization with terms
  identical to those of the June 28, 2002 authorization (although the aggregate
  maximum nominal amount will be limited to €1 million). If approved, this
  new authorization will supersede the prior authorization granted on June 28,
  2002.



B. Memorandum and Articles of Association

General

Our
  company is a société anonyme, a form of limited liability
  company, organized under the laws of France. Our company is registered with
  the Registre du Commerce et Sociétés du Montpellier (Registry
  of Commerce and Companies of Montpellier, France) under No. B339-697-021.



In
  this section, we summarize material information concerning our share capital,
  together with material provisions of applicable French law and our statuts,
  an English translation of which has been filed as an exhibit to this annual
  report. For a description of the provisions of our statutsrelating to
  our Board of Directors and statutory auditors, see Item 6 “Directors,
  Senior Management and Employees.” You may obtain copies of our statuts
  in French from the greffe (Secretary) of the Registre du Commerce
  et Sociétés de Montpellier. Please refer to that full document
  for additional details.



Our
  statuts specify that our corporate affairs are governed by:



| | Title II of the French Commercial Code (previously
      French Company Law No. 66-537 of July 24, 1966, as amended), and
|- | -------------------------------------------------------------------------------------------------------------------------

| | the statuts themselves.
|- | -----------------------

Shareholder Identification

Our
  statuts allow us to obtain from Euroclear France the name, nationality,
  address and number of shares held by the holders of our securities that have,
  or may in the future have, voting rights. If we have reason to believe that
  an individual on any list provided by Euroclear France holds for the account
  of another person, our statuts allow us to request such information regarding
  beneficial ownership directly of any shareholder named on the list provided
  by Euroclear France. See “ Form, Holding and Transfer of Shares”
  below.





59/128

---



Back to Content



|Shareholders Meetings and Voting Rights
|----------------------------------------

|       
|-------
|General

In accordance with the French Commercial Code, there are three types of shareholders meetings, ordinary, extraordinary and special.







| |  | electing, replacing and removing directors;
| | - | -------------------------------------------

| |   |                                 
| | - | --------------------------------
| |  | appointing independent auditors;

| |   |                               
| | - | ------------------------------
| |  | approving the annual accounts;

| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | declaring dividends or authorizing dividends to be paid in shares provided the statuts contain a provision to that effect;

| |   |                                   
| | - | ----------------------------------
| |  | issuing non-convertible bonds; and

| |   |                                       
| | - | --------------------------------------
| |  | approval of stock repurchase programs.

Extraordinary general meetings of shareholders are required for approval of matters such as amendments to our statuts, including any amendment required in connection with extraordinary corporate actions. Extraordinary corporate actions include:



| |  | changing our companys name or corporate purpose;
| | - | -------------------------------------------------

| |   |                                            
| | - | -------------------------------------------
| |  | increasing or decreasing our share capital;

| |   |                                           
| | - | ------------------------------------------
| |  | creating a new class of equity securities;

| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | authorizing the issuance of investment certificates, convertible or exchangeable securities;

| |   |                                                    
| | - | ---------------------------------------------------
| |  | establishing any other rights to equity securities;

| |   |                                                             
| | - | ------------------------------------------------------------
| |  | selling or transferring substantially all of our assets; and

| |   |                                          
| | - | -----------------------------------------
| |  | the voluntary liquidation of our company.

Special meetings of shareholders of a certain category of shares (such as, among others, shares with double voting rights) are required for any modification of the rights derived from such category of shares. The resolutions of the shareholders general meeting affecting these  rights are effective only after approval by the relevant special meeting.





60/128

---



Back to Contents

|                        
|------------------------
|Annual Ordinary Meetings

The French Commercial Code requires our board of directors to convene an annual ordinary general meeting of shareholders for approval of the annual accounts. This meeting must be held within six months of the end of each fiscal year. This period may be extended by an  order of the President of the Commercial Court. The board of directors may also convene an ordinary or extraordinary meeting of shareholders upon proper notice at any time during the year. If the board of directors fails to convene a shareholders meeting, our independent auditors may  call the meeting. In case of bankruptcy, our liquidator or court-appointed agent may also call a shareholders meeting in some instances. Any of the following may request the court to appoint an agent for the purpose of calling a shareholders meeting:



| |  | one or several shareholders holding at least 5% of our share capital,
| | - | ---------------------------------------------------------------------

| |   |                                             
| | - | --------------------------------------------
| |  | any interested party in cases of urgency, or

duly qualified associations of shareholders who have held their shares in registered form for at least two years and who together hold at least 1% of the voting rights of our company.



|Notice of Shareholders
        Meetings
|----------------------------------------

We must announce general meetings at least 30 days in advance by means of a preliminary notice, which is published in the Bulletin des Annonces Légales Obligatoires, or BALO. The preliminary notice must first be sent to the COB. The COB also recommends that  simultaneously with the publication of the preliminary notice a summary of the notice be published in a newspaper of national circulation in France. The preliminary notice must contain, among other things, the agenda, a draft of the resolutions to be submitted to the shareholders and the  procedure for voting by mail.



At least 15 days prior to the date set for a first call, and at least 6 days prior to any second call, we must send a final notice containing the final agenda, the date, time and place of the meeting and other information for the meeting. Such final notice must be sent by mail to all  registered shareholders who have held shares in registered form for more than one month prior to the date of the preliminary notice and published in a newspaper authorized to publish legal announcements in the local administrative department (département) in which our company is  registered as well as in the BALO, with prior notice having been given to the COB. If no shareholder has proposed resolutions to be submitted to the vote of the shareholders at the meeting, we are not required to send the notice to our shareholders; publishing the notice will be deemed  sufficient.



In general, shareholders can only take action at shareholders meetings on matters listed on the agenda. As an exception to this rule, shareholders may take action with respect to the dismissal of directors and certain other matters even though these actions have not been  included on the agenda. Additional resolutions to be submitted for approval by the shareholders at the meeting may be proposed to the board of directors, for recommendation to the shareholders, within ten days of the publication of the preliminary notice in the BALO by:



| |  | one or several shareholders holding a specified percentage of shares, or
| | - | ------------------------------------------------------------------------

| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a duly qualified association of shareholders who have held their shares in registered form for at least two years and who together hold at least 0.76% of our voting rights.

The board of directors must submit these resolutions to a vote of the shareholders after having made a recommendation thereon.



During the two weeks preceding a meeting of shareholders, a shareholder may submit written questions to the board of directors relating to the agenda for the meeting. The board of directors must respond to these questions during the meeting.



|Attendance and Voting at Shareholders Meetings
|-----------------------------------------------

In general, each shareholder is entitled to one vote per share at any general meeting, except for holders of shares with double voting rights (which are described above under Share Capital). Shareholders may attend ordinary general meetings and extraordinary general  meetings and exercise their voting rights subject to the conditions specified in the French Commercial Code and our statuts. There is no requirement that a shareholder have a minimum number of shares in order to attend or to be represented at an ordinary or extraordinary general  meeting.



In order to participate in any general meeting, a holder of registered shares must have its shares registered in its name in a shareholder account maintained by us or on our behalf by an agent appointed by us at least two days prior to the date of the meeting.





61/128

---



Back to Contents

Similarly, a holder of bearer shares must obtain from the accredited financial intermediary (intermédiaire financier habilité) with whom such holder has deposited its shares, a certificate (certificat dimmobilisation) indicating the number of bearer shares owned by such holder  and evidencing the holding of such shares in its account until the date of the meeting. Such certificate must be deposited at the place specified in the notice of the meeting at least two days before the meeting.



|Proxies and Votes by Mail
|-------------------------

In general, all shareholders who have properly registered their shares may participate in general meetings. Shareholders may participate in general meetings either in person or by proxy. Shareholders may vote in person, by proxy or by mail.



Proxies will be sent to any shareholder on request. In order to be counted, such proxies must be received at our registered office, or at any other address indicated on the notice convening the meeting, prior to the date of the meeting (in practice, we request that shareholders  return proxies at least three business days prior to the meeting). A shareholder may grant proxies only to his or her spouse or to another shareholder. A shareholder that is a corporation may grant proxies to a legal representative. Alternatively, the shareholder may send us a blank proxy  without nominating any representative. In this case, the chairman of the meeting will vote the blank proxies in favor of all resolutions proposed or approved by the board of directors and against all others.



With respect to votes by mail, we must send shareholders a voting form upon request. The completed form must be returned to us at least three days prior to the date of the shareholders meeting.



|Quorum
|------

The French Commercial Code requires that shareholders together holding at least 25% of the shares entitled to vote must be present in person, or vote by mail or by proxy, in order to fulfill the quorum requirement for:



| |  | an ordinary general meeting,
| | - | ----------------------------

| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an extraordinary general meeting where only an increase in our share capital is proposed through incorporation of reserves, profits or share premium.

The quorum requirement is one-third of the shares entitled to vote, on the same basis, for any other extraordinary general meeting.



For a special meeting of holders of a certain category of shares, the quorum requirement is half of the shares entitled to vote in that category, on the same basis.



If a quorum is not present at a meeting, the meeting is adjourned. When an adjourned meeting is resumed, there is no quorum requirement for an ordinary meeting or for an extraordinary general meeting where only an increase in our share capital is proposed through  incorporation of reserves, profits or share premium. However, only questions that were on the agenda of the adjourned meeting may be discussed and voted upon. In the case of any other reconvened extraordinary general meeting or special meeting, shareholders having at least 25% of  the shares entitled to vote (or voting shares belonging to the relevant category for special meetings of holders of shares of such specific category) must be present in person or voting by mail or by proxy for a quorum. If a quorum is not present, the reconvened meeting may be adjourned  for a maximum of two months. No deliberation by the shareholders may take place without a quorum.



|Majority
|--------

A simple majority of shareholders may pass a resolution at either an ordinary general meeting or an extraordinary general meeting only concerning a capital increase by incorporation of reserves, profits or share premium. At any other extraordinary general meeting and at any  special meeting of holders of a specific category of shares, a two-thirds majority of the shareholder votes cast is required.



A unanimous shareholder vote is required to increase liabilities of shareholders.



Abstention from voting by those present or those represented by proxy or voting by mail is counted as a vote against the resolution submitted to a shareholder vote.



Under the French Commercial Code, shares of a company held by entities controlled by that company are not entitled to voting rights and do not count for quorum or majority purposes.





62/128

---



Back to Contents

|                  
|------------------
|Shareholder Rights

Shareholder rights can be amended only after an extraordinary general meeting of the class of shareholders affected has taken place. Two-thirds of the shares of the affected class voting either in person or by mail or proxy must approve any proposal to amend shareholder  rights. The voting and quorum requirements applicable to this type of special meeting are the same as those applicable to an extraordinary general meeting, except that the quorum requirements for a special meeting are 50% of the voting shares, or 25% upon resumption of an adjourned  meeting.



As previously noted, our shares currently constitute our only class of capital stock.



|Financial Statements and Other Communications with Shareholders
|---------------------------------------------------------------

In connection with any shareholders meeting, we must provide a set of documents including our annual report and a summary of the results of the five previous fiscal years to any shareholder who so requests. In addition, because our shares are listed on the Nouveau Marché  of Euronext Paris, we are required to file a report (document de référence) with the COB each year that describes our company and our subsidiaries.



|Dividends
|---------

We may only distribute dividends out of our distributable profits, plus any amounts held in our reserve that the shareholders decide to make available for distribution, other than those reserves that are specifically required by law or our statuts. Distributable profits consist  of our unconsolidated net profit in each fiscal year, as increased or reduced by any profit or loss carried forward from prior years, less any contributions to the reserve accounts pursuant to law or our statuts.



|Legal Reserve
|-------------

The French Commercial Code requires us to allocate
  5% of our unconsolidated statutory net profit for each year to our legal reserve
  fund before dividends may be paid with respect to that year. Funds must be allocated
  until the amount in the legal reserve is equal to 10% of the aggregate nominal
  value of the issued and outstanding share capital. This restriction on the payment
  of dividends also applies to each of our French subsidiaries on an unconsolidated
  basis. At December 31, 2002, our legal reserve was €145,848.
  The legal reserve of any company subject to this requirement may only be distributed
  to shareholders upon liquidation of the company.



|Approval of Dividends
|---------------------

According to the French Commercial Code, our board of directors may propose a dividend for approval by the shareholders at the annual general meeting of shareholders. If we have earned distributable profits since the end of the preceding fiscal year, as reflected in an interim  income statement certified by our auditors, our board of directors may distribute interim dividends to the extent of the distributable profits for the period covered by the interim income statement. Our board of directors exercises this authority subject to French law and regulations and  may do so without obtaining shareholder approval.



|Distribution of Dividends
|-------------------------

Dividends are distributed to shareholders pro rata according to their respective holdings of shares. Outstanding dividends are payable to shareholders on the date of the shareholders meeting at which the distribution of dividends is approved. In the case of interim dividends,  distributions are made to shareholders on the date of our board of directors meeting in which the distribution of interim dividends is approved. The actual dividend payment date is decided by the shareholders at an ordinary general meeting or by our board of directors in the absence of  such a decision by the shareholders.



Dividends may be paid in cash or, if the shareholders meeting so decides by ordinary resolution, in kind, provided that all shareholders receive a whole number of assets of the same nature paid in lieu of cash. Our statuts provide that, upon a decision of the shareholders  meeting taken by ordinary resolution, each shareholder may be given the choice to receive his dividend in cash or in shares.



|Timing of Payment
|-----------------

According to the French Commercial Code, we must pay any existing dividends within nine months of the end of our fiscal year, unless otherwise authorized by court order. Dividends on shares that are not claimed within five years of the date of declared payment revert to the  French State.





63/128

---



Back to Contents

|                        
|------------------------
|Changes in Share Capital

|                          
|--------------------------
|Increases in Share Capital

As provided by the French Commercial Code, our share capital may be increased only with the shareholders approval at an extraordinary general meeting following the recommendation of our board of directors. Increases in our share capital may be effected by:



| |  | issuing additional shares,
| | - | --------------------------

| |   |                                                    
| | - | ---------------------------------------------------
| |  | increasing the nominal value of existing shares, or

| |   |                                           
| | - | ------------------------------------------
| |  | creating a new class of equity securities.

Increases in share capital by issuing additional securities may be effected through one or a combination of the following:



| |  | in consideration for cash,
| | - | --------------------------

| |   |                                                 
| | - | ------------------------------------------------
| |  | in consideration for assets contributed in kind,

| |   |                           
| | - | --------------------------
| |  | through an exchange offer,

| |   |                                                    
| | - | ---------------------------------------------------
| |  | by conversion of debt securities previously issued,

| |   |                                                             
| | - | ------------------------------------------------------------
| |  | by capitalization of profits, reserves or share premiums, or

| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | subject to various conditions, in satisfaction of debt incurred by our company.

Decisions to increase the share capital through the capitalization of reserves, profits and/or share premiums require the approval of an extraordinary general meeting, acting under the quorum and majority requirements applicable to ordinary shareholders meetings. Increases  effected by an increase in the nominal value of shares require unanimous approval of the shareholders, unless effected by capitalization of reserves, profits or share premiums. All other capital increases require the approval of an extraordinary general meeting acting under regular quorum  and majority requirements. See Shareholders Meetings and Voting Rights above.

The shareholders may delegate the right to carry out any increase in share capital to our board of directors, provided that the increase has been previously authorized by the shareholders. Our
board of directors may further delegate this right to our chairman and chief executive  officer.



|Decreases in Share Capital
|--------------------------

According to the French Commercial Code, any decrease in our share capital requires approval by the shareholders entitled to vote at an extraordinary general meeting. The share capital may be reduced either by decreasing the nominal value of the outstanding share capital or  by reducing the number of outstanding shares. The number of outstanding shares may be reduced either by an exchange of shares or by the repurchase and cancellation of shares. Holders of each class of shares must be treated equally unless each affected shareholder agrees otherwise.



|Preferential Subscription Rights
|--------------------------------

According to the French Commercial Code, if we issue specific kinds of additional securities, current shareholders will have preferential subscription rights to these securities on a pro rata basis. These preferential rights require us to give priority treatment to current  shareholders. The rights entitle the individual or entity that holds them to subscribe to an issue of any securities that may increase the share capital of our company by means of a cash payment or a set-off of cash debts. Preferential subscription rights are transferable during the  subscription period relating to a particular offering. These rights may also be listed on the Nouveau Marchéof Euronext Paris.

Preferential subscription rights with respect to any particular offering may be waived by a vote of shareholders holding a two-thirds majority of the shares entitled
 to vote at an extraordinary general meeting. Our board of directors and our independent auditors are required by  French law to present reports that specifically address any proposal to waive preferential subscription rights. In the event of a waiver, the issue of securities must be completed within the period prescribed by law.





64/128

---



Back to Contents

Shareholders also may notify us that they wish to waive their own preferential subscription rights with respect to any particular offering if they so choose.

The shareholders may decide at an extraordinary general meeting to give the existing shareholders a non-transferable priority right to subscribe to the new securities, during a limited period of time.

In the event of a capital increase without preferential subscription rights to existing shareholders, French law requires that the capital increase be made at a price equal to or exceeding the average market price of the shares in any consecutive ten trading day period within the 20  trading days preceding the capital increase.



|Form, Holding and Transfer of Shares
|------------------------------------

|              
|--------------
|Form of Shares

Our statuts provide that the shares may be held in either bearer form or registered form at the option of the holder.



|Holding of Shares
|-----------------

In accordance with French law relating to dematerialization of securities, shareholders ownership rights are represented by book entries instead of share certificates. We maintain a share account with Euroclear France (a French clearing system, which holds securities for its  participants) for all shares in registered form, which is administered by Natexis Banques Populaires. In addition, we maintain separate accounts in the name of each shareholder either directly, or, at a shareholders request, through the shareholders accredited intermediary. Each  shareholder account shows the name of the holder and the number of shares held. 140 issues confirmations (attestations dinscription en compte) to each registered shareholder as to shares registered in the shareholders account, but these confirmations are not documents of title.

Shares of a listed company may also be issued in bearer form. Shares held in bearer form are held and registered on the shareholders behalf in an account maintained by an accredited financial intermediary and are credited to an account at Euroclear France maintained by such  intermediary. Each accredited financial intermediary maintains a record of shares held through it and issues certificates of inscription for the shares it holds. Transfers of shares held in bearer form may only be made through accredited financial intermediaries and Euroclear France.

Shares held by persons who are not domiciled in France may be registered in the name of intermediaries who act on behalf of one or more investors. Under a French statute dated May 15, 2001, when shares are so held, we are entitled to request from such intermediaries the  name of the investors and the number of shares held by such investors. Also, we may request any legal person (personne morale) who holds more than 2.5% of our shares, to disclose the name of any person who owns, directly or indirectly, more than a third of its share capital or of its  voting rights. A person not providing the complete requested information in time will be, until provision of the complete requested information, denied the right to vote and suspended the right to dividends, and may in addition be deprived by a French court of either its voting rights or its  dividends or both for a period of up to five years.



|Transfer of Shares
|------------------

Our statuts do not contain any restrictions relating to the transfer of shares.

Registered shares must be converted into bearer form before being transferred on the Nouveau Marché on the shareholders behalf and, accordingly, must be credited to an account maintained by an accredited financial intermediary on the shareholders behalf. A shareholder  may initiate a transfer by giving instructions to the relevant accredited financial intermediary. For additional information regarding the Nouveau Marché, see Item 9 The Offer and ListingMarkets. For dealings on theNouveau Marché, the French Tax Code provides an exemption  from the tax (impôt sur les opérations de bourse) that is usually assessed on the price at which the securities were traded. A fee or commission is payable to the broker involved in the transaction, regardless of whether the transaction occurs within or outside France. No registration duty is  normally payable in France, unless a transfer instrument has been executed in France.



|Liquidation Rights
|------------------

If we are liquidated, any assets remaining after payment of our debts, liquidation expenses and all of our remaining obligations will be first distributed to repay in full the nominal value of our shares. Any surplus will be distributed pro rata among shareholders in proportion to  the nominal value of their shareholdings.





65/128

---



Back to Contents

|                                                       
|-------------------------------------------------------
|Requirements for Holdings Exceeding Certain Percentages

The French Commercial Code provides that any individual
  or entity, acting alone or in concert with others, that becomes the owner, directly
  or indirectly, of more than 5%, 10%, 20%, 33 1/3%, 50% or 66 2/3%
  of the outstanding shares or voting rights of a listed company in France, such
  as our company, or that increases or decreases its shareholding or voting rights
  above or below any of those percentages, must notify the company, within 15
  calendar days of the date it crosses the threshold, of the number of shares
  it holds and their voting rights. The individual or entity must also notify
  the Conseil des Marchés Financiers, or CMF, within five trading
  days of the date it crosses the threshold. Registered intermediaries holding
  shares in custody must comply with the preceding obligation whenever the aggregate
  holdings of their clients crosses such threshold, notwithstanding his own and
  each clients individual reporting obligations as the proprietary owner
  of the shares. The CMF makes the notice public.

French law and COB regulations impose additional reporting
  requirements on persons who acquire more than 10% or 20% of the outstanding
  shares or voting rights of a listed company. These persons must file a report
  with the company, the COB and the CMF within 15 days of the date they cross
  the threshold. In the report, the acquirer must specify if it acts alone or
  in concert with others and specify its intentions for the following 12-month
  period, including whether or not it intends to continue its purchases, to acquire
  control of the company in question or to seek nomination to the board of directors.
  The CMF makes the report public. The acquirer must also publish a press release
  stating its intentions in a financial newspaper of national circulation in France.
  The acquirer may amend its stated intentions, provided that it does so
  on the basis of significant changes in its own situation or shareholders. Upon
  any change of intention, it must file a new report.

In order to permit holders to give the required notice, we must publish in the BALO, not later than 15 calendar days after the annual ordinary general meeting of shareholders, information with respect to the total number of voting rights outstanding as of the date of such  meeting. In addition, if the number of outstanding voting rights changes by 5% or more between two annual ordinary general meetings, we must publish in the BALO, within 15 calendar days of such change, the number of voting rights outstanding. In both cases, we must also provide  the CMF with a written notice setting forth the number of voting rights outstanding. The CMF publishes the total number of voting rights so notified by all listed companies in a weekly notice (avis), mentioning the date each such number was last updated.

If any proprietary owner fails to comply with the legal notification requirement, the shares or voting rights in excess of the relevant threshold will be deprived of voting rights for all shareholders meetings until the end of a two-year period following the date on which the  owner thereof complies with the notification requirements. In addition, any shareholder who fails to comply with these requirements may have all or part of its voting rights suspended for up to five years by the Commercial Court at the request of our Chairman, any shareholder or the  COB, and may be subject to criminal fines.

If a registered intermediary fails to comply with
  the legal notification requirement, the shares or voting rights registered in
  his name will be deprived of voting rights for all shareholders meeting
  until the registered intermediary complies with the notification and payment
  of dividends as postponed until such date. In addition, if a registered intermediary
  willfully fails to comply with these requirements the shares may be deprived
  of all or part of their voting right and dividends for up to five years by the
  Commercial Court, at the request of the company or shareholders holding 5% of
  more of the companys share capital.

Under CMF regulations, and subject to limited exemptions
  granted by the CMF, any person or persons acting in concert owning in excess
  of 331/3% of the share capital or voting rights of a French listed company must
  initiate a public tender offer for the balance of the share capital of such
  company.

In addition, our statuts provide that any person or entity, acting alone or in concert with others, who holds or ceases to hold, directly or indirectly, a portion equal to, or greater than, 1% of the share capital or a multiple of such portion up to the threshold of 34% of the share  capital, must notify us by certified mail, return receipt requested, within five trading days from the day any of such thresholds is crossed, the total number of shares and voting rights it owns directly and in concert, as well as the number of securities granting access in the future to the  capital of the company and the voting rights potentially attached thereto.

Any person or entity that fails to comply with such
  notification requirements, upon the request, recorded in the minutes of the
  shareholders meeting, of one or more shareholders holding at least 5%
  of our share capital made at the general shareholders meeting, will be
  deprived of voting rights with respect to the shares in excess of the relevant
  threshold for all shareholders meetings until the end of a two-year period
  following the date on which such person or entity complies with the notification
  requirements.



|Purchase of Our Own Shares
|--------------------------

Under French law, our company may not issue shares to itself. However, we may, either directly or through a financial intermediary acting on our behalf, acquire up to 10% of our share capital within a maximum period of 18 months, provided our shares are listed on a  regulated market.





66/128

---



Back to Contents

To acquire our shares for this purpose, we must file
  a note dinformation that has received the approval (visa)
  of the COB. We can elect to file such note dinformation either
  prior to obtaining our shareholders approval at an ordinary general meeting,
  or after our board of directors, duly authorized by our shareholders, has decided
  to initiate the share purchase plan. By exception, our company will be exempted
  from filing a note dinformation with the
  COB if our shareholders approve, at an ordinary general meeting, a share
  purchase plan limited, in volume, to 0.5% of the share capital and, in objectives,
  to purchases and sales of shares made to respond to market conditions or regulate
  market prices. If we benefit from this exemption, we will only be required to
  issue, at the latest on the day the share purchase plan is implemented, a press
  release containing all the information requested for a note dinformation.

If we repurchase our shares in either of the foregoing manners, we have three options. We may:



| |  | keep the shares;
| | - | ----------------

| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | sell or transfer them, including
        to our employees under an authorized profit-sharing plan or stock option
        plan;

| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | cancel the shares, with our shareholders approval at an extraordinary general meeting.

We may not cancel more than 10% of our outstanding share capital over any 24-month period. Our repurchase of shares also must not result in our company holding, directly or through a person acting on our behalf, more than 10% of our outstanding share capital, or if we  have different classes of shares, 10% of the shares of each class.

We must hold any shares we repurchase in registered form. These shares also must be fully paid up. Shares repurchased by us are deemed outstanding under French law but are not entitled to dividends or voting rights, and we may not exercise the preferential subscription  rights attached to them.

The shareholders, at an extraordinary general meeting,
  may decide not to take these shares into account in determining the preferential
  subscription rights attached to the other shares. However, if the shareholders
  decide to take them into account, we must either sell the rights attached to
  the shares we hold on the market before the end of the subscription period or
  distribute them to the other shareholders on a pro rata basis.

The purchase and possible cancellation of 0.5% of
  our shares (up to €22.9 million) was authorized by our shareholders on
  June 28, 2002. The purchase price for any such share may not be greater than
  €60, and the selling price of any such share may not be lower than €5.
  Shares repurchased under this program may be used to:



| |  | respond to market conditions;
| | - | -----------------------------

| |   |                        
| | - | -----------------------
| |  | regulate market prices;

| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | provide shares to our employees and officers under stock option plans or shares purchase plans;

| |   |                         
| | - | ------------------------
| |  | finance external growth;

| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | grant shares following the exercise of rights attached to securities that give the right to receive shares; and

| |   |                                 
| | - | --------------------------------
| |  | optimize our capital allocation.

During 2002, we did not acquire any of our own shares.

We may purchase our shares from the date of our shareholders
  meeting of June 28, 2002 through the period ending 18 months from such date,
  which is December 28, 2003.



|Trading in Our Own Shares
|-------------------------

Under Règlement n° 90-04 of the
  COB, as amended, we may not trade in our own shares for the purpose of manipulating
  the market. There are three requirements for trades by a company in its own
  shares to be considered valid. Specifically, in order to be valid:



| |  | trades must be executed on behalf of the company by only one intermediary in each trading session, unless the issuer executes its purchase plan partly through derivative instruments, in which case two intermediaries may be used, but only to the extent that the issuer is able to ensure adequate coordination between the intermediaries;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67/128

---



Back to Contents

| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | any block trades may not be made at a price above the current market price; and

| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | each trade must be made at a price that falls between the lowest and the highest trading price of the trading session during which it is executed.

If a companys shares, like our shares, will be continuously quoted (cotation en continu), then a trade must meet three further requirements to be considered valid:



| |  | the trade must not influence the determination of the quoted price before the opening of trading, at the first trade of the shares, at the reopening of trading following a suspension, or, as applicable, in the last half-hour of any trading session or at the fixing of the closing price;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the trade must not account for more than 25% of the average total daily trading volume on Euronext Paris in the shares during the three trading days immediately preceding the trade; and

| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | the trade must not be carried out in order to influence the price of a derivative instrument relating to the companys shares.

There are two periods during which we are not permitted to trade in our own securities: the 15-day period before the date on which we make our consolidated or annual accounts public, and the period beginning on the date at which we become aware of information that, if  disclosed, would have a significant impact on the market price of our securities and ending on the date this information is made public.

There are certain exceptions to the above requirements:



| |  | trades by a company in its own shares that are used to finance an acquisition are deemed valid, regardless of whether the six requirements listed above are met if (a) the acquisition takes place at least three months after the companys last trade in its own shares and (b) an independent advisor has been appointed in order to assess the value of the shares, the value of the assets acquired and the fairness of the exchange ratio; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | trades by a company in its own shares that are executed on behalf of the company by an intermediary pursuant to a liquidity agreement are deemed valid, regardless of whether the first two requirements listed above regarding continuous quotation and the two restrictions regarding the trading period are met if the terms of the liquidity agreement comply with the ethics guidelines (charte de déontologie) approved by the COB in its Instructionof April 10, 2001.

After making an initial purchase of our own shares, we must file monthly reports with the COB and the CMF that contain specified information about subsequent transactions (including purchases, sales and share cancellations). The CMF makes this information publicly  available.



|Ownership of Shares by Non-French Persons
|-----------------------------------------

The French Commercial Code currently does not limit the right of non-residents of France or non-French persons to own and vote shares. However, non-residents of France must file an administrative notice with French authorities in connection with the acquisition of a  controlling interest in our company. Under existing administrative rulings, ownership of 20% or more of our share capital or voting rights is regarded as a controlling interest, but a lower percentage might be held to be a controlling interest in certain circumstances depending upon factors  such as:



| |  | the acquiring partys intentions,
| | - | ---------------------------------

| |   |                                                     
| | - | ----------------------------------------------------
| |  | the acquiring partys ability to elect directors, or

| |   |                                                          
| | - | ---------------------------------------------------------
| |  | financial reliance by the company on the acquiring party.

|                                   
|-----------------------------------
|Enforceability of Civil Liabilities

We are a limited liability company (société anonyme) organized under the laws of France, and all of our directors and officers reside outside the United States. In addition, a substantial portion of our assets are located in France. As a result, it may be difficult for investors to  effect service of process within the United States on such persons.





68/128

---



Back to Contents

It may also be difficult to enforce against them, either inside or outside the United States, judgments obtained against them in U.S. courts, or to enforce in U.S. courts, judgments obtained against them in courts in jurisdictions outside the United States, in any action based on  civil liabilities under the U.S. federal securities laws. There is doubt as to the enforceability against such persons in France, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws. Actions for enforcement  of foreign judgments against such persons would require such persons who are of French nationality to waive their right under Article 15 of the French Civil Code to be sued only in France. We believe that no such French persons have waived such right with respect to actions predicated  solely upon U.S. federal securities laws. In addition, actions in the United States under the U.S. federal securities laws could be affected under certain circumstances by the French law of July 26, 1968, as amended, which may preclude or restrict the obtaining of evidence in France or  from French persons in connection with such actions. Additionally, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in France.



|C. | Material Contracts
|-- | ------------------

On April 20, 2001, we entered into U.S. $125 million credit facility, and we have amended this credit facility on several occasions, the most recent being April 30, 2003. This credit facility is described in more detail under Item 5 Operating and Financial Review and  Prospects  Liquidity and Capital Resources and Recent Developments and is included as an exhibit under Item 19.



|D. | Exchange Controls
|-- | -----------------

French exchange control regulations currently do not limit the amount of payments that we may remit to non-residents of France. Laws and regulations concerning foreign exchange controls do require, however, that all payments or transfers of funds made by a French resident  to a non-resident be handled by an accredited intermediary. In France, all registered banks and most credit establishments are accredited intermediaries.



|E. | Taxation
|-- | --------

|               
|---------------
|French Taxation

The following generally summarizes the material French tax consequences of purchasing, owning and disposing of our shares or ADSs. The statements relating to French tax laws set forth below are based on the laws in force as of the date hereof, and are subject to any  changes in applicable laws and tax treaties after such date.



This discussion is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all potential tax effects of the purchase, ownership or disposition of our shares.



The following summary does not address the treatment of shares that are held by a resident of France (except for purposes of describing related tax consequences for other holders) or in connection with a permanent establishment or fixed base through which a holder carries on  business or performs personal services in France, or by a person that owns, directly or indirectly, 5% or more of the stock of our company.



There are currently no procedures available for holders that are not U.S. residents to claim tax treaty benefits in respect of dividends received on ADSs or shares registered in the name of a nominee. Such holders should consult their own tax advisor about the consequences of  owning and disposing of ADSs.



|Taxation of Dividends on Shares
|-------------------------------

In France, dividends are paid out of after-tax income. However, French residents are entitled to a tax credit, known as the avoir fiscal, in respect of dividends they receive from French companies. Individuals are entitled to an avoir fiscal equal to 50% of the dividend. The avoir  fiscal applicable to corporate investors generally is equal to 10% of the dividend. Dividends paid to non-residents normally are subject to a 25% French withholding tax and are not eligible for the benefit of the avoir fiscal. However, non-resident holders that are entitled to and comply  with the procedures for claiming benefits under an applicable tax treaty may be subject to a reduced rate of withholding tax, and may be entitled to benefit from a refund of the avoir fiscal, as described below.



France has entered into tax treaties with certain countries under which qualifying residents are entitled to obtain from the French tax authorities a reduction (generally to 15%) of the French dividend withholding tax and a refund of the avoir fiscal (net of applicable withholding  tax).



If a non-resident holder establishes its entitlement to treaty benefits prior to the payment of a dividend, then French tax generally will be withheld at the reduced rate provided under the treaty.





69/128

---



Back to Contents

Dividends paid out of profits that have not been taxed at the ordinary corporate rate, or were earned and taxed more than five years before the distribution, are subject to an equalization tax called the précompte, which is payable by the distributing corporation. The précompte  generally is equal to one-half of the amount of the dividend paid to the shareholder prior to deduction of withholding tax. Corporate investors entitled under a tax treaty to a refund of the avoir fiscal at a rate of 10% generally may claim an additional payment equal to 80% of theprécompte actually paid in cash by the distributing corporation, net of applicable withholding tax. This additional payment is considered an increase to the avoir fiscal.



When a tax treaty does not provide for a refund of the avoir fiscal, or when a non-resident investor is not entitled to such a refund but is otherwise entitled to the benefits of the tax treaty, then a qualifying investor may generally obtain from the French tax authorities a payment  equal to 100% of the précompte actually paid in cash by the distributing corporation, net of applicable withholding tax.



In September 2002, the French government announced a proposed reform of the French tax treatment of distributions, which is to be included in the draft Finance Law for 2004 that will be submitted to the French Parliament in September 2003. The proposed reform  contemplates the implementation of a new mechanism to avoid double taxation of dividends and the elimination of the avoir fiscal and précompte mechanisms. This proposed reform, if adopted, may affect the right of eligible holders to obtain a tax credit payment from the French  Treasury with respect to dividend distributions decided in year 2003. In addition, if the reform is adopted, eligible holders would no longer be entitled to tax credit payments from the French Treasury in respect of dividends paid in 2004 and after.



|Taxation on Sale or Disposition of Shares
|-----------------------------------------

Holders that are not residents of France for tax purposes, do not hold shares or ADSs in connection with the conduct of a business or profession in France, and have held not more than 25% of our dividend rights (droits aux bénéfices sociaux), directly or indirectly, at any time  during the preceding five years, are not subject to any French income tax or capital gains tax on the sale or disposition of shares or ADSs.



A 1% registration duty (subject to a maximum of €3,049
  per transfer) applies to certain transfers of shares or ADSs in French companies.
  The duty does not apply to transfers of shares or ADSs in listed companies that
  are not evidenced by a written agreement, or if any such agreement is executed
  outside France.



|Estate and Gift Tax
|-------------------

France imposes estate and gift tax on shares or ADSs of a French company that are acquired by inheritance or gift. The tax applies without regard to the residence of the transferor. However, France has entered into estate and gift tax treaties with a number of countries pursuant  to which, assuming certain conditions are met, residents of the treaty country may be exempted from such tax or obtain a tax credit.



|Taxation of U.S. Investors
|--------------------------

The following is a summary of the material French and U.S. federal income tax consequences of the purchase, ownership and disposition of our shares or ADSs if you are a holder that is a resident of the United States for purposes of the income tax convention between the  United States and France (the Treaty) and are fully eligible for benefits under the Treaty (a U.S. holder). You generally will be entitled to Treaty benefits in respect of our shares or ADSs if you are:



| |  | the beneficial owner of the shares or ADSs (and the dividends paid with respect thereto);
| | - | -----------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an individual resident of the United States, a U.S. corporation, or a partnership, estate or trust to the extent its income is subject to taxation in the United States in its hands or in the hands of its partners or beneficiaries;

| |   |                                                           
| | - | ----------------------------------------------------------
| |  | not also a resident of France for French tax purposes; and

| |   |                                                                                      
| | - | -------------------------------------------------------------------------------------
| |  | not subject to an anti-treaty shopping article that applies in limited circumstances.

Special rules apply to pension funds and certain other tax-exempt investors.



For U.S. federal income tax purposes, a U.S. holders ownership of the companys ADSs will be treated as ownership of the companys underlying shares.





70/128

---



Back to Contents

This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor, and does not discuss tax considerations that arise from rules of general application or that are generally assumed to be known by  investors. In particular, the summary does not deal with shares that are not held as capital assets, and does not address the tax treatment of holders that are subject to special rules, such as banks, insurance companies, dealers in securities or currencies, regulated investment companies,  persons that elect mark-to-market treatment, persons holding shares as a position in a synthetic security, straddle or conversion transaction, persons that own, directly or indirectly, 5% or more of our voting stock or 10% or more of our outstanding capital and persons whose functional  currency is not the U.S. dollar. The summary is based on laws, treaties, regulatory interpretations and judicial decisions in effect on the date hereof, all of which are subject to change.



This summary does not discuss the treatment of shares or ADSs that are held in connection with a permanent establishment or fixed base through which a holder carries on business or performs personal services in France.



You should consult your own tax advisers regarding the tax consequences of the purchase, ownership and disposition of shares or ADSs in the light of your particular circumstances, including the effect of any state, local or other national laws.



|Dividends
|---------

As discussed in more detail under  French
  Taxation, dividends paid by French companies to non-residents of France
  generally are subject to French withholding tax at a 25% rate, and are not eligible
  for the benefit of the avoir fiscal.



However, under the Treaty, you can claim the benefit
  of a reduced dividend withholding tax rate of 15%. You will also be entitled
  to a payment from the French tax authorities equal to the avoir fiscal,
  less a 15% withholding tax, although as discussed above, the avoir fiscal
  system is currently the subject of a significant reform proposal. The proposed
  reform contemplates the implementation of a new mechanism to avoid double taxation
  of dividends and the elimination of the avoir fiscal and précompte
  mechanisms. This proposed reform, if adopted, may affect the right of U.S. holders
  to obtain a tax credit payment from the French Treasury with respect to dividend
  distributions decided in year 2003. In addition, if the reform is adopted, U.S.
  holders would no longer be entitled to tax credit payments from the French Treasury
  in respect of dividends paid in 2004 and after.



French tax will be withheld at the 15% Treaty rate if you have established before the date of payment that you are a resident of the United States under the Treaty and, if you are not an individual, that you are the owner of all the rights relating to the full ownership of the shares  or ADSs (including, but not limited to, dividend rights). A U.S. holder generally will be entitled to receive a refund of the avoir fiscal only if the holder (or its partners, beneficiaries or grantors, if the holder is a partnership, estate or trust) is subject to U.S. federal income tax on the avoir  fiscal payment and the dividend to which it relates.



A U.S. holder that is a corporation generally will be entitled to an avoir fiscal refund of 10% of the amount of a dividend, while a U.S. holder who is an individual generally will be entitled to an avoir fiscal refund at a 50% rate, in both cases less a 15% withholding tax. The  refund of the avoir fiscal will not be made available until after the close of the calendar year in which the dividend is paid.



Pension funds and certain other tax-exempt U.S. holders are generally entitled under the Treaty to a reduced withholding tax rate of 15%, and to a payment at least equal to 30/85 of the avoir fiscal generally payable to a corporation, less a 15% withholding tax.



U.S. holders that are not entitled to receive payments in respect of the avoir fiscal at the 50% rate (e.g., corporations and certain tax-exempt investors) will be entitled to receive an additional payment from the French tax authorities if we are liable for the précompte  equalization tax (discussed under  French Taxation, above) in respect of a dividend distribution. Corporate holders generally will be entitled to receive, in addition to the payment made in respect of the avoir fiscal at 10%, a payment equal to 80% of the précompte that we actually  pay in cash in respect of a dividend paid, less a 15% withholding tax. The additional payment is considered an increase to the avoir fiscal, and will also not be made available until after the close of the calendar year in which the dividend is paid.



Thus, for example, if we pay a dividend of 100 to an individual U.S. holder, the holder initially will receive 85, but will be entitled to an additional payment of 42.50, consisting of the avoir fiscal of 50 less a 15% withholding tax. If we pay a dividend of 100 to a U.S. holder  that is a corporation, such U.S. holder initially will receive 85, but will generally be entitled to an additional payment of 8.5, consisting of the avoir fiscal of 10 less a 15% withholding tax; in the event that the dividend distribution triggers payment by us of the précompte, such U.S.  holder generally may also obtain from the French tax authorities an additional payment equal to 80% of the précompte that we actually pay in cash, less a 15% withholding tax.





71/128

---



Back to Contents

If you are not entitled to a refund of the avoir fiscal, you generally may obtain from the French tax authorities a refund of the entire précompte we actually pay in cash in respect of a dividend, less a 15% French withholding tax. Pension funds and certain other tax-exempt U.S.  holders are also entitled to certain refunds in respect of the précompte we actually pay in cash. Such holders should consult their own tax advisers in respect of précompte refunds.



The gross amount of dividend, avoir fiscal and précompte payments that you receive (prior to deduction of French withholding tax) generally will be subject to U.S. federal income taxation as foreign source dividend income. Such dividends will not be eligible for the  dividends received deduction generally allowed to U.S. corporations. French withholding tax at the 15% Treaty rate will be treated as a foreign income tax that, subject to generally applicable limitations under U.S. law, is eligible for credit against your U.S. federal income tax liability  or, at your election, may be deducted in computing taxable income. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities or in respect of arrangements in which a U.S. holders expected economic profit is  insubstantial. You should consult your own tax advisers concerning the implications of these rules in the light of your particular circumstances.



Dividends paid in euro will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date you receive the dividend (or the date the depositary receives the dividend, in the case of the ADSs), regardless of whether the  payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.



|Procedures for Claiming Treaty Benefits
|---------------------------------------

In order to claim Treaty benefits, you must complete and deliver to the French tax authorities either:



| |  | the simplified certificate described below; or
| | - | ----------------------------------------------

| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | an application for refund on French Treasury Form RF 1A EU-No. 5052.

A simplified certificate must state that:



| |  | you are a U.S. resident within the meaning of the Treaty;
| | - | ---------------------------------------------------------

| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | you do not maintain a permanent establishment or fixed base in France with which the holding giving rise to the dividend is effectively connected;

| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | you own all the rights attached to the full ownership of the shares (including dividend rights); and

| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | you meet all the requirements of the Treaty for obtaining the benefit of the reduced rate of withholding tax and the refund of the avoir fiscal.

If a holder that is not an individual submits an application for refund on Form RF 1A EU-No. 5052, the application must be accompanied by an affidavit attesting that the holder is the owner of all the rights attached to the full ownership of the shares (including dividend rights).



For partnerships or trusts, claims for Treaty benefits and related attestations are made by the partners, beneficiaries or grantors who also have to supply certain additional documentation.



To be eligible for Treaty benefits, pension funds and certain other tax-exempt U.S. holders have to comply with the filing requirements described above, except that they may have to supply additional documentation evidencing their entitlement to those benefits.



Copies of the simplified certificate and the application for refund are available from the U.S. Internal Revenue Service.



If the certificate or application is not filed prior to a dividend payment, then holders may claim withholding tax and avoir fiscal refunds by filing an application for refund at the latest by December 31 of the second year following the year in which the withholding tax is paid.



If you are not entitled to a refund of the avoir fiscal but are entitled to a full refund of the précompte, or if you are a U.S. pension fund or other tax-exempt U.S. holder that is entitled to a partial refund of the précompte, you must apply for such a refund by filing French  Treasury Form RF 1B EU-No. 5053 before the end of the year following the year in which the dividend was paid. This form, together with instructions, is available from the U.S. Internal Revenue Service or at the Centre des Impôts des Non-Résidents (9, rue dUzès, 75094 Paris  Cedex 2).





72/128

---



Back to Contents

The avoir fiscal or partial avoir fiscal and any French withholding tax refund will not be paid before January 15 following the end of the calendar year in which the dividend is paid.



|Capital Gains
|-------------

Under the Treaty, you will not be subject to French tax on any gain derived from the sale or exchange of shares or ADSs, unless the gain is effectively connected with a permanent establishment or fixed base maintained by you in France.



For U.S. federal income tax purposes, gain or loss you realize on the sale or other disposition of the shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the shares were held for more than one year. The net amount of long-term capital gain  recognized by an individual holder generally is subject to taxation at a maximum rate of 20%. Your ability to offset capital losses against ordinary income is limited.



|French Estate and Gift Tax
|--------------------------

Under the estate and gift tax convention between the United States and France, a transfer of shares or ADSs by gift or by reason of the death of a U.S. holder entitled to benefits under that convention will not be subject to French gift or inheritance tax, so long as the donor or  decedent was not domiciled in France at the time of the transfer, and the shares or ADSs were not used or held for use in the conduct of a business or profession through a permanent establishment or fixed base in France.



|U.S. Information Reporting and Backup Withholding Rules
|-------------------------------------------------------

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (i) is a corporation or other exempt  recipient or (ii) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Holders that are not U.S. persons generally are not subject to information reporting or backup withholding. However, such a holder may be required to  provide a certification of its non-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.



|F. | Dividends and Paying Agents
|-- | ---------------------------

Natexis Banque Polnhaires, Centre de Traitement de
  Caen, 10 rue des Roquements, 14099 Caen Cedex 9 France is the paying agent for
  our dividends. To date, we have not declared any dividends. For additional information
  regarding dividends, please see “Memorandum and Articles of Association
  — Dividends” above and “— Taxation” below.



|G. | Statement by Experts
|-- | --------------------

Not applicable.



|H. | Documents on Display
|-- | --------------------

We are subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended, and, in accordance therewith, we are required to file reports, including annual reports on Form 20-F, and other information with the U.S. Securities and Exchange  Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at the Commissions public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further  information on the public reference rooms. As a foreign private issuer, we are not required to make filings with the Commission by electronic means, although we may do so. Any filings we make electronically will be available to the public over the Internet at the Commissions Web site  at http://www.sec.gov.



|I. | Subsidiary Information.
|-- | -----------------------

Not applicable.





73/128

---



Back to Contents

|                                                                   
|-------------------------------------------------------------------
|Item 11. Quantitative and Qualitative Disclosures about Market Risk

|                                   
|-----------------------------------
|Foreign Currency Exchange Rate Risk

We prepare our financial statements in euros. In 2002, 66% of our total revenues were recorded in U.S. dollars, 15% in British pounds, 5% in Swedish crowns and 2% in Australian dollars. Virtually all of the remaining revenues were in euros. Purchases and expenses in U.S.  dollars, British pounds, Swedish crowns and Australian dollars represented approximately 75%, 7%, 2% and 2%, respectively, of our cost of revenues and operating expenses in 2002. A declining of the euro against the U.S. dollar, the British pound, the Swedish crown and the Australian  dollar and other currencies in which we receive revenues could increase our reported revenues and reduce our reported operating and net loss. Between its introduction on January 1, 1999 and end 2001, the euro has declined from U.S. $1.17 per euro to $0.8813 per euro as of December  31, 2001. This decline has increased the euro value of the U.S. dollar revenues that we have earned in our U.S. activities. From early 2002, the euro has increased from U.S. $0.8813 per euro to $1.0487 per euro as of December 31, 2002. This augmentation has increased the euro value of  the U.S. dollar revenues that we have earned in our U.S. activities. The impact on our revenues of the fluctuations of the euro against various currencies, primarily the dollar and the British pound, is described above under Item 5 Operating and Financial Review and Prospects  Results  of Operations.



We incurred a net foreign exchange gain of €767 thousand in 2000, a net foreign exchange gain of €1,520 thousand in 2001 and a net foreign exchange gain of €1,276 thousand in 2002. The impact of currency exchange movements on our results of operations is typically  mitigated by the fact that we incur expenses in local currency, and that we borrow in local currency, mainly in the United States, although this does not eliminate the entire impact. The extent to which changes in our revenues has historically been affected by currency exchange rate  movements are described above. When deemed appropriate, we have entered into transactions to hedge our exposure to foreign exchange risks incurred in connection with borrowings, including by entering into forward contracts to purchase U.S. dollars and British pounds.



|Interest Rate Risk
|------------------

We are exposed to interest rate risk in our financing
  instruments. At December 31, 2002, we had variable rate debt totaling €112.7
  million and had €0.1 million invested in short-term money market accounts
  bearing variable rates of interest. In order to reduce our exposure to fluctuations
  in interest rates, we have entered, when deemed appropriate, into transactions
  to hedge our exposure to interest rates. On June 29, 2001, we entered into a
  U.S. $57.5 million interest rate swap agreement to hedge our exposure on 50%
  of our outstanding term loans under the U.S. $125 million, credit facility,
  excluding the U.S. $10 million revolving line of credit, granted in April 2001,
  denominated in U.S. dollars. This new agreement replaced a previous agreement
  signed in August 1999. The effect of this new agreement was to convert underlying
  variable rate debt based on Libor USD to fixed rate debt with an interest rate
  of 5.52%. Each interest-rate swap agreement is designated with all or a portion
  of the principal balance and has a term equal to specific debt obligation. This
  agreement involves the exchange of amounts based on a fixed interest rate for
  amounts based on variable interest rates over the life of the agreement without
  an exchange of the notional amount upon which the payments are based. The differential
  to be paid or received as interest rates change is accrued and recognized as
  an adjustment of interest expense related to the debt. The related amount payable
  to or receivable from third parties is included in other liabilities or assets.
  The fair value of the swap agreement and changes in the fair value as a result
  of changes in market interest rates are recognized as comprehensive income or
  loss. As a result, the comprehensive loss for this interest rate swap agreement
  amounted to €1.8 million at December 31, 2002.



We do not use derivative financial instruments for trading or other speculative purposes.





74/128

---



Back to Contents

|                                                                       
|-----------------------------------------------------------------------
|Item 12. Description
        of Securities other than Equity Securities

|   |                
|-- | ---------------
|A. | Debt Securities

Not applicable.



|B. | Warrants and Rights
|-- | -------------------

Not applicable.



|C. | Other Securities
|-- | ----------------

Not applicable.



|D. | American Depositary Shares
|-- | --------------------------

|                            
|----------------------------
|American Depositary Receipts

The Bank of New York, as depositary, will execute and deliver ADRs. ADRs are American Depositary Receipts. Each ADR is a certificate evidencing a specific number of ADSs. Each ADSs will represent one-half of one of our ordinary shares (or the right to receive one-half  of one of our ordinary shares) deposited with one of the following:



| |  | Société Générale,
        32 Rue Champ de Tir, Nantes, France.
| | - | --------------------------------------------------------------

Each ADS will also represent any other securities, cash or other property that may be held by the depositary under the deposit agreement. The Bank of New Yorks Corporate Trust Office is located at 101 Barclay Street, New York, New York 10286. The principal executive  office of the depositary is located at One Wall Street, New York, New York 10286.



You may hold ADSs either directly (by having an ADR registered in your name) or indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold your ADSs  indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADR holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.



As an ADR holder, we will not treat you as one of our shareholders and you will not have shareholder rights. French law governs shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a holder of ADRs, you will have ADR holder rights.  A deposit agreement among Genesys S.A., the depositary, you, as an ADR holder, and the beneficial owners of ADRs sets out ADR holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADRs.



The following is a summary of the deposit agreement. For more complete information, you should read the entire deposit agreement and the ADR itself. Directions on how to obtain copies of these from the Securities and Exchange Commission are provided in the section  entitled Additional Information. You may also inspect a copy of the deposit agreement at the depositarys Corporate Trust Office.



|Share Dividends and Other Distributions
|---------------------------------------

|                                                                     
|---------------------------------------------------------------------
|How Will You Receive Dividends And Other Distributions on the Shares?

The depositary has agreed to pay to you the cash dividends or other distributions that it or the custodian receives on shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ADSs you hold.



Cash.The depositary will convert any cash dividend or other cash distribution paid on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. Although the deposit agreement requires the depositary to convert  amounts paid into U.S. dollars as promptly as practicable, it does not fix a specific date for the determination of exchange rates for conversions into U.S. dollars.





75/128

---



Back to Contents

If it is not possible to convert the amounts into U.S. dollars transferable to the United States on a reasonable basis or if any approval from a government or government agency is needed and is denied or cannot be obtained, the deposit agreement allows the depositary to  distribute the dividends converted into U.S. dollars only to those ADR holders to whom it is possible to do so. It may distribute the dividends it cannot convert into U.S. dollars to, or hold such dividends for, the account of the ADR holders to whom it does not distribute dividends in U.S.  dollars. It will not invest the funds it holds and it will not be liable for any interest.



Before making a distribution, any withholding taxes that must be paid under French law will be deducted. The section entitled Taxation Taxation of Shareholders France explains the relevant French tax rules. The depositary will distribute only whole U.S. dollars and  cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the euros, you may lose some or all of the value of the distribution.



Shares. The depositary may, and at our request will, distribute new ADRs representing any shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADRs. It will sell shares that would require it to deliver a fractional ADR and distribute  the net proceeds in the same way as it distributes cash. If the depositary does not distribute additional ADRs, the outstanding ADRs will also represent the new shares.



Rights to Receive Additional Shares. If we offer holders of our shares any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to you. The depositary must first consult with us and we must furnish it with satisfactory  evidence that it is legal to do so. If we do not furnish this evidence, and the depositary decides it is practical to sell the rights, the depositary will sell the rights and distribute the proceeds, in the same way as it distributes cash. The depositary may allow rights that are not distributed or  sold to lapse. In that case, you will receive no value for them.



If the depositary makes rights available to you, it will exercise the rights and purchase the shares on your behalf. The depositary will then deposit the shares and deliver ADRs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights  require you to pay.



U.S. securities laws may restrict the sale, deposit, cancellation and transfer of ADRs issued upon exercise of rights. For example, you may not be able to trade the ADRs freely in the United States. In this case, the depositary may deliver ADRs under a separate restricted  deposit agreement that will contain the same provisions as the deposit agreement, except for changes needed to put the restrictions in place.



Other Distributions. The depositary will send to you anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and  distribute the net proceeds in the same way as it distributes cash or it may choose any method to distribute the property it deems equitable and practicable.



The depositary is not responsible if it decides that it is unlawful or impractical to make distributions available to any ADR holders. We have no obligation to register our ADSs, shares, rights or other securities under the Securities Act or to take any other action to permit the  distribution of ADRs, shares, rights or anything else to ADR holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for the depositary to make them available to you.



|Deposit, Withdrawal and Cancellation
|------------------------------------

| |                                      
| | -------------------------------------
| | How Does the Depositary Deliver ADRs?

The depositary will deliver ADRs if you or your broker deposit shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses and any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the  appropriate number of our ADSs in the names you request and will deliver the ADRs at its Corporate Trust Office to the persons you request.



| | How Do ADR Holders Cancel an ADR and Obtain Shares?
| | ---------------------------------------------------

You may turn in your ADRs at the depositarys Corporate Trust Office. Upon payment of its fees and expenses and any taxes or charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New York will deliver (1) the underlying shares to an account designated  by you; and (2) any other deposited securities underlying the ADR at the office of a custodian or, at your request, risk and expense, the depositary will deliver the deposited securities at its Corporate Trust Office.





76/128

---



Back to Contents

|             
|-------------
|Voting Rights

| |                 
| | ----------------
| | How Do You Vote?

You may instruct the depositary to vote the shares underlying your ADRs, but only if we ask the depositary to ask for your instructions. Otherwise you will not be able to exercise your right to vote unless you withdraw the shares from the ADR program and vote as an ordinary  shareholder. However, you may not know about the meeting sufficiently in advance to withdraw the shares.



If we ask for your instructions, the depositary will notify you of the upcoming vote and arrange to deliver our voting materials to you. The materials will (1) describe the matters to be voted on; and (2) explain how you may instruct the depositary to vote the shares or other  deposited securities underlying your ADRs as you direct. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will try, as far as practical, subject to French law and the provisions of our by-laws, to vote or to have its agents vote the  shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct.



We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting  instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested.



The deposit agreement allows the depositary and Genesys S.A. to change the voting procedures or require additional voting procedures in addition to the ones described above if necessary or appropriate to comply with French or United States law or our by-laws. For example,  you might be required to arrange to have your ADSs deposited in a blocked account for a specified period of time prior to a shareholders meeting in order to be allowed to give voting instructions.



|Fees and Expenses
|-----------------
|                 

|ADR
        holders must pay:                                                                                                                                                                                      |  | For:                                                                                                                                                                                         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|$5.00
        (or less) per 100 ADSs (or portion thereof)                                                                                                                                                          |  | Each issuance of an ADS, including as a result
      of a distribution of shares or rights or other property                                                                                 | 
|                                                                                                                                                                                                                   |  | Each cancellation of an ADS, including if
      the deposit agreement terminates                                                                                                             | 
|$.02
        (or less) per ADS (or portion thereof)                                                                                                                                                                |  | Any cash payment                                                                                                                                                                             | 
|Registration
        or Transfer Fees                                                                                                                                                                              |  | Transfer and registration of shares on the
      share register of the foreign registrar from your name to the name of the
      depositary or its agent when you deposit or withdraw shares | 
|Expenses
        of The Bank of New York                                                                                                                                                                           |  | Conversion of foreign currency to U.S. dollars                                                                                                                                               | 
|                                                                                                                                                                                                                   |  | Cable, telex and facsimile transmission expenses                                                                                                                                             | 
|                                                                                                                                                                                                                   |  | Servicing of shares or deposited securities                                                                                                                                                  | 
|Taxes
        and other governmental charges the depositary or the Custodian have to
        pay on any ADR or share underlying an ADR, for example, stock transfer
        taxes, stamp duty or withholding taxes |  | As necessary                                                                                                                                                                                 | 

|                
|----------------
|Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on your ADRs or on the deposited securities underlying your ADSs. The depositary may refuse to transfer your ADRs or allow you to withdraw the deposited securities underlying your ADSs until  such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities underlying your ADSs to pay any taxes owed and you will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the  sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.





77/128

---



Back to Contents

|                                              
|----------------------------------------------
|Changes Affecting Deposited
        Securities
|                                              

|We:                                                                                                                                                                                                              |                                                                                      |                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                | Change
        the nominal or par value of our shares.                               |                                                                                                                                                                                                                                                                                                 |  | Distribute securities on the
      deposited shares that are not distributed to you.                                            
|                                                                                                                                                                                                                | Reclassify,
        split up or consolidate any of
        the deposited securities. |                                                                                                                                                                                                                                                                                                 |  | Recapitalize, reorganize, merge,
      liquidate, sell all or substantially all of our assets, or take any similar
      action.
|                                                                                                                                                                                                                 |                                                                                      |                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                 
|Then
        either:                                                                                                                                                                                             |                                                                                      |                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                 
|The
        cash, shares or other securities received by the depositary will become
        deposited securities. Each ADS will automatically represent its equal
        share of the new deposited securities. |                                                                                      | The
      depositary may, and will if we ask it to, distribute some or all of the
      cash, shares or other securities it receives. It may also deliver new ADRs
      or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying
      the new deposited securities. |  

|                       
|-----------------------
|Disclosure of Interests

The obligation of a holder or other person with an interest in our ordinary shares to disclose information under French law and under our by-laws also applies to you and any other persons with an interest in the ADRs other than the depositary. The consequences for failure to  comply with these provisions will be the same for you and any other persons with an interest as for a holder of our ordinary shares. For additional information regarding these obligations, see Item 10 Additional Information  Memorandum and Articles of Association  Share  Capital.



|Amendment and Termination
|-------------------------

| |                                          
| | -----------------------------------------
| | How May the Deposit Agreement be Amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If the amendment adds or increases fees or charges, except for taxes and other governmental charges or certain registration fees, cable, telex or facsimile  transmission costs, delivery cots or other such expenses of the depositary, or prejudices a substantial right of ADR holders, it will only become effective 30 days after the depositary notifies you of the amendment. At the time an amendment becomes effective, you will be considered, by  continuing to hold your ADR, to have agreed to the amendment and to be bound by the ADRs and the deposit agreement as amended.



| | How May the Deposit Agreement be Terminated?
| | --------------------------------------------

The depositary will terminate the agreement if we ask it to do so. The depositary may also terminate the agreement if the depositary has told us that it would like to resign and we have not appointed a new depositary bank within 60 days. In both cases, the depositary must  notify you at least 30 days before termination.



After termination, the depositary and its agents will be required to do only the following under the deposit agreement (1) collect distributions on the deposited securities; and (2) deliver shares and other deposited securities upon cancellation of ADRs. One year or more after  termination, the depositary may sell any remaining deposited securities by public or private sale. After that the depositary will hold the money it received on the sale, as well as any other cash it is holding under the agreement for the pro rata benefit of the ADR holders that have not  surrendered their ADRs. It will not invest the money, which it may hold unsegregated, and will have no liability for interest. The depositarys only obligations will be to account for the proceeds of the sale and other cash and with respect to indemnification. After termination, our only  obligation will be with respect to indemnification and to pay certain amounts to the depositary.



|Limitations on Obligations and Liability to ADR Holders
|-------------------------------------------------------

| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Limits on Our Obligations and Obligations of the Depositary; Limits on Liability to ADR holders

The deposit agreement expressly limits our obligations and the obligations of the depositary and it limits our liability and the liability of the depositary. We and the depositary:



| |  | are obligated only to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
| | - | -----------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | are not liable if either is prevented or delayed by law or circumstances beyond its control from performing its obligations under the deposit agreement;



78/128

---



Back to Contents

| |  | are not liable if either
        exercises or fails to exercise discretion provided for under the deposit
        agreement;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on your behalf or on behalf of any other party;

| |   |                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | are not liable for any acts or omissions in reliance upon the advice of or any information from any person reasonably believed in good faith to be competent to give such advice or information;

| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | may rely upon any documents it believes in good faith to be genuine and to have been signed or presented by the proper party; and

| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | are not liable for any failure to carry out voting instructions or for the manner in which a vote was cast, provided they act in good faith.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.



|Requirements for Depositary Actions
|-----------------------------------

Before the depositary will deliver or register transfer of an ADR, make a distribution on an ADR, or process a withdrawal of shares, the depositary may require:



| |  | payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADRs, register transfers of ADRs or permit withdrawals of shares when the transfer books of the depositary or our transfer books are closed, or at any time if the depositary or we think it advisable to do so.



| | Your Right to Receive the Shares Underlying Your ADRs
| | -----------------------------------------------------

You have the right to cancel your ADRs and withdraw the underlying shares at any time except:



| |  | when temporary delays arise when we or the depositary have closed our transfer books or the deposit of shares is blocked in connection with voting at a shareholders meeting, or the payment of dividends;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------
| |  | when you or other ADR holders seeking to withdraw shares owe money to pay fees, taxes and similar charges; or

| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADRs or to the withdrawal of shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.



|Pre-release of ADRs
|-------------------

Unless we tell the depositary not to, the deposit
  agreement permits the depositary to deliver ADRs before deposit of the underlying
  shares. This is called a pre-release of the ADRs. The depositary may also deliver
  shares upon cancellation of pre-released ADRs (even if the ADRs are cancelled
  before the pre-release transaction has been closed out). A pre-release is closed
  out as soon as the underlying shares are delivered to the depositary. The depositary
  may receive ADRs instead of shares to close out a pre-release. The depositary
  may pre-release ADRs only under the following conditions (1) before or at the
  time of the pre-release, the person to whom the pre-release is being made must
  represent to the depositary in writing that it or its customer owns the shares
  or ADRs to be deposited; (2) the pre-release must be fully collateralized with
  cash, U.S. government securities or other collateral that the depositary considers
  appropriate; and (3) the depositary must be able to close out the pre-release
  on not more than five business days notice. In addition, the depositary
  will limit the number of ADSs that may be outstanding at any time as a result
  of pre-release, although the depositary may disregard the limit from time to
  time, if it thinks it is appropriate to do so.





79/128

---



Back to Contents

|PART II
|-------

|                                                         
|---------------------------------------------------------
|Item 13. Defaults, Dividend Arrearages and Delinquencies.

Not applicable.



|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
|--------------------------------------------------------------------------------------

Not applicable.



|Item 15. Controls and Procedures
|--------------------------------

Within 90 days prior to the date of this report, we
  performed an evaluation of the effectiveness of the design and operation of
  our disclosure controls and procedures. Disclosure controls and procedures are
  designed to ensure that the material financial and non-financial information
  required to be disclosed in the Annual Report on Form 20-F and filed with the
  Securities and Exchange Commission is recorded, processed, summarized and reported
  timely. The evaluation was performed under the supervision of our Chief Executive
  Officer, François Legros, and our Chief Financial Officer, Michael Savage,
  and our disclosure committee. In designing and evaluating the disclosure controls
  and procedures, management recognized that any controls and procedures, no matter
  how well designed and operated, can provide only reasonable, rather than absolute,
  assurance of achieving the desired control objectives, and management necessarily
  was required to apply its judgment in evaluating the cost-benefit relationship
  among the possible controls and procedures. Based on the foregoing, our companys
  management, including the CEO and CFO, concluded that our disclosure controls
  and procedures were effective. There have no significant changes in our internal
  controls or in other facts that could significantly affect internal controls
  subsequent to the date of evaluation. Therefore, no corrective actions were
  taken.



|Item 16. [Reserved]
|-------------------

|                             
|-----------------------------
|Item 17. Financial Statements

See Item 18.



|Item 18. Financial Statements
|-----------------------------

See pages F-1 through F-39, incorporated herein by
  reference.



|Item 19. Exhibits
|-----------------

Documents filed as exhibits to this annual report:



| | 1.1 | Bylaws (statuts) of Genesys (English translation) (as adopted by the General Meeting on June 28, 2002).
| | --- | -------------------------------------------------------------------------------------------------------

| |     |                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1 | Form of Deposit Agreement (incorporated herein by reference to Exhibit A to the Registration Statement on Form F-6 relating to our American Depositary Shares).

| |     |                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.1 | U.S. $125 million Credit
        Facility among Vialog Corporation, Genesys S.A., BNP Paribas and Others
        dated April 20, 2001, as amended November 27 2001, as amended June 11,
        2002 (incorporated herein by reference to Exhibit 4.1 of our annual report
        on Form 20-F for the year ended December 31, 2001 as filed with the SEC
        on June 12, 2002).

| |     |                                                                                                                                                                                                                                                                                
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.2 | Excerpt from the Information Document (Note dInformation) of our company relating to the terms and conditions of our 3% convertible bonds due September 2004 (incorporated herein by reference to Exhibit 10.2 to our Registration Statement on Form F-4, File No. 333-55392).

| |     |                                                                         
| | --- | ------------------------------------------------------------------------
| | 4.3 | Amendment to our U.S. $125 million Credit Facility dated April 30, 2003.

| |     |                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------
| | 8.1 | For a list of our significant subsidiaries, see Item 4 Information on the Company  Organizational Structure.

| |      |                                                                                                                                                                                    
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 99.1 | Certifications by François Legros, Chairman and Chief Executive Officer, and Michael E. Savage, Chief Financial Officer, required by Section 906 of the Sarbanes-Oxley Act of 2002.

| |      |                                                                                                                                                                                                            
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 99.2 | Certifications by François
        Legros, Chairman and Chief Executive Officer, and Michael E. Savage, Chief
        Financial Officer, required by Section 302 of the Sarbanes-Oxley Act of
        2002.



80/128

---



Back to Contents

GENESYS S.A.

|INDEX
        TO FINANCIAL STATEMENTS
|-------------------------------------

FOR THE YEAR ENDED DECEMBER 31, 2002

U.S. GAAP

|                                                                                                                                |  | Page | 
|------------------------------------------------------------------------------------------------------------------------------- |  | ---- | 
|Report
        of Independent Auditors                                                                                          |  | F-2  | 
|Consolidated
        Balance Sheets at December 31, 2000, 2001 and 2002                                                         |  | F-3  | 
|Consolidated
        Statements Of Operations for the years ended December 31, 2000, 2001 and
        2002                      |  | F-4  | 
|Consolidated
        Statements Of Changes In Shareholders Equity for the years ended
        December 31, 2000, 2001 and 2002 |  | F-5  | 
|Consolidated
        Statements Of Cash Flows for the years ended December 31, 2000, 2001 and
        2002                      |  | F-6  | 
|Notes
        To Consolidated Financial Statements                                                                              |  | F-8  | 



F-1

---



Back to Contents

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and ShareholdersGenesys S.A.

We have audited the accompanying consolidated balance
  sheets of Genesys S.A. as of December 31, 2000, 2001 and 2002, and the related
  consolidated statements of income, shareholders equity, and cash flows
  for the years then ended. These financial statements are the responsibility
  of Genesys management. Our responsibility is to express an opinion on
  these financial statements based on our audits.

We conducted our audits in accordance with auditing
  standards generally accepted in the United States. Those standards require that
  we plan and perform the audit to obtain reasonable assurance about whether the
  financial statements are free of material misstatement. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion.

In our opinion, the consolidated financial statements
  referred to above present fairly, in all material respects, the consolidated
  financial position of Genesys S.A. at December 31, 2000, 2001 and 2002, and
  the consolidated results of its operations and its cash flows for the years
  then ended in conformity with accounting principles generally accepted in the
  United States.

As discussed in Note 3 to the consolidated financial
  statements, in 2002, Genesys S.A. changed its method of accounting for goodwill
  and other intangible assets in accordance with guidance provided in Statement
  of Financial Accounting Standards No.142, Goodwill and other Intangible
  Assets”.



| | ERNST & YOUNG AUDIT
| | -------------------

| |                                                  
| | -------------------------------------------------
| | /s/ Antoine PeskineRepresented by Antoine Peskine

Montpellier, France
  May 12, 2003



F-2

---



Back to Contents

GENESYS S.A.CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                          |  | December 31,                      |         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------
|                                                                                                                                                                          |  |                                   |         
|                                                                                                                                                                          |  | 2000                              |         
|                                                                                                                                                                          |  |                                   |         
|                                                                                                                                                                          |  | (in thousands, except share data) |         
|ASSETS                                                                                                                                                                    |  |                                   |         
|Current assets:                                                                                                                                                           |  |                                   |         
|Cash and cash equivalents                                                                                                                                                 |  |                                   | €49,705 
|Accounts
        receivable, less allowances of €1,431 in 2000 €3,201 in 2001and
        €3,502 in 2002                                                                   |  |                                   | 22,974  
|Inventory                                                                                                                                                                 |  |                                   | 136     
|Prepaid expenses                                                                                                                                                          |  |                                   | 2,517   
|Other current assets                                                                                                                                                      |  |                                   | 2,006   
|                                                                                                                                                                          |  |                                   |         
|Total current assets                                                                                                                                                      |  |                                   | 77,338  
|Property and equipment, net                                                                                                                                               |  |                                   | 22,475  
|Goodwill, net                                                                                                                                                             |  |                                   | 83,385  
|Customer lists, net                                                                                                                                                       |  |                                   | 13,370  
|Technology, net                                                                                                                                                           |  |                                   |        
|Other intangibles, net                                                                                                                                                    |  |                                   | 3,503   
|Investment in affiliated company                                                                                                                                          |  |                                   | 109     
|Deferred tax assets                                                                                                                                                       |  |                                   | 281     
|Deferred financing costs, net                                                                                                                                             |  |                                   | 756     
|Promissory notes                                                                                                                                                          |  |                                   | 5,462   
|Other assets                                                                                                                                                              |  |                                   | 490     
|                                                                                                                                                                          |  |                                   |         
|Total assets                                                                                                                                                              |  |                                   | €207,169
|                                                                                                                                                                          |  |                                   |         
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                      |  |                                   |         
|Current liabilities:                                                                                                                                                      |  |                                   |         
|Bank overdrafts                                                                                                                                                           |  |                                   | €1,882  
|Accounts payable                                                                                                                                                          |  |                                   | 8,462   
|Accrued liabilities                                                                                                                                                       |  |                                   | 4,244   
|Accrued compensation                                                                                                                                                      |  |                                   | 3,956   
|Taxes
        payable                                                                                                                                                     |  |                                   | 4,750   
|Deferred revenue                                                                                                                                                          |  |                                   | 863     
|Current portion of long-term debt                                                                                                                                         |  |                                   | 6,782   
|Current portion of capitalized lease obligations                                                                                                                          |  |                                   | 503     
|Current portion of deferred tax liability                                                                                                                                 |  |                                   | 400     
|Current
        portion of other long-term liabilities                                                                                                                    |  |                                   |        
|Other current liabilities                                                                                                                                                 |  |                                   | 2,791   
|                                                                                                                                                                          |  |                                   |         
|Total current liabilities                                                                                                                                                 |  |                                   | 34,633  
|Long-term portion of long-term debt                                                                                                                                       |  |                                   | 44,041  
|Long-term portion of capitalized lease obligations                                                                                                                        |  |                                   | 382     
|Long
        term portion of deferred tax liabilities                                                                                                                     |  |                                   |        
|Other long-term liability                                                                                                                                                 |  |                                   |        
|Commitments and contingencies                                                                                                                                             |  |                                   |        
|Shareholders equity:                                                                                                                                                     |  |                                   |         
|Ordinary
        shares; €5.00 nominal value; 9,342,381,15,271,064 and 15,409,933
        shares issued and outstanding at December 31, 2000, 2001 and 2002, respectively |  |                                   | 46,712  
|Common
        shares to be issued: €5.00 nominal value; 250,687 and 137,347 shares
        at
        December 31, 2001 and 2002, respectively                           |  |                                   |        
|Additional paid-in capital                                                                                                                                                |  |                                   | 90,199  
|Accumulated other comprehensive income                                                                                                                                    |  |                                   | 4,117   
|Deferred compensation                                                                                                                                                     |  |                                   |        
|Accumulated deficit                                                                                                                                                       |  |                                   | (12,766 
|                                                                                                                                                                          |  |                                   |         
|                                                                                                                                                                          |  |                                   | 128,262 
|Less cost of treasury shares: 2,905, 22,131 and 22,131 shares atDecember 31, 2000, 2001 and 2002, respectively                                                            |  |                                   | (149    
|                                                                                                                                                                          |  |                                   |         
|Total shareholders equity                                                                                                                                                |  |                                   | 128,113 
|                                                                                                                                                                          |  |                                   |         
|Total liabilities and shareholders equity                                                                                                                                |  |                                   | €207,169
|                                                                                                                                                                          |  |                                   |         

See notes to financial statements



F-3

---



Back to Contents

GENESYS S.A.CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                |  | Years
      ended December 31,          |          
|------------------------------------------------------------------------------- |  | --------------------------------------- | ---------
|                                                                                |  |                                         |          
|                                                                                |  | 2000                                    |          
|                                                                                |  |                                         |          
|                                                                                |  | (in
      thousands, except share data) |          
|Revenue:                                                                        |  |                                         |          
|Services                                                                        |  |                                         | €89,336  
|Products                                                                        |  |                                         | 3,083    
|                                                                                |  |                                         |          
|                                                                                |  |                                         | 92,419   
|Cost
        of revenue:                                                        |  |                                         |          
|Services                                                                        |  |                                         | 38,173   
|Products                                                                        |  |                                         | 2,548    
|                                                                                |  |                                         |          
|                                                                                |  |                                         | 40,721   
|                                                                                |  |                                         |          
|Gross
        profit                                                            |  |                                         | 51,698   
|Operating
        expenses:                                                     |  |                                         |          
|Research
        and development                                                |  |                                         | 2,613    
|Selling
        and marketing                                                   |  |                                         | 17,867   
|General
        and administrative                                              |  |                                         | 27,165   
|Restructuring
        charge                                                    |  |                                         |         
|Impairment
        of goodwill and other intangibles                            |  |                                         |         
|Amortization
        of goodwill and other intangibles                          |  |                                         | 7,015    
|                                                                                |  |                                         |          
|Total
        operating expenses                                                |  |                                         | 54,660   
|Operating
        loss                                                          |  |                                         | (2,962   
|Financial income (expense)                                                      |  |                                         |          
|Interest income                                                                 |  |                                         | 1,486    
|Interest
        expense                                                        |  |                                         | (3,558   
|Foreign
        exchange gain                                                   |  |                                         | 767      
|Other
        financial income (expense), net                                   |  |                                         | 1,960    
|                                                                                |  |                                         |          
|Financial
        income (expense), net                                         |  |                                         | 655      
|Equity
        in loss of affiliated company                                    |  |                                         | (76      
|                                                                                |  |                                         |          
|Loss
        before taxes                                                       |  |                                         | (2,383   
|Income
        tax (expense) credit                                             |  |                                         | (3,589   
|                                                                                |  |                                         |          
|Net
        loss                                                                |  |                                         | €(5,972  
|                                                                                |  |                                         |          
|Basic
        and diluted net loss per share                                    |  |                                         | €(0.76   
|                                                                                |  |                                         |          
|Number
        of shares used in computing basic and diluted net loss per share |  |                                         | 7,831,257

See notes to financial statements



F-4

---



Back to Contents

GENESYS S.A.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

|                                                                                                                        |  | Ordinary
      shares                   |            | Ordinary
      
      shares tobe issuedAmount |  | Additionalpaid-incapital |  |                |        |                      |  |                    |   | Accumulated
      
      othercomprehensiveincome |       | Shareholdersequity | 
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | ---------------------------------------------- |  | ------------------------ |  | -------------- | ------ | -------------------- |  | ------------------ | - | ------------------------------------------------- | ----- | ------------------- | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  | Treasuryshares |        | Deferredcompensation |  | Accumulateddeficit |   |                                                   |      
|                                                                                                                        |  | Shares                                  |            | Amount                                         |  |                          |  |                |        |                      |  |                   
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|                                                                                                                        |  | (in
      thousands, except share data) |           
|Balance
        at January 1, 2000                                                                                      |  |                                         | 6,627,607  |                                                |  | €30,311                  |  |                |       |                      |  | €15,146            |   |                                                   |      |                     | 
|Issuance
        of ordinary shares at prices ranging from €43.14 to €60.37 per
        share, net of offering expenses |  |                                         | 2,714,774  |                                                |  | 12,684                   |  |                |        |                      |  | 78,800             |   |                                                   |       |                     | 
|Conversion
        of capital into euro and increase in par value from €4.57 to €5.00                                   |  |                                         |            |                                                |  | 3,717                    |  |                |        |                      |  | (3,747             | ) |                                                   |       |                     | 
|Purchase
        of treasury shares                                                                                     |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   | €(149 | )                   | 
|Components
        of comprehensive income:                                                                             |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Net
        loss                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Unrealized
        loss on investments                                                                                  |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Foreign
        currency translation                                                                                    |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Total
        comprehensive loss                                                                                        |  |                                         |            |                                                |  |                         |  |                |       |                      |  |                   |   |                                                   |      |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Balance
        at December 31, 2000                                                                                    |  |                                         | 9,342,381  |                                                |  | 46,712                   |  |                |       |                      |  | €90,199            |   |                                                   | €(149 | )                   | 
|Issuance
        of ordinary shares at prices ranging from €14.70 to €54.00 per
        share, net of offering expenses |  |                                         | 5,928,683  |                                                |  | 29,644                   |  |                |        |                      |  | 87,003             |   |                                                   |       |                     | 
|Ordinary
        shares to be issued                                                                                    |  |                                         |            |                                                |  |                          |  |                | €1,253 |                      |  | 5,964              |   |                                                   |       |                     | 
|Issuance
        of replacement stocks options relating to the acquisition of Vialog and
        Astound                |  |                                         |            |                                                |  |                          |  |                |        |                      |  | 10,853             |   |                                                   |       |                     | 
|Deferred
        stock-based compensation                                                                               |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Amortization
        of deferred Stock-based compensation                                                               |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Purchase
        of treasury shares                                                                                     |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   | (529  | )                   | 
|Net
        loss of disposed treasury shares                                                                            |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   | (73   | )                   | 
|Components
        of comprehensive loss:                                                                               |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Net
        loss                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Foreign
        currency translation                                                                                    |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Unrealized
        loss on cash flow hedges                                                                             |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Total
        comprehensive loss                                                                                        |  |                                         |            |                                                |  |                         |  |                |       |                      |  |                   |   |                                                   |      |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Balance
        at December 31, 2001                                                                                    |  |                                         | 15,271,064 |                                                |  | €76,356                  |  |                | €1,253 |                      |  | €194,019           |   |                                                   | €(751 | )                   | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Exercised
        stock-options                                                                                         |  |                                         | 25,529     |                                                |  | 128                      |  |                |        |                      |  | 198                |   |                                                   |       |                     | 
|Converted
        notes                                                                                                 |  |                                         | 113,340    |                                                |  | 566                      |  |                | (566   | )                    |  |                    |   |                                                   |       |                     | 
|Amortization
        of deferred Stock-based compensation                                                               |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Other
        movements                                                                                                 |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Components
        of comprehensive income:                                                                             |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Net
        loss                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Foreign
        currency translation                                                                                    |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Unrealized
        gain on cash flow hedges                                                                             |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Total
        comprehensive loss                                                                                        |  |                                         |            |                                                |  |                         |  |                |       |                      |  |                   |   |                                                   |      |                     | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 
|Balance
        at December 31, 2002                                                                                    |  |                                         | 15,409,933 |                                                |  | €77,050                  |  |                | €687   |                      |  | €194,217           |   |                                                   | €(751 | )                   | 
|                                                                                                                        |  |                                         |            |                                                |  |                          |  |                |        |                      |  |                    |   |                                                   |       |                     | 

See notes to financial statements



F-5

---



Back to Contents

GENESYS S.A.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)

|                                                                                                          |  | Years
      ended December 31, |        
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------
|                                                                                                          |  |                                |        
|                                                                                                          |  | 2000                           |        
|                                                                                                          |  |                                |        
|Cash
        flows from operating activities:                                                             |  |                                |        
|Net
        loss                                                                                          |  |                                | €(5,972
|Adjustments
        to reconcile net loss to net cash provided by (used in) operating activities:         |  |                                |        
|Depreciation                                                                                              |  |                                | 7,474  
|Amortization
        of goodwill and other intangibles                                                    |  |                                | 7,015  
|Impairment
        of goodwill and other intangibles                                                      |  |                                |       
|Amortization
        of deferred financing costs and debt issuance discount                               |  |                                | 437    
|Amortization
        of deferred charges                                                                  |  |                                |       
|Allowance
        for bad debt                                                                            |  |                                | 297    
|Amortization
        of deferred stock-based compensation                                                 |  |                                |       
|Loss
        (gain) on disposal of assets                                                                 |  |                                | 49     
|Deferred
        taxes expense (credit)                                                                   |  |                                | 378    
|Equity
        in loss of affiliated companies                                                            |  |                                | 75     
|Changes
        in unrealized losses on investments                                                       |  |                                | (43    
|Changes
        in operating assets and liabilities, net of effects of acquisition of
        businesses: |  |                                |        
|Decrease
        (increase) in accounts receivable                                                        |  |                                | (3,614 
|Decrease
        in inventory                                                                             |  |                                | 169    
|Decrease
        (increase) in prepaid expenses                                                           |  |                                | (344   
|Decrease
        (increase) in other assets                                                               |  |                                | (1,843 
|(Increase)
        in note receivable                                                                     |  |                                |       
|Increase
        (decrease) in accounts payable                                                           |  |                                | 1,719  
|Increase
        (decrease) in accrued liabilities                                                        |  |                                | 645    
|Increase
        (decrease) in accrued compensation                                                       |  |                                | 2,569  
|Increase
        (decrease) in accrued taxes                                                              |  |                                | 1,861  
|Increase
        (decrease) in deferred revenue                                                           |  |                                | (740   
|Increase
        (decrease) in other liabilities                                                          |  |                                | (830   
|                                                                                                          |  |                                |        
|Net
        cash provided by (used in) operating activities                                               |  |                                | 9,302  
|                                                                                                          |  |                                |        
|Cash
        flows from investing activities:                                                             |  |                                |        
|Acquisition
        of customer list                                                                      |  |                                | (4,470 
|Acquisitions
        of businesses, net of cash acquired                                                  |  |                                | (7,498 
|Acquisition
        of furniture and equipment                                                            |  |                                | (10,593
|Proceeds
        from sales of furniture and equipment                                                    |  |                                | 119    
|Issuance
        of promissory notes                                                                      |  |                                | (5,793 
|                                                                                                          |  |                                |        
|Net
        cash used in investing activities                                                             |  |                                | (28,235
|                                                                                                          |  |                                |        
|Cash
        flows from financing activities:                                                             |  |                                |        
|Increase
        (decrease) in bank overdrafts                                                            |  |                                | 1,099  
|Net
        proceeds from issuance of common stock                                                        |  |                                | 55,206 
|Purchase
        of treasury shares                                                                       |  |                                | (149   
|Net
        proceeds from sales of treasury shares                                                        |  |                                |       
|Proceeds
        from the issuance of long-term debt                                                      |  |                                | 5,376  
|Principal
        payments on long-term debt                                                              |  |                                | (7,971 
|Deferred
        financing costs                                                                          |  |                                |       
|                                                                                                          |  |                                |        
|Net
        cash provided by (used in) financing activities                                               |  |                                | 53,561 
|                                                                                                          |  |                                |        
|Effect
        of foreign exchange rate changes on cash and cash equivalents                              |  |                                | 1,323  
|Increase
        (decrease) in cash and cash equivalents                                                  |  |                                | 35,951 
|Cash
        and cash equivalents, beginning of period                                                    |  |                                | 13,754 
|                                                                                                          |  |                                |        
|Cash
        and cash equivalents, end of period                                                          |  |                                | €49,705
|                                                                                                          |  |                                |        

|Supplemental
        disclosures of cash flow information:                  |  |  |         |   |  |          |   |  |        | 
|--------------------------------------------------------------------------- |  |  | ------- | - |  | -------- | - |  | ------ | 
|Interest
        paid                                                       |  |  | €3,472  |   |  | €7,310   |   |  | €7,578 | 
|Income
        taxes paid                                                   |  |  | 1,677   |   |  | 1,933    |   |  | 3,286  | 
|Non-cash
        investing and financing transactions:                      |  |  |         |   |  |          |   |  |        | 
|Fixed
        assets acquired under capital lease                           |  |  | €397    |   |  |         |   |  | €218   | 
|Issuance
        of common stock in connection with acquisitions            |  |  | 22,429  |   |  | 101,941  |   |  |       | 
|Acquisition
        of businesses:                                          |  |  |         |   |  |          |   |  |        | 
|Assets
        acquired                                                     |  |  | €28,818 |   |  | €331,843 |   |  |       | 
|Liabilities
        assumed and issued                                      |  |  | (2,648  | ) |  | (200,569 | ) |  |       | 
|Common
        stock issued                                                 |  |  | (22,435 | ) |  | (94,724  | ) |  |       | 
|Common
        stock committed to be issued                                 |  |  |        |   |  | (7,217   | ) |  |       | 
|Acquisition
        costs incurred in connection with probable acquisitions |  |  | 2,914   |   |  |         |   |  |       | 
|Costs
        incurred during previous period for current year acquisitions |  |  |        |   |  | (1,682   | ) |  |       | 
|Cash
        to be paid in the following period                             |  |  | (920    | ) |  | (4,170   | ) |  |       | 
|Cash
        paid in connection with previous period acquisitions           |  |  | 1,876   |   |  | 1,112    |   |  | 4,299  | 
|                                                                            |  |  |         |   |  |          |   |  |        | 
|Cash
        paid                                                           |  |  | 7,605   |   |  | 24,593   |   |  | 4,299  | 
|Less
        cash acquired                                                  |  |  | (107    | ) |  | (3,161   | ) |  |       | 
|                                                                            |  |  |         |   |  |          |   |  |        | 
|Net
        cash paid for acquisitions of businesses                        |  |  | €7,498  |   |  | €21,432  |   |  | €4,299 | 
|                                                                            |  |  |         |   |  |          |   |  |        | 



See notes to financial statements

F-6

---





Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Note 1. Organization and business
|---------------------------------

Genesys S.A., together with its subsidiaries (the Company), is a limited liability company organized under the laws of France.



The Company is a global communications specialist, providing practical and innovative real-time collaborative and managed event services worldwide.



|Note 2. Summary of significant accounting policies
|--------------------------------------------------

|                     
|---------------------
|Basis of presentation

The accompanying consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States.



As a publicly traded company on the Nouveau Marché of Euronext Paris since October 1998, the Company publishes consolidated financial statements that have been prepared in accordance with generally accepted accounting principles in France, which differ in certain  respects from generally accepted accounting principles in the United States.



In addition, the Company has been listed on the Nasdaq Stock Market since April 26, 2001. As a result, the Company filed a Form 20-F on June 29, 2001 and June 12, 2002 including consolidated financial statements for the fiscal year ended December 31, 2000 and 2001,  respectively, that have been prepared in accordance with generally accepted accounting principles in the United States.



The main consolidation principles are as follows:



| |  | Companies which are wholly owned or which the Company controls are consolidated;
| | - | --------------------------------------------------------------------------------

| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | Companies over which the Company exercises significant influence but does not control are accounted for under the equity method of accounting;

| |   |                                                                        
| | - | -----------------------------------------------------------------------
| |  | All significant inter-company transactions and balances are eliminated.

|                              
|------------------------------
|Scope
        of consolidation

The following companies have been consolidated:





F-7

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Name                                                      |  |  | Location             |  |  | Interest and
      control |  
|--------------------------------------------------------- |  |  | -------------------- |  |  | -------------------------- | -
|                                                          |  |  |                      |  | 
|Fully
        consolidated companies:                     |  |  |                      |  |  |                            |  
|Genesys
        S.A                                       |  |  | Montpellier, France  |  |  | Parent company             |  
|Genesys
        Conferencing France, S.A.                 |  |  | Ivry, France         |  |  | 100                        | %
|Genesys
        Conferencing A.B                          |  |  | Stockholm, Sweden    |  |  | 100                        | %
|Genesys
        Conferencing S.A                          |  |  | Brussels, Belgium    |  |  | 100                        | %
|Genesys
        Conferencing Ltd                          |  |  | Croydon, England     |  |  | 100                        | %
|Genesys
        Conferencing Pte Ltd                      |  |  | Singapore            |  |  | 100                        | %
|Genesys
        Conferencing Pty Ltd                      |  |  | Melbourne, Australia |  |  | 100                        | %
|Genesys
        Conferencing Ltd                          |  |  | Hong Kong            |  |  | 100                        | %
|Genesys
        Conferencing, Inc                         |  |  | Denver, USA          |  |  | 100                        | %
|Genesys
        Conferencing S.R.L                        |  |  | Milan, Italy         |  |  | 100                        | %
|Genesys
        Conferencing Ltd                          |  |  | Toronto, Canada      |  |  | 100                        | %
|Darome
        Teleconferencing GmbH                      |  |  | Berlin, Germany      |  |  | 100                        | %
|Eesys,
        S.A.S                                      |  |  | Paris, France        |  |  | 100                        | %
|Geene,
        S.A.S                                      |  |  | Paris, France        |  |  | 100                        | %
|305
        4344 Nova Scotia Ltd                          |  |  | Halifax, Canada      |  |  | 100                        | %
|305
        4345 Nova Scotia Ltd                          |  |  | Halifax, Canada      |  |  | 100                        | %
|Affiliates
        accounted for under the equity method: |  |  |                      |  |  |                            |  
|Genesys
        Conferencing Iberia                       |  |  | Madrid, Spain        |  |  | 20                         | %

On January 1, 2002, Genesys Conferencing Inc merged into Genesys Conferencing of Massachusetts, Inc. Thereafter, Genesys Conferencing of Massachusetts, Inc. was renamed to Genesys Conferencing, Inc.



In 2002, Astound Inc was renamed to Genesys Conferencing Ltd (Canada).



|Use of estimates
|----------------

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the  accompanying notes. Actual results could differ from these estimates.



|Translation of financial statements of foreign subsidiaries
|-----------------------------------------------------------

The functional currency of each subsidiary is the
  local currency, except Genesys Conferencing Ltd (formerly Astound Inc), a Canadian
  company using U.S. dollars. In accordance with Statement of Financial Accounting
  Standard No. 52, assets and liabilities of the Company and its subsidiaries
  with functional currencies other than the Euro are translated into Euro equivalents
  at the rate of exchange in effect on the balance sheet date. Revenues and expenses
  are translated at the average exchange rates for each reporting period. Foreign
  Currency translation gains or losses are recorded as a separate component of
  shareholders equity.



Due to the number of currencies involved, the constant change in currency exposures, and the substantial volatility of currency exchange rates, the effect of exchange rate fluctuations upon future operating results could be significant.



|Transactions in foreign currencies
|----------------------------------

At year end, foreign currency denominated balances are translated using closing rates of exchange. In accordance with Statement of Financial Accounting Standard No. 52, unrealized gains and losses are recognized in income for the period unless the supporting transactions  hedge a foreign currency commitment or a net investment in a foreign entity.



|Revenue
        recognition
|---------------------------

The Company generally recognizes revenue upon completion of conferencing services or at the time of shipment of equipment, assuming that persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectibility is probable, unless the  Company has future obligations for installation or has to obtain customer acceptance, in which case revenue is deferred until these obligations are met. Amounts billed in excess of revenue recognized are included as deferred revenue in the accompanying consolidated balance sheets.





F-8

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Cost of services
|----------------

Cost of services consists principally of telephony costs, equipment product costs, operator and operations management salaries and office expenses for operations staff and depreciation on teleconferencing bridges and telecommunications equipment.



|Cost of products
|----------------

Cost of products consists of audio and video equipment that the Company purchases and sells.



|Cash and cash equivalents
|-------------------------

The Company considers all highly liquid investments with insignificant interest rate risk and purchased with an original maturity of three months or less from the date of purchase to be cash equivalents. Management determines the appropriate classification of its cash  equivalents and investment securities at the time of purchase and reevaluates its determination as of each balance sheet date. Management has classified the Companys marketable securities as available-for-sale securities within cash and cash equivalents in the accompanying  consolidated financial statements. Unrealized gains and losses on such securities are recorded as a component of comprehensive income.



|Inventories
|-----------

Video and audio equipment inventories are stated at the lower of cost or market, on a first-in, first-out (FIFO) basis.



|Accounts receivable
|-------------------

Allowance for doubtful accounts is established for the amount that is considered as uncollectable at year-end.



|Goodwill and identifiable intangible assets
|-------------------------------------------

Goodwill represents the excess purchase price paid over the net identifiable tangible and intangible assets acquired in business combinations. Other intangible assets primarily represent technology and customer lists.



Prior to January 1, 2002, goodwill and other intangible assets were being amortized on a straight-line basis over the following periods: 3 to 5 years for assembled workforce, 4 years for technology, 5 to 10 years for customer lists and 20 years (audio and video teleconferencing)  or 5 years (data and web conferencing) for goodwill, which represented their estimated useful lives.



The Company has adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, since January 1, 2002. Statement 142 prohibits the amortization of goodwill and indefinite-lived intangible assets. Statement 142 requires that these assets  be reviewed for impairment at least annually. Intangible assets that have definite lives will continue to be amortized over their useful lives.



Application of the non-amortization provisions of
  Statement 142 resulted in a decrease in amortization expenses of approximately
  €12.7 million for the year ended December 31, 2002. The Company also reclassified
  an assembled workforce intangible asset with an unamortized balance of €6.5
  million (along with a deferred tax liability of €1.8 million) to goodwill
  at January 1, 2002. The following table sets forth net loss and net loss per
  share to exclude amortization of goodwill recorded prior to the adoption of
  Statement 142 on January 1, 2002:



|                                                      |  | Years
      ended December 31, |        
|----------------------------------------------------- |  | ------------------------------ | -------
|                                                      |  |                                |        
|                                                      |  | 2000                           |        
|                                                      |  |                                |        
|Reported
        net loss                             |  |                                | €(5,972
|Add
        back: amortization of goodwill            |  |                                | 7,015  
|                                                      |  |                                |        
|Adjusted
        net loss                             |  |                                | €1,043 
|                                                      |  |                                |        
|Reported
        basic and diluted net loss per share |  |                                | €(0.76 
|Add
        back: amortization of goodwill            |  |                                | 0.89   
|                                                      |  |                                |        
|Adjusted
        basic and diluted net loss per share |  |                                | €0.13  
|                                                      |  |                                |        

The Company tests goodwill for impairment using the two-step process prescribed in Statement 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. In the first quarter of 2002, the Company performed  the first step of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. Based on the results of this transition test, including a report from an independent expert, no impairment charge was recorded at January 1, 2002 as a cumulative effect of  change in accounting principle.





F-9

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The required annual impairment test was performed
  as of October 1, 2002. Following the results of the first step of the required
  impairment test which was failed, the second step was required. Based on the
  results of this annual impairment test, including a report from an independent
  expert, an impairment charge of €81.7 million was recorded, as described
  in note No. 3, Impairment of goodwill and identifiable intangible assets.



Since January 1, 2002, other intangible assets have been amortized on a straight-line basis over the following periods: 4 years for technology and 5 to 10 years for customer lists, which represented their estimated useful lives.



|Property
        and equipment
|------------------------------

Property and equipment are stated at cost, net of accumulated depreciation. Property and equipment are depreciated using the straight-line method over estimated useful lives of the assets. The following table shows estimated useful lives of property and equipment:



|Software
        and systems                           |  | 1 to 5 years  | 
|------------------------------------------------------ |  | ------------- | 
|Bridges
        and other telecommunications equipment |  | 5 years       | 
|Fixtures
        and fittings                          |  | 5 to 10 years | 
|Office
        and computer equipment                  |  | 3 to 5 years  | 
|Furniture                                              |  | 5 to 10 years | 
|Buildings                                              |  | 25 years      | 

|                               
|-------------------------------
|Impairment of long-lived assets

The Company has applied Statement of Financial Accounting
  Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
  Assets(SFAS 144), since January 1, 2002, whenever events or changes in
  business circumstances indicate that the carrying amount of the assets may not
  be fully recoverable. The Company tests identifiable intangible assets for impairment
  using the two-step process prescribed in Statement 144. In accordance with this
  Statement, an impairment loss is recognized when estimated undiscounted future
  cash flows expected to result from the use of the asset and its eventual disposition
  is less than its carrying amount. Impairment, if any, is assessed using discounted
  cash flows. Based on the results of this review in 2002 of certain identifiable
  intangible assets, including a report from an independent expert, an impairment
  charge of €11.9 million was recorded, as described in note No. 3, Impairment
  of goodwill and identifiable intangible assets.



|Research and development
|------------------------

The Company maintains engineering departments that, in part, develop features and products for group communications. The Company charges to expense when incurred that portion of the costs of these departments which relates to research and development activities.



In 2000, 2001 and 2002, research and development expenses
  amounted to €2,613, 5,366 and €4,734 which represents 2.8%, 3.0%
  and 2.4% of total revenue, respectively. Expenses relating to software and information
  system network maintenance and development classified as general and administrative
  expenses in 2000, 2001 and 2002amounted
  to €2,555, €6,318 and €7,894, respectively, which represents
  2.7%, 3.5% and 3.9% of total revenue, respectively.



|Computer software costs
|-----------------------

In accordance with Statement of Position 98-1 Accounting for the Costs of Computer Software Developed or Obtained for Internal use, the company capitalizes certain costs related to internal use software once specific criteria have been met.



|Deferred financing costs
|------------------------

Costs to obtain debt financing are capitalized and
  amortized over the life of the related debt using the effective interest method.
  Due to a higher conversion rate than expected for the convertible notes issued
  in August 1999, an additional amortization amounting to €144 and €27
  was recorded in additional paid-in-capital in 2000 and 2001, respectively.





F-10

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|            
|------------
|Income taxes

In accordance with Statement of Financial Accounting Standards No. 109, the Company provides for deferred taxes using the liability method of accounting. Under this method, deferred tax assets and liabilities are determined based on the temporary differences arising  between the tax bases of assets and liabilities and their financial reporting amounts, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to reverse. A valuation allowance is recognized if, on the weight of available evidence, it is  more likely than not that some portion or all of the deferred tax asset will not be realized.



Deferred tax liability is recorded for identifiable intangible assets (technology and customer lists), if necessary. Such liability is amortized over the life of the related intangible assets.



|Stock options
|-------------



The
  Company accounts for stock options granted to employees in accordance with the
  provisions of Accounting Principles Board Statement No. 25 “Accounting for Stock
  issued to Employees”. Under APB 25, no compensation expense is recognized for
  stock options issued to employees with an exercise price equal to the market
  price of the underlying shares on the date of grant. Stock options issued with
  an exercise price less than the market price of the underlying shares on the
  date of grant result in deferred compensation which is amortized to expense
  over the vesting period.

Statement
  of Financial Accounting Standards No. 123, “Accounting for Stock Based
  Compensation”, provides an alternative to APB 25 in accounting for stock-based
  compensation issued to employees using the fair value based method. Companies
  can elect to continue to apply the provisions of APB 25 but are required by
  SFAS 123 to disclose the pro forma effect on net income and net income per share
  as if the fair value basis method had been applied.

Pro
  forma information regarding net income and earnings per share is required by
  SFAS 123 and SFAS 148, and has been determined as if the Company had accounted
  for its employee stock options under the fair value method of SFAS 123. The
  fair value of these options was estimated at the date of grant using a Black-Scholes
  option pricing model with the following assumptions:

|                                     |  | 2000      |   | 2001      |   | 2002      |  
|------------------------------------ |  | --------- | - | --------- | - | --------- | -
|                                     |  |           |   |           |   |           |  
|Expected dividend
      yield        |  | 0         | % | 0         | % | 0         | %
|Expected volatility                  |  | 0.913     |   | 0.985     |   | 0.865     |  
|Risk-free interest
      rate        |  | 5.40      | % | 5.05      | % | 4.93      | %
|Weighted average
      expected life |  | 5.6 years |   | 5.5 years |   | 5.5 years |  

For purposes of pro forma disclosure, the estimated
  fair value of the options is amortized to expense over the options’ vesting
  period. The Company’s pro forma information
  is as follows (in thousands of euros except for earnings per share information):

|                                                                                                                                                |  | Years
      ended December 31, |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -
|                                                                                                                                                |  |                                |  
|                                                                                                                                                |  | 2000                           |  
|                                                                                                                                                |  |                                |  
|Net loss, as
      reported                                                                                                                     |  | €(5,972                        | )
|Add: Stock-based
      employee compensation expense included in reported net loss                                                              |  |                               |  
|Deduct: Stock-based employee
      compensation expense determined under fair value method for all stock option
      grants (SFAS 123 expense) |  | (3,438                         | )
|                                                                                                                                                |  |                                |  
|Pro forma net loss                                                                                                                              |  | €(9,410                        | )
|                                                                                                                                                |  |                                |  
|Basic and diluted net loss per
      common share, as reported                                                                                  |  | (0.76                          | )
|Pro forma basic and diluted net
      loss per common share                                                                                     |  | (1.20                          | )
|                                                                                                                                                |  |                                |  

The
  weighted average fair value of options granted during 2000, 2001 and 2002 was
  as follows:

|                                                                                                             |  | Years
      ended December 31, | 
|------------------------------------------------------------------------------------------------------------ |  | ------------------------------ | 
|                                                                                                             |  |                                | 
|                                                                                                             |  | 2000                           | 
|                                                                                                             |  |                                | 
|Options whose
      price was less than the market price of the underlying shares on the grant
      date    |  | €46.98                         | 
|Options whose
      price was greater than the market price of the underlying shares on the
      grant date |  | 39.93                          | 



|                           
|---------------------------
|Comprehensive income (loss)

As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. SFAS 130 establishes new rules for the reporting and display of comprehensive income (loss) and its components. The Companys other  comprehensive income (loss), as set forth in the accompanying consolidated statements of shareholders equity, includes net loss, unrealized gains and losses on investments and derivative instruments (interest rate swap agreement) and cumulative foreign currency translation  adjustments.





F-11

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|                      
|----------------------
|Net earnings per share

In accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share basic and diluted earnings per share have been presented. Basic earnings per share exclude the dilutive effects of options and reflect only the actual ordinary shares outstanding.  Diluted earnings per share include the dilutive effects of options as if they had been exercised. Because the potentially issuable shares from the exercise of stock options would be antidilutive, there are no differences between basic and diluted net loss per share for the Company through  December 31, 2002.



|Segment reporting
|-----------------

Management has reviewed Statement of Financial Accounting
  Standards No. 131 Disclosures About Segments of an Enterprise and Related
  Information and considered the way its operations are currently organized.
  Management has concluded that the Company and its subsidiaries operate currently
  in four reportable segments: North America, Europe and Asia-Pacific, and starting
  in 2002, a Global Video division, as management internally evaluates and reports
  the performance of the Company on the basis of these separate 4 business units.
  Segment information for 2000 and 2001 initially based on three segments have
  been restated to report the Global Video Division as a separate segment to be
  comparable with the segment presentation for 2002.



|Advertising expense
|-------------------

The cost of advertising is expensed as incurred. The Companys advertising costs for the years ended December 31, 2000, 2001 and 2002 were €2,810, €2,987 and €2,309, respectively.



|Derivative instruments
|----------------------

Statement of Financial Accounting Standards No. 133 Accounting for Derivative Instruments and Hedging Activities (SFAS 133), requires the Company to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair  value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instruments depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are  designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.



For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a  component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period during which the hedged transaction affects earnings. At December 31, 2002, the Company does not hold derivative instruments  that are designated and qualify as a fair value hedge or hedge of a net investment in a foreign currency. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change.



During the year ended December 31, 2002, the Company did not recognize gains or losses for cash flow hedges that has been discontinued.



|Concentration of risk
|---------------------

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash equivalents and trade receivables.



The Company has cash investment policies that limit investments to short-term low-risk instruments. The Companys cash is held primarily in U.S. dollars, Euros and British Sterling Pounds (GBP) and concentrated mainly in 5 banks in the United States, France and the  United Kingdom and.



The Company sells its services and products to customers in a variety of countries in North America, Europe and Asia-Pacific. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses.





F-12

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

To date, such losses have been within managements expectations. A summary of the activity in the allowance for doubtful accounts is as follows:

|                                         |  | Years
      ended December 31, |       
|---------------------------------------- |  | ------------------------------ | ------
|                                         |  |                                |       
|                                         |  | 2000                           |       
|                                         |  |                                |       
|Allowance
        balance at January 1   |  |                                | €1,235
|Amounts
        charged to expense       |  |                                | 676   
|Amounts
        written off              |  |                                | (525  
|Currency
        translation adjustment  |  |                                |      
|Net
        assets acquired              |  |                                | 45    
|                                         |  |                                |       
|Allowance
        balance at December 31 |  |                                | €1,431
|                                         |  |                                |       

For all periods presented, no customer represented revenues in excess of 10% of the Companys total consolidated revenues.



|Recent accounting pronouncements
|--------------------------------

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations(SFAS 143). SFAS 143 requires the fair value of a liability for an asset retirement obligation be recognized  in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. An entity shall measure changes in the liability for an asset retirement obligation due to  passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. That amount shall be recognized as an increase in the carrying amount of the liability and as an expense classified as an operating item in the statement of income.  SFAS 143 will become effective for the Company beginning on January 1, 2003. The Company does not anticipate that adoption of SFAS 143 will have a material impact on its results of operations or its financial position.



In April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements 4, 44, and 64, Amendment of FASB Statement 13, and Technical Corrections. (SFAS 145). This Statement amends FASB  Statement 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The rescission of  SFAS 4 is effective for fiscal years beginning after May 15, 2002. The other provisions are effective for transactions occurring on or after May 15, 2002. The adoption of the provisions of this Statement relating to 2002 have not resulted in a material impact on The Companys financial  position or on its results of operation and cash-flows as of December 31, 2002. The Company does not anticipate that adoption of the provisions of this Statement relating to the classification of gains resulting from the extinguishment of debt (SFAS 4) will have a material impact on its  results of operations or its financial position.



In June 2002, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities(SFAS 146). SFAS 146 is effective for exit or disposal activities that are initiated after  December 31, 2002. The provisions of SFAS 146 are not expected to have a material impact on the Companys consolidated financial statements.



In November 2002, the Emerging Issues Task Force reached consensus on EITF Issue 00-21 Accounting for Revenue Arrangements with Multiple Deliverables. This Issue addresses certain aspects of the accounting by a vendor for arrangements under which it will perform  multiple revenue-generating activities. In some arrangements, the different revenue-generating activities (deliverables) are sufficiently separable, and there exists sufficient evidence of their fair values to separately account for some or all of the deliverables (that is, there are separate  units of accounting). In other arrangements, some or all of the deliverables are not independently functional, or there is not sufficient evidence of their fair values to account for them separately. This Issue addresses when and, if so, how an arrangement involving multiple deliverables  should be divided into separate units of accounting. This Issue does not change otherwise applicable revenue recognition criteria. However, this Issue does provide guidance with respect to the effect of certain customer rights due to vendor nonperformance on the recognition of revenue  allocated to delivered units of accounting. This Issue also addresses the impact on the measurement and/or allocation of arrangement consideration of customer cancellation provisions and consideration that varies as a result of future actions of the customer or the vendor. Finally, this  Issue provides guidance with respect to the recognition of the cost of certain deliverables that are excluded from the revenue accounting for an arrangement. The provisions of this Issue become effective for fiscal periods beginning after June 15, 2003. The Company is currently  reviewing this Issue to measure the potential impact on its results of operations and financial position.



In November 2002, the Financial Accounting Standard Board issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (the Interpretation). The Interpretation will  significantly change current practice in the accounting for and disclosure of guarantees.





F-13

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The Interpretation requires certain guarantees to be recorded at fair value, which is different from current practice, which is generally to record a liability only when a loss is probable and reasonably estimable, as those terms are defined in Statement of Financial Accounting  Standards No. 5, Accounting for Contingencies. The Interpretation also requires a guarantor to make significant new disclosures, even when the likelihood of making any payments under the guarantee is remote, which is another change from current practice. The Interpretations  disclosure requirements are effective and have been adopted by the Company for the financial statements ending December 31, 2002. The Interpretations initial recognition and initial measurement provisions are applicable on a prospective basis to guarantees issued or modified after  December 31, 2002, irrespective of the guarantors fiscal year-end. The guarantors previous accounting for guarantees issued prior to the date of the Interpretations initial application should not be revised or restated to reflect the Interpretations provisions. The Company is currently  reviewing the initial recognition and measurement provisions of the Interpretation to measure the potential impact on its financial position and results of operations.



In December 2002, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation, Transition and Disclosure (SFAS 148). SFAS 148 provides alternative methods of transition for a  voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently  and in a tabular format. Additionally, SFAS 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS 148 are effective for the Companys fiscal year 2003. The Company does not expect SFAS 148 to have a  material effect on the Companys financial position or results of operations.



In January 2003, the Financial
  Accounting Standards Board announced the issuance of Interpretation No. 46,
  Consolidation of Variable Interest Entities (an interpretation of ARB 51).As a result of increasing transactions involving variable interest entities,
  and given the fragmented and incomplete accounting literature available, Interpretation
  46 addresses consolidation of certain types of variable interest entities by
  business enterprises considered to be the primary beneficiaries of the variable
  interest entities. The primary beneficiary of a variable interest entity is
  the party that absorbs a majority of the entity expected losses, receives
  a majority of its expected residual returns, or both, as a result of holding
  variable interests, which are the ownership, contractual, or other pecuniary
  interests in an entity. Consolidation of variable interest entities is no longer
  determined solely on the majority of voting interests approach, but instead
  on identifying the enterprise holding the controlling financial interests in
  the variable interest entity. A primary beneficiary holds the controlling financial
  interests in a variable interest entity and is required to consolidate the assets,
  liabilities, and results of the activities of the variable interest entity in
  the primary beneficiarys consolidated financial statements. Interpretation
  46 requires additional disclosures relating to transactions involving variable
  interest entities to be made by primary beneficiaries and enterprises holding
  significant variable interests in variable interest entities. This Interpretation
  applies immediately to variable interest entities created after January 31,
  2003, and to variable interest entities in which an enterprise obtains an interest
  after that date. For variable interests acquired by The Company before February
  1, 2003, this Interpretation becomes applicable beginning on January 1, 2004.
  The Company is currently reviewing the Interpretation to assess the potential
  impact on its financial position and results of operations upon adoption.



|Note 3. Impairment of goodwill and identifiable intangible assets
|-----------------------------------------------------------------

|                                       |  | Years
      ended December 31, |        
|-------------------------------------- |  | ------------------------------ | -------
|                                       |  |                                |        
|                                       |  | 2001                           |        
|Impairment
        of:                 |  |                                |        
|Goodwill                               |  |                                | €50,611
|Identifiable
        intangible assets |  |                                | 10,658 
|                                       |  |                                |        
|                                       |  |                                | €61,269
|                                       |  |                                |        

|    
|----
|2001

As of December 31, 2001, the Company performed a review of the carrying value of its goodwill and identifiable intangible assets that were recorded in connection with its various acquisitions. This review was triggered by the significant decline in stock value in the  telecommunications industry, which includes the Companys conferencing services. During 2001, management of telecommunication companies and financial analysts revised down their estimates of future financial performance of this industry. Additionally, during the three last years,  the Company acquired numerous businesses using common stock as a major component of the purchase price when the Companys valuation was at a significantly higher level.



Based on the results of this review, including an
  independent report, the Company recorded a total impairment charge of €61,269.
  Of this amount, €50,611 was a reduction to the carrying value of goodwill
  and the remaining €10,658 was a reduction to the carrying value of identifiable
  intangible assets. The impairment charge of €61,269 is mainly associated
  with the acquisition of Astound (€32,777) and video-conferencing (€20,598)
  which were included in service offerings of several acquisitions made by the
  Company.





F-14

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The review was performed in accordance with the Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121). Under the guidance of SFAS 121, the Company divided its  assets into six groups of assets with identifiable cash flows. For those groups of assets where the carrying value exceeded the undiscounted future cash flows, the amount of impairment was determined using discounted future cash flows, based on managements best estimates.



|2002
|----

In accordance with Statement of Financial Accounting
  Standards No. 142, Goodwill and Other Intangible Assets,that requires
  that goodwill be reviewed for impairment at least annually, the Company tested
  goodwill for impairment using the two-step process prescribed in Statement 142
  at the date of October 1, 2002. The first step is a screen for potential impairment,
  while the second step measures the amount of the impairment, if any. Under the
  guidance of SFAS 142, the Company divided its business into reporting units
  composed of 4 reportable segments (North America, Europe, Asia-Pacific and Global
  Video Division). For segments where the carrying value exceeded the estimated
  fair value of net assets, the second step was required. During this second step,
  the amount of impairment is defined by the difference of implied fair value
  of goodwill and its book value at the date of the review. The Company performed
  this review with the assistance of an independent valuation consulting company.
  Based on the results of this review, using a discounted cash flow approach based
  on the Company’s current financial projections, the Company recorded a
  total impairment charge of €81,749 that was recorded as a reduction to
  the carrying value of goodwill. The impairment charge of €81,749 is mainly
  associated with the acquisition of North America businesses (€81,315),
  mainly related the Vialog Corporation acquisition, which occurred in April 2001.



As of October 1, 2002, the Company also performed
  a review of the carrying value of technology, an intangible asset identified
  during the acquisition of Astound in 2001 as certain information indicated that
  the carrying amount of the acquired technology may not be recoverable. The review
  was performed in accordance with the Statement of Financial Accounting Standards
  No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets(SFAS
  144). Based on the results of this review, including an independent report,
  the Company recorded a total impairment charge of €11.9 million that was
  recorded as a reduction to the carrying value of intangible assets.



|Note 4. Acquisitions
|--------------------

All acquisitions made by the Company have been accounted for under the purchase method of accounting. The results of operations of the acquired businesses are included in the consolidated financial statements from the dates of acquisition.



Below are described acquisitions from January 1, 2000.

In April 2000, the Company acquired the audio and
  video conferencing activities of Cable & Wireless Communications. The transaction
  amounted to GBP 3,436 (€5.7 million). This investment has been recorded
  in intangible assets as customer lists and is being amortized over 10 years.



On June 6, 2000, the Company acquired 3,999 of the
  4,000 issued and outstanding shares of Mediactiv, a French company specializing
  in the organization of medical conferences on the Internet. The total purchase
  price was €1,856 and consisted of 30,289 shares of Genesys S.A. with a
  fair market value of €1,829 at the time of issuance and 27 of acquisition
  costs. The purchase price exceeded the fair value of the net tangible assets
  acquired by €1,762. The excess was allocated to goodwill and was being
  amortized over 5 years until effective date of Statement of Financial Accounting
  Standards No. 142, Goodwill and Other IntangibleAssets (FAS 142) on
  January 1, 2002.



On June 6, 2000, as part of the same business acquisition
  described above, the Company acquired 499 of all 500 shares of the issued and
  outstanding shares of MedLive, a French holding company. The total purchase
  price was €905 and consisted of €586 in cash and 5,288 shares of
  Genesys S.A. with a fair market value of €319 at the time of issuance.
  The purchase price exceeded the fair value of the net tangible assets acquired
  by €901. The excess was allocated to goodwill and is being amortized over
  5 years until effective date of Statement No. 142 on January 1, 2002.



On July 31, 2000, the Company acquired all of the
  issued and outstanding stock of Cote & Com, a French company specializing
  in live web streaming of financial presentation, for 31,044 shares of Genesys
  S.A. with a fair market value of €1,426 at the time of issuance. The purchase
  price exceeded the fair value of the net tangible assets acquired by €1,510.
  The excess was allocated to goodwill and is being amortized over 5 years until
  effective date of Statement No. 142 on January 1, 2002.



On July 31, 2000, the Company acquired all of the issued and outstanding stock of EBCS (Languages Virtuels), a French company specializing in multimedia web-streaming and rich media on the Internet, for 155,500 ordinary shares of Genesys S.A. with a fair market  value of €6,709 at the time of issuance. The purchase price exceeded the fair value of the net tangible assets acquired by €6,587. The excess was allocated to goodwill and is being amortized over 5 years until effective date of Statement No. 142 on January 1, 2002.





F-15

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

On July 31, 2000, as part of the same business acquisition,
  the Company acquired all of the issued and outstanding stock of Axone, a company
  specializing in web events, for 150,000 ordinary shares of Genesys S.A. with
  a fair market value of €6,471 at the time of issuance. The purchase price
  exceeded the fair value of the net tangible assets acquired by €6,570.
  The excess was allocated to goodwill and is being amortized over 5 years until
  effective date of Statement No. 142 on January 1, 2002.

On July 31, 2000, the Company acquired the audio and
  video conferencing activities of Telcen, an Australian video conferencing company,
  for AUD 1,400 (€894) in cash. The purchase price exceeded the fair value
  of the net tangible assets acquired by €793. The excess was allocated to
  goodwill and is being amortized over 20 years until effective date of Statement
  No. 142 on January 1, 2002. Telcen activities were subsequently contributed
  to Genesys Conferencing Pty Ltd.

On September 20, 2000, the Company acquired all of
  the issued and outstanding stock of Telechoice Deutschland GmbH, a German
  company engaged in offering services and trading products in the area of telecommunications,
  and Eureka Global Teleconferencing Service GmbH, a German Company specializing
  in audio-, video- and data conferencing, for 124,597 ordinary shares of Genesys
  S.A. with a fair market value of €5,675 at the time of the purchase agreement,
  and €1,074 in cash. The purchase price exceeded the fair value of the net
  tangible assets acquired by €7,268. The excess was allocated to goodwill
  and is being amortized over 20 years until effective date of Statement No. 142
  on January 1, 2002. A contractual additional amount (€920) was recorded
  as goodwill in December 2000. On June 6, 2001, an €387 additional purchase
  price (including €38 for acquisition costs) was paid to former shareholders
  of Telechoice and Eureka. This amount is classified in goodwill and is amortized
  over 20 years until effective date of Statement No. 142 on January 1, 2002.

On January 1, 2001, Axone, Cote & Com, EBCS and Medlive merged into Mediactiv and was renamed to Genesys Open Media (GOM). GOMs activity consisted of event and managed services. At the end of 2001, Genesys Open Media was renamed to Genesys Conferencing  France, S.A.

On January 1, 2001, Telechoice Deutschland GmbH and Eureka Global Teleconferencing Service GmbH merged into Darome Teleconferencing GmbH.

On March 27, 2001, the Company completed the acquisition of Astound Inc., a web conferencing and web streaming company headquartered in Canada.

The total purchase price was €58,939 and consisted
  of:



| |  | €14,399 in cash paid
        immediately;
| | - | -----------------------------------------

| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | €4,000 in cash (named
        top up) paid on January 4, 2002, together with interests Libor
        USD 9 months + spread 2.75% thereon (€171);

| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 916,391 convertible notes,
        each with a principal amount of €28.79. Each note is convertible
        into one share of common stock, not later than March 27, 2011. The fair
        market value of these notes amounted to €26,383 at acquisition date;

| |   |                                     
| | - | ------------------------------------
| |  | €1,659 of acquisition
        costs;

| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | €1,561 for deferred
        compensation relating to 188,116 stock options;

| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | €10,766 for deferred
        tax relating to identifiable intangible assets.

The purchase price exceeded the fair value of the
  net tangible assets acquired by €60,463. Based on an independent report,
  this excess was allocated to:



| |  | technology for €30,351,
        classified in other intangibles and amortized over 4 years;
| | - | -------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | assembled workforce for
        €1,349, classified in other intangibles and amortized over 3 years
        until effective date of Statement No. 142 on January 1, 2002. In accordance
        with FAS 142, the unamortized balance of assembled workforce was reclassified
        to goodwill at January 1, 2002;

| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | goodwill for €28,763
        and amortized over 5 years until effective date of Statement No. 142 on
        January 1, 2002.

On April 25, 2001, the Company completed the acquisition of Vialog Corporation, an audio, video and data conferencing company listed on the American Stock Exchange (AMEX).





F-16

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The total purchase price was €123,511 and consisted
  of:



| |  | 3,446,969 shares of Genesys
        S.A. with a fair market value of €75,557 at the time of issuance.
        Vialog shareholders received ADSs for each Vialog share at an exchange
        ratio of 0.33515 Genesys share per Vialog share, resulting in approximately
        24.65% ownership of Genesys S.A. One Genesys ADS is equivalent to one-half
        Genesys common shares;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                     
| | - | ------------------------------------
| |  | €8,717 of acquisition
        costs;

| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | €8,648 for deferred
        compensation relating to 2,466,889 stock options;

| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | €30,589 for deferred
        tax relating to allocated purchase price.

The purchase price exceeded the fair value of the
  net tangible assets acquired by €204,091. Based on an independent report,
  this excess was allocated to:



| |  | customer list for retail
        conferencing for €81,551, classified in other intangibles and amortized
        over 10 years;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | customer list for wholesale
        conferencing for €4,245, classified in other intangibles and amortized
        over 5 years;

| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | assembled workforce for
        €5,250, classified in other intangibles and amortized over 4 years
        until effective date of Statement No. 142 on January 1, 2002. In accordance
        with FAS 142, the unamortized balance of assembled workforce was reclassified
        to goodwill at January 1, 2002;

| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | goodwill for €113,045
        and amortized over 20 years until effective date of Statement No. 142
        on January 1, 2002. In 2002, original goodwill was increased by :

| |  |   |                                                                                                                                                                                                                                                                         
| |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | U.S.$3,437 (or €3,940)
        due to accrued restructuring expenses associated with the closure of the
        Vialog Corporations call centers located in Bedford, Massachusetts
        and Montgomery, Alabama, as described in Note 13, Other long-term liability;

| |  |   |                                                                                                                                                                                  
| |  | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | U.S.$1,509 (or €1,730)
        due to some additional liabilities relating to future operating leases
        payment for call centers closed in 1998 and 1999 and stock-options.

Following the acquisition, Vialog Corporation was renamed to Genesys Conferencing of Massachusetts, Inc.

In May 2001, the Company registered a subsidiary in Italy, named Genesys Conferencing srl and held by Genesys S.A. for 95% and Genesys Conferencing Ltd (UK) for 5%.



|Note 5. Cash equivalents
|------------------------

The following is a summary of available-for-sale securities:



|                   |  | December 31, |        
|------------------ |  | ------------ | -------
|                   |  |              |        
|                   |  | 2000         |        
|Cash equivalents:  |  |              |        
|Money market funds |  |              | €3,096 
|Term deposits      |  |              | 39,062 
|                   |  |              |        
|                   |  |              | €42,158
|                   |  |              |        

At December 31, 2000, 2001 and 2002, there are no
  material unrealized holding gains on available-for-sale securities. Net realized
  gains from sales of available-for-sale securities were €1,960, €387
  and €32 in 2000, 2001 and 2002, respectively.



|Note 6. Property and equipment
|------------------------------

Property and equipment consist of the following:



|                                         |  | December
      31, |        
|---------------------------------------- |  | ------------------ | -------
|                                         |  |                    |        
|                                         |  | 2000               |        
|                                         |  |                    |        
|Telecommunications
        equipment     |  |                    | €23,522
|Software
        and systems             |  |                    | 5,916  
|Office
        and computer equipment    |  |                    | 5,997  
|Leasehold
        improvements           |  |                    | 2,128  
|Software
        development in progress |  |                    | 281    
|                                         |  |                    |        
|                                         |  |                    | 37,844 
|Less
        accumulated depreciation    |  |                    | (15,369
|                                         |  |                    |        
|                                         |  |                    | €22,475
|                                         |  |                    |        



F-17

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The Company leases certain of its equipment under
  capital leases. The cost of such equipment included in property and equipment
  was €1,649, €1,609 and €1,698 at December 31, 2000, 2001 and
  2002, respectively. Accumulated amortization of this equipment was €1,115,
  €1,033 and €1,209 at December 31, 2000, 2001 and 2002, respectively.

Software development in progress at December 31, 2001
  and 2,002 mainly consists of an integrated reservation and billing system (€2,776
  and €564, respectively) that was implemented in certain countries in 2002
  and, consequently, partly reclassified to software and systems. This system
  is expected to be implemented in all locations by the end of the third quarter
  of 2003.

Depreciation expense including equipment under capital
  leases was €7,474, €15,862 and €15,728 in 2000, 2001 and 2002,
  respectively.



|Note 7. Goodwill and other intangible assets
|--------------------------------------------

Goodwill and other intangible assets consist of the following:



|                                                                |  | December
      31, |         
|--------------------------------------------------------------- |  | ------------------ | --------
|                                                                |  |                    |         
|                                                                |  | 2000               |         
|                                                                |  |                    |         
|Goodwill                                                        |  |                    | €91,458 
|Customer
        lists                                          |  |                    | 16,383  
|Technology                                                      |  |                    |        
|Assembled
        workforce                                     |  |                    | 2,797   
|Costs
        incurred in connection with probable acquisitions |  |                    | 1,682   
|Others                                                          |  |                    | 44      
|                                                                |  |                    |         
|                                                                |  |                    | 112,364 
|Less
        accumulated amortization                           |  |                    | (12,106 
|Less
        impairment loss (see Note No. 3)                   |  |                    |        
|                                                                |  |                    |         
|                                                                |  |                    | €100,258
|                                                                |  |                    |         

The costs incurred during the year 2000 that relate
  to probable acquisitions pertained to the acquisition of Vialog and Astound,
  and were recorded as other intangible assets for €1,682 at December 31,
  2000. At the acquisition dates, the respective costs were reclassified to goodwill.



| | In accordance with Statement No. 142, assembled workforce was reclassified to goodwill on January 1, 2002.
| | ----------------------------------------------------------------------------------------------------------

Amortization expense were €7,015, €30,768
  and €13,888 in 2000, 2001 and 2002, respectively. The estimated amortization
  expense for the next 5 fiscal years is as follows:



|2003 |  |  | €10,459 | 
|---- |  |  | ------- | 
|2004 |  |  | 10,429  | 
|2005 |  |  | 10,219  | 
|2006 |  |  | 9,582   | 
|2007 |  |  | 9,168   | 

The changes in the carrying amount of goodwill and other intangibles from December 31, 2001 through December 31, 2002 are as follows:



|                                                                                     |  | December
      31, |         
|------------------------------------------------------------------------------------ |  | ------------------ | --------
|                                                                                     |  |                    |         
|                                                                                     |  | 2000               |         
|                                                                                     |  |                    |         
|Balances
        as of the beginning of the year                                     |  |                    | €69,820 
|Add:
        goodwill for current year acquisitions                                  |  |                    | 32,011  
|Less:
        amortization of goodwill & other intangibles                           |  |                    | (7,015  
|Less:
        impairment of goodwill & other intangibles                             |  |                    |        
|Adjustments
        of goodwill and other intangibles for previous year acquisitions |  |                    |        
|Impact
        of foreign currency fluctuations                                      |  |                    | 5,442   
|                                                                                     |  |                    |         
|Balances
        as of the end of the year                                           |  |                    | €100,258
|                                                                                     |  |                    |         



F-18

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|                                    
|------------------------------------
|Note 8. Short-term credit facilities

Borrowings under short-term facilities represent overdraft
  positions on the Companys bank accounts. Such borrowings bear interest
  at 4.3% at December 31, 2002. The short-term facilities provide for a maximum
  amount of borrowings of €5.1 million, including €3.4 million utilized
  as bank overdraft as of December 31, 2002. The weighted average interest rate
  for the Company under such facilities was 6.1% for 2000, 7.1% for 2001 and 4.3%
  for 2002.



|Note 9. Long-term debt
|----------------------

Long-term debt consists of the following:



|                                                                                                                |  | December
      31, |        
|--------------------------------------------------------------------------------------------------------------- |  | ------------------ | -------
|                                                                                                                |  |                    |        
|                                                                                                                |  | 2000               |        
|                                                                                                                |  |                    |        
|Term
        loans, variable rate                                                                               |  |                    | €38,601
|Term
        loans, fixed rate                                                                                  |  |                    |       
|Revolving
        loans, variable rate                                                                          |  |                    |       
|3%
        Convertible notes, net of unamortized discount of €659 in 2000, €469
        in 2001and €297 in 2002 |  |                    | 11,326 
|British
        Pound (GBP) denominated loan                                                                    |  |                    | 642    
|Interest
        free loan from ANVAR                                                                           |  |                    | 254    
|Capital
        lease obligations                                                                               |  |                    | 885    
|                                                                                                                |  |                    |        
|Total
        long-term debt                                                                                    |  |                    | 51,708 
|Less
        current portion (see below for 2002)                                                               |  |                    | (7,285 
|                                                                                                                |  |                    |        
|Long-term
        debt, less current portion                                                                    |  |                    | €44,423
|                                                                                                                |  |                    |        

|                 
|-----------------
|Future repayments

The breakdown of financial indebtedness by principal
  repayment date set forth in the table below does not take into account the amendment
  of the U.S.$125 million credit facility signed on April 30, 2003 that modifies
  the repayment schedule, with the exception of a postponement of U.S.$16.0 million
  (€15.3 million) of principal payments definitively rescheduled from 2003
  to 2004. The remainder of the rescheduling, as well as the rescheduling of principal
  under the Company’s 3% convertible notes, is subject to certain conditions,
  as described under Financial Restructuring below.

As of December 31, 2002, future repayments of long-term debt, excluding capital lease obligations, are as follows:



|2003                        |  | €16,400  | 
|--------------------------- |  | -------- | 
|2004                        |  | 25,070   | 
|2005                        |  | 27,356   | 
|2006                        |  | 52,482   | 
|2007                        |  |         | 
|2008                        |  |         | 
|2009
        and thereafter |  |         | 
|                            |  |          | 
|Total                       |  | €121,308 | 
|                            |  |          | 

According to the amendment signed
  on April 30, 2003, which is subject to certain conditions, as described under
  Financial Restructuring below, the amended principal payment schedule
  on an annual basis compared to the prior maturity schedule is as follows:



F-19

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)





|      |  | Original repayments         |       | Repaymentsaccording toamendment signedon April 30, 2003 |   | Difference
      in
      repayments |  | Difference
      in
      repayments |      
|----- |  | --------------------------- | ----- | ------------------------------------------------------- | - | ------------------------------------ |  | ------------------------------------ | -----
|      |  | in millions of U.S. dollars |       |                                                         |   |                                      |  | in
      millions of euros           |      
|2003  |  | $                           | 17.0  |                                                         | $ | 1.0                                  |  | $                                    | (16.0
|2004  |  |                             | 22.0  |                                                         | $ | 18.0                                 |  |                                      | (4.0 
|2005  |  |                             | 24.0  |                                                         | $ | 22.0                                 |  |                                      | (2.0 
|2006  |  |                             | 55.0  |                                                         | $ | 30.0                                 |  |                                      | (25.0
|2007  |  |                             |      |                                                         | $ | 23,5                                 |  |                                      | 23.5 
|2008  |  |                             |      |                                                         | $ | 23,5                                 |  | $                                    | 23.5 
|      |  |                             |       |                                                         |   |                                      |  |                                      |      
|Total |  | $                           | 118.0 |                                                         | $ | 118.0                                |  |                                      |     
|      |  |                             |       |                                                         |   |                                      |  |                                      |      

The following breakdown of financial indebtedness
  by principal repayment date does take into account the amendment of the US$125
  million credit facility agreement, which is subject to certain conditions, as
  described under Financial restructuring below.

As of December 31, 2002, future repayments of long-term debt, excluding capital lease obligations, would be as follows:



|2003                |  | € | 1,143    | 
|------------------- |  | - | -------- | 
|2004                |  |   | 25,676   | 
|2005                |  |   | 21,028   | 
|2006                |  |   | 28,643   | 
|2007                |  |   | 22,409   | 
|2008                |  |   | 22,409   | 
|2009 and thereafter |  |   |         | 
|                    |  |   |          | 
|Total               |  |   | €121,308 | 
|                    |  |   |          | 

As the postponement of U.S.$ 16.0 million (or €15.3
  million) of principal payments are definitively rescheduled from 2003 to 2004,
  this has been reflected in the reported short-term portion and long term portion
  of long-term debt reported in the consolidated balance sheet.



|U.S. dollar denominated credit facility
|---------------------------------------

On July 16, 1999, the Company entered into a new credit
  agreement (“Bridge Loan) in order to partially finance the acquisition
  of CAC. This agreement provided for a U.S. $35 million term loan (€34.3
  million), which bore interest at Libor 1 month plus 1.5% and was to be repaid
  in 6 semi-annual installments starting in September 2001. The loan contained
  certain affirmative and negative covenants. The shares of GCI and Genesys Conferencing
  Ltd. were pledged to secure this loan. The assets of Genesys S.A. were secured
  by its banks in the amount of €720 as collateral for the loan issued. The
  average interest rate for the loan was 7.8% in 2000 and 7.2% in 1999.

On August 11, 2000, the Company refinanced the Bridge Loan with a $35.0 million multi-currency term loan, which bore interest at Libor 1 month plus 2.0%. The other terms and conditions of the loan (repayment schedule, covenants, pledge and security) had not been  modified compared to the Bridge Loan. The average interest rate for the loan was 8.6% in 2000.

On April 20, 2001, the Company and Vialog entered into a U.S. $125 million credit facility agreement with BNP Paribas, CIBC World Markets and Fortis Bank. This credit facility, which was amended thereafter, replaced its then outstanding U.S. $35 million multi-currency  term loan and the long term debt of Vialog (U.S. $75 million senior notes payable) that existed prior to the acquisition of Vialog. Prior to the signature on April 30, 2003 of the amendment described under Financial Rest
ructuring below, the U.S. $125 million credit facility included  the following terms:



| |  | a U.S. $50 million senior term loan facility granted to Vialog, which was used by Vialog to refinance its existing debt. This facility matures on April 28, 2006 and bears interest at the rate of Libor USD plus a margin of 2.65% per annum.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a U.S. $30 million senior term loan facility granted to Vialog, which was used by Vialog to refinance its existing debt. This facility matured on October 31, 2006 and bears interest at the rate of Libor USD plus a margin of 3.15% per annum.



F-20

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

| |   |                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a U.S. $35 million senior term loan facility granted to its company, which the Company used to partially refinance its existing debt. This facility matured on April 28, 2006 and bears interest at the rate of Libor USD plus a margin of 2.65% per annum.

| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a U.S. $5 million revolving loan facility granted to Vialog, to be used by Vialog for working capital purposes. This facility bears interest at the rate of Libor USD plus a margin of 2.65% per annum.

| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a U.S. $5 million revolving loan facility granted to the Company, which the Company uses for working capital purposes. This facility bears interest at the rate of Libor USD plus a margin of 2.65% per annum.

Prior to the financial restructuring as described
  below, the U.S. $50 million and U.S. $35 million term loans granted to Vialog
  and the Company, respectively, were to be repaid in semi-annual installments
  in accordance with the schedule set forth in the credit facility agreement.
  The U.S. $30 million facility was to be repaid in one payment at maturity. All
  amounts borrowed are repayable at any time in whole or in part at the option
  of the borrower.



The U.S. $125 million credit facility requires us
  to comply with certain financial covenants, consisting of leverage, interest
  cover, and cash cover ratios. Prior to the April 30, 2003 amendment, the Company
  received a waiver from the Banks, which cured the non-compliance of certain
  financial covenants at December 31, 2002. Thereafter, those covenants were amended
  in connection with the financial restructuring. The Company is currently in
  compliance with all of the covenants, as amended (although our continued compliance
  depends on the conditions to the effectiveness of the April 30, 2003 amendment
  being satisfied). In addition, the credit facility places limits on its ability
  to make capital expenditures and prohibits its payment of dividends. The Company
  has pledged as security for its credit facility the shares of its principal
  subsidiaries, as well as the accounts receivable of its principal U.S. subsidiary.
  If its financial results do not reach the levels required by its debt covenants
  and the Company is unable to obtain a waiver from its lenders, its debt would
  be in default and subject to acceleration by its lenders.



|Bank Financing Restructuring
|----------------------------

|                                    
|------------------------------------
|Terms of the Financial Restructuring

On April 11, 2003, the Company reached an agreement in principle with its lenders under the $125 million credit facility, several of the holders of its 3% convertible bonds and certain of its shareholders (some of who are also bondholders) on a financial restructuring plan that  is designed to facilitate its continuing growth in the coming years. The agreement was negotiated under a procedure that involved the appointment by a French court of a mediator whose mandate was to facilitate the renegotiation process.



The financial restructuring is essentially comprised of:



| |  |  | various amendments to its April 2001 $125 million credit facility that would extend the maturity of the remaining principal through October 2008;
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  |   |                                                                                                    
| |  | - | ---------------------------------------------------------------------------------------------------
| |  |  | deferral of the maturity date for 50% of the principal of its outstanding 3% convertible bonds; and

| |  |   |                                                                        
| |  | - | -----------------------------------------------------------------------
| |  |  | a €6-8 million offering of rights to subscribe for its ordinary shares.

The various components of the financial restructuring plan, which are subject to several conditions precedent and subsequent (including receiving shareholder and bondholder approvals), are described in more detail below.



|Amendments to the April 2001 $125 Million Credit Facility
|---------------------------------------------------------

On April 30, 2003, the Company signed an amendment
  to the April 2001 $125 million credit facility with its main bank creditors.
  The amendment provides for the extension of the final maturity of the $118 million
  (€112.5 million) remaining principal amount under the credit facility
  from October 2006 to October 2008, and the rescheduling of principal repayments,
  in each case subject to the satisfaction of certain conditions subsequent, which
  are described below. A copy of this amendment is included under Item 19 as an
  Exhibit to this annual report.





F-21

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The amended principal payment schedule on an annual basis compared to the prior maturity schedule is as follows:



|Year |  | Amended Credit Facility |              | Prior Maturity Schedule |  
|---- |  | ----------------------- | ------------ | ----------------------- | -
|     | 
|     |  |                         |              |                         |  
|2003 |  | $                       | 1 million    |                         | $
|2004 |  | $                       | 18 million   |                         | $
|2005 |  | $                       | 22 million   |                         | $
|2006 |  | $                       | 30 million   |                         | $
|2007 |  | $                       | 23.5 million |                         |  
|2008 |  | $                       | 23.5 million |                         |  

Under the amendment, $7 million of principal would be payable on April 30, 2004 and $11 million of principal would be payable on October 31, 2004, with varying amounts of principal payable every six months thereafter until maturity. Interest will continue to be paid  according to the original schedule (i.e. semi-annually on April 30 and October 31), subject to an increase of up to 200 basis points commencing in 2006. The Company has also agreed to prepay the loan if its excess cash flows (excluding the proceeds of the proposed rights offering  described below) exceed certain levels.



The amendment permits the Company to raise at least
  $3 million by entering into a factoring arrangement for up to $6 million (or
  the equivalent in Euros) of customers receivables by waiving the negative pledge
  on up to $6 million (or the equivalent in Euros) of such receivables and otherwise
  permitting their sale or disposition. Certain other covenants have also been
  amended, including financial ratios.



The amendment provides that the deferral of principal payments originally due in 2003 is definitive, although if the conditions described below are not satisfied, those principal payments will become due on January 10, 2004. Except for that deferral, the amendment is subject  to the following conditions subsequent:



| |  |  | the Company must complete
        a rights offering, which must first be approved by its shareholders with
        gross proceeds of at least €6 million by August 31, 2003, and
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |   |                                                                                                                                                                                                                                                                                                                                                               
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | the Company must amend the
        terms of its 3% convertible bonds due September 1, 2004 by June 30,
        2003 to provide that 50% of the €18.37 of principal per bond will
        be repayable on the original maturity date, i.e. September 1, 2004 and
        the remaining 50% of principal per bond will be repayable on October 31,
        2005.

If the Company fails to meet the conditions subsequent,
  and if such conditions are not waived by its main bank creditors, then the original
  maturity schedule and the financial ratios and other covenants, as previously
  amended, will remain in effect with the exception of the deferral of $16 million
  in principal repayments originally due in 2003, as discussed above.



|Deferral of 50% of Principal Repayment for the 3% Convertible Bonds due 2004
|----------------------------------------------------------------------------

Under the financial restructuring plan, the Company
  will propose to holders of its 3% convertible bonds due 2004, that they approve
  the rescheduling of 50% of the principal repayment (all of which is currently
  due September 1, 2004). If the bondholders approve this extension of the maturity
  date, the Company will repay 50% of the outstanding principal (€8.4 million)
  as of December 31, 2002, net of unamortized discount of €0.3 million on
  September 1, 2004 and the remaining 50% of the outstanding principal on October
  31, 2005. A meeting of the bondholders to vote on such proposal is currently
  scheduled for May, 26, 2003. The majority is required to approve the proposal.



Partcom S.A. and certain of its affiliates and Pechel Industries S.A., who together hold approximately 42.6% of the outstanding 3% convertible bonds, have advised us that they currently intend to vote in favor of the proposal. Partcom S.A. is also a shareholder of the  Company and has made other undertakings in connection with the rights offering, as discussed below.



|Subscription Rights Offering
|----------------------------

The company has agreed to hold a shareholders meeting no later than June 30, 2003 to receive authorization for an equity rights offering to raise €8 million. In connection with this undertaking, the Company has called a shareholders meeting for May 28, 2003, at which the  Company will ask its shareholders for such authorization.



If authorized by its shareholders, and as required
  by the April 30, 2003 amendment to its April 2001 $125 million credit facility,
  the Company will seek to raise at least €6 million by way of a rights offering
  by August 31, 2003. The planned rights offering will permit all of its existing
  shareholders to subscribe for newly issued shares at a price expected to be
  approximately €2.20 per share.





F-22

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

Universal Capital Partners, holder of approximately 11.69% of the shares of the Company, and PartCom S.A. and certain of its affiliates, who together hold approximately 6% of the share capital, have agreed that they will exercise all of their rights and to subscribe for any  new shares that are not subscribed for by other shareholders provided that the subscription price does not exceed €2.20 per share. Under the agreement with those shareholders, the aggregate number of shares to be purchased by Universal Capital Partners, which will purchase 70% of the  shares, and PartCom S.A., which shall purchase 30% of the shares, will represent at least enough shares so that the Company raises at least €6 million from the rights offering. [Universal Capital Partners has provided its main bank creditors a guarantee in respect of its obligation to  purchase at least 70% of the shares necessary to ensure that the Company raises a total amount of €6 million in the rights offering].



The Company has agreed to use the proceeds of the rights offering, which the Company has agreed to deposit in an escrow account, to repay the principal of, or repurchase, its 3% convertible bonds due 2004.



|Reduction in Capital
|--------------------

To facilitate the rights offering described above, the Company will request that its shareholders approve a reduction in the nominal value of its ordinary shares to €1 per share at the May 28, 2003, shareholders meeting. The current nominal value is €5 per share. Under French  law, the Company cannot offer shares in the rights offering at a price that is less than the nominal value of those shares.



Universal Capital Partners, holder of approximately 11.69% of the shares of the Company, and PartCom S.A. and certain of its affiliates, who together hold approximately 6% of its share capital, have advised us that they currently intend to vote in favor of that proposal.



|Factoring Arrangement
|---------------------

The Company has agreed to use its best efforts to enter into a factoring arrangement to seek to raise at least $3 million (or the equivalent thereof in Euros) against up to $6 million (or the equivalent thereof in Euros) in customers receivables. Under the amendment to the $125  million credit agreement discussed above and included as an Exhibit under Item 19, the main bank creditors have waived the negative pledge on up to $6 million of customers receivables and the other prohibitions on sale under the credit facility to permit this factoring arrangement.



|Financial Restructuring Fees and Expenses
|-----------------------------------------

The Company has agreed to pay its main bank creditors a $ 295 thousand fee that represents 0.25% of the principal amount outstanding on the date of the preliminary agreement on December 31, 2004.



|Other long-term debt
|--------------------

On August 6, 1999, the Company issued 1,524,390 3% convertible notes, each with a principal amount of €18.37, for €16.40 each. Each note is convertible into one share of common stock, and unless converted, is due September 1, 2004 and might be modified in 2003 (see  Note 20, Subsequent events). The notes are callable at the Companys option. The original issuance discount of €3,003 is being amortized as additional interest expense over the life of the notes. 851,056 and 197,011 notes were converted into shares of common stock during the year  2000 and 2001, respectively. As a result, 476,323 were not converted at December 31, 2002.



A GBP 4.0 million (€5.8 million) denominated loan was entered into in 1997 in order to partially finance the acquisition of Darome Ltd. The loan bears interest at Libor plus 0.75%. The amount outstanding was repayable in equal quarterly installments through June 30, 2001.  The loan contained certain affirmative and negative covenants. The average interest rates for the GBP denominated loan were 6.7% and 2000, respectively.



On April 12, 2000, the Company entered into a credit
  agreement in order to partially finance the acquisition of the audio and video
  conferencing activities of Cable & Wireless Communications. This agreement
  provides for a GBP 3.3 million (€5.5 million) term loan, which bears interest
  at 8.3% (fixed rate). This loan was repaid on August 18, 2000.



On July 18, 2001, Genesys S.A. entered into a €762 revolving loan agreement, which bears interest at Euribor 3 months plus a margin of 0.50% (fixed rate). This loan was repaid on October 16, 2002.



The Company also entered into several other term loan agreements with various financial institutions. The average interest rate was 5.8% for 2000, 5.5% for 2001 and 4.0% for 2002. At December 31, 2002, these loans bear interest at an average interest rate of 3.7%. The loans  contain certain affirmative and negative covenants.





F-23

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The Company was granted an interest free loan for
  €406 by ANVAR (an agency of the French government) for a research program
  for the development of videoconferencing services. The loan became due as the
  Company stopped the program after the acquisition of VideoWeb Ltd. in Europe
  and CAC in the United States in 1999. The outstanding amount due for this loan
  at December 31, 2001 (€132) was repaid in 2002. During 2001, the Company
  was granted an additional interest free loan for €120 by ANVAR that relates
  to web conferencing and will be repaid between 2004 and 2006



|Note 10. Fair value of financial instruments
|--------------------------------------------

At December 31, 2000, 2001 and 2002, the carrying
  values of current financial instruments such as cash, accounts receivable and
  payable, other receivables, accrued liabilities and the current portion of long-term
  debt approximated their market values, based on the short-term maturities of
  these instruments. At December 31, 2000, 2001 and 2002, the fair values and
  carrying values of the long term portion of long-term debt obligations were:



|                                   |  | 2000             |         | 2001                 |  | 2002             | 
|---------------------------------- |  | ---------------- | ------- | -------------------- |  | ---------------- | 
|                                   |  |                  |         |                      |  |                  | 
|                                   |  | Fair
      value |         | Carrying
      Value |  | Fair
      value | 
|                                   |  |                  |         |                      |  |                  | 
|                                   |  |                  |         |                      |  |                  | 
|Long-term
        debt             |  |                  | €53,373 |                      |  | €44,423          | 
|Of
        which Convertible notes |  |                  | €24,680 |                      |  | €11,326          | 

The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues, or where quoted prices are not available, on the present value of future cash flows discounted at borrowing rates currently offered for debt with similar remaining  maturities.



|Note 11. Shareholders equity
|-----------------------------

|                   
|-------------------
|Astound acquisition

To finance the acquisition of Astound and after the
  approval at the Shareholders special meeting of the Company on March 23,
  2001, the Company exclusively for Geene, S.A.S. issued 1,103,200 convertible
  notes on March 27, 2001. 156,109 and 30,700 of the 1,103,200 notes were issued
  in exchange of future exercise of replacement options and special options, respectively.
  The 1,103,200 notes are convertible into ordinary shares. As a result, Astound
  shareholders will receive ordinary shares of the Company, immediately or later.
  The unit share price amounted to €28.79 split in nominal value for €5.00
  and unit additional paid-in-capital for €23.79. In 2001, 676,708 notes
  have been converted into shares including 3,144 notes for exercised replacement
  options and 7,860 notes for future exercise of replacement options and, consequently,
  ordinary shares increased by €3,384. In 2002, 113,340 notes have been converted
  into shares and, consequently, ordinary shares increased by €566. Ordinary
  shares to be issued represent the 137,347 convertible notes into shares at a
  unit price of €28.79, which have not been converted. In addition, 98,608
  replacement options and 30,700 special options have not yet been converted at
  December 31, 2002. In 2002, 46,497 replacement options have been forfeited following
  the end of employment with the Company of some bondholders.



The schedule below summarizes the movements of options and shares pertaining the acquisition of Astound:



|                                                                  |  | Issuance ofconvertiblenotes onMarch 27 |           | Convertednotes |  | Anticipatedconversion |  | Remainingconvertiblenotes atDec 31, 2001 |       | Convertednotes |  | Forfeitednotes |  | Remainingconvertiblenotes atDec 31, 2002 |        
|----------------------------------------------------------------- |  | -------------------------------------- | --------- | -------------- |  | --------------------- |  | ---------------------------------------- | ----- | -------------- |  | -------------- |  | ---------------------------------------- | -------
|                                                                  |  |                                        |           |                |  |                       |  |                                          |       |                |  |                |  |                                          |        
|Number of notes issued for future exercise of replacement options |  |                                        | 156,109   |                |  | 3,144                 |  |                                          | 7,860 |                |  | 145,105        |  |                                          |       
|Number of notes issued for future exercise of special options     |  |                                        | 30,700    |                |  |                      |  |                                          |      |                |  | 30,700         |  |                                          |       
|Number of other notes                                             |  |                                        | 916,391   |                |  | 665,704               |  |                                          |      |                |  | 250,687        |  |                                          | 113,340
|                                                                  |  |                                        |           |                |  |                       |  |                                          |       |                |  |                |  |                                          |        
|Total                                                             |  |                                        | 1,103,200 |                |  | 668,848               |  |                                          | 7,860 |                |  | €426,492       |  |                                          | 113,340
|                                                                  |  |                                        |           |                |  |                       |  |                                          |       |                |  |                |  |                                          |        

|Vialog acquisition
|------------------

To acquire Vialog Corporation and after the approval
  of the Shareholders special meeting of the Company and Vialog on March
  23, 2001, the Company issued 3,446,969 shares to Vialogs shareholders
  on April 25, 2001, in exchange for the 10,284,854 shares of Vialog common stock
  outstanding at the date of the merger. The issuance price amounted to €21.92
  split in nominal value for €5.00 and unit additional paid-in-capital for
  €16.92. As a result, the shareholders equity increased by €75,557.
  Vialog shareholders received Genesys American Depositary Shares (ADSs),
  which represents one-half of an ordinary share of the Company. The ADSs
  of the Company began trading on the Nasdaq Stock Market on April 26, 2001 (symbol:
  GNSY).





F-24

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The offering expenses amounting to €3,598 are classified in additional paid-in-capital, as part of the purchase accounting for the transaction.



In 2001, 261,110 stocks options of Genesys Conferencing, Inc. (formerly Vialog) were exercised. In accordance with the merger agreement, 87,510 ordinary shares of Genesys S.A. were issued in exchange of ordinary shares issued by Genesys Conferencing of Massachusetts,  using the final exchange ratio of 0.33515. As a result, ordinary shares and additional paid-in-capital increased by €438 and €1,183 respectively.



In 2002, 55,000 stocks options of Genesys Conferencing, Inc. (formerly Vialog) were exercised. In accordance with the merger agreement, 18,431 ordinary shares of Genesys S.A. were issued in exchange of ordinary shares issued by Genesys Conferencing of Massachusetts,  using the final exchange ratio of 0.33515. As a result, ordinary shares and additional paid-in-capital increased by €93 and €163 respectively.



|Other acquisitions
|------------------

On June 6, 2000, in connection with the acquisition of Mediactiv and Medlive, the Company issued 30,289 and 5,288 shares, respectively, at a price of €60.37 per share in exchange for shares of the acquired companies.



On July 31, 2000, in connection with the acquisition of Cote&Com, EBCS (Languages Virtuels) and Axone, the Company issued 31,044, 155,500 and 150,000 shares, respectively, at prices of €45.93, €43.14 and €43.14 per share, respectively, in exchange for shares of the  acquired companies.



On September 20, 2000, in connection with the acquisition
  of Telechoice Deutschland GmbH and Eureka Global Teleconferencing Service GmbH,
  the Company issued 124,597 shares at a price of €45.54 per share in exchange
  for shares of the acquired companies.



|Stock Options of Genesys S.A.
|-----------------------------

On May 4, 2001, 100 stock options of Genesys S.A.
  were exercised. As a result, ordinary shares and additional paid-in-capital
  increased by 500 euros and 1,032 euros, respectively.



On January 7, 2002, 7,098 stock options of Genesys
  S.A. were exercised. As a result, ordinary shares and additional paid-in-capital
  increased by €35 and €35, respectively.



|Public offerings
|----------------

On June 26, 2000, the Company closed an offering of 1,367,000 shares on the Nouveau Marché of Euronext Paris at a price of €39.82 per share. Each share carries an equity warrant issued at a price of €2.18; 2 warrants will allow the holder to purchase one of the Companys  ordinary shares at an exercise price of €54.00 up to the expiration date of June 27, 2003. The net proceeds of the offering were approximately €55.5 million.



After the approval of the Shareholders special
  meeting of the Company on March 23, 2001, the Company sold 1,520,380 ordinary
  shares on the Nouveau Marché of Euronext Paris at a price of €14.7
  (nominal value of €5.0 and unit additional paid-in-capital of €9.7)
  in October 2001. As a result, ordinary shares and additional paid-in-capital
  increased by €7,602 and €14,748 respectively. The expenses relating
  to this public offering (€1,402) were classified in additional paid-in-capital.



|Other movements
|---------------

On September 29, 2000, the share capital was converted
  from French Francs (FF) into euros. Consequently, the share capital was increased
  by €3,717 by withdrawal from additional paid-in capital and the par value
  of the shares was increased from €4.57 (FF30.00) to €5.00.



On April 25, 2001, 10 of the 1,367,000 equity warrants issued on June 26, 2000 were exercised for 270 euros. As a result, ordinary shares and additional paid-in-capital increased by 25 euros and 245 euros, respectively.



851,056 and 197,011 notes issued on August 6, 1999
  on Nouveau Marché of Euronext Paris were converted into shares
  in 2000 and 2001, respectively. As a result, ordinary shares increased by €4,161
  in 2000 and €985 in 2001. Additional paid-in-capital increased by €9,797
  in 2000 and €2,245 in 2001.





F-25

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Stock repurchase program
|------------------------

In September 2000, the Board of Directors approved
  the implementation of a share repurchase program whereby the Company may repurchase
  up to 683,088 of its ordinary shares. This plan which was valid for 18 months
  includes a limit value for purchase (not higher than 200 euros) and sale (not
  lower than 30 euros).



On June 28, 2002, the General Meeting authorized the Board of Directors to implement a new share repurchase program whereby the Company may repurchase up to 0.5% of its ordinary shares that amount to 15,409,933 at December 31, 2002.



At December 31, 2000, 2001 and 2002, the Company held
  2,905, 22,131 and 22,131 treasury shares, respectively, for a total cost of
  €149, €678 and €678, respectively. The net loss on disposed treasury
  shares (€73 in 2001) was classified in accumulated deficit.



|Preemptive subscription rights
|------------------------------

Shareholders have preemptive rights to subscribe on a pro rata basis for additional shares issued by the Company for cash. Shareholders may waive their preemptive subscription rights at an extraordinary general meeting of shareholders under certain circumstances.  Preemptive subscription rights, if not previously waived, are transferable during the subscription period relating to a particular offer of shares.



|Dividend rights
|---------------

The Company may distribute dividends out of its distributable profits, plus any amounts held in its reserve which the shareholders decide to make available for distribution, other than those reserves which are specifically required by law or its by-laws. Distributable profits  consist of its statutory net profits in each fiscal year, as increased or reduced by any profit or loss carried forward from prior years, less any contributions to the reserve accounts pursuant to law or its by-laws.



The Company must allocate five percent of its statutory
  net profit for each year to its legal reserve account before dividends may be
  paid with respect to that year. Such allocation must be made until the amount
  in the legal reserve is equal to 10 percent of the aggregate nominal value of
  the issued and outstanding share capital. This restriction on the payment of
  dividends also applies to each of the Companys French subsidiaries on
  a statutory basis. At December 31, 2000, 2001 and 2002, the Companys legal
  reserve was €125, €146 and €146, respectively. The legal reserve
  may be distributed to shareholders only upon liquidation of the Company.



|Note 12. Employee stock option plans
|------------------------------------

|                               
|-------------------------------
|1998, 1999 and 2000 Stock Plans

On September 23, 1998, the Board of Directors approved the 1998 Stock Plan
      (“the 1998 plan”) for grants of options for ordinary shares
      to directors, officers and key employees. A total of 412,890 shares are
      authorized for issuance under the 1998 plan. Stock options under the 1998
      plan are granted at prices equivalent to the price of the initial public
      offering on October 1, 1998. Under the terms of the 1998 plan, the options
      give the right to purchase one share per option. The options generally vest
      at a rate of 20% by the first year anniversary (“bracket A”),
      50% by the third year anniversary (“bracket B”) and the final
      30% by the fourth year anniversary (“bracket C”). Shares acquired
      upon the exercise of stock options must be held for 3 years for bracket
      A options and 2 years for bracket B and bracket C options. The options expire
      eight years after the date of grant. Ordinary shares attributable to awards,
      which have expired, terminated or been canceled or forfeited, are available
      for issuance or use in connection with future awards.
  On September 15, 1999, the Board of Directors approved the 1999 Stock Plan
      (“the 1999 plan”) for grants of options for ordinary shares
      to directors, officers and key employees. A total of 301,483 shares are
      authorized for issuance under the 1999 plan. Stock options under the 1999
      plan are granted at prices equivalent to the average market value of the
      Company’s ordinary shares calculated over the 20 trading sessions
      prior to the date of grant. The other terms of the 1999 plan are identical
      to the 1998 plan.
  On September 8, 2000, the Board of Directors of the Company approved the
      2000 Stock Plan (“the 2000 plan”) pursuant to the authorization
      given by the shareholders’ meeting held on June 6, 2000. A total of
      550,000 shares are authorized for issuance under the 2000 plan. Stock options
      under the 2000 plan are granted at prices equivalent to the average market
      value of the Company’s ordinary shares calculated over the 20 trading
      sessions prior to the date of grant. Under the terms of the 2000 plan, the
      options give the right to purchase one share per option. The options generally
      vest at a rate of 20% by the first year anniversary (“bracket A”),
      50% by the third year anniversary (“bracket B”) and the final
      30% by the fourth year anniversary (“bracket C”). Shares acquired
      upon the exercise of stock options must be held for 3 years for bracket
      A options and 2 years for bracket B and bracket C options. Options expire
      eight years after the date of grant.



F-26

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

Ordinary shares attributable to awards, which have expired, terminated
      or been canceled or forfeited, are available for issuance or use in connection
      with future awards.
  On September 8, 2000, the Board of Directors amended these three stock
      option plans with respect to the change of control clause that stipulates
      that if an individual shareholder or a group of shareholders (acting together)
      acquires more than 25% of the Company’s shares, the vesting of options
      can be accelerated, at the discretion of the Board for certain identified
      employees of the Company.
  On September 26, 2001, for these three plans, the
    minimal period before selling shares acquired upon the exercise of stock options
    for non-French residents or non-signers of a work contract according to the
    French Law was changed. These option holders can now sell their shares upon
    exercise.
  2001 Stock Plan
  On September 26, 2001, the Board of Directors of the Company approved the
      2001 Stock Plan (“the 2001 plan”) pursuant to the authorization
      given by the shareholders’ meeting held on June 26, 2001. A total
      of 550,000 shares are authorized for issuance under the 2001 plan. This
      plan is divided into two parts.
  The first part of the 2001 plan relates to French residents or signers
      of a work contract according to French Law. Stock options under this part
      are granted at prices equivalent to the average market value of the Company’s
      ordinary shares calculated over the 20 trading sessions prior to the date
      of grant. Under the terms of this part of the 2001 plan, the options give
      the right to purchase one share per option. The options generally vest at
      a rate of 20% by the first year anniversary (“bracket A”), 50%
      by the third year anniversary (“bracket B”) and the final 30%
      by the fourth year anniversary (“bracket C”). Shares acquired
      upon the exercise of stock options must be held for 3 years for bracket
      A options and 2 years for bracket B and bracket C options. Options expire
      eight years after the date of grant. Ordinary shares attributable to awards,
      which have expired, terminated or been canceled or forfeited, are available
      for issuance or use in connection with future awards.
  The second part of the 2001 plan relates to non-French residents or non-signers
      of a work contract according to the French Law. Stock options under this
      part are granted at prices equivalent to the average market value of the
      Company’s ordinary shares calculated over the 20 trading sessions
      prior to the date of grant. The options are exercised on the Nasdaq Stock
      Market only. Under the terms of this part of the 2001 plan, the options
      give the right to purchase 2 ADS’s per option. If on the effective
      date of the exercise of a vested option, the grantee is a restricted participant,
      such grantee shall receive one ordinary share instead of 2 ADS’s.
      The options vest at rate of 10% upon the first year anniversary and an additional
      7,5% for each quarter thereafter, until fully vested. Options can be exercised
      immediately upon vesting and there are no holding restrictions on the underlying
      ADS’s (or ordinary shares for restricted participant). Options expire
      eight years after the date of grant. ADS’s (or ordinary shares for
      restricted participant) attributable to awards which have expired, terminated
      or been canceled or forfeited are available for issuance or use in connection
      with future awards.
  In December 2002, 1,045,511 options of plans described above were cancelled
      after acceptance of grantees and 64,570 options were forfeited after the
      grantees’ leave from the Company. In addition to remaining authorized
      but not yet granted options, these cancelled and forfeited options could
      be granted until their expiration date.
  Stock option activity under the 1998, 1999, 2000 and 2001 plans was as
      follows:
  Shares
          availablefor grant
      
      Optionsoutstanding
      
      WeightedaverageexercisepriceBalance as of January 1,
        2000
      50,000
      
      593,394
      
      12.20Authorized
      550,000
      
      
      
      Granted
      (335,500
      )
      335,500
      
      51.04Canceled
      37,542
      
      (37,542
      )
      11.21Balance as of December 31,
        2000
      302,042
      
      891,352
      
      26.86Authorized
      550,000
      
      
      
      Granted
      (694,358
      )
      694,358
      
      21.15Exercised
      
      
      (100
      )
      15.32Canceled
      24,650
      
      (24,650
      )
      37.97Balance as of December 31,
        2001
      182,334
      
      1,560,960
      
      23.32Granted
      (161,000
      )
      161,000
      
      13.98Exercised
      
      
      (7,098
      )
      9.99Forfeited
      102,750
      
      (110,820
      )
      28.67Canceled
      1,041,511
      
      (1,041,511
      )
      21.64Balance as of December 31,
        2002
      1,165,595
      
      562,531
      
      22.47



F-27

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The following table summarizes the status of stock
    options outstanding and exercisable at December 31, 2002:
  Options
        outstandingRange of exercise price
      
      Numberoutstanding
      
      Weighted-averageremainingcontractual life(in years)
      
      Numberexercisable€9.91  €12.97
      
      90,839
      
      4.0
      
      60,839€15.32  € 15.86
      
      259,834
      
      4.6
      
      120,553€22.09  €25.02
      
      121,858
      
      5.4
      
      24,371€50.42  €53.47
      
      90,000
      
      4.5
      
      18,000562,531
      
      4.6
      
      223,763Stock plan at Genesys Conferencing, Inc. (formerly Vialog
    Corporation)
  In accordance to the merger agreement, Vialog stock options remain outstanding
      after the acquisition by Genesys S.A., on the same terms and conditions,
      except that, upon exercise the holder receives a right to receive Genesys
      ADSs for Vialog common stock based on the same exchange ratio used in connection
      with the merger.
  On February 14, 1996 and April 29, 1999, Vialog’s Board of Directors
      approved the 1996 and 1999 Vialog Stock Plan, respectively. The maximum
      number of shares of Vialog’s common stock that may subject to outstanding
      awards may have not exceeded 3,250,000 shares and 1,500,000 shares as of
      December 31, 2001 for the 1996 and 1999 Vialog’s Stock Plans, respectively.
      Shares of common stock attributable to awards, which have expired, terminated
      or been canceled or forfeited are available for issuance or use in connection
      with future awards. The 1996 and 1999 Vialog Stock Plans will remain in
      effect until February 14, 2006 and April 29, 2009, respectively, unless
      terminated earlier by the Vialog’s Board of Directors.
  Stock option activity under the 1996 and 1999 Vialog Stock Plans was as
      follows:
  Number ofoptionsavailablefor grant
      
      Number ofoutstandingVialog stockoptions
      
      Equivalentnumber ofGenesysordinary shares
      
      Equivalentweightedaverage exerciseprice of Genesysordinary shareBalance as of April 25,
        2001
      881,659
      
      2,385,362
      
      799,454
      
      19.43Exercised
      
      
      (261,110
      )
      (87,510
      )
      12.43Canceled
      78,406
      
      (78,406
      )
      (26,279
      )
      19.68Balance as of December 31,
        2001
      960,065
      
      2,045,846
      
      685,665
      
      20.65Exercised
      
      
      (55,000
      )
      (18,433
      )
      11.21Forfeited
      1,202,556
      
      (1,202,556
      )
      (403,037
      )
      19.45Balance as of December 31,
        2002
      2,162,621
      
      788,290
      
      264,195
      
      17.06The following table summarizes the status of stock
    options outstanding and exercisable at December 31, 2002:
  Options
          outstandingRange of equivalent exercise price
      
      Equivalentoutstanding numberof Genesysordinary shares
      
      Weighted-averageremainingcontractual life(in years)
      
      Equivalentexercisable numberof Genesysordinary shares€6.26  €14.49
      
      121,492
      
      5.1
      
      121,352€15.65  €21.90
      
      68,625
      
      5.7
      
      68,625€25.03
      
      15,836
      
      5.1
      
      15,836€31.29  €32.86
      
      58,242
      
      6.6
      
      41,565264,195
      
      5.6
      
      247,565



F-28

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Note 13. Other long-term
        liabilities
|--------------------------------------------

Other long-term liabilities consists of the following:



|                                                                      |  | December
      31, |  
|--------------------------------------------------------------------- |  | ------------------ | -
|                                                                      |  |                    |  
|                                                                      |  | 2000               |  
|                                                                      |  |                    |  
|Accrued
        restructuring expenses (Unites States, 2002 plan)     |  |                    | 
|Accrued
        restructuring expenses (United States, 1998-99 plans) |  |                    | 
|Accrued
        restructuring expenses (Germany)                      |  |                    | 
|Accrued
        severance and related litigation                      |  |                    | 
|Fair
        value of interest-rate swap                              |  |                    | 
|Deferred
        rent                                                 |  |                    | 
|Others                                                                |  |                    | 
|                                                                      |  |                    |  
|Total
        other long-term liabilities                             |  |                    | 
|Less
        current portion of accrued restructuring expenses        |  |                    | 
|                                                                      |  |                    |  
|Other
        long-term liabilities, less current portion             |  |                    | 
|                                                                      |  |                    |  

|                                                   
|---------------------------------------------------
|Consolidation of North America call centers in 2002

On February 6, 2002, the Company announced plans to
  consolidate its call center operations in North America from six call centers
  to three call centers to provide higher levels of customer service and improve
  operating efficiencies. On November 4, 2002, the Company announced the second
  part of its consolidation plan with the closure of a fourth call center in North
  America. On April 24, 2003, the Company confirmed that the North America consolidation
  of call centers was completed during the fourth quarter 2002.



The two remaining call centers have absorbed the current
  volume previously generated by the call centers that were closed and have the
  capacity to provide for future growth. The restructuring costs related to these
  closings amounted to €7.7 million and are primarily for unusable future
  facility lease commitments, the write-off of certain leasehold improvements
  and equipment, employee severance for approximately 200 people as well as other
  miscellaneous costs associated with the call center consolidation. Components
  of these costs by closed call center are presented in the table below:



|Date of announcement:                                        |  | On February 6, 2002 |        | On November 14, 2002 |  |            |  |          
|------------------------------------------------------------ |  | ------------------- | ------ | -------------------- |  | ---------- |  | ---------
|                                                             |  |                     |        |                      |  |            |  |          
|                                                             |  | Bedford             |        | Denver               |  | Montgomery |  | Sub total
|                                                             |  |                     |        |                      |  |            |  |          
|Write-offs
        of property, plant and equipment          |  |                     | €218   |                      |  | €2,099     |  |          
|Future lease payments under non cancelable operating leases. |  |                     | 912    |                      |  | 1,185      |  |          
|Severance
        and other people related expenses          |  |                     | 117    |                      |  | 327        |  |          
|Other
        related expenses                               |  |                     | 25     |                      |  | 60         |  |          
|                                                             |  |                     |        |                      |  |            |  |          
|Total                                                        |  |                     | €1,272 |                      |  | €3,671     |  |          
|                                                             |  |                     |        |                      |  |            |  |          

Of the €7.7 million accrued restructuring costs,
  €3.8 million was recorded as a non-recurring restructuring charge and €3.9
  million was recorded as an increase to goodwill arising from the acquisition
  of Vialog.



On March 20, 2002, the Companys Bedford, Massachusetts call center was closed and all traffic formerly generated in Bedford has been re-routed to the Companys Reston, Virginia call center. Actual costs incurred for the Bedford closing compared to the costs accrued  through December 31, 2002 are presented in the table below:



|                                                                                  |  | Costsaccrued |        | Currencytranslationadjustment |  | Incurred in2002 |   | Balance atDecember 31,2002 |      
|--------------------------------------------------------------------------------- |  | ------------ | ------ | ----------------------------- |  | --------------- | - | -------------------------- | -----
|                                                                                  |  |              |        |                               |  |                 |   |                            |      
|Write-offs
        of leasehold improvements, equipment and other tangible assets |  |              | €218   |                               |  | €(31            | ) |                            | €(110
|Future
        lease payments under non cancelable operating leases               |  |              | 912    |                               |  | (144            | ) |                            | (114 
|Severance
        and other people related expenses                               |  |              | 117    |                               |  | (15             | ) |                            | (102 
|Other
        related expenses                                                    |  |              | 25     |                               |  | (3              | ) |                            | (22  
|                                                                                  |  |              |        |                               |  |                 |   |                            |      
|Total                                                                             |  |              | €1,272 |                               |  | €(193           | ) |                            | €(348
|                                                                                  |  |              |        |                               |  |                 |   |                            |      



F-29

---





Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

On June 30, 2002, the Companys Denver, Colorado call center was closed and all traffic formerly generated in Denver has been re-routed to the Companys other call centers. Actual costs incurred for the Denver closing compared to the costs accrued through December 31,  2002 are presented in the table below:



|                                                                                  |  | Costsaccrued |        | Currencytranslationadjustment |  | Incurred in2002 |   | Reversals |         | Balance atDecember 31,2002 | 
|--------------------------------------------------------------------------------- |  | ------------ | ------ | ----------------------------- |  | --------------- | - | --------- | ------- | -------------------------- | 
|                                                                                  |  |              |        |                               |  |                 |   |           |         |                            | 
|Write-offs
        of leasehold improvements, equipment and other tangible assets |  |              | €2,099 |                               |  | €(208           | ) |           | €(1,032 | )                          | 
|Future
        lease payments under non cancelable operating leases               |  |              | 1,185  |                               |  | (151            | ) |           |        |                            | 
|Severance
        and other people related expenses                               |  |              | 327    |                               |  | (20             | ) |           | (307    | )                          | 
|Other
        related expenses                                                    |  |              | 60     |                               |  | (9              | ) |           | (25     | )                          | 
|                                                                                  |  |              |        |                               |  |                 |   |           |         |                            | 
|Total                                                                             |  |              | €3,671 |                               |  | €(389           | ) |           | €(1,364 | )                          | 
|                                                                                  |  |              |        |                               |  |                 |   |           |         |                            | 

In early October, 2002, the Companys Montgomery,
  Alabama call center was closed and all traffic formerly generated in Montgomery
  has been re-routed to the Companys other call centers. Actual costs incurred
  for the Montgomery closing compared to the costs accrued through December 31,
  2002 are presented in the table below:



|                                                                                  |  | Costsaccrued |        | Currencytranslationadjustment |  | Incurred in2002 |   | Balance atDecember 31,2002 |        
|--------------------------------------------------------------------------------- |  | ------------ | ------ | ----------------------------- |  | --------------- | - | -------------------------- | -------
|                                                                                  |  |              |        |                               |  |                 |   |                            |        
|Write-offs
        of leasehold improvements, equipment and other tangible assets |  |              | €1,059 |                               |  | €(84            | ) |                            | €(809  
|Future
        lease payments under non cancelable operating leases               |  |              | 1,092  |                               |  | (175            | ) |                            | (100   
|Severance
        and other people related expenses                               |  |              | 411    |                               |  | (46             | ) |                            | (361   
|Other
        related expenses                                                    |  |              | 105    |                               |  | (9              | ) |                            | (77    
|                                                                                  |  |              |        |                               |  |                 |   |                            |        
|Total                                                                             |  |              | €2,667 |                               |  | €(314           | ) |                            | €(1,347
|                                                                                  |  |              |        |                               |  |                 |   |                            |        

On December 31, 2002, the Companys Honolulu,
  Hawaii call center was closed and all traffic formerly generated in Honolulu
  has been re-routed to the Companys other call centers. Actual costs incurred
  for the Honolulu closing compared to the costs accrued through December 31,
  2002 are presented in the table below:



|                                                                                  |  | Costsaccrued |        | Currencytranslationadjustment |  | Incurred in2002 |   | Balance atDecember 31,2002 |     
|--------------------------------------------------------------------------------- |  | ------------ | ------ | ----------------------------- |  | --------------- | - | -------------------------- | ----
|                                                                                  |  |              |        |                               |  |                 |   |                            |     
|Write-offs
        of leasehold improvements, equipment and other tangible assets |  |              | €199   |                               |  | €(9             | ) |                            |    
|Future
        lease payments under non cancelable operating leases               |  |              | 968    |                               |  | (45             | ) |                            |    
|Severance
        and other people related expenses                               |  |              | 437    |                               |  | (19             | ) |                            | (67 
|Other
        related expenses                                                    |  |              | 25     |                               |  | (1              | ) |                            |    
|                                                                                  |  |              |        |                               |  |                 |   |                            |     
|Total                                                                             |  |              | €1,629 |                               |  | €(74            | ) |                            | €(67
|                                                                                  |  |              |        |                               |  |                 |   |                            |     

Other costs relating to the consolidation of call
  centers were recorded as expenses as incurred during the year ended December
  31, 2002, in accordance with generally accepted accounting principles. These
  costs include retention bonuses for €339 and duplicative costs in closing
  the affected call centers for €750.



The company estimates that future annual cost savings
  from the consolidation will range from €6.5 to €7.0 million beginning
  2003. This annual cost saving is expected to have a positive impact on gross
  margin, and to reduce selling and marketing and general and administrative expenses.



|Consolidation of North America call centers in 1998-99
|------------------------------------------------------

Following a detailed review of accrued restructuring
  expenses relating to consolidation of call centers performed by Vialog Corporation
  (merged with Genesys Conferencing Inc on January 1, 2002) in 1998-99, an additional
  future rental charge of €1,144 representing an updated estimate of unrecoverable
  future payment under non cancelable operating leases was recorded in 2002. Consequently,
  goodwill from Vialog acquisition increased by €1,144 as well.





F-30

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Closing of the Frankfurt,
        Germany call center
|-----------------------------------------------------

To provide higher levels of customer service and improve
  operating efficiencies, the call center of Roedermark, Germany was closed in
  October of 2002 and all traffic formerly generated in Frankfurt has been re-routed
  to the Companys other European call center, located in the United Kingdom.



|Fair value of interest rate swap
|--------------------------------

The fair value of the swap agreement and changes in
  the fair value as a result of changes in market interest rates are recognized
  as comprehensive income or loss. As a result, the comprehensive loss for this
  interest rate swap agreement amounted to €1,839 at December 31, 2002, compared
  to €2,249 at December 31, 2001 (see Note 15, Commitments and contingencies).



|Note 14. Income taxes
|---------------------

The components of the income tax expense (benefit) provision are as follows:



|                                          |  | Years
      ended December 31, |       
|----------------------------------------- |  | ------------------------------ | ------
|                                          |  |                                |       
|                                          |  | 2000                           |       
|                                          |  |                                |       
|Current:                                  |  |                                | €3,326
|
        Domestic                        |  |                                | 1,152 
|
        Foreign                         |  |                                | 2,174 
|Deferred:                                 |  |                                | 263   
|
        Domestic                        |  |                                | (14   
|
        Foreign                         |  |                                | 277   
|                                          |  |                                |       
|Net
        income tax provision (credit) |  |                                | €3,589
|                                          |  |                                |       

The provision for income taxes differs from the computed expected income tax benefit using the French statutory tax rate of 38%, 36% and 35% in 2000, 2001 and 2002, respectively, for the following reasons:



|                                                                                                    |  | December
      31, |        
|--------------------------------------------------------------------------------------------------- |  | ------------------ | -------
|                                                                                                    |  |                    |        
|                                                                                                    |  | 2000               |        
|                                                                                                    |  |                    |        
|Loss
        before taxes                                                                           |  |                    | €(2,383
|French
        statutory tax rate                                                                   |  |                    | 37.76  
|Income
        tax benefit at statutory rate                                                        |  |                    | €(900  
|Increase
        (reduction) in taxes resulting from                                                |  |                    |        
|Foreign
        income tax rates different from the French statutory tax rate                       |  |                    | (192   
|Amortization
        of non-deductible goodwill and other intangibles                               |  |                    | 1,422  
|Non
        deductible impairment on goodwill and identifiable intangible assets                    |  |                    |       
|Valuation
        allowance on deferred tax assets                                                  |  |                    | 1,753  
|Public
        offering expenses                                                                    |  |                    |       
|Tax
        on acquisitions costs of companies classified in goodwill and intangible
        assets |  |                    | 1,174  
|Deferred
        tax due to amortization and impairment of identifiable intangible assets           |  |                    |       
|Others                                                                                              |  |                    | 332    
|                                                                                                    |  |                    |        
|Reported
        current and deferred income tax provision                                          |  |                    | €3,589 
|                                                                                                    |  |                    |        



F-31

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The consolidated net deferred tax asset consists of the following:



|                                              |  | December
      31, |       
|--------------------------------------------- |  | ------------------ | ------
|                                              |  |                    |       
|                                              |  | 2000               |       
|                                              |  |                    |       
|Total
        deferred tax liability          |  |                    | €(400 
|Net
        operating losses carried forward: |  |                    |       
|France                                        |  |                    | 905   
|Belgium                                       |  |                    | 221   
|Germany                                       |  |                    | 796   
|Italy                                         |  |                    |      
|Canada                                        |  |                    |      
|United
        States                         |  |                    | 573   
|Singapore                                     |  |                    | 353   
|Australia                                     |  |                    | 30    
|Hong
        Kong                             |  |                    | 58    
|                                              |  |                    |       
|Total                                         |  |                    | 2,936 
|Others                                        |  |                    | 2,587 
|                                              |  |                    |       
|Total
        deferred tax assets             |  |                    | 5,523 
|                                              |  |                    |       
|Valuation
        allowance                   |  |                    | (5,242
|                                              |  |                    |       
|Total
        deferred tax assets, net        |  |                    | 281   
|                                              |  |                    |       
|Deferred
        taxes, net                   |  |                    | €(119 
|                                              |  |                    |       



The use of a portion of the net operating losses carried forward of United States and Canada could be limited because of the ownership change that occurred upon acquisition of Vialog in April 2001, Astound in March 31, 2001 and, to a lesser extent, in Germany in September  2000.



The deferred tax liability at December 31, 2002 mainly relates to the acquisition of identifiable intangible assets from technology of Astound and customer lists of Vialog. Such liability will be written off at the same rate as the amortization of the related identifiable intangible  assets. This liability could be also reduced by future additional impairment of related identifiable intangible assets.



The Company has recorded a valuation allowance against deferred tax assets generated in France, Germany, Canada, United States, Australia, Singapore and Hong Kong for all periods presented herein, due to the uncertainty of realization through future operations. The  valuation allowance will be reduced at such time as management believes it is more likely than not that the deferred tax assets will be realized. Any reductions in the valuation allowance will reduce future provisions for income tax expense.



The breakdown per expiration date of net operating losses carried forward is as follows

|2003                      |  |  | €3,694   | 
|------------------------- |  |  | -------- | 
|2004                      |  |  | 1,854    | 
|2005                      |  |  | 1,971    | 
|2006                      |  |  | 8,601    | 
|2007                      |  |  | 21,193   | 
|2008                      |  |  | 1,991    | 
|2009                      |  |  | 2,637    | 
|2018-2023 (United States) |  |  | 102,193  | 
|No expiration date        |  |  | 11,212   | 
|                          |  |  |          | 
|Total                     |  |  | €155,346 | 
|                          |  |  |          | 

|                                      
|--------------------------------------
|Note 15. Commitments and contingencies

|               
|---------------
|Lease contracts

The Company leases its facilities under long-term
  operating lease agreements expiring on various dates through November 2011.
  The Company also leases equipment (mainly teleconferencing bridges) under long-term
  operating leases expiring on various dates through December 2006. The rent expenses
  for long-term operating leases amounted to €2,783, €7,464 and €10,198
  in 2000, 2001 and 2002, respectively.



As of December 31, 2002, aggregate minimum lease payments under non cancelable operating leases and commitments were as follows:



|2003       |  |  | 8,723   | 
|---------- |  |  | ------- | 
|2004       |  |  | 6,748   | 
|2005       |  |  | 4,083   | 
|2006       |  |  | 2,259   | 
|2007       |  |  | 1,853   | 
|Thereafter |  |  | 1,609   | 
|           |  |  |         | 
|Total      |  |  | €25,275 | 
|           |  |  |         | 

The Company also leases equipment and cars through capital leases contracts, which expire at various dates through 2005.





F-32

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The amounts of future minimum lease payments, excluding interest, under those contracts are as follows:



|2003                                           |  |  | €207 |  
|---------------------------------------------- |  |  | ---- | -
|2004                                           |  |  | 58   |  
|2005                                           |  |  | 28   |  
|2006                                           |  |  | 28   |  
|Thereafter                                     |  |  | 42   |  
|                                               |  |  |      |  
|                                               |  |  | 363  |  
|Less imputed interest                          |  |  | (23  | )
|                                               |  |  |      |  
|Present value of future minimum lease payments |  |  | €340 |  
|Less current portion                           |  |  | (191 | )
|                                               |  |  |      |  
|Long-term portion                              |  |  | €149 |  
|                                               |  |  |      |  

|                                              
|----------------------------------------------
|Interest rate swap and term purchase agreement

On August 31, 1999, the Company entered into a U.S. $20 million interest rate swap agreement to hedge its exposure on a portion of its outstanding debt denominated in U.S.$. The effect of this agreement was to convert underlying variable rate debt based on Libor USD to  fixed rate debt with an interest rate of 6.78%. On June 29, 2001, the Company entered into a U.S. $57.5 million interest rate swap agreement to hedge its exposure on 50% of its outstanding term loans under the U.S. $125 million credit facility, excluding the U.S. $10 million revolving  line of credit, granted in April 2001, denominated in U.S. dollars. This agreement replaces the agreement signed in August 1999. The effect of the latter agreement was to convert underlying variable rate debt based on Libor USD to fixed rate debt with an interest rate of 5.52%.



Each interest-rate swap agreement is designated with
  all or a portion of the principal balance and has a term equal to specific debt
  obligation. This agreement involves the exchange of amounts based on a fixed
  interest rate for amounts based on variable interest rates over the life of
  the agreement without an exchange of the notional amount upon which the payments
  are based. The differential to be paid or received as interest rates change
  is accrued and recognized as an adjustment of interest expense related to the
  debt. The related amount payable to or receivable from third parties is included
  in other liabilities or assets. The fair value of the swap agreement and changes
  in the fair value as a result of changes in market interest rates are recognized
  as comprehensive income or loss. As a result, the comprehensive loss for this
  interest rate swap agreement amounted to €1,839 at December 31, 2002.



As of December 31, 2002, the Company expects to reclassify
  €467 of net loss on derivative instruments from accumulated comprehensive
  income to earnings during the next twelve months due to the payment of variable
  interest associated with the senior term loan facility.



To hedge the exposure risk on foreign currency translation rates, on December 5, 2000, the Company entered into term purchase agreements (forward contracts) for nominal amounts of U.S. $30,125 and GBP 1,355 with a purchase date on January 5, 2001. Gains and losses on  these transactions are reported in comprehensive income. There are no purchase agreements at December 31, 2002.



|Tax audit and risk
|------------------

On June 27, 2000, the Company received a preliminary
  conclusion of a tax audit for Genesys S.A. for the years ended December 31,
  1996, 1997, 1998 and 1999. The amounts reported in the reassessment notice received
  from the tax authorities amounted to approximately €1.3 million in relation
  to the deductibility of certain expenses incurred by the parent company such
  as acquisition costs for companies outside of France, and offering and debt
  issuance costs. The Company believes that, based on its outside legal counsel
  and the latest correspondence from the tax authorities, the risk of liability
  is remote. During the second half year 2000, the tax authorities revised their
  initial notice from €1.3 million to approximately €850. On June 27,
  2001, the tax authorities revised again their notice by €460. The remaining
  portion amounted to €390 at December 31, 2002. Except for €63 accrued
  since December 31, 2000, the remaining portion is still disputed by the Company.
  It will be subject to a further favorable decision to be taken by the European
  Court.



The Companys U.S. subsidiary Genesys Conferencing,
  Inc (GCI) assesses, collects and pays federal, state and local taxes where it
  can determine the taxable transport or transmission service, the jurisdiction
  in which a tax would apply and where it has the ability to assess the tax. When
  GCI is unable to determine or is unable to assess federal, state and local taxes,
  it does not. As of December 31, 2000, 2001 and 2002, GCI had established a reserve
  of approximately U.S. $569 (equivalent to €611), U.S. $1,100 (equivalent
  to €1,248) and U.S. $1,100 (equivalent to €1,048), respectively, for
  federal, state and local taxes, which it believed is sufficient to cover taxes,
  if any, that GCI should have assessed through December 31, 2002, but did not,
  in the event they become due.





F-33

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

In January 2003, GCI settled an outstanding assessment
  with the State of Massachusetts for sales and use taxes associated with a predecessor
  corporation of Vialog. The settlement resulted in the assessment of taxes and
  interest to GCI of U.S. $169 (equivalent to €161). This settlement will
  be charged against the accrual above when it paid during 2003.



|Commitments
|-----------

The U.S. $125 million credit facility agreement signed on April 20, 2001 with BNP Paribas, CIBC World Markets and Fortis Bank is secured by the following:



| |  | Stock pledge of shares of
        Genesys Conferencing Ltd (England), Genesys Conferencing AB (Sweden),
        Genesys Conferencing Inc;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Security over some assets
        such as accounts receivable of Genesys Conferencing Inc, including assets
        previously hold by Vialog before the merger with Genesys Conferencing
        Inc on January 1, 2002.

The Company also entered into other collateral security
  agreement in favor of banks amounting to €1,537 and other security agreements
  with the French tax administration (€342) and leasing companies (€3,117).



|Others
|------

In the normal course of business, the Company is at times subject to pending and threatened legal actions and proceedings. Management believes that the outcome of such actions or proceedings is not expected to have a material adverse effect on the financial position of the  Company.



|Note 16. Employee retirement and benefit plans
|----------------------------------------------

The Company contributes to pensions for personnel in France in accordance with local law, by contributing based on salaries to the relevant government agencies. There exists no actuarial liability in connection with these plans.



In the United States, the Company sponsors two defined
  contribution plans which qualify under section 401(k) of the Internal Revenue
  Code (GCI Plan and Vialog Plan). During 2000, 2001 and 2002, the Company made
  contributions of approximately U.S. $122 (equivalent to €132), U.S. $420
  (equivalent to €469) and U.S. $417 (equivalent to €441), respectively,
  to these plans. Employees who are not former Vialog employees are eligible to
  enroll in the GCI Plan and may contribute up to 20% of their eligible wages
  into this Plan, so long as the total contributions do not exceed dollar limits
  established under IRS regulations. The Company matches 20% of the employee contributions
  under the GCI Plan. Former Vialog employees participate in the Vialog Plan and
  may contribute up to 15% of pre-tax annual compensation, as defined in this
  separate Plan, so long as the total contributions do not exceed dollar limits
  established under IRS regulations. The Company, under the Vialog Plan, matches
  50% of the participants contribution up to a maximum of 6% of the participants
  compensation.



Effective beginning January 1, 2003, the Vialog Plan was terminated and former Vialog employees who participated in the Vialog Plan were merged into and became participants in the GCI Plan.



In England, the Company has defined contribution plans
  whose assets are held separately from those of the Company. Costs recognized
  for these plans were €184, €233 and €293 in 2000, 2001 and 2002,
  respectively.



French law also requires payment of a lump sum retirement indemnity to all employees based upon years of service and compensation at retirement. Benefits do not vest prior to retirement. There is no formal plan and no funding of the obligation is required. The Companys  obligation is not material to its financial condition, liquidity or results of operations as of December 31, 2000, 2001 and 2002 or for the years ended December 31, 2000, 2001 and 2002.



|Note 17. Revenues
|-----------------

Revenues consist of the following:



|                               |  | Years ended December 31, |        
|------------------------------ |  | ------------------------ | -------
|                               |  |                          |        
|                               |  | 2000                     |        
|                               |  |                          |        
|Services                       |  |                          |        
|Genesys
        Meeting Center |  |                          | €27,950
|Events & Managed Services      |  |                          | 49,148 
|Video
        Conferencing     |  |                          | 12,238 
|Products                       |  |                          | 3,083  
|                               |  |                          |        
|Total                          |  |                          | €92,419
|                               |  |                          |        



F-34

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|                                           
|-------------------------------------------
|Note 18. Segment and geographic information

The Company and its subsidiaries currently operate in four reportable segments: North America, Europe, Asia-Pacific, and, starting in 2002, a Global Video division. The Company makes key decisions and evaluates performance of the Company based on these segments.  Transfers between segments are accounted for at amounts that are generally above cost and consistent with the rules and regulations of governing tax authorities. Such transfers are eliminated in the consolidated financial statements. Corporate items include non-operating overhead and  research and development expenditures. Corporate assets mainly include research and development telecommunications equipment.

The Company believes that EBITDA is a meaningful measure of performance and use it for purposes of managing its business and evaluating its financial health. The Company defines EBITDA as earnings (loss) before interest, income taxes, depreciation, amortization charges and impairment of goodwill and other intangibles. Its depreciation charges are divided among the line items cost of revenue, research and development, selling and marketing and general and administrative expenses, based on the use of the assets being  amortized. EBITDA is not a measurement of operating performance calculated in accordance with accounting principles generally accepted in the United States, and should not be considered a substitute for operating income (loss), net income (loss), cash flows from operating activities  or other statement of operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States, or as a measure of profitability or liquidity. EBITDA may not be indicative of our historical operating results; nor is it meant to be  predictive of potential results. Because all companies do not calculate EBITDA identically, the presentation of EBITDA contained in this annual report may not be comparable to similarly named measures of other companies.

The following is a summary of operations by segment for the years ended December 31, 2000, 2001 and 2002:



|                                                                                                     |  | NorthAmerica |          | Europe |  | Asia-Pacific |   | GlobalVideo |        | Corporate |  | Inter-segment |   | Total |         
|---------------------------------------------------------------------------------------------------- |  | ------------ | -------- | ------ |  | ------------ | - | ----------- | ------ | --------- |  | ------------- | - | ----- | --------
|                                                                                                     |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|2000                                                                                                 |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Net sales                                                                                            |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Customers                                                                                            |  |              | €40,357  |        |  | €35,781      |   |             | €4,044 |           |  | €12,237       |   |       |        
|Intercompany                                                                                         |  |              | 464      |        |  | 22           |   |             |       |           |  |              |   |       |        
|Gross profit                                                                                         |  |              | 19,904   |        |  | 26,217       |   |             | 1,993  |           |  | 3,584         |   |       |        
|EBITDA (see below)                                                                                   |  |              | 5,786    |        |  | 13,789       |   |             | 343    |           |  | 4,493         |   |       | €(12,884
|Operating income (loss)                                                                              |  |              | 1,925    |        |  | 4,703        |   |             | 43     |           |  | 3,584         |   |       | (13,217 
|Net interest (expense) income                                                                        |  |              | (1,605   | )      |  | 2,270        |   |             | (10    | )         |  |              |   |       |        
|Equity in loss of affiliated company                                                                 |  |              |         |        |  | (76          | ) |             |       |           |  |              |   |       |        
|Income (loss) before tax                                                                             |  |              | 320      |        |  | 6,897        |   |             | 33     |           |  | 3,584         |   |       | (13,217 
|Income tax expense                                                                                   |  |              | (126     | )      |  | (3,231       | ) |             | (232   | )         |  |              |   |       |        
|Total assets                                                                                         |  |              | 66,955   |        |  | 134,789      |   |             | 3,862  |           |  |              |   |       | 1,563   
|Depreciation                                                                                         |  |              | 3,259    |        |  | 2,660        |   |             | 312    |           |  | 909           |   |       | 334     
|Additions to property and equipment                                                                  |  |              | 3,062    |        |  | 5,246        |   |             | 678    |           |  |              |   |       | 1,607   
|2001                                                                                                 |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Net sales                                                                                            |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Customers                                                                                            |  |              | €108,035 |        |  | €53,762      |   |             | €6,210 |           |  | €10,944       |   |       |        
|Intercompany                                                                                         |  |              | 1,138    |        |  | 22           |   |             | 26     |           |  |              |   |       |        
|Gross profit                                                                                         |  |              | 58,134   |        |  | 39,556       |   |             | 3,138  |           |  | 1,947         |   |       |        
|EBITDA before impairment of goodwilland identifiable intangibles (see below)                         |  |              | 12,532   |        |  | 20,822       |   |             | 472    |           |  | 1,474         |   |       | €(18,961
|Operating loss                                                                                       |  |              | (62,611  | )      |  | (7,986       | ) |             | (618   | )         |  | (24           | ) |       | (20,027 
|Net interest expense                                                                                 |  |              | (5,247   | )      |  | (1,409       | ) |             | (66    | )         |  |              |   |       |        
|Equity in loss of affiliated company                                                                 |  |              |         |        |  | (55          | ) |             |       |           |  |              |   |       |        
|Income (loss) before tax                                                                             |  |              | (67,858  | )      |  | (9,450       | ) |             | (684   | )         |  | (24           | ) |       | (20,027 
|Income tax (expense) credit                                                                          |  |              | 5,365    |        |  | (5,848       | ) |             | 1      |           |  |              |   |       |        
|Total assets                                                                                         |  |              | 316,736  |        |  | 84,302       |   |             | 3,486  |           |  |              |   |       | 5,880   
|Depreciation                                                                                         |  |              | 9,914    |        |  | 2,996        |   |             | 388    |           |  | 1,498         |   |       | 1,066   
|Additions to property and equipment                                                                  |  |              | 6,660    |        |  | 6,884        |   |             | 355    |           |  |              |   |       | 2,053   
|2002                                                                                                 |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Net sales                                                                                            |  |              |          |        |  |              |   |             |        |           |  |               |   |       |         
|Customers                                                                                            |  |              | €126,977 |        |  | €58,233      |   |             | €6,480 |           |  | €8,973        |   |       |        
|Intercompany                                                                                         |  |              | 950      |        |  | 2,050        |   |             | 33     |           |  |              |   |       |        
|Gross profit                                                                                         |  |              | 63,823   |        |  | 43,562       |   |             | 3,636  |           |  | 2,199         |   |       |        
|EBITDA
        before impairment of goodwill and identifiable intangible assets 
        (see below) |  |              | 12,808   |        |  | 21,601       |   |             | 663    |           |  | 10            |   |       | €(21,667
|Operating loss                                                                                       |  |              | (103,520 | )      |  | 15,904       |   |             | (232   | )         |  | (1,131        | ) |       | (20,835 
|Net interest (expense) income                                                                        |  |              | (6,666   | )      |  | 389          |   |             | (101   | )         |  |              |   |       | (2,609  
|Equity in loss of affiliated company                                                                 |  |              |         |        |  | (8           | ) |             |       |           |  |              |   |       |        
|Income (loss) before tax                                                                             |  |              | (110,186 | )      |  | 16,285       |   |             | (333   | )         |  | (1,131        | ) |       | (23,444 
|Income tax (expense) credit                                                                          |  |              | 8,484    |        |  | (3,460       | ) |             | 47     |           |  |              |   |       | (28     
|Total assets                                                                                         |  |              | 176,457  |        |  | 55,750       |   |             | 3,417  |           |  |              |   |       | 14,109  
|Depreciation                                                                                         |  |              | 10,056   |        |  | 2,801        |   |             | 462    |           |  | 1,141         |   |       | 1,268   
|Additions to property and equipment                                                                  |  |              | 1,985    |        |  | 1,110        |   |             | 742    |           |  |              |   |       | 2,948   



F-35

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

EBITDA calculation





Management believes
  that the most directly comparable GAAP measure to EBITDA is operating income
  (loss).


The following table reconciles EBITDA to operating
  loss for the periods presented.



|                                                 |  | 2000 |        | 2001 |  | 2002    |  
|------------------------------------------------ |  | ---- | ------ | ---- |  | ------- | -
|Operating
        loss                           |  |      | (2,962 | )    |  | (91,266 | )
|Depreciation                                     |  |      | 7,474  |      |  | 15,862  |  
|Amortization
        of goodwill and intangibles |  |      | 7,015  |      |  | 30,768  |  
|Impairment
        of goodwill and intangibles   |  |      |       |      |  | 61,269  |  
|                                                 |  |      |        |      |  |         |  
|EBITDA                                           |  |      | 11,527 |      |  | 16,633  |  
|                                                 |  |      |        |      |  |         |  





|Geographic area information:
|----------------------------

|                                    |  | United
      States |          | France |  | England |  | Nordic |         | Australia |  | Other
      foreign
      countries |  | Total |       
|----------------------------------- |  | ------------------- | -------- | ------ |  | ------- |  | ------ | ------- | --------- |  | ----------------------------------- |  | ----- | ------
|                                    |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       
|2000                                |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       
|Revenue                             |  |                     | €42,097  |        |  | €10,726 |  |        | €26,444 |           |  | €5,010                              |  |       | €2,918
|Property
        and equipment, net |  |                     | 9,139    |        |  | 4,346   |  |        | 5,022   |           |  | 1,240                               |  |       | 667   
|2001                                |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       
|Revenue                             |  |                     | €113,481 |        |  | €13,750 |  |        | €30,576 |           |  | €7,077                              |  |       | €4,088
|Property
        and equipment, net |  |                     | 30,575   |        |  | 7,698   |  |        | 4,524   |           |  | 1,432                               |  |       | 583   
|2002                                |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       
|Revenue                             |  |                     | €130,986 |        |  | €13,409 |  |        | €30,219 |           |  | €9,083                              |  |       | €4,575
|Property
        and equipment, net |  |                     | 16,747   |        |  | 9,078   |  |        | 2,738   |           |  | 1,066                               |  |       | 859   
|                                    |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       
|                                    |  |                     |          |        |  |         |  |        |         |           |  |                                     |  |       |       



F-36

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|                          
|--------------------------
|Note 19. Subsequent events

In January 2003, the Company announced the realignment
  and streamlining of its senior management. This initiative is part of the cost
  reduction efforts made by the Company to improve financial performance.



On April 30, 2003, the Company signed an amendmentwith its main bank creditors to the US$125 million credit facility, which
  the Company entered into in April 2001 to acquire Vialog. The amendment extends
  the maturity of the remaining principal and modifies the convenants. Some parts
  of the amendment are subject to the satisfaction of certain conditions, including
  the following:



| |  | the approval of the bondholders
        to vote on the rescheduling of 50% of the principal payment for the 3%
        convertible notes.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| |  | the completion of a rights
        offering not later than August 31, 2003 that will permit all of the existing
        shareholders to subscribe for newly issued shares.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------








|Note 20. Unaudited proforma
        information
|-----------------------------------------------

The following “pro forma” information
  was prepared in accordance with French listing requirements, it was not prepared
  and shall not be construed as prepared in accordance with Article 11of SEC Regulation
  S-X.



The following schedules set forth unaudited “pro
  forma” condensed consolidated financial information for the Company, which
  has been prepared to reflect the acquisitions made by the Company as if they
  occurred on January 1, 2001. These acquisitions included:



 Genesys Open Media acquired in July 2000 and renamed into Genesys Conferencing France thereafter,



 Eureka and Telechoice, acquired in September 2000 and merged into Darome Teleconferencing GmbH (Germany) thereafter,



 Astound Inc., acquired in March 2001 and renamed into Genesys Conferencing Ltd (Canada) thereafter,



 Vialog Corp., acquired in April 2001 and merged into Genesys Conferencing Inc (United States) thereafter,





F-37

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

The consolidated “pro forma” information has been derived from
    accounting data prepared in accordance with generally accepted accounting
    principles in the United States.



The unaudited “pro
  forma” condensed consolidated statement of operations for the year
  ended December 31, 2000 gives effect to the acquisitions of Vialog, Astound,
  Telechoice, Eureka and Genesys Open Media as if they had occurred on January
  1, 2000.



The unaudited “pro
  forma” condensed consolidated balance sheet as of December 31,
  2000 has been prepared as if the acquisitions of Vialog and Astound had occurred
  on December 31, 2000.



The unaudited “pro
  forma” condensed consolidated statement of operations for the year
  ended December 31, 2001 gives effect to the acquisitions of Vialog and
  Astound as if they had occurred on January 1, 2001.



The “pro forma”
  statements of operations and balance sheets include:



| |  | goodwill and other intangible assets relating to the acquisitions;
| | - | ------------------------------------------------------------------

| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | long term debt and common stock issued to finance the acquisitions;

| |   |                                                           
| | - | ----------------------------------------------------------
| |  | opening adjustments relating to the acquisition of Vialog.

The “pro forma”
  information is not necessarily indicative of the financial statements that would
  have been obtained had these acquisitions actually occurred at January 1, 2000,
  December 31, 2000 or January 1, 2001, nor are they necessarily indicative of
  future consolidated information.



|Unaudited “pro
          forma” condensed consolidated statements of operations
|-------------------------------------------------------------------------------

|                                                                       |  | Year ended December 31, |           
|---------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                       |  |                         |           
|                                                                       |  | 2000                    |           
|                                                                       |  |                         |           
|Revenue                                                                |  |                         | €181,778  
|Cost of revenue:                                                       |  |                         | 84,068    
|                                                                       |  |                         |           
|Gross profit                                                           |  |                         | 97,710    
|Operating expenses:                                                    |  |                         |           
|Research and development                                               |  |                         | 4,966     
|Selling, general and administrative                                    |  |                         | 86,226    
|Impairment of goodwill and other intangibles                           |  |                         |          
|Amortization of goodwill and other intangibles                         |  |                         | 39,775    
|                                                                       |  |                         |           
|Total operating expenses                                               |  |                         | 130,967   
|                                                                       |  |                         |           
|Operating loss                                                         |  |                         | (33,257   
|Financial expense, net                                                 |  |                         | (8,648    
|Equity in loss of affiliated company                                   |  |                         | (75       
|                                                                       |  |                         |           
|Loss before taxes                                                      |  |                         | (41,980   
|Income tax expense                                                     |  |                         | (3,951    
|                                                                       |  |                         |           
|Net loss                                                               |  |                         | €(45,931  
|Basic and diluted net loss per share                                   |  |                         | €(3.67    
|                                                                       |  |                         |           
|Number of shares used in computing basic and diluted netloss per share |  |                         | 12,495,893
|                                                                       |  |                         |           
|Supplementary information:                                             |  |                         |           
|EBITDA excluding impairment of goodwill and otherIntangibles           |  |                         | €21,179   
|                                                                       |  |                         |           

EBITDA CALCULATION

|                                         |  | Years ended December 31, |         
|---------------------------------------- |  | ------------------------ | --------
|                                         |  |                          |         
|                                         |  | 2000                     |         
|                                         |  |                          |         
|Operating loss                           |  |                          | €(33,257
|Depreciation                             |  |                          | 13,687  
|Amortization of goodwill and intangibles |  |                          | 39,775  
|Impairment of goodwill and intangibles   |  |                          |        
|Vialog opening adjustments               |  |                          | 974     
|Non-recurring charge                     |  |                          |        
|                                         |  |                          |         
|Total                                    |  |                          | €21,179 
|                                         |  |                          |         



F-38

---



Back to Contents

GENESYS S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share data and when indicated)

|Reconciliation with
        net loss
|------------------------------------

|                                                                                                                                      |  | Year ended December 31, |         
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------
|                                                                                                                                      |  |                         |         
|                                                                                                                                      |  | 2000                    |         
|                                                                                                                                      |  |                         |         
|“Proforma”
        net loss                                                                                                           |  |                         | €(45,931
|Vialog net loss before April 25, 2001                                                                                                 |  |                         | 9,913   
|Astound net loss before March 27, 2001                                                                                                |  |                         | 5,587   
|Open Media companies net loss before Acquisition date (June and July 2000)                                                            |  |                         | 1,723   
|German companies net loss before Acquisition date (September 2000)                                                                    |  |                         | 1,408   
|Amortization
        of goodwill and intangibles                                                                                      |  |                         | 26,192  
|Interest
        expenses (income) for financing the Astound and Vialog acquisitions and
        refinancing long-term Debt of Vialog |  |                         | (6,362  
|Other
        adjustments                                                                                                             |  |                         | 1,498   
|                                                                                                                                      |  |                         |         
|Net
        loss                                                                                                                      |  |                         | €(5,972 
|                                                                                                                                      |  |                         |         

|                                                                    
|--------------------------------------------------------------------
|Unaudited “pro forma” condensed
          consolidated balance sheet

|                                               |  | December 31,2000 |         
|---------------------------------------------- |  | ---------------- | --------
|                                               |  |                  |         
|ASSETS                                         |  |                  |         
|Current assets:                                |  |                  |         
|Cash and cash equivalents                      |  |                  | €22,958 
|Accounts receivables                           |  |                  | 43,885  
|Inventory                                      |  |                  | 161     
|Prepaid expenses and other current assets      |  |                  | 5,338   
|                                               |  |                  |         
|Total current assets                           |  |                  | 72,342  
|Property and equipment, net                    |  |                  | 47,709  
|Goodwill and other intangibles, net            |  |                  | 359,036 
|Investment in affiliated company               |  |                  | 109     
|Deferred tax assets                            |  |                  | 281     
|Deferred financing costs and other assets, net |  |                  | 4,858   
|                                               |  |                  |         
|Total assets                                   |  |                  | €484,335
|                                               |  |                  |         
|LIABILITIES
        AND SHAREHOLDERS EQUITY   |  |                  |         
|Current liabilities:                           |  |                  |         
|Bank overdrafts                                |  |                  |        
|Revolving line of credit                       |  |                  | €7,995  
|Accounts payable                               |  |                  | 27,528  
|Accrued liabilities and accrued compensation   |  |                  | 11,370  
|Taxes payable                                  |  |                  | 4,758   
|Deferred revenue                               |  |                  | 3,189   
|Current portion of long-term debt              |  |                  | 8,014   
|Current portion of deferred tax liability      |  |                  | 400     
|Other current liabilities                      |  |                  | 4,097   
|                                               |  |                  |         
|Total current liabilities                      |  |                  | 67,351  
|Long-term portion of long-term debt            |  |                  | 139,567 
|Long-term portion of deferred tax liability    |  |                  | 36,742  
|Other long term liability                      |  |                  | 1,155   
|Commitments and contingencies                  |  |                  |        
|Shareholders equity                           |  |                  | 239,520 
|                                               |  |                  |         
|Total liabilities and shareholders equity     |  |                  | €484,335
|                                               |  |                  |         



F-39

---



Back to Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



| | GENESYS S.A.                   
| | -------------------------------
| |                                
| | By    /s/
      FRANÇOIS LEGROS
| |                                
| |                                

Date: May 15, 2003



---