##### Table of Contents






As filed with the Securities and Exchange
Commission on June 12, 2002







---




SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

Form 20-F

|   |  |                                                                                                            
|-- |  | -----------------------------------------------------------------------------------------------------------
|o  |  | REGISTRATION STATEMENT PURSUANT TO SECTION
    12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
    or
|  
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934                   
|  
|   |  | For the fiscal year ended December 31,
    2001                                                            
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 or
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934               
|  
|   |  | For the transition period
    from           to                                                            




Commission File
Number: 001-16451






---

Genesys S.A.

(Exact name of Registrant as specified in its
charter)


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

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 Stock Market                       
|American Depositary Shares, each representing one
    half of one ordinary share, nominal value
    5 per share |  | Nasdaq Stock Market                       

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

Indicate the number of outstanding shares of each
of the issuers classes of capital or common stock as of
the close of the period covered by the annual report
(December 31, 2001):

Ordinary shares, nominal value
5 per share:
15,271,064

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 þ          No o

Indicate by check mark which financial statement
item the registrant has elected to follow:

Item 17 o  Item 18 þ



|  |                                                                                                                                                                                                                  
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | 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.



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---

TABLE OF CONTENTS



|                                                 |                                                                                        |                                                           |  |  |  |  |  | 
|------------------------------------------------ | -------------------------------------------------------------------------------------- | --------------------------------------------------------- |  |  |  |  |  | 
|TABLE OF CONTENTS                               
|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 the 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                                  
|                                                 |                                                                                        | A.Operating Results                                      
|                                                 |                                                                                        | B.Liquidity and Capital Resources                        
|                                                 |                                                                                        | C.Research and Development, Patents and Licenses, etc.   
|                                                 |                                                                                        | D.Trend Information                                      
|                                                 |                                                                                        | E.Critical accounting policies                           
|                                                 | 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                                                         
|                                                 |                                                                                        | A.Consolidated Statements and Other Financial Information
|                                                 |                                                                                        | B.Significant Changes                                    
|                                                 | 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. [Reserved]                                                                   
|                                                 | Item 16. [Reserved]                                                                   
|                                                 | Item 17. Financial Statements                                                         
|                                                 | Item 18. Financial Statements                                                         
|                                                 | Item 19. Exhibits                                                                     
|Exhibit Index                                   
|U.S. $125 Million Credit Facility - Vialog Corp.



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TABLE OF CONTENTS





|         |  |                                                           |  |      |    | 
|-------- |  | --------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                           |  | Page
|         |  |                                                           |  |     
|PART I  
|Item 1.  |  | Identity of Directors, Senior Management and
    Advisers |  |      | 3  | 
|Item 2.  |  | Offer Statistics and Expected Timetable                   |  |      | 3  | 
|Item 3.  |  | Key Information                                           |  |      | 4  | 
|         |  | A. Selected Financial Data                                |  |      | 4  | 
|         |  | B. Capitalization and Indebtedness                        |  |      | 7  | 
|         |  | C. Reasons for Offer and Use of Proceeds                  |  |      | 7  | 
|         |  | D. Risk Factors                                           |  |      | 8  | 
|Item 4.  |  | Information on the Company                                |  |      | 15 | 
|         |  | A. History and Development of the Company                 |  |      | 15 | 
|         |  | B. Business Overview                                      |  |      | 16 | 
|         |  | C. Organizational Structure                               |  |      | 26 | 
|         |  | D. Property, Plants and Equipment                         |  |      | 26 | 
|Item 5.  |  | Operating and Financial Review and Prospects              |  |      | 28 | 
|Item 6.  |  | Directors, Senior Management and Employees                |  |      | 42 | 
|         |  | A. Directors and Senior Management                        |  |      | 42 | 
|         |  | B. Compensation                                           |  |      | 45 | 
|         |  | C. Board Practices                                        |  |      | 46 | 
|         |  | D. Employees                                              |  |      | 47 | 
|         |  | E. Share Ownership                                        |  |      | 48 | 
|Item 7.  |  | Major Shareholders and Related Party Transactions         |  |      | 50 | 
|         |  | A. Major Shareholders                                     |  |      | 50 | 
|         |  | B. Related Party Transactions                             |  |      | 50 | 
|         |  | C. Interests of Experts and Counsel                       |  |      | 50 | 
|Item 8.  |  | Financial Information                                     |  |      | 51 | 
|Item 9.  |  | The Offer and Listing                                     |  |      | 52 | 
|         |  | A. Offer and Listing Details                              |  |      | 52 | 
|         |  | B. Plan of Distribution                                   |  |      | 53 | 
|         |  | C. Markets                                                |  |      | 53 | 
|         |  | D. Selling Shareholders                                   |  |      | 54 | 
|         |  | E. Dilution                                               |  |      | 54 | 
|         |  | F. Expenses of the Issue                                  |  |      | 54 | 
|Item 10. |  | Additional Information                                    |  |      | 55 | 
|         |  | A. Share Capital                                          |  |      | 55 | 
|         |  | B. Memorandum and Articles of Association                 |  |      | 55 | 
|         |  | C. Material Contracts                                     |  |      | 55 | 
|         |  | D. Exchange Controls                                      |  |      | 55 | 
|         |  | E. Taxation                                               |  |      | 55 | 
|         |  | F. Dividends and Paying Agents                            |  |      | 60 | 
|         |  | G. Statement by Experts                                   |  |      | 60 | 
|         |  | H. Documents on Display                                   |  |      | 60 | 
|         |  | I.  Subsidiary Information                                |  |      | 60 | 




1



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|         |  |                                                                                  |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                  |  | Page
|         |  |                                                                                  |  |     
|Item 11. |  | Quantitative and Qualitative Disclosures about
    Market Risk                   |  |      | 61 | 
|Item 12. |  | Description of Securities other than Equity
    Securities                       |  |      | 61 | 
|PART II 
|Item 13. |  | Defaults, Dividend Arrearages and Delinquencies                                  |  |      | 62 | 
|Item 14. |  | Material Modifications to the Rights of Security
    Holders and Use of Proceeds |  |      | 62 | 
|Item 15. |  | [Reserved]                                                                       |  |      | 62 | 
|Item 16. |  | [Reserved]                                                                       |  |      | 62 | 
|PART III
|Item 17. |  | Financial Statements                                                             |  |      | 62 | 
|Item 18. |  | Financial Statements                                                             |  |      | 62 | 
|Item 19. |  | Exhibits                                                                         |  |      | 62 | 




2



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PART I






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

Not applicable.






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

Not applicable.

3



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|        |                
|------- | ---------------
|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 2001
euro amounts into U.S. dollars, using the rate of
$1.00 = 1.123,
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 December 31, 2001. 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,
|                                                           |                                                                   |                                          
|                                                           |                                                                   | 1997                                      |           | 1998  |       | 1999 |           | 2000   |        | 2001 |           | 2001  
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |       
|                                                           |                                                                   |                                          
|                                                           |                                                                   | (thousands except share data)            
|Consolidated statement of operations
    data:             |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Revenue:                                                   |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           | Services                                                          |                                           |          | 8,205 |       |      |          | 18,311 |        |      |          | 47,159 |        |   |          | 89,336 |        |   |           | 177,120 |         |   | $          | 157,720 |        
|                                                           | Products                                                          |                                           |           | 726   |       |      |           | 910    |        |      |           | 836    |        |   |           | 3,083  |        |   |            | 1,831   |         |   |            | 1,631   |        
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           |                                                                   | Total revenues                            |           |       | 8,931 |      |           |        | 19,221 |      |           |        | 47,995 |   |           |        | 92,419 |   |            |         | 178,951 |   |            |         | 159,351 | 
|Cost of revenue:                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           | Services                                                          |                                           |           | 2,196 |       |      |           | 7,517  |        |      |           | 19,959 |        |   |           | 38,173 |        |   |            | 74,774  |         |   |            | 66,584  |        
|                                                           | Products                                                          |                                           |           | 471   |       |      |           | 656    |        |      |           | 596    |        |   |           | 2,548  |        |   |            | 1,402   |         |   |            | 1,249   |        
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           |                                                                   | Total cost of revenues                    |           |       | 2,667 |      |           |        | 8,173  |      |           |        | 20,555 |   |           |        | 40,721 |   |            |         | 76,176  |   |            |         | 67,833  | 
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Gross profit                                               |                                                                   |                                           | 6,264     |       |       |      | 11,048    |        |        |      | 27,440    |        |        |   | 51,698    |        |        |   | 102,775    |         |         |   | 91,518     |        
|Operating expenses:                                        |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           | Research and development                                          |                                           |           | 1,043 |       |      |           | 910    |        |      |           | 1,629  |        |   |           | 2,613  |        |   |            | 5,366   |         |   |            | 4,778   |        
|                                                           | Selling and marketing                                             |                                           |           | 2,903 |       |      |           | 5,747  |        |      |           | 10,130 |        |   |           | 17,867 |        |   |            | 42,718  |         |   |            | 38,039  |        
|                                                           | General and administrative                                        |                                           |           | 2,603 |       |      |           | 4,004  |        |      |           | 12,952 |        |   |           | 27,165 |        |   |            | 53,920  |         |   |            | 48,014  |        
|                                                           | Amortization and impairment of goodwill and other
    intangibles |                                           |           | 300   |       |      |           | 1,396  |        |      |           | 3,216  |        |   |           | 7,015  |        |   |            | 92,037  | (1)     |   |            | 81,957  |        
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|                                                           |                                                                   | Total operating expenses                  |           |       | 6,849 |      |           |        | 12,057 |      |           |        | 27,927 |   |           |        | 54,660 |   |            |         | 194,041 |   |            |         | 172,788 | 
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Operating loss                                             |                                                                   |                                           | (585      | )     |       |      | (1,009    | )      |        |      | (487      | )      |        |   | (2,962    | )      |        |   | (91,266    | )       |         |   | (81,270    | )      
|Financial income (expense), net                            |                                                                   |                                           | (251      | )     |       |      | (335      | )      |        |      | (2,083    | )      |        |   | 655       |        |        |   | (6,722     | )       |         |   | (5,986     | )      
|Equity in loss of affiliated company                       |                                                                   |                                           |          |       |       |      |          |        |        |      | (15       | )      |        |   | (76       | )      |        |   | (55        | )       |         |   | (49        | )      
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Loss before income taxes and minority interest             |                                                                   |                                           | (836      | )     |       |      | (1,344    | )      |        |      | (2,585    | )      |        |   | (2,383    | )      |        |   | (98,043    | )       |         |   | (87,305    | )      
|                                                           | Income tax expense                                                |                                           |           | (349  | )     |      |           | (293   | )      |      |           | (1,253 | )      |   |           | (3,589 | )      |   |            | (484    | )       |   |            | (431    | )      
|Minority interest                                          |                                                                   |                                           | (40       | )     |       |      |          |        |        |      |          |        |        |   |          |        |        |   |           |         |         |   |           |        
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Net loss                                                   |                                                                   |                                          | (1,225    | )     |       |     | (1,637    | )      |        |     | (3,838    | )      |        |  | (5,972    | )      |        |  | (98,527    | )       |         | $ | (87,736    | )      
|                                                           |                                                                   |                                           |           |       |       |      |           |        |        |      |           |        |        |   |           |        |        |   |            |         |         |   |            |        
|Basic and diluted net (loss) per share                     |                                                                   |                                          | (0.51     | )     |       |     | (0.39     | )      |        |     | (0.60     | )      |        |  | (0.76     | )      |        |  | (7.65      | )       |         | $ | (6.81      | )      
|Weighted average number of ordinary shares
    outstanding |                                                                   |                                           | 2,388,504 |       |       |      | 4,209,669 |        |        |      | 6,374,278 |        |        |   | 7,831,257 |        |        |   | 12,878,594 |         |         |   | 12,878,594 |        






---






|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(1) | In 2001,
    61.3 million
    represents impairment of intangibles in accordance with SFAS
    No. 121.




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|                                                          |  |                                           |         |               |  |      |        |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |  
|--------------------------------------------------------- |  | ----------------------------------------- | ------- | ------------- |  | ---- | ------ | ---- |  | ---- | ------- | ---- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                                          |  |                                          
|                                                          |  | As of and for the year ended December 31,
|                                                          |  |                                          
|                                                          |  | 1997                                      |         | 1998          |  | 1999 |        | 2000 |  | 2001 |         | 2001
|                                                          |  |                                           |         |               |  |      |        |      |  |      |         |     
|                                                          |  |                                           |         | (in thousands
|                                                          |  | (in thousands of )                       |         | of $)        
|Consolidated balance sheet data:                          |  |                                           |         |               |  |      |        |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |  
|Total current assets                                      |  |                                           | 11,242  |               |  |      | 25,408 |      |  |      | 32,194  |      |  |  | 77,338  |   |  |  | 80,465  |   |  |  | 71,652  |  
|Total assets                                              |  |                                           | 34,777  |               |  |      | 51,620 |      |  |      | 122,890 |      |  |  | 207,169 |   |  |  | 410,404 |   |  |  | 365,453 |  
|Total current liabilities                                 |  |                                           | 6,754   |               |  |      | 8,172  |      |  |      | 19,500  |      |  |  | 34,633  |   |  |  | 72,704  |   |  |  | 64,741  |  
|Total long-term liabilities                               |  |                                           | 12,665  |               |  |      | 7,382  |      |  |      | 62,056  |      |  |  | 44,423  |   |  |  | 174,832 |   |  |  | 155,683 |  
|Total shareholders equity                                |  |                                           | 15,358  |               |  |      | 36,066 |      |  |      | 41,334  |      |  |  | 128,113 |   |  |  | 162,868 |   |  |  | 145,029 |  
|Cash flow statement data:                                 |  |                                           |         |               |  |      |        |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |  
|Cash flows provided by (used in) operating
    activities |  |                                           | 1,718   |               |  |      | (28    | )    |  |      | 3,945   |      |  |  | 9,302   |   |  |  | (18,299 | ) |  |  | (16,295 | )
|Cash flows used in investing activities                   |  |                                           | (23,540 | )             |  |      | (5,932 | )    |  |      | (60,571 | )    |  |  | (28,235 | ) |  |  | (36,057 | ) |  |  | (32,108 | )
|Cash flows provided by financing activities               |  |                                           | 28,147  |               |  |      | 18,468 |      |  |      | 50,517  |      |  |  | 53,561  |   |  |  | 20,701  |   |  |  | 18,434  |  

5



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EXCHANGE RATE INFORMATION

AND THE EUROPEAN MONETARY SYSTEM


The European Monetary System

The rate of exchange for the French franc against
the euro was fixed on December 31, 1998 at
1.00 =
FF 6.55957. Although the introduction of the euro has
eliminated exchange rate risks between the French franc and the
currencies of the member states of the European Monetary Union,
or EMU, there can be no assurance as to the relative strength of
the euro against non-EMU currencies. We discuss the extent to
which our financial results are subject to currency fluctuations
in Item 5 Operating and Financial Review and
Prospects.

Exchange Rates




The following table sets forth, for the periods
and dates indicated, certain information concerning the exchange
rates for the French franc from 1997 through 1998, expressed in
French francs per U.S. dollar, and for the euro from 1999
through April 30, 2002, 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.




|     |  |                               |      |         |  |      |      |     |  |  |      |  |  |  |      | 
|---- |  | ----------------------------- | ---- | ------- |  | ---- | ---- | --- |  |  | ---- |  |  |  | ---- | 
|     |  | Period-end                    |      | Average |  |      |      |    
|     |  | Rate                          |      | Rate(1) |  | High |      | Low
|     |  |                               |      |         |  |      |      |    
|     |  |                              
|     |  | French francs per U.S. dollar
|1997 |  |                               | 6.02 |         |  |      | 5.84 |     |  |  | 6.35 |  |  |  | 5.19 | 
|1998 |  |                               | 5.59 |         |  |      | 5.90 |     |  |  | 6.21 |  |  |  | 5.39 | 



---



|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(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           |      | Average |  |      |      |     
|                            |          | Rate                 |      | Rate(1) |  | High |      | Low 
|                            |          |                      |      |         |  |      |      |     
|                            |          |                     
|                            |          | U.S. dollar per euro
|1999                        |          |                      | 1.01 |         |  |      | 1.06 |      |  |  | 1.18 |      |  |  | 1.00 |     
|2000                        |          |                      | 0.94 |         |  |      | 0.92 |      |  |  | 1.03 |      |  |  | 0.83 |     
|2001                        |          |                      | 0.89 |         |  |      | 0.89 |      |  |  | 0.95 |      |  |  | 0.84 |     
|2002 (through May 31, 2002) |          |                      | 0.93 |         |  |      | 0.92 |      |  |  | 0.94 |      |  |  | 0.90 |     
|2001                        |          |                      |      |         |  |      |      |      |  |  |      |      |  |  |      |     
|                            | December |                      |      | 0.89    |  |      |      | 0.89 |  |  |      | 0.90 |  |  |      | 0.88 | 
|2002                        |          |                      |      |         |  |      |      |      |  |  |      |      |  |  |      |     
|                            | January  |                      |      | 0.86    |  |      |      | 0.88 |  |  |      | 0.90 |  |  |      | 0.86 | 
|                            | February |                      |      | 0.87    |  |      |      | 0.87 |  |  |      | 0.88 |  |  |      | 0.86 | 
|                            | March    |                      |      | 0.88    |  |      |      | 0.88 |  |  |      | 0.88 |  |  |      | 0.87 | 
|                            | April    |                      |      | 0.90    |  |      |      | 0.89 |  |  |      | 0.90 |  |  |      | 0.88 | 
|                            | May      |                      |      | 0.93    |  |      |      | 0.92 |  |  |      | 0.94 |  |  |      | 0.90 | 






---






|    |                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 31,
    2002, the Noon Buying Rate was $1 =
    1.07
    ($0.93 per 1).




6



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##### Table of Contents






B.  Capitalization and
Indebtedness

Not applicable.




C.  Reasons for the Offer and Use of
Proceeds

Not applicable.

7



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##### Table of Contents






D.  Risk Factors

Risks Relating to Our Company

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.




Web conferencing services will compete with our
traditional audio and video conferencing services, and if they
are perceived as an equal quality but lower-cost alternative to
our traditional audio and video conferencing services, we may
lose market share 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.







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. In October 2000, for example, our
Denver, Colorado automated audio conferencing bridge, which
services all of our North American automated audio conferencing
customers, experienced a technical failure that lasted
approximately 45 minutes. The cause for this outage has
been ascertained and remedied. 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

8



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##### Table of Contents



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
companies acquired during 2000 accounted for 4.4% of our revenue
growth in 2001, and for 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, and
do not show trends that could be useful in analyzing our
historical or forecasting future trends.

Our high level of debt may limit our
operating flexibility.




We are highly leveraged. As of December 31,
2001, we had
149.9 million
of financial debt, the bulk of which was incurred under a 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 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.

9



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##### Table of Contents



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

We recorded significant goodwill and intangible
assets in 2001 in connection with our acquisitions of Vialog and
Astound. We will be required to amortize some identifiable
intangible assets over time, and to test this goodwill and the
value of the intangible assets that we acquired each time we
prepare our financial statements. In 2001, we recorded goodwill
amortization charges of
30.8 million
and impairment charges of
61.3 million.
While not all of these charges were related to Vialog and
Astound, the total amount was significantly increased by the two
acquisitions. Goodwill charges and any impairment charges could
increase our net loss and extend the time needed for us to reach
profitability.

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

In the year ended December 31, 2001, we
incurred a net loss of
98.5 million.
As of December 31, 2001, we had an accumulated deficit of
111.9 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 revenue growth 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 18 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 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.

Since the introduction of the euro in January
1999, its value has declined substantially against the
U.S. dollar and the British pound. As a result of this
decline, our revenues stated in euros have been greater than
they would have otherwise been. If the euro strengthens against
the dollar or the pound, our revenues stated in euros will be
lower than they would otherwise be. 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 beginning on page 61 of this annual
report.




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

10



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##### Table of Contents



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.

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
characterizes 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 Worldcom 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

11



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##### Table of Contents



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 months 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.

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, 2002, the closing price of our ordinary
shares ranged from a high of
79.50 per
share ($70.79 per share using the December 31, 2001
Noon Buying Rate) to a low of
7.57 per
share ($6.74 per share using the December 31, 2001
Noon Buying Rate), and since April 26, 2001 through
April 30, 2002, the closing price of our ADSs ranged from a
high of $15.59 per ADS to a low of $3.55 per ADS. Recently,
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.                                   

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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 and 2000 stock option plans. As of
April 30, 2002, options on up to 513,028 shares,
representing approximately 3.4% 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 Stock 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.




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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 8 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.

14



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|        |                           
|------- | --------------------------
|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.



| |                            
| | ---------------------------
| | 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 our innovative
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.






| |             
| | ------------
| | 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. It had four operating
centers, state-of-the-art digital conferencing technology, an
Internet portal site and an experienced U.S. sales force.
Vialog had built a large, stable customer base ranging from
Fortune 500 companies to small institutions, including several
major long distance telecommunications providers who had
outsourced their conferencing services to Vialog. 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 develops and markets
software for real-time multimedia data collaboration,
application sharing and personalized information delivery. Our
PowerShare service, now a part of our Genesys Meeting
Center, was developed by Astound, and we began marketing it
in June 2000 under a resale arrangement. We believe that the
acquisition of Astound strengthened our research and development
capabilities, particularly in the area of data collaboration.

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.

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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 NASDAQ in the form of American Depositary Shares, each
representing one half of one ordinary share.




B.  Business Overview

Introduction

We are the worlds leading independent
specialist provider of interactive group communications services
and applications, based on 2001 revenues. Since 1999, our
revenues have more than tripled largely as a result of our
acquisitions and, to a lesser extent, through organic growth,
increasing from
47.8 million
in 1999, to
92.4 million
in 2000 to
178.9 million
in 2001. Our acquisitions have also shifted our revenue base
from a majority in Europe in 1999 (58.1%), to a majority in
North America in 2001 (63.4%).

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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Virtual Group Conferencing.Our Virtual Group Conferencing
    category encompasses our innovative Genesys Meeting
    Center, which is a combination of our automated
    TeleMeeting audio conferencing, our Web-based data
    collaboration application PowerShare, Astounds
    conference center and our proprietary Web technology,
    Multi-Conference Manager. We also include our video
    conferencing services in this category.                                              
|
|
| |  | Events and Managed
    Services.Our Events And Managed
    Services category assists our customers in achieving the maximum
    results for any event, from a large scale telephone conference
    to a fully interactive Webcast. Our Events and Managed Services
    category encompasses our EventStream and
    PowerStream applications, which permit synchronized audio
    and video broadcasting, and our TeleEventservice, a fully
    operator-managed audio conferencing service.




The services provided in our two interactive
group communications platforms are derived from one or more of
the following three types of group communications:






| |   |                        
| | - | -----------------------
| |  | audio conferencing;    
|
| |  | video conferencing; and
|
| |  | Web-based conferencing.




We believe that we have the broadest global
presence among all full-service independent group communications
specialists, providing service to approximately 17,000
businesses, with more than 1,500 employees in 18 countries
in Europe, North America, and the Asia/Pacific Rim region as of
December 31, 2001. 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.




We believe our commitment to emerging interactive
group communication tools, applications and technologies has
been one of the cornerstones of our growth, and we are moving
rapidly to capitalize on the new opportunities provided by the
Internet.

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Strategy

We aim to be the worlds leading provider of
interactive group communications services and applications in
terms of both market share and technology. In pursuit of this
goal, we intend to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Aggressively market our global
    capabilities.We will use our
    experienced, knowledgeable sales force to aggressively market
    our global capabilities to multinational customers that we
    currently serve through only one or a few markets, such as
    Vialogs base of multinational companies, all of whom
    previously used Vialogs services only in the United
    States. In addition, we will actively pursue major new
    international contracts offered in global requests for proposals
    for one or more interactive group communication services.                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Enhance profitability and stimulate usage
    by migrating customers to automated services.We will continue to migrate
    customers wherever appropriate from operator-assisted services
    to fully-automated conferencing services. Vialogs
    customers, almost all of which used operator-assisted services,
    have been targeted for migration to automated services, which
    involve lower costs for the customer but generate higher margins
    and stimulate usage. In implementing this strategy, we will use
    our internal sales teams, which are dedicated to servicing
    existing customers, to promote the benefits of newer services.                                                                                                                                                                                                                                                                                                             
|
| |  | Continue to provide a comprehensive suite
    of services designed to provide a full array of integrated
    real-time communications.We will
    continue to offer one-stop shopping for a full line of group
    communications services, from traditional audio and video
    services to the latest in data collaboration over the Internet
    and Web streaming technology. We believe that offering both
    traditional audio and video conferencing as well as, and
    integrated with, new Internet-based services is essential to
    winning the business of our target multinational and multi-site
    national corporations, who are increasingly looking to
    rationalize and centralize their communication needs.                                                                                                                                                                                                                                        
|
| |  | Establish leadership through customer focus
    and innovation.We invest in and
    acquire new and innovative services designed to ensure that our
    services respond to the full range of customer demands. Examples
    of our commitment to innovation include our integrated
    Genesys Meeting Center, which has met with significant
    success since its launch in October 2001, and our Genesys
    Events and Managed Services, to be deployed to our call
    centers during 2002 in anticipation of commercial launch. Our
    Genesys Events and Managed Services is a feature-rich
    integration of audio, Web and video designed to provide an
    integrated multimedia platform for investor relations and event
    conferencing. As we move forward, we intend to focus on systems
    based on universal standards and open systems, in order to
    facilitate ease of use by our customers and the development of
    further innovative services.
|
| |  | Broaden distribution channels for our
    services.We will market
    customized and individually branded packages to alternative
    telecommunications providers, business-to-business exchanges and
    business-oriented Internet portals that seek to outsource the
    provision of group communications services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Reduce selling, general and administrative
    costs.We are in the process of a
    program designed to reduce our selling, general and
    administrative costs as a percentage of revenues. One way in
    which we are implementing this strategy is by consolidating our
    call centers in North America. The consolidation process,
    launched in February 2002, will transform our six North American
    call centers into three multimedia super centers, to
    provide higher levels of customer service and improve operating
    efficiencies.                                                                                                                                                                                                                                                                                                                                                                                                              

Our Group Communications Services and
Applications

From the simple conference call to the
large-scale Internet broadcast, from audio to video, data and
rich media, we provide group conferencing and managed event
conferencing services, linking remote participants and audiences
at any given time. We group our services into two categories of
interactive group communications: virtual group conferencing,
and events and managed services. The services that we provide in
each of these categories are based on one or more of three types
group communications: audio conferencing, video conferencing, or
Web-based conferencing.

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| |                           
| | --------------------------
| | Virtual Group Conferencing

We group our integrated audio and Web
conferencing service, Genesys Meeting Center, and our
video conferencing services under our Virtual Group Conferencing
category.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Genesys Meeting Center.Genesys Meeting Center is a
    fully integrated audio and Web conferencing platform, accessible
    on-demand through the Web and over the phone. Our innovative
    service takes virtual communication to the next level and
    permits true real-time, multimedia collaboration. Genesys
    Meeting Center is a new platform that combines the
    simplicity of the telephone with the impact of the Internet,
    turning the PC into a universal communications tool. It
    incorporates our fully automated TeleMeeting audio
    conferencing, our proprietary Web technology,
    Multi-Conference Manager, our PowerShare Web
    conferencing application and Astounds conference center
    resulting in a Web-based platform that gives users access to a
    virtual conference room 24 hours per day, 7 days
    per week.









| |  |                                                                                                                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Genesys Meeting
    Centerpermits the moderator to manage
    all aspects of the meeting through the Internet and by a simple
    click of the mouse. Other features of Genesys Meeting
    Center include:






| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A unique audio status and control bar next to
    participants names identifies the active speaker and
    allows the moderator to manage the audio portion of the
    conference along with the Web portion.                                                                                    
|
| |  | The capability of presenters to deliver dynamic
    multimedia presentations, collaborate and share any application
    running on their computers, conduct follow-me Web
    tours and jump between applications at any time during the
    meeting.                                           
|
| |  | A comprehensive invitation wizard with Microsoft
    Outlook® integration, and RSVP and reminder functions for
    easy invitation management for organizers.                                                                                                                                     
|
| |  | Pre-scheduling of polls and pre-selection of Web
    pages.                                                                                                                                                                                                                                       
|
| |  | Waiting room, sub conference rooms, mute and
    un-mute, surveys and ad hoc voting, and live text chat that can
    be conducted during the conference and then archived.                                                                                                                        
|
| |  | Advanced streaming and archiving capabilities
    that permit participants to attend a conference call or working
    session through their PCs, in real time or at a later date,
    through archived sessions. Live conferences can be streamed to
    reach wider audiences throughout the Web.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We host Genesys Meeting Center on our
    global network with multiple bridge locations across the 18
    countries in which we operate. We launched Genesys Meeting
    Center in October 2001 in North America and in the United
    Kingdom, and have progressively deployed it throughout the
    Asia/Pacific Rim region and Europe at the end of 2001 and
    beginning of 2002. Localized versions in French, German,
    Swedish, Spanish and Italian are available. We generate revenues
    from Genesys Meeting Center in two ways. We charge for
    the Web-based conferencing services in Genesys Meeting
    Center on a monthly subscription basis based upon the number
    of seats available in the virtual conference room.
    We also earn revenues from the fully automated audio
    conferencing services in Genesys Meeting Center on a per
    participant, per minute basis.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Video Conferencing.We offer a multi-point video
    conference service enabling video connection between two sites
    or more, no matter what equipment, networks and standards are
    used. We handle the whole meeting, from inviting participants to
    the selection of the best networks in relation to the location
    of the sites involved. 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. We generate revenues by
    charging for the service on a per-line, per-minute basis, with
    enhanced services charged on an added fee basis.



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

From a large scale telephone conference to a
fully interactive Webcast, our managed event services provide
our customers with multiple possibilities to achieve their
desired impact. We group our Web-based audio and

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video streaming applications, EventStream
and PowerStream, and our fully-operated assisted audio
conferencing service, TeleEvent, under our Events and
Managed Services category.







| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | EventStream and
    PowerStream.EventStream
    and PowerStream are both 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. Conferences
    or events, can be transmitted live over the Web or recorded for
    later playback.






| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 like to view it. For example, participants may
    chose to listen in via telephone or through an audio stream over
    the Internet.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TeleEvent.TeleEvent is 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 will
    dial-out to them. An operator takes full control of the
    conference, ensuring that the delivery of the call is flawless.
    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
    TeleEvents, we assign a dedicated cross-functional team
    to each TeleEvent client. Our service begins with
    guidance in the initial planning of the event to maximize the
    events impact. During the event, specialist operators
    manage all aspects of the conference including branded
    greetings, detailed recording of participant information and the
    management of controlled question and answer sessions, which
    help to control speaking time and maintain focus. This allows
    the presenter to focus on conveying the desired message to the
    audience.
|
| | 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.                                                                                                                                                                       



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

The services that we offer in our two 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
    TeleEvent. Audio conferencing represented approximately
    88.1% of our revenues in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | 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. We offer our video
    conferencing services primarily in our Virtual Group
    Conferencing category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | 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. Our
    PowerShare application, now a part of our 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. Our
    Multi-Conference Manager browser based end-user software,
    which forms part of our Genesys Meeting Center, enables
    customers to monitor and manage their virtual

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| |  |                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 four main types of products and
services from outside suppliers:




Telecommunications
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. Our main suppliers are Sprint, AT&T and
Cable & Wireless in the United States; France Telecom
and WorldCom in France; Telewest, Colt and Energis in the United
Kingdom; Telstra in Australia and Tele2 in Sweden. We
increasingly deal with alternative operators such as Colt in
Germany, and are currently investigating the possibility of
developing region-wide service contracts in Europe and
Asia/Pacific in order to reduce transmission costs.







Since April 1,1999, our U.S. subsidiary
has been obligated to purchase a portion of its long-distance
telecommunications services from Cable &Wireless. This
portion is related to the business originally conducted by Aloha
Conferencing (which was acquired from Cable &Wireless in
April 1999). Prices under the agreement are subject to
adjustment every six months to match any more favorable rates
offered by Cable &Wireless to a comparable customer. We may
terminate the agreement with Cable &Wireless at any time
after on April 1, 2003 with six months prior notice. We may
also terminate the agreement from time to time as to either
U.S. or international service if the prices being charged
under the agreement cease to be competitive with those offered
by other specified major long-distance carriers as determined
under a formula provided in the agreement.







Teleconferencing Bridges and Video
Platforms.Our primary suppliers
of teleconferencing bridges include Prescom and Spectel. Our
principal video platforms include equipment manufactured by
VideoServer, PictureTel and Accord.







Audio and Video Conferencing
Equipment.Our primary provider of
audio and video conferencing equipment is Polycom, a major
supplier of conferencing terminal equipment. Since
July 31,1999, we have been obligated to exclusively use
Williams Communications for our external video events management
services.




Data Collaboration and Web Streaming
Software.We acquired our primary
supplier of data collaboration software, Astound, in March 2001.
Astound developed our PowerShare application, which is
now integrated into Genesys Meeting Center. We have an
agreement with Activate for the provision of audio streaming
services, although we provide a portion of our needs internally.

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 each of the 18 countries in which we operate, and
tailor our sales organization, marketing and advertising efforts
to each individual market. We have a direct sales force in each
market. At the end of December 2001, we had a total of 277 sales
personnel, including 73 based in Europe, 181 based in the United
States and 23 based in Asia. Our acquisition of Vialog nearly
tripled our sales force in the United States. 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
    relation-

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | ships. 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 2001, won global contracts with
    companies such as JP Morgan, Regus, Sony and Federal Express.
    Each account manager deals with the customers home country
    office or headquarters when establishing global service.
|
| |  | 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.                                                                                                                                                                                                                                       



| |                                                 
| | ------------------------------------------------
| | 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, PC bundling relationships with Hewlett Packard and Dell
Computer and are negotiating additional relationships.



| |          
| | ---------
| | 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, Goto.com and the GTE Superpages, 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 Web-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 and
stored on each telecommunications bridge 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




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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 are 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. 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 teleconferencing 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. We believe that
this common back office system, with its functionality and
flexibility, will enhance our ability to respond to requests
from customers for customized billing and reporting. For
example, a multinational client can be provided with usage
reporting by service, geography and user. We currently expect
the implementation of this system to be completed over the next
six to nine months.




Customers




As of December 31, 2001 we had over 17,000
customers world-wide 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. Our April 2001 acquisition of Vialog
doubled our customer base. No one customer accounted for more
than 5% of our revenues during the year ended December 31,
2001. Our top 20 customers accounted for 25.8% of our revenues
during the year ended December 31, 2001. Some of our top
customers in 2001 were Cable & Wireless, CIGNA Corp.,
Citibank, Deutsche Bank, the Gartner Group and JP Morgan.




On April 1,1999, as a condition to our
acquisition of Aloha, we agreed with Cable & Wireless
USA, Inc. that Cable & Wireless USA, Inc. would
purchase from our company, in each twelve month period ending
March 31 during an initial four year term, 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. The prices
charged to Cable & Wireless are subject to adjustment
every six months to match any more favorable rates we offer to a
comparable customer in the United States.




On July 31, 1999, as a condition to our
acquisition of the conferencing unit of Williams Communications,
we and Williams Communications agreed that we would be the
preferred third-party provider of audio and data conferencing
services and, after September 25, 2000, video conferencing
services (that use ISDN as a transport protocol), to Williams
Communications and its affiliates in the United States for a
term of three years, with limited exceptions where Williams
Communications had internal capabilities. The prices charged are
on a retail most favored customer basis, which is reevaluated as
of November 1 of each year during the term.




22



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Global Presence

We offer our services in 18 countries in Europe,
North America, and the Asia/Pacific Rim region. The countries in
which we have facilities include:

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

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 country by country basis, with each country reporting to a
regional Executive Vice President who in turn reports to the
Chief Operating Officer. Local advertising and marketing
decisions are made on a country by country basis and are
coordinated by regional Executive Vice Presidents. A global
sales team also reporting to the Chief Operating Officer focuses
on major multinational and global accounts. During 2001, we
created a global video division, with its own division Chief
Executive Officer.

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 1999, we
earned nearly 38% of our revenues in the United States, in 2000,
we earned nearly 46% in the United States, and in 2001, we
earned over 60% in the United States.

Technology

Our conferencing services are provided using
equipment known as telecommunications bridges. Conferencing
capacity is measured in ports, with one port needed for each
conference participant. At the end of 2001, we had a total audio
conferencing capacity of 38,998 ports, of which 9,600 were
located in Europe, 28,386 were located in the United States and
1,012 were located in the Asia/Pacific Rim region. These ports
can be networked in whole or in part to accommodate large calls.
We have procedures designed to manage server and bridge capacity
in order to manage traffic during periods of heavy demand,
including peak periods such as Monday mornings. Additional audio
conferencing capacity can be added through the purchase and
installation of additional bridges. Our video conferencing
capacity was approximately 444 ports worldwide at the end of
2001, of which 184 were located in Europe, 224 were located in
the United States and 36 were located in the Asia/Pacific Rim
region.

We provide our data collaboration and streaming
services through relationships with our suppliers M-Show,
Activate and LiveWare5 as well as through internally developed
services. To date, operational capacity for these services has
exceeded market demand as these services are still in their
infancy, but we estimate that the theoretical capacity is in
excess of 100,000 simultaneous users. Our policy is to purchase
additional bridging and streaming capacity when average daily
usage reaches 70% of available capacity.

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.

All of our network operation centers are designed
with resilience and redundancy to help limit interruptions to
service. Each location is serviced by more than one primary
telecommunications carrier, and many feature bi-directional
fiber access and SONET rings, which increase reliability. All
network operations centers have backup electrical power and
significant fire and security protection. Each network
operations center provides backup for other group network
operations centers, so in the event of a national or regional
catastrophic failure, traffic can be diverted to a
geographically distant, and therefore non-affected, location.

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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 2001, we
spent
5.4 million,
or 3% of our total revenues, on research and development. We
consider that our ability to develop innovative applications
such as Genesys Meeting Center, Genesys Event and Managed
Services and our Multi-Conference Manager software
have been instrumental to our growth and our ability to retain
customers. Our research and development team, including
management information systems development, included around 100
researchers at the end of December 2001. Our research and
development team is managed by our Chief Strategy Officer, 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;                                         
|
| |  | enhancements to Genesys Meeting Center;                                      
|
| |  | enhanced Web streaming applications;                                         
|
| |  | enhanced data collaboration services;                                        
|
| |  | voice over Internet applications;                                            
|
| |  | video over Internet applications; and                                        
|
| |  | management information systems, including
    customer reporting and billing.

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.
We hold one U.S. patent, through the acquisition of
Astound, pertaining to the synchronization of audio and music to
graphics and have filed for others. 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, the group communications market is
dominated by major telecommunications operators. Additionally,
Internet-based services are increasingly being offered by large
software companies. 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

24



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##### Table of Contents



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 its services are:



| |   |                                                               
| | - | --------------------------------------------------------------
| |  | innovation;                                                   
|
| |  | brand awareness;                                              
|
| |  | quality of customer service;                                  
|
| |  | ease of use of services;                                      
|
| |  | geographic scope;                                             
|
| |  | breadth, reliability and security of service
    offerings;   
|
| |  | compatibility with new and existing communication
    formats;
|
| |  | capacity; and                                                 
|
| |  | 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 WorldCom;                                                                
|
|
|
| |  | Companies with conferencing revenues of over
    U.S. $100 million to U.S. $199 million per
    annum: Intercall and Global Crossing; and                                            
|
|
|
| |  | Companies with conferencing revenues of below
    U.S. $100 million per annum: ACT, Premiere, Raindance,
    British Telecom, WebEx, 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.




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. There can be no
assurances 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.

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C.  Organizational
Structure

The table below sets forth our significant
subsidiaries and affiliates as of December 31, 2001.




|                                            |  |               |                |           |  |  |     |  
|------------------------------------------- |  | ------------- | -------------- | --------- |  |  | --- | -
|                                            |  | Country of    |                | Ownership
|Significant Subsidiary or Affiliate         |  | Incorporation |                | Interest 
|                                            |  |               |                |          
|Genesys Conferencing, Inc.                  |  |               | United States  |           |  |  | 100 | %
|Genesys Conferencing of Massachusetts, Inc. |  |               | United States  |           |  |  | 100 | %
|Genesys Conferencing Ltd.                   |  |               | United Kingdom |           |  |  | 100 | %




Since the beginning of 2002, we have undertaken
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 Massachusetts, 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.

We have also planned to contribute all of the
conferencing activities we conducted in France to our
subsidiary, Genesys Conferencing France S.A., in order to become
a holding company. If approved at our June 2002
shareholders meeting, this restructuring will be
retroactive to January 2002.




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
rerouted from an operations center that is at full capacity. Our
administrative headquarters are located in Montpellier, France.
At December 31, 2001, our principal operational facilities
were the locations listed in the table below.




|                        |  |                     |  |                     
|----------------------- |  | ------------------- |  | --------------------
|North America           |  | Europe              |  | Asia/Pacific        
|                        |  |                     |  |                     
|Headquarters:           |  | Headquarters:       |  | Headquarters:       
|                        |  |                     |  |                     
|Denver, Colorado        |  | London, England     |  | Singapore           
|                       
|Call Centers:           |  | Call Centers:       |  | Call Centers:       
|                        |  |                     |  |                     
|Montgomery, Alabama*    |  | Croydon, England    |  | Melbourne, Australia
|Bedford, Massachusetts* |  | Thatcham, England   |  | Hong Kong           
|Denver, Colorado*       |  | Roedermark, Germany |  |                     
|Reston, Virginia        |  |                     |  |                     
|Chanhassen, Minnesota   |  |                     |  |                     
|Honolulu, Hawaii        |  |                     |  |                     






---



|  |                                                                                  
|- | ---------------------------------------------------------------------------------
|* | Call center to be closed as part of North
    American call center consolidation.

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.

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In February 2002, we announced plans to
consolidate our six North American call centers into three
multimedia super centers, to provide higher levels
of customer service and improve operating efficiencies. In March
2002, in connection with this plan, we announced the execution
of the first phase, with the closure of our Bedford,
Massachusetts call center on March 20, 2002. All traffic
generated through that site has been re-routed to our Reston,
Virginia facility. The other call centers affected by our
consolidation plan include Montgomery, Alabama and Denver,
Colorado.

27



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



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

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 since the beginning of 1998.
During that period, 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 67.0% of our
revenues outside Europe in 2001. We have also diversified the
scope of our products and services. At the beginning of 1998, we
provided only audio conferencing services. Since then, we have
expanded our services to include video conferencing (beginning
in 1998), and Web-based conferencing comprised of data
collaboration and Web streaming services (both beginning in the
third quarter of 2000).

Since the beginning of 2001, we have 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 financial statements for 2001
include the results of Astound for nine months and the results
of Vialog for eight months.






A.  Operating Results




| |                    
| | -------------------
| | Recent Developments

In February 2002, we announced plans to
consolidate our six North American call centers into three
multimedia super centers during 2002. We estimate
that the costs associated with the consolidation will total
approximately
8 million.
Of this amount, we expect to record a pre-tax restructuring
charge of approximately
3.6 million
in the first quarter of 2002. The remaining amount will be added
to the goodwill relating to the acquisition of Vialog. The costs
include primarily the lease commitments on expected unused
facilities, the write-off of certain leasehold improvements and
equipment and employee severance. We estimate that future annual
cost savings from the consolidation will range from
3.5 to
4.0 million
beginning the third quarter of 2002. This annual cost saving is
expected to have a positive impact on our gross margin, and to
reduce selling and marketing and general and administrative
expenses. In March 2002, we announced the completion of the
first phase of our call center consolidation.



| |                       
| | ----------------------
| | Impact of Acquisitions

One of the primary drivers of our recent growth
has been our effort to expand our global presence and service
offering by making strategic acquisitions. Among the most
significant effects of our acquisitions have been:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased
    revenues.During the three year
    period ended December 31, 2001, our revenues grew from
    48.0 million
    in 1999 to
    179.0 million
    in 2001. Companies we acquired during 2000 accounted for
    2.5 million
    in revenues, or approximately 5.7% of our total annual revenue
    growth, in 2000. An additional
    18.5 million,
    or 42% of the total annual revenue growth in 2000, was due to
    the impact of including a full year of revenues in 2000 from
    companies that were consolidated for less than the full year in
    1999. Companies we acquired during 2001 accounted for
    65.7 million
    in revenues, or approximately 76% 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.
|
| |  | Change in composition of revenues and
    margins.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, and thus
    have lower margins than automated unattended conferencing
    services. As a result, we position operator-assisted service as
    a complement to our core                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | automated service, and are migrating existing
    customers of our acquired companies from operator-assisted
    services to higher margin automated services. We also expect to
    generate a greater proportion of our revenues in the future from
    data collaboration and Web streaming services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Global
    presence.Our acquisitions have
    enabled us to expand our geographic coverage from
    5 European countries at the beginning of 1998 to 18
    countries in Europe, North America, and the Asia/Pacific region
    at the end of 2001. Our April 2001 acquisition of Vialog alone
    nearly tripled our North American operations. Based on our
    experience in marketing global conferencing services, we believe
    our global coverage enhances our ability to win contracts from
    the multinational customers that are the worlds largest
    users of conferencing services. One of the effects of our
    expansion into new markets has been to increase our exposure to
    exchange rate fluctuations. The impact of exchange rate
    fluctuations is discussed in more detail below.                                                                                                                                                                                                                                                                                                    
|
| |  | Increased amortization and financial
    expenses.We have accounted for
    all of our acquisitions under the purchase method of accounting.
    Under this method of accounting, we record the excess of the
    purchase price over the net assets of acquired companies as
    goodwill and identifiable intangible assets, which we amortize
    on a straight line basis over a period ranging from 3 to
    20 years. The resulting increase in amortization expense
    has had and will continue to have a significant impact on our
    results of operations. In 2001, we recorded
    30.8 million
    and
    61.2 million
    in goodwill and other intangibles amortization charges and
    impairment charges, respectively. In 2002, we will adopt
    Statement of Financial Accounting Standards No 142, Goodwill
    and Other Intangible Assets, which we expect will result in
    a decrease in amortization charge of
    12.5 million
    in 2002. In connection with our acquisitions, we have also
    incurred additional indebtedness, which has increased our net
    financial expense.

We intend to continue to make strategic
acquisitions to further expand our global presence and to
broaden the scope of our services. As we do so, the factors
mentioned above may have an increasing impact on our results of
operations.

Our principal acquisitions in 2000 and 2001 are
summarized in the following table:

|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  |                                 
|------------------------------------------------------------------------------------ |  | ------- | ------------- | ---- |  | -------- | ---------- | ----------------------------- |  | - | ----- |  |  | --------------------------------
|                                                                                     |  |         |               |      |  | Purchase |            |                              
|                                                                                     |  |         |               |      |  | Price in |            |                              
|Name                                                                                 |  | Country |               | Date |  | millions |            | Principal benefits to Genesys
|                                                                                     |  |         |               |      |  |          |            |                              
|Cable & Wireless Communications audio
    and video conferencing services in Europe |  |         | U.K.          |      |  |          | April 2000 |                               |  |  | 5.7   |  |  | Strengthen audio and video      
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | conferencing position in Europe 
|Mediactiv/MedLive                                                                    |  |         | France        |      |  |          | June 2000  |                               |  |  | 2.7   |  |  | Web event expertise             
|Cote & Com                                                                           |  |         | France        |      |  |          | July 2000  |                               |  |  | 1.4   |  |  | Web event expertise             
|Langages Virtuels (EBCS/Axone)                                                       |  |         | France        |      |  |          | July 2000  |                               |  |  | 13.2  |  |  | Web streaming expertise         
|Telcen                                                                               |  |         | Australia     |      |  |          | July 2000  |                               |  |  | 0.9   |  |  | Expand video conferencing in    
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | Australia                       
|Telechoice Deutschland/Eureka Global
    Teleconferencing                            |  |         | Germany       |      |  |          | Sept. 2000 |                               |  |  | 6.7   |  |  | Strengthen audio and video      
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | conferencing position in Germany
|Astound, Inc.                                                                        |  |         | Canada        |      |  |          | March 2001 |                               |  |  | 58.9  |  |  | Strengthen research and         
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | development capabilities,       
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | particularly in the area of data
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | collaboration                   
|Vialog Corporation                                                                   |  |         | United States |      |  |          | April 2001 |                               |  |  | 123.5 |  |  | Double our customer base and    
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | become the leading conferencing 
|                                                                                     |  |         |               |      |  |          |            |                               |  |   |       |  |  | specialist in North America     

29



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We include the results of acquired companies in
our results of operations from their respective dates of
acquisition. As a result, our historical financial statements
are not directly comparable from one period to the next. For
additional information regarding these acquisitions see
Item 4 Information on the Company  History
and Development of the Company,  Business
Overview and Note 4 to our financial statements filed
under Item 18.



| |                                                        
| | -------------------------------------------------------
| | Key factors affecting revenues and
    operating income

Until 2002, we organized our services and
reported our revenues along the type of service provided: audio
conferencing, video conferencing and data collaboration and Web
streaming. Beginning in 2002, we will further group these
services into two interactive group communications categories:
Virtual Group Conferencing and Events and Managed Services.



| |        
| | -------
| | Revenue

We generate our revenues primarily from fees
charged to our customers for conferencing and related services.
We earn revenues from three principal types of interactive group
communications services:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Audio conferencing.Historically, we have generated the large majority of our
    revenues from fees charged to customers for audio conferencing
    services, which accounted for 88.1% of our total revenues in
    2001. We bill our audio conferencing services on a per-line,
    per-minute basis.                                                                                                                                                                                                                                                                              
|
|
|
| |  | Video conferencing.We began offering video conferencing services in 1998, in
    partnership with VideoWeb, and significantly expanded those
    services with our acquisitions of VideoWeb in April 1999,
    Conferencing Acquisition Corporation (a subsidiary of Williams,
    Inc.) in July 1999, the customer list of Cable & Wireless UK
    in April 2000 and Vialog Corporation in April 2001. In 2001,
    video conferencing services accounted for approximately 6.1% of
    total revenues. We bill our video conferencing services on a
    per-line, per-minute basis.
|
|
| |  | Web-based conferencing.We offer two types of Web-based
    conferencing services: data collaboration and Web streaming.                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Data collaboration.We began offering data collaboration services in the fourth
    quarter of 2000, following the launch of our PowerShare
    application. We have further strengthened our position since
    then through the acquisition of Astound. In October 2001, we
    launched Genesys Meeting Center, a fully integrated audio
    and Web conferencing platform, which now incorporates
    PowerShare. In 2001, data collaboration services
    accounted for approximately 2.4% of total revenues. We bill data
    collaboration services either on a per-user, per-minute basis
    or, in the case of the Web conferencing service included in
    Genesys Meeting Center, on a monthly subscription basis.
    Subscribing customers pay a monthly fee for a certain number of
    seats in a virtual conference room.
|
| |  | Web streaming.We
    began offering Web streaming services in June 2000, following
    our acquisition of Mediactiv, and further strengthened our
    position since then through our July 2000 acquisitions of
    Langages Virtuels and Cote&Com. In 2001, Web streaming
    services accounted for approximately 2.3% of total revenues. We
    charge for Web streaming services on a per event basis that
    takes into account the size and complexity of the services
    requested.                                                                                                                                                                                                                                                                                                                                             




For each of our audio, video and data services,
the key factors that determine revenues are the volume of
minutes sold and the average per-line, per-minute price for the
service. We have experienced strong volume growth in each of
these types of services since 1999, driven primarily by
acquisitions, together with, in the case of audio conferencing,
strong organic growth. Average per-minute prices for audio
conferencing have declined since 1999, primarily as a result of
the effect of volume discounts, competitive pressure and an
emphasis on automated unattended conferencing services, which we
bill at lower rates. The key drivers for the Web collaboration
included in the Genesys Meeting Center are the number of
subscriptions sold. The key drivers of Web streaming revenues
are the number of events managed and the average per event price
for the service.




30



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##### Table of Contents



In addition to our services, we also earn other
revenues from the sale of audio and video conferencing
equipment, which we record under Products. These
sales accounted for 1.0% of our total revenues in 2001. 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 until
these obligations are met. We include amounts billed in excess
of revenue recognized as deferred revenue in our consolidated
balance sheets.



| |                                 
| | --------------------------------
| | Cost of Revenue and Gross Profit

Our cost of revenue consists of long distance
telephone and network charges, operator and technical support
salaries and office expenses for operations staff, depreciation
on our teleconferencing bridges and telecommunications equipment
and equipment product costs. Of these costs, the largest
components are operator and technical support salaries and long
distance telephone and network charges. Our overall gross margin
increased from 55.9% of total sales in 2000 to 57.4% in 2001
primarily as a result of the migration of our customers,
particularly in North America, from attended services to
automated services, which carry higher margins. We expect our
gross margin to continue to improve if we continue to be
successful in this strategy. However, the improvement may be
partly offset by expected price decreases due to stronger
pressure from competitors and favorable rates offered for large,
multinational contracts. We expect that the costs savings from
our announced consolidation of our North American call centers
described above under  Recent
Developments will have a positive impact on our gross
margin.



| |                        
| | -----------------------
| | Seasonality of Revenues

We historically have experienced, and expect to
continue to experience, seasonal fluctuations in revenues,
including lower revenues in the third quarter. This seasonality
results mainly from decreases in general consumption during the
summer vacation periods, particularly in the months of July and
August. Because of this seasonality, our rate of revenue growth
is typically lower in the third quarter than in other quarters.



| |                 
| | ----------------
| | Operating income

Our operating income depends on our revenue, our
cost of revenue, and the level of our other operating expenses.
Our principal operating expenses are:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.
|
| |  | Impairment of goodwill and other intangibles,
    which consists principally of charges related to the review of
    the carrying value of its goodwill and identifiable intangible
    assets that were recorded in connection with our various
    acquisitions.                                                                                                                                                                                                                                                              

31



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Amortization of goodwill and other intangibles,
    which consists principally of expenses related to the
    amortization of goodwill from acquisitions, and to a lesser
    extent, of the amortization of other intangibles. We will apply
    Statement of Financial Accounting Standards No 142,
    Goodwill and Other Intangible Assets, beginning in 2002,
    which we expect will result in a decrease in amortization charge
    of
    12.5 million
    beginning in 2002.

Additionally, we expect to record a pre-tax
restructuring charge of approximately
3.6 million
in the first quarter ending March 31, 2002 related to the
consolidation of our North American call centers described above
under  Recent Developments.



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

We believe that EBITDA is a meaningful measure of
performance and use it for purposes of managing our business and
evaluating our financial health. We define EBITDA as earnings
(loss) before income taxes, interest, depreciation, amortization
charges and impairment of goodwill and other intangibles. Our
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.

Our EBITDA declined as a percentage of revenues
from 14.1% in 1999 to 9.4% in 2001. One of the most important
drivers behind our EBITDA margin is the level of our personnel
costs, which are divided among the line items cost of revenue,
research and development, selling and marketing and general and
administrative expenses based on the function of the relevant
employees.

Year ended December 31, 2001 compared
with year ended December 31, 2000



| |        
| | -------
| | Revenue

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                    |        | 2001    
|                                    |  |                         |        |         
|                                    |  | in thousands            |        | % of     |  | in thousands |        | % of    
|                                    |  | of                     |        | revenues |  | of          |        | revenues
|                                    |  |                         |        |          |  |              |        |         
|Audio conferencing                  |  |                         | 75,541 |          |  |              | 81.7%  |          |  |  | 157,707 |  |  |  | 88.1%  | 
|Video conferencing                  |  |                         | 12,238 |          |  |              | 13.2%  |          |  |  | 10,944  |  |  |  | 6.1%   | 
|Data conferencing and Web streaming |  |                         | 1,557  |          |  |              | 1.8%   |          |  |  | 8,469   |  |  |  | 4.7%   | 
|Products                            |  |                         | 3,083  |          |  |              | 3.3%   |          |  |  | 1,831   |  |  |  | 1.1%   | 
|                                    |  |                         |        |          |  |              |        |          |  |  |         |  |  |  |        | 
|Total revenues                      |  |                         | 92,419 |          |  |              | 100.0% |          |  |  | 178,951 |  |  |  | 100.0% | 
|                                    |  |                         |        |          |  |              |        |          |  |  |         |  |  |  |        | 

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 movements, 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 in 2001, as opposed to
including only six, three and three months, respectively, in
2000. The remaining
15.7 million
increase was

32



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##### Table of Contents



driven by organic revenue growth in the United
States and Europe, particularly in the United Kingdom, France
and Sweden. This organic growth is mainly attributable to our
automated audio-conferencing services. 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.


Audio conferencing.Audio conferencing revenues increased by 108.6%, from
75.5 million
during 2000 to
157.7 million
during 2001. Of the
82.2 million
increase in audio conferencing revenues,
62.8, or 76.5%
of the increase, was attributable to the acquisition of Vialog
at the end of April 2001 with the resulting increase in call
volume minutes. The remaining
19.4 increase
was mainly driven by organic revenue growth in the United States
and Europe as described above.

Video conferencing.Video conferencing revenues decreased by 10.6%, from
12.2 million
during 2000 to
10.9 million
during 2001. This decrease is mainly due to the loss of
maintenance contracts for video equipment that were included as
part of the 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.

Data conferencing and Web
streaming.Data conferencing and Web
streaming revenues significantly increased from
1.6 million
in 2000 to
8.5 million
in 2001. The
6.9 million
increase in revenues was 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, as well as the inclusion of nine months of results of
Astound, following its acquisition in March 2001.

Geographic composition of
revenues.The following table breaks
down our revenues by region for each of 2000 and 2001 in euros
and expressed as a percentage of total revenues:

|               |  |                         |        |          |  |              |        |          |  |  |         |  |  |  |        | 
|-------------- |  | ----------------------- | ------ | -------- |  | ------------ | ------ | -------- |  |  | ------- |  |  |  | ------ | 
|               |  |                        
|               |  | Year ended December 31,
|               |  |                        
|               |  |                         |        |         
|               |  | 2000                    |        | 2001    
|               |  |                         |        |         
|               |  | in thousands            |        | % of     |  | in thousands |        | % of    
|               |  | of                     |        | revenues |  | of          |        | revenues
|               |  |                         |        |          |  |              |        |         
|Europe         |  |                         | 45,886 |          |  |              | 49.6%  |          |  |  | 59,125  |  |  |  | 33.0%  | 
|North America  |  |                         | 42,097 |          |  |              | 45.6%  |          |  |  | 113,481 |  |  |  | 63.4%  | 
|Asia-Pacific   |  |                         | 4,436  |          |  |              | 4.8%   |          |  |  | 6,345   |  |  |  | 3.6%   | 
|               |  |                         |        |          |  |              |        |          |  |  |         |  |  |  |        | 
|Total revenues |  |                         | 92,419 |          |  |              | 100.0% |          |  |  | 178,951 |  |  |  | 100.0% | 
|               |  |                         |        |          |  |              |        |          |  |  |         |  |  |  |        | 

The shift in the geographic composition of
revenues to North America is primarily a result of the impact of
our April 2001 acquisition of Vialog, and to a lesser extent,
our March 2001 acquisition of Astound.



| |             
| | ------------
| | Gross Profit

Our gross profit increased from
51.7 million
in 2000 to
102.8 million
in 2001. 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, particularly in North America. Automated services
carry higher margins than attended services. We expect that the
announced consolidation of our North American call centers,
planned for 2002, will have a positive impact on our gross
margin due to the expected reduction in our cost of revenues.



| |               
| | --------------
| | Operating Loss

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

33



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##### Table of Contents



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 components.


|                                               |  |                         |        |          |  |              |       |          |  |  |         |  |  |  |        | 
|---------------------------------------------- |  | ----------------------- | ------ | -------- |  | ------------ | ----- | -------- |  |  | ------- |  |  |  | ------ | 
|                                               |  |                        
|                                               |  | Year ended December 31,
|                                               |  |                        
|                                               |  |                         |        |         
|                                               |  | 2000                    |        | 2001    
|                                               |  |                         |        |         
|                                               |  | in thousands            |        | % of     |  | in thousands |       | % of    
|                                               |  | of                     |        | revenues |  | of          |       | revenues
|                                               |  |                         |        |          |  |              |       |         
|Research 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.
Approximately
2.2 million,
or 4.4% 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 relationship expenses following
our listing in April 2001 on the Nasdaq Stock Market).






| |                                                   
| | --------------------------------------------------
| | 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 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.

34



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##### Table of Contents





| |                                                 
| | ------------------------------------------------
| | 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.






| |              
| | -------------
| | EBITDA Margin

Our EBITDA, excluding the impairment loss on
goodwill and identifiable intangible assets, increased from
12.0 million
in 2000 to
16.9 million
in 2001. Our EBITDA margin decreased from 12.9% in 2000 to 9.4%
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. We expect that the
announced consolidation of our North American call centers
during 2002 will improve operating efficiency and that this will
help improve our EBITDA margin after the consolidation is
completed.



| |                            
| | ---------------------------
| | Financial Income (Expenses)

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 payable).



| |                   
| | ------------------
| | 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.

35



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##### Table of Contents



Year ended December 31, 2000 compared
with year ended December 31, 1999



| |        
| | -------
| | Revenue

The following table sets forth our revenues for
1999 and 2000 by category and expressed as a percentage of total
revenues.

|                                       |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 
|-------------------------------------- |  | ----------------------- | ------ | -------- |  | ------------ | ------ | -------- |  |  | ------ |  |  |  | ------ | 
|                                       |  |                        
|                                       |  | Year ended December 31,
|                                       |  |                        
|                                       |  |                         |        |         
|                                       |  | 1999                    |        | 2000    
|                                       |  |                         |        |         
|                                       |  | in thousands            |        | % of     |  | in thousands |        | % of    
|                                       |  | of                     |        | revenues |  | of          |        | revenues
|                                       |  |                         |        |          |  |              |        |         
|Audio conferencing                     |  |                         | 42,788 |          |  |              | 89.2%  |          |  |  | 75,541 |  |  |  | 81.7%  | 
|Video conferencing and other services* |  |                         | 4,372  |          |  |              | 9.1%   |          |  |  | 13,795 |  |  |  | 14.9%  | 
|Products                               |  |                         | 835    |          |  |              | 1.7%   |          |  |  | 3,083  |  |  |  | 3.4%   | 
|                                       |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 
|Total revenues                         |  |                         | 47,995 |          |  |              | 100.0% |          |  |  | 92,419 |  |  |  | 100.0% | 
|                                       |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 



---



|  |                                                                    
|- | -------------------------------------------------------------------
|* | Includes data collaboration and Web streaming
    services in 2000.

Total revenues increased from
48.0 million
in 1999 to
92.4 million
in 2000, an increase of 92.6%. Of the
44.4 million
increase,
2.5 million,
or 5.7% of the increase, was attributable to acquisitions made
during 2000. Approximately
8.1 million,
or 18.2% of the increase in revenues from 1999 to 2000 was due
to the impact of currency exchange rate movements, as the euro
depreciated against the dollar and other non-euro currencies in
which we do business. Approximately
18.5 million,
or 42% of the increase in revenues from 1999 to 2000 was due to
the impact of including a full year of revenues from Williams,
Aloha and VideoWeb in 2000, as opposed to including only five,
nine and eight months, respectively, in 1999. The remaining
15.3 million
increase was driven by strong revenue growth in Europe,
particularly in the United Kingdom and Germany, due to growth in
automated services. During the period, our total call minutes
nearly doubled from 158 million in 1999 to 305 million
in 2000.

Audio conferencing.Audio conferencing revenues increased 76.5%, from
42.8 million
during 1999 to
75.5 million
during 2000. Of the
32.7 million
increase in audio conferencing revenues, the main part was
attributable to impact of including a full year of revenues from
Williams and Aloha in 2000, as opposed to including only five
and nine months, respectively, in 1999. The remaining increase
was driven by strong revenue growth in Europe, particularly in
the United Kingdom and France, due to strong growth in automated
services.

Video and data
conferencing.Video and data
conferencing revenues more than tripled from
4.4 million
in 1999 to
13.8 million
in 2000. The
9.4 million
increase in revenues was attributable to the consolidation of
Williams and VideoWeb revenues for the full year in 2000,
compared to five and eight months, respectively, in 1999 and the
acquisition of Cable & Wireless European video
conferencing activities in April 2000. The figure for 2000 also
includes
1.5 million
in web streaming revenues. These services were offered for the
first time in 2000.

Geographic composition of
revenues.The following table breaks
down our revenues by region for each of 1999 and 2000 in euros
and expressed as a percentage of total revenues:

|               |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 
|-------------- |  | ----------------------- | ------ | -------- |  | ------------ | ------ | -------- |  |  | ------ |  |  |  | ------ | 
|               |  |                        
|               |  | Year ended December 31,
|               |  |                        
|               |  |                         |        |         
|               |  | 1999                    |        | 2000    
|               |  |                         |        |         
|               |  | in thousands            |        | % of     |  | in thousands |        | % of    
|               |  | of                     |        | revenues |  | of          |        | revenues
|               |  |                         |        |          |  |              |        |         
|Europe         |  |                         | 27,861 |          |  |              | 58.1%  |          |  |  | 45,886 |  |  |  | 49.6%  | 
|North America  |  |                         | 18,158 |          |  |              | 37.8%  |          |  |  | 42,097 |  |  |  | 45.6%  | 
|Asia-Pacific   |  |                         | 1,976  |          |  |              | 4.1%   |          |  |  | 4,436  |  |  |  | 4.8%   | 
|               |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 
|Total revenues |  |                         | 47,995 |          |  |              | 100.0% |          |  |  | 92,419 |  |  |  | 100.0% | 
|               |  |                         |        |          |  |              |        |          |  |  |        |  |  |  |        | 

36



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##### Table of Contents



The change in the geographic composition of
revenues primarily reflects the impact of including the revenues
of Williams and Aloha for the full year in 2000, as opposed to
only five and nine months, respectively, in 1999.



| |             
| | ------------
| | Gross Profit

Gross profit increased from
27.4 million
in 1999 to
51.7 million
in 2000. Gross profit declined as a percentage of sales from
57.2% in 1999 to 55.9% in 2000. This reduction in margins
resulted from an increase in labor costs as a result of the
acquisition of Aloha, Video Web and Williams, which were
acquired in the course of 1999 and generate most of their
revenues from operator-assisted conferencing. The decline in
margins also reflects our acquisitions during the second half of
2000 in the field of Web streaming, which generates lower
margins than audio conferencing. Excluding the impact of
acquisitions made during 1999 and 2000, our gross margin
increased from 1999 to 2000.



| |               
| | --------------
| | Operating Loss

Our operating loss increased from
0.5 million
in 1999 to
3.0 million
in 2000. The following table breaks down our operating costs and
expenses that are not included in cost of revenue for 1999 and
2000 by major components.

|                                               |  |                         |        |          |  |              |       |          |  |  |        |  |  |  |       | 
|---------------------------------------------- |  | ----------------------- | ------ | -------- |  | ------------ | ----- | -------- |  |  | ------ |  |  |  | ----- | 
|                                               |  |                        
|                                               |  | Year ended December 31,
|                                               |  |                        
|                                               |  |                         |        |         
|                                               |  | 1999                    |        | 2000    
|                                               |  |                         |        |         
|                                               |  | in thousands            |        | % of     |  | in thousands |       | % of    
|                                               |  | of                     |        | revenues |  | of          |       | revenues
|                                               |  |                         |        |          |  |              |       |         
|Research and development                       |  |                         | 1,629  |          |  |              | 3.4%  |          |  |  | 2,613  |  |  |  | 2.8%  | 
|Selling and marketing                          |  |                         | 10,130 |          |  |              | 21.1% |          |  |  | 17,867 |  |  |  | 19.3% | 
|General and administrative                     |  |                         | 12,952 |          |  |              | 27.0% |          |  |  | 27,165 |  |  |  | 29.4% | 
|Amortization of goodwill and other intangibles |  |                         | 3,216  |          |  |              | 6.7%  |          |  |  | 7,015  |  |  |  | 7.6%  | 
|                                               |  |                         |        |          |  |              |       |          |  |  |        |  |  |  |       | 
|Total operating expenses                       |  |                         | 27,927 |          |  |              | 58.2% |          |  |  | 54,660 |  |  |  | 59.1% | 
|                                               |  |                         |        |          |  |              |       |          |  |  |        |  |  |  |       | 



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

Research and development expenses increased by
60.4% from
1.6 million
in 1999 to
2.6 million
in 2000. The increase in research and development costs resulted
primarily from additional employees hired in connection with our
research and development efforts in connection with data
collaboration and enhancements to our TeleMeeting service
and our Multi-Conference Manager browser. As a percentage
of total revenues, research and development expenses declined
from 3.4% in 1999 to 2.8% in 2000. This decrease primarily
reflects a broader revenue base (especially after our
acquisitions in 1999) over which to spread our research and
development expenses.



| |                      
| | ---------------------
| | Selling and Marketing

Selling and marketing expenses increased by 76.4%
from
10.1 million
in 1999 to
17.9 million
in 2000. The increase primarily reflects the addition of sales
personnel from Williams, which was acquired in July 1999, and
Mediactiv, Cote & Com, Langages Virtuels, Telcen, Telechoice
and Eureka, each of which were acquired in 2000. It also
reflects, to a lesser extent, growth in the size of our global
marketing team. As a percentage of total revenues, selling and
marketing expenses decreased from 21.1% in 1999 to 19.3% in
2000, reflecting increased usage by our existing customers and
greater revenues per sales person.



| |                           
| | --------------------------
| | General and Administrative

General and administrative costs more than
doubled, from
13.0 million in
1999 to
 27.2
million in 2000. As a percentage of total revenues, general and
administrative costs increased from 27.0% in 1999 to 29.4% in
2000. The increase in general and administrative costs was
primarily due to the recruitment of personnel to handle upgrades
to our management information systems and additional accounting
and support staff, and

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consulting and legal fees paid in connection with
acquisitions investigated but not completed. The increase also
reflects the acquisition of general and administrative personnel
from Williams and the companies we acquired during 2000.




| |                                                   
| | --------------------------------------------------
| | Amortization of Goodwill and Other
    Intangibles

Amortization of goodwill and other intangibles
more than doubled from
3.2 million
in 1999 to
7.0 million
in 2000. This increase primarily reflects the recording of a
full year of amortization expenses for Williams, Aloha and
VideoWeb in 2000, as opposed to only five, nine and eight
months, respectively, during 1999. The increase also reflects
goodwill recorded in connection with the acquisitions of
Mediactiv, Cote & Com, Langages Virtuels, Telcen, Telechoice
and Eureka in 2000.



| |              
| | -------------
| | EBITDA Margin

Our EBITDA increased from
6.8 million
in 1999 to
12.0 million
in 2000. Our EBITDA margin decreased from 14.1% in 1999 to 12.9%
in 2000. The decrease in EBITDA margins primarily reflects the
impact of increased corporate expenses incurred in preparation
for the integration of Vialog. It also reflects the impact of
charges associated with the acquisition of Mediactiv, Langages
Virtuels, Cote & Com, Eureka and Telcen, each of whom was
generating losses at the time it was acquired, as well as
charges linked to the creation of new subsidiaries in Norway and
Denmark. To a lesser extent, the decrease in EBITDA margin
reflects the impact of consolidating Williams, which had lower
margins, for a full year in 2000, as opposed to only six months
in 1999.



| |                            
| | ---------------------------
| | Financial Income (Expenses)




We generated net financial income of
0.7 million
in 2000, after incurring net financial expense of
2.1 million
in 1999. The change primarily reflects a significant increase in
interest income and other net financial income, primarily
reflecting the investment of cash received as a result of a
capital increase in June 2000.






| |                   
| | ------------------
| | Income Tax Expense

We recorded income tax expense of
3.6 million
in 2000, as compared with
1.3 million
in 1999. The increase reflects higher earnings 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
6.0 million
in 2000, as compared with a net loss of
3.8 million
in 1999.




B.  Liquidity and Capital
Resources



| |        
| | -------
| | General

Our liquidity requirements are driven primarily
by the implementation of our acquisition strategy and capital
expenditures on servers, computers, software, telecommunications
and bridging equipment. To date, we have funded our capital
requirements through a combination of equity offerings,
borrowings (including bank financings and convertible debt
issuances), and operating cash flow.

At December 31, 2001, our principal sources
of liquidity included
17.5 million
in cash and cash equivalents and a total of
5.4 million
of unutilized short-term credit facilities. Under the terms of
our U.S. $125 million credit facility, we may only
have U.S. $4.0 million of additional indebtedness,
which 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

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purposes. This facility is described in more
detail below. We believe that our capital resources are
sufficient to meet our current working capital needs.




| |           
| | ----------
| | Cash Flows

Cash and cash equivalents decreased from
49.7 million
at the end of December 2000 to
17.5 million
at the end of December 2001.

We used cash of
18.3 million
in operating activities. This amount reflected an increase in
our working capital requirements arising from an
18.5 million
note receivable that we acquired in connection with the
acquisition of Vialog. Additionally, our accounts receivable and
prepaid expenses increased by
7.5 million
and
5.9 million,
respectively.

We used cash of
36.0 million
in investing activities, primarily in connection with the
acquisition of Astound
(13.6 million)
and Vialog
(6.3 million).
Cash used in investing activities also reflected capital
expenditures of
16.0 million
for servers, computers, software (including
2.8 million
relating to the capitalized development of an integrated
reservation and billing system), telecommunications and bridging
equipment. 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 decreased, amounting to
15.6%, 11.4% and 8.9% of revenues in 1999, 2000 and 2001,
respectively. The following table sets forth our capital
expenditures for the periods indicated.

|                     |  |                         |       |      |  |      |        |  |  |  |        | 
|-------------------- |  | ----------------------- | ----- | ---- |  | ---- | ------ |  |  |  | ------ | 
|                     |  |                        
|                     |  | Year ended December 31,
|                     |  |                        
|                     |  | 1999                    |       | 2000 |  | 2001
|                     |  |                         |       |      |  |     
|                     |  |                        
|                     |  | (in thousands of )    
|Capital expenditures |  |                         | 7,465 |      |  |      | 10,593 |  |  |  | 15,952 | 

Financing activities provided
20.7 million
of cash, primarily reflecting the closing of an equity offering
in October 2001 that provided net proceeds of
20.9 million.
We also issued
6.6 million
of long-term debt and repaid
3.0 million
of long-term debt.



| |                                                       
| | ------------------------------------------------------
| | Contractual Obligations and Commercial
    Commitments

As of December 31, 2001, the repayment
schedule for all of our contractual obligations and commercial
commitments is as follows:

|                                          |  |                        |        |       |  |       |         |            |  |       |         |  |  |  |        |  |  |  |          | 
|----------------------------------------- |  | ---------------------- | ------ | ----- |  | ----- | ------- | ---------- |  | ----- | ------- |  |  |  | ------ |  |  |  | -------- | 
|                                          |  |                       
|                                          |  | Payments due by period
|                                          |  |                       
|                                          |  |                        |        | 2003- |  | 2005- |         | 2007 and   |  |      
|                                          |  | 2002                   |        | 2004  |  | 2006  |         | thereafter |  | Total
|                                          |  |                        |        |       |  |       |         |            |  |      
|Term loans, variable rate                 |  |                       | 6,007  |       |  |       | 44,510 |            |  |       | 78,295 |  |  |  |       |  |  |  | 128,812 | 
|Revolving loans, variable rate            |  |                        | 762    |       |  |       |        |            |  |       | 11,346  |  |  |  |       |  |  |  | 12,108   | 
|3% Convertible notes                      |  |                        |       |       |  |       | 8,281   |            |  |       |        |  |  |  |       |  |  |  | 8,281    | 
|Interest free loan from ANVAR             |  |                        | 132    |       |  |       | 84      |            |  |       | 36      |  |  |  |       |  |  |  | 252      | 
|Capital lease obligations                 |  |                        | 266    |       |  |       | 164     |            |  |       | 7       |  |  |  |       |  |  |  | 437      | 
|                                          |  |                        |        |       |  |       |         |            |  |       |         |  |  |  |        |  |  |  |          | 
|Total long-term debt, excluding interests |  |                        | 7,167  |       |  |       | 53,039  |            |  |       | 89,684  |  |  |  |       |  |  |  | 149,890  | 
|Operating leases                          |  |                        | 10,347 |       |  |       | 12,572  |            |  |       | 5,629   |  |  |  | 6,651  |  |  |  | 35,199   | 
|Other long term liabilities               |  |                        |       |       |  |       | 2,480   |            |  |       | 1,124   |  |  |  |       |  |  |  | 3,604    | 
|                                          |  |                        |        |       |  |       |         |            |  |       |         |  |  |  |        |  |  |  |          | 
|Total contractual cash obligations        |  |                       | 17,514 |       |  |       | 68,091 |            |  |       | 96,437 |  |  |  | 6,651 |  |  |  | 188,693 | 
|                                          |  |                        |        |       |  |       |         |            |  |       |         |  |  |  |        |  |  |  |          | 



| |                
| | ---------------
| | 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




39



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senior notes payable) that existed prior to our
acquisition of Vialog. The U.S. $125 million credit
facility includes the following items:




| |   |                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 matures 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 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. $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.                                                  

The U.S. $50 million and
U.S. $35 million term loans granted to Vialog and our
company, respectively, are 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 is 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.
We are currently in compliance with all of the covenants, as
amended. Confirmation of the approval of the latest amendment
was received on May 31, 2002. In addition, the credit
facility places limits on our ability to make capital
expenditures and 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 callable by our lenders.






| |                  
| | -----------------
| | Other Commitments

We lease our facilities and some of our equipment
under long-term operating leases. Our minimum payments due under
operating leases are
10.4 million
in 2002,
7.1 million
in 2003,
5.5 million
in 2004,
3.4 million
in 2005,
2.2 million
in 2006 and
6.7 million
thereafter, for a total of
35.2 million.
We also have obligations under capital leases that total
approximately
478,000,
including 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.




C.  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.




D.  Trend Information

On March 6, 2002, we announced that we
believed the business environment was going to remain favorable
for the conferencing and collaboration industry in 2002. As a
result, we stated our expectation that our gross

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margin and EBITDA might improve due to the
increasing share of our business represented by automated
services, as well as control of selling and marketing, and
general and administrative expenses.


For internal planning purposes, we have targeted
growth in revenues to between
230 million
and
250 million.
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.




E.  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.



| |                                                              
| | -------------------------------------------------------------
| | 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, we recorded an
impairment charge on these assets of
61.3 million.

Effective January 1, 2002, we will adopt
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets. Under SFAS 142, we
will discontinue amortizing our goodwill, but we will be
required to review our goodwill for impairment during the three
months ending March 31, 2002, and then 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 will continue to amortize our identifiable
intangible assets that have determinable lives, but we will
still be 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 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
0.2 million
as of December 31, 2001, and we have established a full
valuation allowance on the remaining amount of our deferred tax
assets.




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|        |                                               
|------- | ----------------------------------------------
|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 six 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. If the proposed resolution is passed at
our annual shareholders meeting to be held on June 17,
2002, the term may not exceed three years. 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).




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:                                         |  | 36                                                                                                                                                                                                    
|Chairman and            |  | First elected:                               |  | June 1997                                                                                                                                                                                             
|Chief Executive Officer |  | Term expires:                                |  | 2002                                                                                                                                                                                                  
|                        |  | Principal occupation:                        |  | 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 Astound Inc.
|                       
|Jean-Jacques Bertrand   |  | Age:                                         |  | 49                                                                                                                                                                                                    
|Director                |  | First elected:                               |  | October 1998*                                                                                                                                                                                         
|                        |  | Term expires:                                |  | 2002                                                                                                                                                                                                  
|                        |  | 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 Firstmark France.                                                                
|                       
|Jean-Charles Bouillet   |  | Age:                                         |  | 55                                                                                                                                                                                                    
|Director                |  | First elected:                               |  | March 2000*                                                                                                                                                                                           
|                        |  | Term expires:                                |  | 2003                                                                                                                                                                                                  
|                        |  | Principal occupation:                        |  | Director for Corporate Development, Unilog S.A.
    France                                                                                                                                            
|                        |  | Other directorships and business experience: |  | Director of Shanghai Integrata                                                                                                                                                                        




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|                 |  |                                              |  |                                                                                                                                                                                                                                         
|---------------- |  | -------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Patrick S. Jones |  | Age:                                         |  | 58                                                                                                                                                                                                                                      
|Director         |  | First elected:                               |  | June 2001                                                                                                                                                                                                                               
|                 |  | Term expires:                                |  | 2004                                                                                                                                                                                                                                    
|                 |  | Principal occupation:                        |  | Retired                                                                                                                                                                                                                                 
|                 |  | Other directorships and business experience: |  | Chairman of the Board, Dione Plc; Director of
    InterTrust Technologies Inc. and QRS Corp.; Former Senior Vice
    President, Chief Financial Officer, Gemplus S.A.; Former Vice
    President and Corporate Controller of Intel Corp.
|                
|Philippe Piriou* |  | Age:                                         |  | 48                                                                                                                                                                                                                                      
|Director         |  | First elected:                               |  | 2000                                                                                                                                                                                                                                    
|                 |  | Term expires:                                |  | 2002                                                                                                                                                                                                                                    
|                 |  | Principal occupation:                        |  | Investment Director, PartCom                                                                                                                                                                                                           
|                 |  | Other directorships and business experience: |  | Representative of InCom on board of Jeriko
    et FA Technology; representative of PartCom on board of
    C2A.                                                                                                                       
|                
|Alan Senter      |  | Age:                                         |  | 61                                                                                                                                                                                                                                      
|Director         |  | First elected:                               |  | 2001                                                                                                                                                                                                                                    
|                 |  | Term expires:                                |  | 2004                                                                                                                                                                                                                                    
|                 |  | Principal occupation:                        |  | Chairman, AZ Senter Consulting                                                                                                                                                                                                          
|                 |  | Other directorships and business experience: |  | Director of XL Capital Ltd. and Hippographics
    Inc.; Former Executive Vice President and Chief Financial
    Officer of NYNEX Corporation.                                                                                           






---



|  |                                                                                                                                                                                                                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | 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 1995; and
    Mr. Piriou sat on our Board as the representative of both
    InCom and PartCom from 1988-2000.

At our annual shareholders meeting
scheduled for June 17, 2002, our shareholders will be asked
to approve the re-appointment of Mr. Legros as Chairman and
Mr. Bertrand as Director, for an additional term.

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.

None of our directors 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,
Networks & Infrastructure.Mr. Detert joined our company in
October 1997 as Executive Vice President, Business Development.
In 1998 he was appointed to Executive Vice President,
Research & Development, which he served until
appointment to his present position. Prior to joining

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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.


Andrew Pearce, Executive Vice President,
Europe.Mr. Pearce has been our
Executive Vice-President, Europe since January 2000. He joined
our company in April 1999 as Managing Director of Darome
Teleconferencing Ltd. (one of our subsidiaries). Prior to
joining our company, Mr. Pearce spent 10 years with
British Telecom Conferencing, where he held several positions
including Head of Operations, BT Conferencing and Business
Manager, Conferencing Services.

Margie Medalle, Executive Vice President and
Chief Operating Officer, North America.Ms. Medalle has been our
Executive Vice President and Chief Operating Officer, North
America since April 2001. 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 Present, 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, Chief Operating
Officer.Mr. Huzell joined our
company as Chief Operating Officer in 2000. Prior to this time,
Mr. Huzell spent five 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 Comviq European, an
independent mobile telephone operator.

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

Rolf Dahlin, Chief Executive Officer, Video
Division.Mr. Dahlin has been the
Chief Executive Officer of our Video Division since October
2001. He joined our company in 1995, and has served in a variety
of positions since that time including Managing Director, Sweden
and Vice President of Business Development. Before joining our
company, Mr. Dahlin spent nine years at Esselte both as a
sales manager and a marketing manager.

Kailash Ambwani, Chief Strategy
Officer.Mr. Ambwani has been our
Chief Strategy Officer since January 2002. Prior to appointment
to his present position, he served as Executive Vice President
from April 2001. Before joining our company, Mr. Ambwani
co-founded Astound Incorporated in June 1996 and served as its
Chairman and Chief Executive Officer until we acquired Astound
in March 2001. Prior to Astound, Mr. Ambwani served as
Chairman and Chief Executive Officer of Gold Disk Incorporated,
a software publisher.

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.

44



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In 2001, Mr. Kim Mayyasi served as our Chief
Executive Officer for our North American operations. Prior to
his position at our company, he served as President and Chief
Executive Officer of Vialog Corporation. He resigned from our
company effective January 1, 2002.




B.  Compensation






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







In 2001, 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
3.1 million.
Of this amount
47,000 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 |  |                | 4,000  | 
|Jean-Charles Bouillet |  |                | 4,000  | 
|Patrick Jones         |  |                | 15,000 | 
|David Lougee*         |  |                | 10,000 | 
|Philippe Piriou       |  |                | 4,000  | 
|Alan Senter           |  |                | 10,000 | 
|                      |  |                 |        | 
|Total                 |  |                | 47,000 | 
|                      |  |                 |        | 



---



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




Our Chairman and Chief Executive Officer received
458,532 in
compensation in 2001 before taxes and other charges, consisting
of a base salary of
258,532 and a
200,000 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 2001, a total of 327,500 options were
granted to senior management, including senior management who
left our company during the year, as set forth below. Each
option gives the right to purchase one of our ordinary shares at
the exercise price and that expire on the date set forth in the
following table.




|                     |  |         |         |          |  |            |       |  |  |  |             | 
|-------------------- |  | ------- | ------- | -------- |  | ---------- | ----- |  |  |  | ----------- | 
|                     |  | Number  |         |          |  |           
|                     |  | of      |         | Exercise |  | Expiration
|Employee             |  | Options |         | Price    |  | Date      
|                     |  |         |         |          |  |           
|François Legros      |  |         | 25,000  |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Andrew Pearce        |  |         | 22,500  |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Margie Medalle       |  |         | 15,000  |          |  |           | 22.09 |  |  |  | 24 Apr 2009 | 
|                     |  |         | 5,000   |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Olivier Fourcade     |  |         | 5,000   |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Jim Huzell           |  |         | 50,000  |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Michael E. Savage    |  |         | 100,000 |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Marie Capela-Laborde |  |         | 25,000  |          |  |           | 15.86 |  |  |  | 11 Nov 2009 | 
|Rolf Dahlin          |  |         | 5,000   |          |  |           | 39.83 |  |  |  | 26 Feb 2009 | 
|Kailash Ambwani      |  |         | 75,000  |          |  |           | 25.03 |  |  |  | 13 Mar 2009 | 




The other members of our senior management,
including those who left our company in 2001, did not receive
any stock options during 2001.




45



---



##### Table of Contents






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






| |                                   
| | ----------------------------------
| | 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 2001 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 strategic 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 Stock
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 2001, the members of our audit committee were
Mr. Bouillet, Mr. Jones and Mr. Piriou.

46



---



##### Table of 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 2001, the members of our compensation
committee were Mr. Lougee, Mr. Piriou and
Mr. Senter.



| |                   
| | ------------------
| | Strategy Committee

Our Board of Directors has also established a
strategy committee. Our strategy committee is in charge of
defining our overall strategy. In 2001, the members of the
strategic committee were Mr. Lougee, Mr. Senter,
Mr. Bertrand and Mr. Bouillet.




D.  Employees

We had 1,530 employees world-wide as of
December 31, 2001. The table below sets forth the breakdown
of employees by geographic area and by main category of activity
as of December 31, 1999, 2000 and 2001.

|              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 
|------------- |  | ------------------ | ----- | - |  | ---- | ------ | - |  | ---- | --- | - |  |  | ------ |  |  |  | --- |  |  |  | ------ | 
|              |  |                   
|              |  | As of December 31:
|              |  |                   
|              |  | 2001               |       | % |  | 2000 |        | % |  | 1999 |     | %
|              |  |                    |       |   |  |      |        |   |  |      |     |  
|Europe        |  |                    | 494   |   |  |      | 32.3%  |   |  |      | 380 |   |  |  | 54.7%  |  |  |  | 248 |  |  |  | 44.8%  | 
|North America |  |                    | 971   |   |  |      | 63.5%  |   |  |      | 272 |   |  |  | 39.1%  |  |  |  | 273 |  |  |  | 49.4%  | 
|Asia Pacific  |  |                    | 65    |   |  |      | 4.2%   |   |  |      | 43  |   |  |  | 6.2%   |  |  |  | 32  |  |  |  | 5.8%   | 
|              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 
|TOTAL         |  |                    | 1,530 |   |  |      | 100,0% |   |  |      | 695 |   |  |  | 100,0% |  |  |  | 553 |  |  |  | 100,0% | 
|              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 

|                              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 
|----------------------------- |  | ------------------ | ----- | - |  | ---- | ------ | - |  | ---- | --- | - |  |  | ------ |  |  |  | --- |  |  |  | ------ | 
|                              |  |                   
|                              |  | As of December 31:
|                              |  |                   
|                              |  | 2001               |       | % |  | 2000 |        | % |  | 1999 |     | %
|                              |  |                    |       |   |  |      |        |   |  |      |     |  
|Sales & Marketing             |  |                    | 408   |   |  |      | 26.6%  |   |  |      | 180 |   |  |  | 25.9%  |  |  |  | 145 |  |  |  | 26.2%  | 
|Research and Development      |  |                    | 64    |   |  |      | 4.2%   |   |  |      | 33  |   |  |  | 4.7%   |  |  |  | 29  |  |  |  | 5.3%   | 
|Operators and Reservationists |  |                    | 740   |   |  |      | 48.4%  |   |  |      | 335 |   |  |  | 48.2%  |  |  |  | 266 |  |  |  | 48.1%  | 
|Administrative and Managerial |  |                    | 272   |   |  |      | 17.8%  |   |  |      | 123 |   |  |  | 17.7%  |  |  |  | 94  |  |  |  | 17.0%  | 
|MIS and Operations            |  |                    | 46    |   |  |      | 3.0%   |   |  |      | 24  |   |  |  | 3.5%   |  |  |  | 19  |  |  |  | 3.4%   | 
|                              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 
|TOTAL                         |  |                    | 1,530 |   |  |      | 100.0% |   |  |      | 695 |   |  |  | 100.0% |  |  |  | 553 |  |  |  | 100.0% | 
|                              |  |                    |       |   |  |      |        |   |  |      |     |   |  |  |        |  |  |  |     |  |  |  |        | 

Since 1997, we have experienced significant
growth in our total number of employees as our business has
expanded both through internal growth and acquisitions. However,
our high percentage of automated audio conferencing calls
enables us to deliver conferencing services with a smaller ratio
of operators and reservation personnel than competitors that
rely more heavily on operator-assisted conferencing.

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.

47



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##### Table of Contents



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




E.  Share Ownership




The following table sets forth information known
to us with respect to the ownership of our ordinary shares as of
March 31, 2002 based on 15,281,090 shares outstanding as of
such date by:






| |   |                                                           
| | - | ----------------------------------------------------------
|
| |  | Each of our directors and named senior
    management; and
|
|
|
| |  | All directors and named senior management as a
    group. 
|




|                      |                                                                     |              |         |                  |  |  |     |     |  
|--------------------- | ------------------------------------------------------------------- | ------------ | ------- | ---------------- |  |  | --- | --- | -
|                      |                                                                     |              |         | % of Outstanding
|Name                  |                                                                     | Shares Owned |         | Shares          
|                      |                                                                     |              |         |                 
|François Legros       |                                                                     |              | 22,559  |                  |  |  | *   |    
|Jean-Jacques Bertrand |                                                                     |              | 347,001 | (1)              |  |  | 2.3 | %  
|Jean-Charles Bouillet |                                                                     |              | 350     |                  |  |  | *   |    
|Patrick S. Jones      |                                                                     |              | 500     | (2)              |  |  | *   |    
|Philippe Piriou       |                                                                     |              | 150     |                  |  |  | *   |    
|Alan Senter           |                                                                     |              | 50      | (2)              |  |  | *   |    
|David Detert          |                                                                     |              | 648     |                  |  |  | *   |    
|Andrew Pearce         |                                                                     |              | 509     |                  |  |  | *   |    
|Margie Medalle        |                                                                     |              | 0       |                  |  |  | *   |    
|Olivier Fourcade      |                                                                     |              | 574     |                  |  |  | *   |    
|Jim Huzell            |                                                                     |              | 0       |                  |  |  | *   |    
|Michael E. Savage     |                                                                     |              | 117     |                  |  |  | *   |    
|Marie Capela-Laborde  |                                                                     |              | 2,152   |                  |  |  | *   |    
|Rolf Dahlin           |                                                                     |              | 1,000   |                  |  |  | *   |    
|Kailash Ambwani       |                                                                     |              | 55,381  |                  |  |  | *   |    
|                      |                                                                     |              |         |                  |  |  |     |    
|                      | All directors and senior management as a group
    (15 individuals) |              |         | 430,991          |  |  |     | 2.8 | %
|                      |                                                                     |              |         |                  |  |  |     |    






---






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






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Mr. Bertrand may be considered the
    beneficial owner of 347,000 shares held of record by Europe
    Telecom Media Fund II LP, 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).                                                                                                                                                                          
|   

48



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##### Table of Contents






The following table sets forth information with
respect to the ownership of options to purchase our ordinary
shares as of March 31, 2002 by:






| |   |                                         
| | - | ----------------------------------------
|
| |  | Each of our named senior management; and
|
|
|
| |  | All senior management as a group.       
|




|                     |                                                       |                    |         |          |  |            |        |  |  |  |          |  | 
|-------------------- | ----------------------------------------------------- | ------------------ | ------- | -------- |  | ---------- | ------ |  |  |  | -------- |  | 
|                     |                                                       | Number of Shares   |         | Exercise |  | Expiration
|Name                 |                                                       | underlying options |         | Price    |  | Date      
|                     |                                                       |                    |         |          |  |           
|François Legros      |                                                       |                    | 110,320 | (1)      |  |           | 9.91   |  |  |  | 09/23/06 | 
|                     |                                                       |                    | 12,363  | (2)      |  |           | 15.32  |  |  |  | 09/15/07 | 
|                     |                                                       |                    | 50,000  | (3)      |  |           | 50.42  |  |  |  | 09/08/08 | 
|                     |                                                       |                    | 25,000  | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                     |                                                       |                    | 50,000  | (4)      |  |           | 14.30  |  |  |  | 01/07/10 | 
|                    
|David Detert         |                                                       |                    | 40,559  | (1)      |  |           | 9.91   |  |  |  | 09/23/06 | 
|                    
|Andrew Pearce        |                                                       |                    | 22,000  | (2)      |  |           | 15.32  |  |  |  | 09/15/07 | 
|                     |                                                       |                    | 5,000   | (2)      |  |           | 53.17  |  |  |  | 03/08/06 | 
|                     |                                                       |                    | 22,500  | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                    
|Margie Medalle       |                                                       |                    | 30,000  | (2)      |  |           | 15.32  |  |  |  | 09/15/07 | 
|                     |                                                       |                    | 10,000  | (2)      |  |           | 53.17  |  |  |  | 03/08/08 | 
|                     |                                                       |                    | 15,000  | (3)      |  |           | 22.09  |  |  |  | 04/24/09 | 
|                     |                                                       |                    | 5,000   | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                    
|Olivier Fourcade     |                                                       |                    | 57,727  | (1)      |  |           | 9.91   |  |  |  | 09/24/06 | 
|                     |                                                       |                    | 10,000  | (3)      |  |           | 50.42  |  |  |  | 09/08/08 | 
|                     |                                                       |                    | 5,000   | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                    
|Jim Huzell           |                                                       |                    | 100,000 | (3)      |  |           | 50.42  |  |  |  | 09/08/08 | 
|                     |                                                       |                    | 50,000  | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                    
|Michael E. Savage    |                                                       |                    | 1,676   | (5)      |  |            | $11.93 |  |  |  | 01/26/10 | 
|                     |                                                       |                    | 8,379   | (5)      |  |            | $14.92 |  |  |  | 02/10/10 | 
|                     |                                                       |                    | 33,515  | (5)      |  |            | $10.63 |  |  |  | 11/11/09 | 
|                     |                                                       |                    | 100,000 | (4)      |  |           | 15.86  |  |  |  | 11/11/09 | 
|                     |                                                       |                    | 26,390  | (5)      |  |            | $31.33 |  |  |  | 10/02/10 | 
|                    
|Marie Capela-Laborde |                                                       |                    | 3,000   | (2)      |  |           | 15.32  |  |  |  | 09/15/07 | 
|                     |                                                       |                    | 7,000   | (2)      |  |           | 53.17  |  |  |  | 03/08/08 | 
|                     |                                                       |                    | 3,000   | (3)      |  |           | 50.42  |  |  |  | 09/08/08 | 
|                     |                                                       |                    | 25,000  | (4)      |  |           | 15.86  |  |  |  | 11/11/08 | 
|                    
|Rolf Dahlin          |                                                       |                    | 13,383  | (1)      |  |           | 9.91   |  |  |  | 09/23/06 | 
|                     |                                                       |                    | 5,000   | (3)      |  |           | 39.38  |  |  |  | 02/26/09 | 
|                    
|Kailash Ambwani      |                                                       |                    | 75,000  | (3)      |  |           | 25.05  |  |  |  | 03/13/09 | 
|                     |                                                       |                    |         |          |  |            |        |  |  |  |          | 
|                    
|                     | All senior management as a group
    (10 individuals) |                    |         | 921,812  |  |            |        |  |  |  |          |  | 
|                     |                                                       |                    |         |          |  |            |        |  |  |  |          | 






---



|    |                                           
|--- | ------------------------------------------
|   
|(1) | Granted pursuant to the 1998 plan.        
|   
|   
|(2) | Granted pursuant to the 1999 plan.        
|   
|   
|(3) | Granted pursuant to the 2000 plan.        
|   
|   
|(4) | Granted pursuant to the 2001 plan.        
|   
|   
|(5) | 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.




49



---



##### Table of Contents








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






A.  Major Shareholders





The table below shows the beneficial owners of
more than 5% or more of our ordinary shares and ADSs, based on
15,281,057 ordinary shares outstanding as at February 21,
2002.







|                                       |  |           |           |            |  |  |        | 
|-------------------------------------- |  | --------- | --------- | ---------- |  |  | ------ | 
|                                       |  | Number of |           |           
|Name                                   |  | Shares    |           | % of Class
|                                       |  |           |           |           
|Schroder Investment Management Limited |  |           | 1,547,538 |            |  |  | 10.13% | 
|J. Hassett Group                       |  |           | 903,406   |            |  |  | 5.91%  | 




In March 2002, we learned that a group of
shareholders led by John Hassett filed a Schedule 13D with
the U.S. Securities and Exchange Commission indicating that
the group had acquired 5.9% of our outstanding shares. No
filings have been made in France.




Our statuts (bylaws) currently do not
provide for double voting rights. We have proposed a resolution
authorizing double voting rights for approval at our
June 17, 2002 annual shareholders meeting. For more
information relating to our ordinary shares, see Item 10
Additional Information  Memorandum and Articles
of Association.







As of March 31, 2002, there were 8,746,146
of our ADSs outstanding representing 4,373,073 of our ordinary
shares, or 28.6% of our total shares outstanding as of such
date. As of March 31, 2002, there were 57 record
holders of our ADSs, of which 18 have registered addresses in
the United States. In addition, as of March 31, 2002, 420
of our ordinary shares were held by 18 record holders with
registered addresses in the United States.




Other than as described above, we are not aware
of any arrangements that may at a subsequent date result in a
change in control of our company.




B.  Related Party
Transactions

During 2001, we did not enter into any related
party transactions.




C.  Interests of Experts and
Counsel

Not applicable.

50



---



##### Table of Contents








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






A.  Consolidated Statements and
Other Financial Information





See Item 18  Financial
Statements and pages F-1 through F-37.






| |                  
| | -----------------
| | 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.

51



---



##### Table of 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 Stock Market.

Our ordinary shares were included in the SBF 250
Index as of March 23, 2001. The SBF 250 features similar
criteria for the top 250 publicly traded French equities.

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 Stock Market.




|                                                     |  |                 |       |            |  |      |       |     |  |  |       |  |  |  |      | 
|---------------------------------------------------- |  | --------------- | ----- | ---------- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ---- | 
|                                                     |  |                 |       |           
|                                                     |  | Euronext Paris  |       | Nasdaq    
|                                                     |  |                 |       |           
|Period                                               |  | High            |       | Low        |  | High |       | Low
|                                                     |  |                 |       |            |  |      |       |    
|                                                     |  |                 |       |           
|                                                     |  | (ordinary share |       | (ADS price
|                                                     |  | price in )     |       | in $)     
|1998                                                 |  |                 |       |            |  |      |       |     |  |  |       |  |  |  |      | 
|beginning (October 1, 1998)                          |  |                 | 12.04 |            |  |      | 8.54  |     |  |  |      |  |  |  |     | 
|1999                                                 |  |                 | 37.00 |            |  |      | 9.90  |     |  |  |      |  |  |  |     | 
|2000                                                 |  |                 | 79.50 |            |  |      | 30.00 |     |  |  |      |  |  |  |     | 
|First Quarter                                        |  |                 | 79.50 |            |  |      | 30.00 |     |  |  |      |  |  |  |     | 
|Second Quarter                                       |  |                 | 63.60 |            |  |      | 32.10 |     |  |  |      |  |  |  |     | 
|Third Quarter                                        |  |                 | 62.00 |            |  |      | 42.00 |     |  |  |      |  |  |  |     | 
|Fourth Quarter                                       |  |                 | 60.90 |            |  |      | 47.20 |     |  |  |      |  |  |  |     | 
|2001                                                 |  |                 | 53.80 |            |  |      | 9.76  |     |  |  |      |  |  |  |     | 
|First Quarter                                        |  |                 | 53.80 |            |  |      | 20.12 |     |  |  |      |  |  |  |     | 
|Second Quarter (Nasdaq beginning April 26,
    2001) |  |                 | 35.82 |            |  |      | 26.02 |     |  |  | 15.29 |  |  |  | 9.90 | 
|Third Quarter                                        |  |                 | 25.60 |            |  |      | 9.76  |     |  |  | 11.00 |  |  |  | 4.55 | 
|Fourth Quarter                                       |  |                 | 16.94 |            |  |      | 11.03 |     |  |  | 8.35  |  |  |  | 5.10 | 
|2002                                                 |  |                 |       |            |  |      |       |     |  |  |       |  |  |  |      | 
|First Quarter                                        |  |                 | 14.45 |            |  |      | 7.57  |     |  |  | 6.80  |  |  |  | 3.55 | 
|2001                                                 |  |                 |       |            |  |      |       |     |  |  |       |  |  |  |      | 
|December                                             |  |                 | 15.60 |            |  |      | 11.03 |     |  |  | 7.20  |  |  |  | 5.10 | 
|2002                                                 |  |                 |       |            |  |      |       |     |  |  |       |  |  |  |      | 
|January                                              |  |                 | 14.45 |            |  |      | 11.67 |     |  |  | 6.80  |  |  |  | 5.00 | 
|February                                             |  |                 | 12.56 |            |  |      | 7.57  |     |  |  | 5.73  |  |  |  | 3.55 | 
|March                                                |  |                 | 14.29 |            |  |      | 10.68 |     |  |  | 6.60  |  |  |  | 4.60 | 
|April                                                |  |                 | 14.33 |            |  |      | 10.80 |     |  |  | 6.54  |  |  |  | 5.10 | 
|May                                                  |  |                 | 11.20 |            |  |      | 7.50  |     |  |  | 5.36  |  |  |  | 3.66 | 






---



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

52



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##### Table of Contents






B.  Plan of Distribution

Not Applicable.




C.  Markets

Trading On The Nouveau Marche



| |        
| | -------
| | General

On September 22, 2000,
ParisBourseSBF S.A., Amsterdam Exchange N.V. and the
Societé 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, ParisBourseSBF 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 and
Oddo Pinatton act as Teneurs 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
5:35 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. Euronext




53



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##### Table of Contents






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.

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.




54



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##### Table of Contents








|         |                       
|-------- | ----------------------
|Item 10. | Additional Information






A.  Share Capital


Not applicable.




B.  Memorandum and Articles of
Association




We have previously filed a description of our
bylaws, or statuts, in a registration statement on
Form F-4 filed on February 12, 2001 (File
No. 333-55392) under the caption Description of
Genesys Share Capital. That description is incorporated by
reference into this annual report.







We have proposed certain resolutions for adoption
at our June 17, 2002 annual shareholders meeting.
Certain of the changes are to modify our bylaws in accordance
with changes in French law as well as certain additional
proposals. If approved, the significant changes to our bylaws
will be the following:






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | all fully-paid up shares held in registered form
    in the name of the same shareholder for at least two years will
    have double voting rights;                                                                                                                                                                                                                                                                                                                                             
|
|
|
| |  | any shareholder will be required to notify us
    within five trading days from the day it acquires more than 1%
    of our share capital; and                                                                                                                                                                                                                                                                                                                                                  
|
|
|
| |  | if we have reason to believe that a shareholder,
    who is named on the list of holders of our bearer shares
    provided by Euroclear, is holding on behalf of a third party, we
    will be able to ask that shareholder for certain information
    regarding the third parties on whose behalf it holds the shares
    (name, nationality, address, and number of shares) and if such
    information is not provided or is incomplete, we may deny such
    shareholder the right to vote.
|




Our shareholders will also be asked to authorize
a share repurchase program at our June 17, 2002
shareholders meeting. If adopted, the resolution will permit us
to purchase and sell our ordinary shares, within the limits
provided by law, during an 18-month period from the date of such
meeting, at the maximum purchase price of
60 (or the
corresponding amount in any other currency) and at the minimum
sale price of 5
(or the corresponding amount in any other currency). We will be
subject to the same limitations as under the existing
authorization and the purpose of the share repurchase program
will not be changed.







C.  Material Contracts




On April 20, 2001, as amended thereafter, we
entered into U.S. $125 million credit facility. 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.







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.

55



---



##### Table of Contents



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 15% 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.

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
15% generally may claim an additional payment equal to 70% of
the précompte 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
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.



| |                                              
| | ---------------------------------------------
| | 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.

56



---



##### Table of Contents



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.

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. 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
15% 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

57



---



##### Table of Contents



50% rate. 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 15%, a payment equal to 70% 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 12.75, consisting of the avoir
fiscal of 15 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 70% of the précompte that we actually pay
in cash, less a 15% withholding tax.

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;

58



---



##### Table of Contents





| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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) or, if the
holder is not the owner of all such rights, providing certain
information concerning other owners.

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).

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.

59



---



##### Table of Contents






F.  Dividends and Paying
Agents

Not applicable.




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.

60



---



##### Table of Contents








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



| |                                         
| | ----------------------------------------
| | Impact of Exchange Rate
    Fluctuations

We prepare our financial statements in euros. In
2001, 63% of our total revenues were recorded in
U.S. dollars, 17% in British pounds, 4% 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 56%, 19%, 3% and 2%,
respectively, of our cost of revenues and operating expenses in
2001. A strengthening 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 reduce
our reported revenues and increase our reported operating and
net loss. Since its introduction on January 1, 1999, 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. The impact on our revenues
of the decline 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 loss of
36 thousand in
1999, a net foreign exchange gain of
767 thousand in
2000 and a net foreign exchange gain of
1,520 thousand
in 2001. 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 have 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, 2001, we had
variable rate debt totaling
140.9 million
and had
1.6 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
2.2 million
at December 31, 2001.




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






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

Not applicable.

61



---



##### Table of 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. | [Reserved]






|         |           
|-------- | ----------
|Item 16. | [Reserved]






|         |                     
|-------- | --------------------
|Item 17. | Financial Statements

See Item 18.






|         |                     
|-------- | --------------------
|Item 18. | Financial Statements




See pages F-1 through F-37, incorporated
herein by reference.









|         |         
|-------- | --------
|Item 19. | Exhibits

Documents filed as exhibits to this annual report:



| |     |                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 1.1 | Bylaws (statuts) of Genesys (English
    translation) (incorporated herein by reference to
    Exhibit 3.1 to our Registration Statement on Form F-4,
    File No. 333-55392)                                                                                                                 
|
|
|
| | 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                                                                                                      
|
|
|
| | 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)
|
|
|
| | 8.1 | For a list of our significant subsidiaries, see
    Item 4 Information on the Company 
    Organizational Structure                                                                                                                                                                        
|

62



---



##### Table of Contents



GENESYS S.A.

INDEX TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31,
2001

U.S. GAAP

|                                                                                                                        |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                        |  | Page
|                                                                                                                        |  |     
|Report of Independent Auditors                                                                                          |  |      | F-2 | 
|Consolidated Balance Sheets at December 31,
    1999, 2000 and 2001                                                     |  |      | F-3 | 
|Consolidated Statements Of Operations for the
    years ended December 31, 1999, 2000 and 2001                          |  |      | F-4 | 
|Consolidated Statements Of Changes In
    Shareholders Equity for the years ended December 31,
    1999, 2000 and 2001 |  |      | F-5 | 
|Consolidated Statements Of Cash Flows for the
    years ended December 31, 1999, 2000 and 2001                          |  |      | F-6 | 
|Notes To Consolidated Financial Statements                                                                              |  |      | F-7 | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT AUDITORS







The Board of Directors and Shareholders







Genesys S.A.








We have audited the accompanying consolidated
balance sheets of Genesys S.A as of December 31, 1999, 2000
and 2001, 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 financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Genesys S.A at
December 31, 1999, 2000 and 2001, 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.







| |  |                                                                                
| |  | -------------------------------------------------------------------------------
|
| |  | ERNST & YOUNG AUDIT
    /s/  Antoine Peskine
    Represented by Antoine Peskine







Montpellier, France







June 2, 2002





F-2



---



##### Table of Contents



GENESYS S.A.

CONSOLIDATED BALANCE SHEETS




|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |          |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------ | ------- | ---- | ------- | ------- | ------- |  | ------- | -------- | ------- | 
|                                                   |                                                                                                                                                                                                                                                     |                                           
|                                                   |                                                                                                                                                                                                                                                     | December 31,                              
|                                                   |                                                                                                                                                                                                                                                     |                                           
|                                                   |                                                                                                                                                                                                                                                     | 1999                                       |        | 2000   |         | 2001
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |     
|                                                   |                                                                                                                                                                                                                                                     |                                           
|                                                   |                                                                                                                                                                                                                                                     | (in thousands, except share               
|                                                   |                                                                                                                                                                                                                                                     | data)                                     
|ASSETS                                             |                                                                                                                                                                                                                                                     |                                            |        |       
|Current assets:                                    |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   | Cash and cash equivalents                                                                                                                                                                                                                           |                                            |       | 13,754 |         |      |        | 49,705  |         |  |        | 17,510   |        
|                                                   | Accounts receivable, less allowances of
    1,235 in 1999,
    1,431 in 2000
    and
    3,201 in 2001                                                                                                                                           |                                            |        | 17,138 |         |      |         | 22,974  |         |  |         | 48,989   |        
|                                                   | Inventory                                                                                                                                                                                                                                           |                                            |        | 63     |         |      |         | 136     |         |  |         | 146      |        
|                                                   | Prepaid expenses                                                                                                                                                                                                                                    |                                            |        | 940    |         |      |         | 2,517   |         |  |         | 7,156    |        
|                                                   | Other current assets                                                                                                                                                                                                                                |                                            |        | 299    |         |      |         | 2,006   |         |  |         | 6,664    |        
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     | Total current assets                       |        |        | 32,194  |      |         |         | 77,338  |  |         |          | 80,465  | 
|Property and equipment, net                        |                                                                                                                                                                                                                                                     |                                            | 18,904 |        |         |      | 22,475  |         |         |  | 47,697  |         
|Goodwill and other intangibles, net                |                                                                                                                                                                                                                                                     |                                            | 69,820 |        |         |      | 100,258 |         |         |  | 275,058 |         
|Investment in affiliated company                   |                                                                                                                                                                                                                                                     |                                            | 185    |        |         |      | 109     |         |         |  | 126     |         
|Deferred tax assets                                |                                                                                                                                                                                                                                                     |                                            | 502    |        |         |      | 281     |         |         |  | 236     |         
|Deferred financing costs, net                      |                                                                                                                                                                                                                                                     |                                            | 1,151  |        |         |      | 756     |         |         |  | 4,722   |         
|Promissory notes                                   |                                                                                                                                                                                                                                                     |                                            |       |        |         |      | 5,462   |         |         |  |        |         
|Other assets                                       |                                                                                                                                                                                                                                                     |                                            | 134    |        |         |      | 490     |         |         |  | 2,100   |         
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     | Total assets                               |        |       | 122,890 |      |         |        | 207,169 |  |         |         | 410,404 | 
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                  
|LIABILITIES AND SHAREHOLDERS
    EQUITY           |                                                                                                                                                                                                                                                     |                                            |        |       
|Current liabilities:                               |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   | Bank overdrafts                                                                                                                                                                                                                                     |                                            |       | 499    |         |      |        | 1,882   |         |  |         |         |        
|                                                   | Accounts payable                                                                                                                                                                                                                                    |                                            |        | 5,285  |         |      |         | 8,462   |         |  |        | 24,533   |        
|                                                   | Accrued liabilities                                                                                                                                                                                                                                 |                                            |        | 3,529  |         |      |         | 4,244   |         |  |         | 7,148    |        
|                                                   | Accrued compensation                                                                                                                                                                                                                                |                                            |        | 1,292  |         |      |         | 3,956   |         |  |         | 7,489    |        
|                                                   | Tax payable                                                                                                                                                                                                                                         |                                            |        | 2,195  |         |      |         | 4,750   |         |  |         | 9,929    |        
|                                                   | Deferred revenue                                                                                                                                                                                                                                    |                                            |        | 304    |         |      |         | 863     |         |  |         | 4,198    |        
|                                                   | Current portion of long-term debt                                                                                                                                                                                                                   |                                            |        | 2,135  |         |      |         | 6,782   |         |  |         | 6,901    |        
|                                                   | Current portion of capitalized lease obligations                                                                                                                                                                                                    |                                            |        | 646    |         |      |         | 503     |         |  |         | 266      |        
|                                                   | Current portion of deferred tax liability                                                                                                                                                                                                           |                                            |        | 358    |         |      |         | 400     |         |  |         | 5,346    |        
|                                                   | Other current liabilities                                                                                                                                                                                                                           |                                            |        | 3,257  |         |      |         | 2,791   |         |  |         | 6,894    |        
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     | Total current liabilities                  |        |        | 19,500  |      |         |         | 34,633  |  |         |          | 72,704  | 
|Long-term portion of long-term debt                |                                                                                                                                                                                                                                                     |                                            | 61,631 |        |         |      | 44,041  |         |         |  | 142,552 |         
|Long-term portion of capitalized lease obligations |                                                                                                                                                                                                                                                     |                                            | 425    |        |         |      | 382     |         |         |  | 171     |         
|Long term portion of deferred tax liability        |                                                                                                                                                                                                                                                     |                                            |       |        |         |      |        |         |         |  | 28,503  |         
|Other long-term liability                          |                                                                                                                                                                                                                                                     |                                            |       |        |         |      |        |         |         |  | 3,606   |         
|Commitments and contingencies                      |                                                                                                                                                                                                                                                     |                                            |       |        |         |      |        |         |         |  |        |         
|Shareholders equity:                              |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   | Ordinary shares;
    4.57,
    5.00 and
    5.00 nominal
    value at December 31, 1999, 2000 and 2001, respectively;
    6,627,607, 9,342,381 and 15,271,064 shares issued and
    outstanding at December 31, 1999, 2000 and 2001 respectively |                                            |        | 30,311 |         |      |         | 46,712  |         |  |         | 76,356   |        
|                                                   | Common shares to be issued:
    5.00 nominal
    value; 250,687 shares at December 31, 2001                                                                                                                                                        |                                            |        |       |         |      |         |        |         |  |         | 1,253    |        
|                                                   | Additional paid-in capital                                                                                                                                                                                                                          |                                            |        | 15,146 |         |      |         | 90,199  |         |  |         | 194,019  |        
|                                                   | Accumulated other comprehensive income                                                                                                                                                                                                              |                                            |        | 2,671  |         |      |         | 4,117   |         |  |         | 3,749    |        
|                                                   | Deferred compensation                                                                                                                                                                                                                               |                                            |        |       |         |      |         |        |         |  |         | (465     | )      
|                                                   | Accumulated deficit                                                                                                                                                                                                                                 |                                            |        | (6,794 | )       |      |         | (12,766 | )       |  |         | (111,293 | )      
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     |                                            | 41,334 |        |         |      | 128,262 |         |         |  | 163,619 |         
|                                                   | Less cost of treasury shares: 2,905 and 22,131
    shares at December 31, 2000 and 2001, respectively                                                                                                                                               |                                            |        |       |         |      |         | (149    | )       |  |         | (751     | )      
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     | Total shareholders equity                 |        |        | 41,334  |      |         |         | 128,113 |  |         |          | 162,868 | 
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         
|                                                   |                                                                                                                                                                                                                                                     | Total liabilities and shareholders equity |        |       | 122,890 |      |         |        | 207,169 |  |         |         | 410,404 | 
|                                                   |                                                                                                                                                                                                                                                     |                                            |        |        |         |      |         |         |         |  |         |         




See notes to financial statements

F-3



---



##### Table of Contents



GENESYS S.A.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |         |         |  
|--------------------------------------------------------------------------- | ---------------------------------------------- | --------------------------------- | --------- | ------ | ------ | ---- | --------- | ------ | ------ | - | ---------- | ------- | ------- | -
|                                                                            |                                                |                                  
|                                                                            |                                                | Years ended December 31,         
|                                                                            |                                                |                                  
|                                                                            |                                                | 1999                              |           | 2000   |        | 2001
|                                                                            |                                                |                                   |           |        |        |     
|                                                                            |                                                |                                  
|                                                                            |                                                | (in thousands, except share data)
|Revenue:                                                                    |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            | Services                                       |                                   |          | 47,159 |        |      |          | 89,336 |        |   |           | 177,120 |        
|                                                                            | Products                                       |                                   |           | 836    |        |      |           | 3,083  |        |   |            | 1,831   |        
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            |                                                |                                   | 47,995    |        |        |      | 92,419    |        |        |   | 178,951    |        
|Cost of revenue:                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            | Services                                       |                                   |           | 19,959 |        |      |           | 38,173 |        |   |            | 74,774  |        
|                                                                            | Products                                       |                                   |           | 596    |        |      |           | 2,548  |        |   |            | 1,402   |        
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            |                                                |                                   | 20,555    |        |        |      | 40,721    |        |        |   | 76,176     |        
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|Gross profit                                                                |                                                |                                   | 27,440    |        |        |      | 51,698    |        |        |   | 102,775    |        
|Operating expenses:                                                         |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            | Research and development                       |                                   |           | 1,629  |        |      |           | 2,613  |        |   |            | 5,366   |        
|                                                                            | Selling and marketing                          |                                   |           | 10,130 |        |      |           | 17,867 |        |   |            | 42,718  |        
|                                                                            | General and administrative                     |                                   |           | 12,952 |        |      |           | 27,165 |        |   |            | 53,920  |        
|                                                                            | Impairment of goodwill and other intangibles   |                                   |           |       |        |      |           |       |        |   |            | 61,269  |        
|                                                                            | Amortization of goodwill and other intangibles |                                   |           | 3,216  |        |      |           | 7,015  |        |   |            | 30,768  |        
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            |                                                | Total operating expenses          |           |        | 27,927 |      |           |        | 54,660 |   |            |         | 194,041 |  
|Operating loss                                                              |                                                |                                   | (487      | )      |        |      | (2,962    | )      |        |   | (91,266    | )      
|Financial income (expense)                                                  |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            | Interest income                                |                                   |           | 198    |        |      |           | 1,486  |        |   |            | 380     |        
|                                                                            | Interest expense                               |                                   |           | (2,242 | )      |      |           | (3,558 | )      |   |            | (8,407  | )      
|                                                                            | Foreign exchange gain (loss)                   |                                   |           | (36    | )      |      |           | 767    |        |   |            | 1,520   |        
|                                                                            | Other financial income (expense), net          |                                   |           | (3     | )      |      |           | 1,960  |        |   |            | (215    | )      
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|Financial expense, net                                                      |                                                |                                   | (2,083    | )      |        |      | 655       |        |        |   | (6,722     | )      
|Equity in loss of affiliated company                                        |                                                |                                   | (15       | )      |        |      | (76       | )      |        |   | (55        | )      
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|Income (loss) before taxes                                                  |                                                |                                   | (2,585    | )      |        |      | (2,383    | )      |        |   | (98,043    | )      
|Income tax expense                                                          |                                                |                                   | (1,253    | )      |        |      | (3,589    | )      |        |   | (484       | )      
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|                                                                            |                                                | Net loss                          |           |       | (3,838 | )    |           |       | (5,972 | ) |            |        | (98,527 | )
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|Basic and diluted net loss per share                                        |                                                |                                  | (0.60     | )      |        |     | (0.76     | )      |        |  | (7.65      | )      
|                                                                            |                                                |                                   |           |        |        |      |           |        |        |   |            |        
|Number of shares used in computing basic and
    diluted net loss per share |                                                |                                   | 6,374,278 |        |        |      | 7,831,257 |        |        |   | 12,878,594 |        

See notes to financial statements

F-4



---



##### Table of Contents



GENESYS S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY




|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |         |  
|------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | --------------------------------- | ---------- | --------- |  | ---------- | ------ | -------- |  | -------- | ----- | ------------ |  | ------------- | ------- | ------------- |  | --------- | ---- | - |  | - | ---- | - |  | - | -------- | ------- | - | - | ------ | ------ | - | - | -------- | ------- | -
|                                                                                                                    |                                     |                                   |            | Ordinary  |  |            |        |          |  |          |       |              |  | Accumulated   |         |              
|                                                                                                                    |                                     | Ordinary shares                   |            | shares to |  | Additional |        |          |  |          |       |              |  | other         |         | Shareholders
|                                                                                                                    |                                     |                                   |            | be issued |  | paid-in    |        | Treasury |  | Deferred |       | Accumulated  |  | comprehensive |         | equity       
|                                                                                                                    |                                     | Shares                            |            | Amount    |  | Amount     |        | capital  |  | shares   |       | compensation |  | deficit       |         | income (loss) |  | (deficit)
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |          
|                                                                                                                    |                                     |                                  
|                                                                                                                    |                                     | (in thousands, except share data)
|Balance at January 1, 1999                                                                                          |                                     |                                   | 6,043,002  |           |  |           | 27,637 |          |  |          |      |              |  |              | 11,375  |               |  |           |     |   |  |   |     |   |  |  | (2,956   | )       |   |  | 10     |        |   |  | 36,066   |        
|Issuance of ordinary shares at
    11.02 per
    shares, net of offering expenses                                  |                                     |                                   | 584,605    |           |  |            | 2,674  |          |  |          |       |              |  |               | 3,771   |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | 6,445    |        
|Components of comprehensive loss:                                                                                   |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|                                                                                                                    | Net loss                            |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          | (3,838  | ) |   |        |        |   |   |          | (3,838  | )
|                                                                                                                    | Unrealized loss on investments      |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | (24    | ) |   |          | (24     | )
|                                                                                                                    | Foreign currency translation        |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | 2,685  |   |   |          | 2,685   |  
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Total comprehensive income (loss)                                                                                   |                                     |                                   |            |           |  |            |       |          |  |          |      |              |  |               |        |               |  |           |     |   |  |   |     |   |  |   | (3,838   | )       |   |   | 2,661  |        |   |   | (1,177   | )      
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Balance at December 31, 1999                                                                                        |                                     |                                   | 6,627,607  |           |  |           | 30,311 |          |  |          |      |              |  |              | 15,146  |               |  |           |     |   |  |   |     |   |  |  | (6,794   | )       |   |  | 2,671  |        |   |  | 41,334   |        
|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  |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | 91,484   |        
|Conversion of capital into euro and increase in
    par value from
    4.57 to
    5.00                           |                                     |                                   |            |           |  |            | 3,717  |          |  |          |       |              |  |               | (3,747  | )             |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | (30      | )      
|Purchase of treasury shares                                                                                         |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |          | (149 | ) |  |   |      |   |  |   |          |         |   |   |        |        |   |   | (149     | )      
|Components of comprehensive loss:                                                                                   |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|                                                                                                                    | Net loss                            |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          | (5,972  | ) |   |        |        |   |   |          | (5,972  | )
|                                                                                                                    | Unrealized loss on investments      |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | (43    | ) |   |          | (43     | )
|                                                                                                                    | Foreign currency translation        |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | 1,489  |   |   |          | 1,489   |  
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Total comprehensive income (loss)                                                                                   |                                     |                                   |            |           |  |            |       |          |  |          |      |              |  |               |        |               |  |           |     |   |  |   |     |   |  |   | (5,972   | )       |   |   | 1,446  |        |   |   | (4,526   | )      
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Balance at December 31, 2000                                                                                        |                                     |                                   | 9,342,381  |           |  |           | 46,712 |          |  |          |      |              |  |              | 90,199  |               |  |          | (149 | ) |  |   |     |   |  |  | (12,766  | )       |   |  | 4,117  |        |   |  | 128,113  |        
|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  |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | 116,647  |        
|Ordinary shares to be issued                                                                                        |                                     |                                   |            |           |  |            |        |          |  |         | 1,253 |              |  |               | 5,964   |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | 7,217    |        
|Issuance of replacement stocks options relating
    to the acquisition of Vialog and Astound                        |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               | 10,853  |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   | 10,853   |        
|Deferred stock-based compensation                                                                                   |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |  | (644 | ) |  |   |          |         |   |   |        |        |   |   | (644     | )      
|Amortization of deferred stock-based compensation                                                                   |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   | 179  |   |  |   |          |         |   |   |        |        |   |   | 179      |        
|Purchase of treasury shares                                                                                         |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           | (529 | ) |  |   |      |   |  |   |          |         |   |   |        |        |   |   | (529     | )      
|Net loss of disposed treasury shares                                                                                |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           | (73  | ) |  |   |      |   |  |   |          |         |   |   |        |        |   |   | (73      | )      
|Components of comprehensive loss:                                                                                   |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|                                                                                                                    | Net loss                            |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          | (98,527 | ) |   |        |        |   |   |          | (98,527 | )
|                                                                                                                    | Foreign currency translation        |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | 1,881  |   |   |          | 1,881   |  
|                                                                                                                    | Unrealized loss on cash flow hedges |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        | (2,249 | ) |   |          | (2,249  | )
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Total comprehensive income (loss)                                                                                   |                                     |                                   |            |           |  |            |       |          |  |          |      |              |  |               |        |               |  |           |     |   |  |   |     |   |  |   | (98,527  | )       |   |   | (2,249 | )      |   |   | (100,776 | )      
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        
|Balance at December 31, 2001                                                                                        |                                     |                                   | 15,271,064 |           |  |           | 76,356 |          |  |         | 1,253 |              |  |              | 194,019 |               |  |          | (751 | ) |  |  | (465 | ) |  |  | (111,293 | )       |   |  | 3,749  |        |   |  | 162,868  |        
|                                                                                                                    |                                     |                                   |            |           |  |            |        |          |  |          |       |              |  |               |         |               |  |           |      |   |  |   |      |   |  |   |          |         |   |   |        |        |   |   |          |        




See Notes to financial statements

F-5



---



##### Table of Contents



GENESYS S.A.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(in thousands)


|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |          |  
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------ | ------- | ------ | - | ---- | ------- | ------- | - | - | ------- | -------- | -
|                                                                                              |                                                                         |                         
|                                                                                              |                                                                         | Years ended December 31,
|                                                                                              |                                                                         |                         
|                                                                                              |                                                                         | 1999                     |         | 2000   |   | 2001
|                                                                                              |                                                                         |                          |         |        |   |     
|Cash flows from operating activities:                                                         |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Net loss                                                                                      |                                                                         |                         | (3,838  | )      |   |     | (5,972  | )       |   |  | (98,527 | )       
|Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities: |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Depreciation                                                            |                          |         | 4,023  |   |      |         | 7,474   |   |   |         | 15,862   |  
|                                                                                              | Amortization of goodwill and other intangibles                          |                          |         | 3,216  |   |      |         | 7,015   |   |   |         | 30,768   |  
|                                                                                              | Impairment of goodwill and other intangibles                            |                          |         |       |   |      |         |        |   |   |         | 61,269   |  
|                                                                                              | Amortization of deferred financing costs and debt
    issuance discount |                          |         | 347    |   |      |         | 437     |   |   |         | 1,107    |  
|                                                                                              | Amortization of deferred charges                                        |                          |         |       |   |      |         |        |   |   |         | 119      |  
|                                                                                              | Allowance for bad debt                                                  |                          |         | 604    |   |      |         | 297     |   |   |         | 2,948    |  
|                                                                                              | Amortization of deferred stock-based compensation                       |                          |         |       |   |      |         |        |   |   |         | 179      |  
|                                                                                              | Loss on disposal of assets                                              |                          |         | 154    |   |      |         | 49      |   |   |         | 293      |  
|                                                                                              | Deferred taxes expense (income)                                         |                          |         | 73     |   |      |         | 378     |   |   |         | (3,062   | )
|                                                                                              | Equity in loss of affiliated companies                                  |                          |         | 15     |   |      |         | 75      |   |   |         | 55       |  
|                                                                                              | Changes in unrealized losses on investments                             |                          |         | (24    | ) |      |         | (43     | ) |   |         |         |  
|Changes in operating assets and liabilities, net
    of effects of acquisition of businesses: |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | (Increase) in accounts receivable                                       |                          |         | (5,852 | ) |      |         | (3,614  | ) |   |         | (7,449   | )
|                                                                                              | Decrease in inventory                                                   |                          |         | 25     |   |      |         | 169     |   |   |         | 32       |  
|                                                                                              | (Increase) in prepaid expenses                                          |                          |         | (521   | ) |      |         | (344    | ) |   |         | (5,897   | )
|                                                                                              | Decrease (increase) in other assets                                     |                          |         | 1,650  |   |      |         | (1,843  | ) |   |         | 638      |  
|                                                                                              | (Increase) in note receivable                                           |                          |         |       |   |      |         |        |   |   |         | (18,462  | )
|                                                                                              | (Increase) in intangibles                                               |                          |         | (15    | ) |      |         |        |   |   |         |         |  
|                                                                                              | Increase (decrease) in accounts payable                                 |                          |         | 1,261  |   |      |         | 1,719   |   |   |         | (2,412   | )
|                                                                                              | Increase in accrued liabilities                                         |                          |         | 630    |   |      |         | 645     |   |   |         | 1,828    |  
|                                                                                              | Increase in accrued compensation                                        |                          |         | 590    |   |      |         | 2,569   |   |   |         | 734      |  
|                                                                                              | Increase in accrued taxes                                               |                          |         | 1,161  |   |      |         | 1,861   |   |   |         | (78      | )
|                                                                                              | Increase (decrease) in deferred revenue                                 |                          |         | (203   | ) |      |         | (740    | ) |   |         | 659      |  
|                                                                                              | Increase (decrease) in other liabilities                                |                          |         | 649    |   |      |         | (830    | ) |   |         | 1,097    |  
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Net cash provided by (used in) operating
    activities                                       |                                                                         |                          | 3,945   |        |   |      | 9,302   |         |   |   | (18,299 | )       
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Cash flows from investing activities:                                                         |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Acquisition of customer list                                                                  |                                                                         |                          |        |        |   |      | (4,470  | )       |   |   |        |         
|Acquisitions of businesses, net of cash acquired                                              |                                                                         |                          | (53,124 | )      |   |      | (7,498  | )       |   |   | (21,432 | )       
|Acquisition of furniture and equipment                                                        |                                                                         |                          | (7,465  | )      |   |      | (10,593 | )       |   |   | (15,952 | )       
|Proceeds from sales of furniture and equipment                                                |                                                                         |                          | 18      |        |   |      | 119     |         |   |   | 1,327   |         
|Issuance of promissory notes                                                                  |                                                                         |                          |        |        |   |      | (5,793  | )       |   |   |        |         
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Net cash used in investing
    activities                                                     |                                                                         |                          | (60,571 | )      |   |      | (28,235 | )       |   |   | (36,057 | )       
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Cash flows from financing activities:                                                         |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Increase (decrease) in bank overdrafts                                                        |                                                                         |                          | 480     |        |   |      | 1,099   |         |   |   | (1,882  | )       
|Net proceeds from issuance of convertible bonds                                               |                                                                         |                          | 25,000  |        |   |      |        |         |   |   |        |         
|Net proceeds from issuance of common stock                                                    |                                                                         |                          |        |        |   |      | 55,206  |         |   |   | 21,347  |         
|Purchase of treasury shares                                                                   |                                                                         |                          |        |        |   |      | (149    | )       |   |   | (529    | )       
|Net proceeds from sales of treasury shares                                                    |                                                                         |                          |        |        |   |      |        |         |   |   | (74     | )       
|Proceeds from the issuance of long-term debt                                                  |                                                                         |                          | 33,352  |        |   |      | 5,376   |         |   |   | 6,594   |         
|Principal payments on long-term debt                                                          |                                                                         |                          | (7,059  | )      |   |      | (7,971  | )       |   |   | (3,023  | )       
|Deferred financing costs                                                                      |                                                                         |                          | (1,256  | )      |   |      |        |         |   |   | (1,731  | )       
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Net cash provided by financing
    activities                                                 |                                                                         |                          | 50,517  |        |   |      | 53,561  |         |   |   | 20,701  |         
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Effect of foreign exchange rate changes on cash
    and cash equivalents                      |                                                                         |                          | 450     |        |   |      | 1,323   |         |   |   | 1,459   |         
|Increase (decrease) in cash and cash
    equivalents                                          |                                                                         |                          | (5,659  | )      |   |      | 35,951  |         |   |   | (32,195 | )       
|Cash and cash equivalents, beginning of
    period                                            |                                                                         |                          | 19,413  |        |   |      | 13,754  |         |   |   | 49,705  |         
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Cash and cash equivalents, end of
    period                                                  |                                                                         |                         | 13,754  |        |   |     | 49,705  |         |   |  | 17,510  |         
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|Supplemental disclosures of cash flow information:                                            |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Interest paid                                                           |                          |        | 382    |   |      |        | 3,472   |   |   |        | 7,310    |  
|                                                                                              | Income taxes paid                                                       |                          |         | 809    |   |      |         | 1,677   |   |   |         | 1,933    |  
|Non-cash investing and financing transactions:                                                |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Fixed assets acquired under capital lease                               |                          |        | 15     |   |      |        | 397     |   |   |         |         |  
|                                                                                              | Issuance of common stock in connection with
    acquisitions            |                          |         | 6,444  |   |      |         | 22,429  |   |   |        | 101,941  |  
|Acquisition of businesses:                                                                    |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Assets acquired                                                         |                          |        | 68,365 |   |      |        | 28,818  |   |   |        | 331,843  |  
|                                                                                              | Liabilities assumed and issued                                          |                          |         | (5,634 | ) |      |         | (2,648  | ) |   |         | (200,569 | )
|                                                                                              | Common stock issued                                                     |                          |         | (6,444 | ) |      |         | (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                                 |                          |         | (1,876 | ) |      |         | (920    | ) |   |         | (4,170   | )
|                                                                                              | Cash paid in connection with previous period
    acquisitions           |                          |         |       |   |      |         | 1,876   |   |   |         | 1,112    |  
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Cash paid                                                               |                          |         | 54,411 |   |      |         | 7,605   |   |   |         | 24,593   |  
|                                                                                              | Less cash acquired                                                      |                          |         | (1,287 | ) |      |         | (107    | ) |   |         | (3,161   | )
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         
|                                                                                              | Net cash paid for acquisitions of businesses                            |                          |        | 53,124 |   |      |        | 7,498   |   |   |        | 21,432   |  
|                                                                                              |                                                                         |                          |         |        |   |      |         |         |   |   |         |         

See notes to financial statements

F-6



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##### Table of 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 including
consolidated financial statements for the fiscal year ended
December 31, 2000 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.                                                                           

F-7



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





Scope of
consolidation

The following companies have been consolidated:

|                                                                              |  |                      |  |               
|----------------------------------------------------------------------------- |  | -------------------- |  | --------------
|                                                                              |  |                      |  | Interest and  
|Name                                                                          |  | Location             |  | control       
|                                                                              |  |                      |  |               
|Fully consolidated companies:                                                 |  |                      |  |               
|Genesys S.A.                                                                  |  | Montpellier, France  |  | Parent company
|Genesys Conferencing France, S.A. (formerly
    Genesys Open Media, 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 of Massachusetts, Inc.
    (formerly Vialog Corporation) |  | Bedford, USA         |  | 100%          
|Genesys Conferencing S.R.L.                                                   |  | Milan, Italy         |  | 100%          
|Astound Inc.                                                                  |  | 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%           

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

Prior to January 1, 2000, the reporting and
the functional currency was the French franc. The consolidated
financial statements for all years have been translated from
French francs into euro equivalents using the fixed rate of
FF6.55957 per euro. Comparative financial statements reported in
euros depict the same trends as would have been presented if the
Company had continued to present financial statements in French
francs. Financial statements for periods prior to
January 1, 2000 will not be comparable to the financial
statements of other companies that report in euro which
previously reported in currencies other than French franc. The
functional currency of each subsidiary is the local currency,
except Astound, 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

F-8



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





exchange in effect on the balance sheet date.
Revenues and expenses are translated at the average exchange
rates for the year. 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.

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.

Reclassifications

Certain reclassifications have been made in prior
years financial statements to conform to classification
used in the current year. Beginning fiscal year 2000,
certain company expenses have been presented using more accurate
allocation methods. Such reclassification had no impact on
reported net earnings, earnings per share or shareholders
equity.

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.

F-9



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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

Goodwill and identifiable intangible assets,
which consist of assembled workforce, technology and customer
lists, result from the excess of the purchase price over the
fair value of net tangible assets of businesses acquired.
Goodwill and other intangible assets are 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 represent their
estimated useful lives. The Company measures impairment of
goodwill and other intangible assets when events or
circumstances indicate that the carrying amount of the assets
may not be recoverable. Recoverability of goodwill and other
intangible assets is measured by a comparison of the carrying
amount of the asset to future undiscounted net cash flows
expected to be generated by the acquired company. If such assets
are considered to be impaired, the impairment to be recognized
is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets.

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

In accordance with the provisions of Statement of
Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, the Company reviews long-lived
assets, including property and equipment, for impairment
whenever events or changes in business circumstances indicate
that the carrying amount of the assets may not be fully
recoverable. Under Statement of Financial Accounting Standards
No. 121, an impairment loss would be 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. At December 31, 2001, an impairment
loss was recorded as described in note 3.

F-10



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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 and 2001, research and development
expenses amounted to
2,613 and
5,366, which
represents 2.8% and 3.0% of total revenue, respectively.
Expenses relating to software and information system network
maintenance and development classified as general and
administrative expenses amounted in 2000 and 2001 to
2,555 and
6,318,
respectively, which represents 2.7% and 3.5% 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.



| |             
| | ------------
| | 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, assembled workforce
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.

The Company has elected to continue to apply
APB 25 and presents the pro forma disclosure required by
SFAS 123 in Note 12.

F-11



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)







| |                            
| | ---------------------------
| | 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.



| |                       
| | ----------------------
| | 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, 2001.

The Company executed a twenty-seven-for-one stock
split in December 1997 and a two-for-one stock split in August
1998. All share data in the consolidated financial statements
and accompanying notes have been adjusted to reflect these stock
splits.



| |                  
| | -----------------
| | 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 operates currently in
three regional segments (Europe, North America and Asia-Pacific)
as management internally evaluates and reports the performance
of the Company on the basis of these separate 3 business
units.



| |                    
| | -------------------
| | Advertising expense

The cost of advertising is expensed as incurred.
The Companys advertising costs for the years ended
December 31, 1999, 2000 and 2001 were
925,
2,810 and
2,987,
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, 2001, 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

F-12



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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, 2001, 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 Euros, British Sterling
Pounds (GBP) and U.S. dollars and concentrated mainly in 5
banks in France, the United Kingdom and the United States.

The Company sells its services and products to
customers in a variety of countries in Europe, North America and
Asia-Pacific. The Company performs ongoing credit evaluations of
its customers and maintains allowances for potential credit
losses.

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,
|                                 |  |                         
|                                 |  | 1999                     |       | 2000 |  | 2001
|                                 |  |                          |       |      |  |     
|Allowance balance at January 1   |  |                         | 152   |      |  |     | 1,235 |   |  |  | 1,431  |  
|Amounts charged to expense       |  |                          | 798   |      |  |      | 676   |   |  |   | 3,189  |  
|Amounts written off              |  |                          | (82   | )    |  |      | (525  | ) |  |   | (1,469 | )
|Currency translation adjustment  |  |                          |      |      |  |      |      |   |  |   | 50     |  
|Net assets acquired              |  |                          | 367   |      |  |      | 45    |   |  |   |       |  
|                                 |  |                          |       |      |  |      |       |   |  |   |        |  
|Allowance balance at December 31 |  |                         | 1,235 |      |  |     | 1,431 |   |  |  | 3,201  |  
|                                 |  |                          |       |      |  |      |       |   |  |   |        |  

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. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. Statement of
Financial Accounting Standards No. 141 requires that the
purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is no longer permitted.
SFAS 141 also includes guidance on the initial recognition
and measurement of goodwill and other intangible assets acquired
in a business combination completed after June 30, 2001.
Statement of Financial Accounting Standards No. 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. Additionally, Statement 142 requires that
goodwill included in the carrying value of equity investments no
longer be amortized.

The Company will apply Statement 142
beginning in the first quarter of 2002. Application of the
non-amortization provisions of Statement 142 is expected to
result in a decrease in amortization expenses of
12.5 million
in 2002. The Company will also reclassify 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 the date of

F-13



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





adoption. The Company will test 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. The Company expects to perform the first of
the required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002 in the first
quarter of 2002. Any impairment charge resulting from these
transitional impairment tests will be reflected as the
cumulative effect of a change in accounting principle in the
first quarter of 2002. The Company does not believe that the
effect of these tests will be material to the earnings and
financial position of the Company.

In October 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This Statement addresses the
financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS 121, and the
accounting and reporting provisions of APB Opinion No. 30,
Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the
disposal of a segment of a business (as previously defined in
that Opinion). SFAS 144 also amends ARB No. 51,
Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is
likely to be temporary. The provisions of this Statement are
effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company has
currently reviewed the provisions of this statement and does not
believe its adoption will have a material impact on its results
of operations or its financial position.

Note 3.     Impairment
of goodwill and identifiable intangible assets

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 services offering of several acquisitions made
by the Company.

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.

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, 1999.

F-14



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





On April 1, 1999, Genesys Conferencing, Inc.
(GCI), a wholly-owned subsidiary of the Company,
acquired substantially all of the assets of Aloha Conferencing
Inc., an American teleconferencing company. The total purchase
price was 14,104
and consisted of
13,684
(U.S.$ 14,925) in cash and
421 of
acquisition costs. The total purchase price was allocated as
follows:

|                                     |  |   |        | 
|------------------------------------ |  | - | ------ | 
|Working capital                      |  |  | 727    | 
|Property & equipment, net            |  |   | 584    | 
|Goodwill and other intangible assets |  |   | 12,710 | 
|Other assets                         |  |   | 83     | 
|                                     |  |   |        | 
|                                     |  |  | 14,104 | 
|                                     |  |   |        | 

The purchase price exceeded the fair value of the
net tangible assets acquired by
12,710. The
excess was allocated to goodwill for
10,822,
amortized over 20 years, assembled workforce for
629, amortized
over 5 years, and customer lists for
1,259, amortized
over 10 years.

On April 13, 1999, the Company acquired all
of the issued and outstanding stock of VideoWeb Ltd., a British
videoconferencing company. The total purchase price was
10,082 and
consisted of
3,425 (GBP
2,300) in cash, 584,605 shares of Genesys S.A. with a fair
market value of
6,444 at the
time of issuance and
213 of
acquisition costs. The total purchase price was allocated as
follows:

|                                     |  |   |        |  
|------------------------------------ |  | - | ------ | -
|Working capital                      |  |  | 28     |  
|Property & equipment, net            |  |   | 888    |  
|Goodwill and other intangible assets |  |   | 10,072 |  
|Other assets                         |  |   | 32     |  
|Long-term liabilities                |  |   | (948   | )
|                                     |  |   |        |  
|                                     |  |  | 10,082 |  
|                                     |  |   |        |  

The purchase price exceeded the fair value of the
net tangible assets acquired by
10,072. The
excess was allocated to goodwill for
8,622, amortized
over 20 years, assembled workforce for
233, amortized
over 5 years, and customer lists for
1,217, amortized
over 10 years.

On July 31, 1999, the Company acquired
Conferencing Acquisition Corporation (CAC), a
subsidiary of Williams Inc., an American teleconferencing
company. CAC was an entity established by Williams, Inc. for
purposes of effecting the acquisition of certain assets and
liabilities of Williams Conferencing by Genesys. The total
purchase price was
37,428 and
consisted of
35,964
(U.S.$ 38,452) in cash and
1,464 of
acquisition costs.

The total purchase price was allocated as follows:

|                                     |  |  |         |  
|------------------------------------ |  |  | ------- | -
|Working capital                      |  |  | 3,033  |  
|Property & equipment, net            |  |  | 5,900   |  
|Goodwill and other intangible assets |  |  | 27,374  |  
|Other assets                         |  |  | 1,197   |  
|Long-term liabilities                |  |  | (76     | )
|                                     |  |  |         |  
|                                     |  |  | 37,428 |  
|                                     |  |  |         |  

The purchase price exceeded the fair value of net
tangible assets acquired by
27,374. The
excess was allocated to goodwill for
23,717,
amortized over 20 years, assembled workforce for
1,219, amortized
over 5 years, and customer lists for
2,438, amortized
over 10 years.

F-15



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





On November 2, 1999, UST and CAC merged into
GCI.

On January 1, 2000, VideoWeb Ltd merged into
Genesys Conferencing Ltd (formerly Darome Ltd).

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 is being amortized over
5 years.

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.

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.

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.

On July 31, 2000, as part of the same
business acquisition, the Company also 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.

On July 31, 2000, the Company also 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. 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. A contractual additional amount
(920) was
recorded as goodwill in December 2000.

On January 1, 2001, Axone, Cote &
Com, EBCS and Medlive merged into Mediactiv and was renamed to
Genesys Open Media (GOM). GOMs activity consist of event
and managed services. At the end of 2001, Genesys Open Media was
renamed to Genesys Conferencing France, S.A.

F-16



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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;
|
| |  | goodwill for
    28,763 and
    amortized over 5 years.                                           

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).

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;
|
| |  | workforce for
    5,250,
    classified in other intangibles and amortized over 4 years;                               
|
| |  | goodwill for
    113,045 and
    amortized over 20 years.                                                              

F-17



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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%.

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.

Note 5.     Cash
equivalents

The following is a summary of available-for-sale
securities:

|                  |                    |              |        |        |  |      |         |        |  |  |        |        | 
|----------------- | ------------------ | ------------ | ------ | ------ |  | ---- | ------- | ------ |  |  | ------ | ------ | 
|                  |                    |             
|                  |                    | December 31,
|                  |                    |             
|                  |                    | 1999         |        | 2000   |  | 2001
|                  |                    |              |        |        |  |     
|Cash equivalents: |                    |              |        |        |  |      |         |        |  |  |        |       
|                  | Money market funds |              |        | 2,776 |  |      |         | 3,096 |  |  |        | 1,569 | 
|                  | Term deposits      |              |        |       |  |      |         | 39,062 |  |  |        | 6,886  | 
|                  |                    |              |        |        |  |      |         |        |  |  |        |       
|                  |                    |              | 2,776 |        |  |      | 42,158 |        |  |  | 8,455 |       
|                  |                    |              |        |        |  |      |         |        |  |  |        |       




Unrealized holding gains on available-for-sale
securities at December 31, 1999 were
30. At
December 31, 2000 and 2001, there is no material unrealized
holding gains on available-for-sale securities. Net realized
gains from sales of available-for-sale securities were
241,
1,960 and
387 in 1999,
2000 and 2001, respectively.




Note 6.     Property
and equipment

Property and equipment consist of the following:

|                                 |  |              |         |      |  |      |         |   |  |  |         |  
|-------------------------------- |  | ------------ | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                 |  |             
|                                 |  | December 31,
|                                 |  |             
|                                 |  | 1999         |         | 2000 |  | 2001
|                                 |  |              |         |      |  |     
|Telecommunications equipment     |  |              | 16,814 |      |  |      | 23,522 |   |  |  | 43,612 |  
|Office and computer equipment    |  |              | 8,099   |      |  |      | 11,913  |   |  |  | 24,692  |  
|Leasehold improvements           |  |              | 1,252   |      |  |      | 2,128   |   |  |  | 5,586   |  
|Software development in progress |  |              | 684     |      |  |      | 281     |   |  |  | 3,229   |  
|                                 |  |              |         |      |  |      |         |   |  |  |         |  
|                                 |  |              | 26,849  |      |  |      | 37,844  |   |  |  | 77,119  |  
|Less accumulated depreciation    |  |              | (7,945  | )    |  |      | (15,369 | ) |  |  | (29,422 | )
|                                 |  |              |         |      |  |      |         |   |  |  |         |  
|                                 |  |              | 18,904 |      |  |      | 22,475 |   |  |  | 47,697 |  
|                                 |  |              |         |      |  |      |         |   |  |  |         |  

The Company leases certain of its equipment under
capital leases. The cost of such equipment included in property
and equipment was
962,
1,649 and
1,609 at
December 31, 1999, 2000 and 2001, respectively. Accumulated
amortization of this equipment was
610,
1,115 and
1,033 at
December 31, 1999, 2000 and 2001, respectively.

Software development in progress at
December 31, 2001 mainly consists of an integrated
reservation and billing system
(2,776) that
will be implemented in 2002.

F-18



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





Note 7.     Goodwill
and other intangible assets

Goodwill and other intangible assets consist of
the following:




|                                                            |  |              |         |      |  |      |          |   |  |  |          |  
|----------------------------------------------------------- |  | ------------ | ------- | ---- |  | ---- | -------- | - |  |  | -------- | -
|                                                            |  |             
|                                                            |  | December 31,
|                                                            |  |             
|                                                            |  | 1999         |         | 2000 |  | 2001
|                                                            |  |              |         |      |  |     
|Goodwill                                                    |  |              | 61,600 |      |  |      | 91,458  |   |  |  | 237,134 |  
|Customer lists                                              |  |              | 10,431  |      |  |      | 16,383   |   |  |  | 102,510  |  
|Technology                                                  |  |              |        |      |  |      |         |   |  |  | 30,351   |  
|Assembled workforce                                         |  |              | 2,643   |      |  |      | 2,797    |   |  |  | 9,513    |  
|Costs incurred in connection with probable
    acquisitions |  |              |        |      |  |      | 1,682    |   |  |  |         |  
|Others                                                      |  |              | 71      |      |  |      | 44       |   |  |  | 20       |  
|                                                            |  |              |         |      |  |      |          |   |  |  |          |  
|                                                            |  |              | 74,745  |      |  |      | 112,364  |   |  |  | 379,528  |  
|Less accumulated amortization                               |  |              | (4,925  | )    |  |      | (12,106  | ) |  |  | (43,201  | )
|Less impairment loss                                        |  |              |        |      |  |      |         |   |  |  | (61,269  | )
|                                                            |  |              |         |      |  |      |          |   |  |  |          |  
|                                                            |  |              | 69,820 |      |  |      | 100,258 |   |  |  | 275,058 |  
|                                                            |  |              |         |      |  |      |          |   |  |  |          |  




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.

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 6.7% at December 31, 2001. The
weighted average interest rate for the Company under such
facilities was 7.3% for 1999, 6.1% for 2000 and 7.1% for 2001.
The short-term facilities provide for a maximum amount of
borrowings of
5.4 million
as of December 31, 2001.

Note 9.     Long-term
debt

Long-term debt consists of the following:




|                                                                                                                   |  |              |         |      |  |      |         |   |  |  |          |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | ---- |  | ---- | ------- | - |  |  | -------- | -
|                                                                                                                   |  |             
|                                                                                                                   |  | December 31,
|                                                                                                                   |  |             
|                                                                                                                   |  | 1999         |         | 2000 |  | 2001
|                                                                                                                   |  |              |         |      |  |     
|Term loans, variable rate                                                                                          |  |              | 36,098 |      |  |      | 38,601 |   |  |  | 128,812 |  
|Revolving loans, variable rate                                                                                     |  |              |        |      |  |      |        |   |  |  | 12,108   |  
|3% Convertible notes, net of unamortized discount
    of 2,761 in
    1999, 659 in
    2000 and 469 in
    2001 |  |              | 25,242  |      |  |      | 11,326  |   |  |  | 8,281    |  
|British Pound (GBP) denominated loan                                                                               |  |              | 1,930   |      |  |      | 642     |   |  |  |         |  
|Interest free loan from ANVAR                                                                                      |  |              | 496     |      |  |      | 254     |   |  |  | 252      |  
|Capital lease obligations                                                                                          |  |              | 1,071   |      |  |      | 885     |   |  |  | 437      |  
|                                                                                                                   |  |              |         |      |  |      |         |   |  |  |          |  
|Total long-term debt                                                                                               |  |              | 64,837  |      |  |      | 51,708  |   |  |  | 149,890  |  
|Less current portion                                                                                               |  |              | (2,781  | )    |  |      | (7,285  | ) |  |  | (7,167   | )
|                                                                                                                   |  |              |         |      |  |      |         |   |  |  |          |  
|Long-term debt, less current portion                                                                               |  |              | 62,056 |      |  |      | 44,423 |   |  |  | 142,723 |  
|                                                                                                                   |  |              |         |      |  |      |         |   |  |  |          |  




F-19



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)







| |                                            
| | -------------------------------------------
| | 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 and amended thereafter,
Genesys S.A. (Genesys) and Vialog Corporation
(Vialog) entered into a U.S. $125 million
credit facility agreement with BNP Paribas, CIBC World Markets
and Fortis Bank. This credit facility replaced the
$35 million multi-currency term loan of Genesys described
above and long term debt of Vialog (U.S. $75 million
senior notes payable), which existed prior to the acquisition by
Genesys. The U.S. $125 million credit facility
includes the following items:






| |   |                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a U.S. $50 million senior term loan
    facility granted to Vialog, to be 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, to be used by Vialog to refinance
    its existing debt. This facility matures 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 Genesys, to be used by Genesys to partially
    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. $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 Genesys, to be used by Genesys for working
    capital purposes. This facility bears interest at the rate of
    Libor USD plus a margin of 2.65% per annum.                                                

The U.S. $50 million and
U.S. $35 million term loans granted to Vialog and
Genesys, respectively, are 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 is 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.
The Company is currently in compliance with all of the covenants
as amended. Confirmation of the latest amendment was received on
May 31, 2002.






| |                     
| | --------------------
| | 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. 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

F-20



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





converted into shares of common stock during the
year 2000 and 2001, respectively. As a result, 476,323 were not
converted at December 31, 2001.

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 6.3%
and 6.7% in 1999 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).

The Company also entered into several other term
loan agreements with various financial institutions. The average
interest rate was 4.2% for 1999, 5.8% for 2000 and 5.5% for
2001. At December 31, 2001, these loans bear interest at an
average interest rate of 4.4%. The loans contain certain
affirmative and negative covenants.

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) will
be repaid in 2002. During 2001, the Company was granted an
additional interest free loan for
120 by ANVAR
that relates to web conferencing.



| |                  
| | -----------------
| | Future repayments

Future repayments of long-term debt, excluding
capital lease obligations, are as follows:

|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2002                |  |  | 6,901   | 
|2003                |  |   | 19,518  | 
|2004                |  |   | 33,358  | 
|2005                |  |   | 27,269  | 
|2006 and thereafter |  |   | 62,407  | 
|                    |  |   |         | 
|Total               |  |  | 149,453 | 
|                    |  |   |         | 

Note 10.     Fair
value of financial instruments

At December 31, 1999, 2000 and 2001, 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, 1999, 2000
and 2001, the fair values and carrying values of long term
portion of long-term debt obligations were:

|                           |  |       |        |          |  |       |        |          |  |       |        |          |  |   |        |  |  |   |         |  |  |   |         | 
|-------------------------- |  | ----- | ------ | -------- |  | ----- | ------ | -------- |  | ----- | ------ | -------- |  | - | ------ |  |  | - | ------- |  |  | - | ------- | 
|                           |  |       |        |          |  |      
|                           |  | 1999  |        | 2000     |  | 2001 
|                           |  |       |        |          |  |      
|                           |  | Fair  |        | Carrying |  | Fair  |        | Carrying |  | Fair  |        | Carrying
|                           |  | value |        | Value    |  | value |        | Value    |  | value |        | Value   
|                           |  |       |        |          |  |       |        |          |  |       |        |         
|Long-term debt             |  |      | 84,248 |          |  |      | 62,056 |          |  |      | 53,373 |          |  |  | 44,423 |  |  |  | 141,187 |  |  |  | 142,719 | 
|Of which Convertible notes |  |      | 47,256 |          |  |      | 25,242 |          |  |      | 24,680 |          |  |  | 11,326 |  |  |  | 8,097   |  |  |  | 8,281   | 

F-21



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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



| |                         
| | ------------------------
| | Changes in 1999 and 2000

On July 6, 1999, the Company issued 584,605
shares at a price of
11.02 per share
in exchange for all of the outstanding shares of VideoWeb Ltd.

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 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.

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.

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.



| |                    
| | -------------------
| | Astound acquisition

To finance the acquisition of Astound and after
the approval at the Shareholders special meeting of the
Company on March 23, 2001, 1,103,200 convertible notes were
issued by the Company exclusively for Geene, S.A.S. 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. As a result, ordinary
shares and additional paid-in-capital increased by
3,384 and
16,099,
respectively. Ordinary shares to be issued represents the
250,687 convertible notes into shares at a unit price of
28.79 which have
not been converted. In addition, 145,105 replacement options and
30,700 special options have not been converted in 2001.

F-22



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





The schedule below summarize the movements of
options and shares pertaining the acquisition of Astound:

In 2001, the number of convertibles notes is as
follows:

|                                                            |  |             |           |           |  |              |         |  |  |   |         | 
|----------------------------------------------------------- |  | ----------- | --------- | --------- |  | ------------ | ------- |  |  | - | ------- | 
|                                                            |  | Issuance of |           |           |  | Remaining   
|                                                            |  | convertible |           |           |  | convertible 
|                                                            |  | notes on    |           | Converted |  | notes at    
|                                                            |  | March 27    |           | notes     |  | Dec 31, 2001
|                                                            |  |             |           |           |  |             
|Notes issued for future exercise of replacement
    options |  |             | 156,109   |           |  |              | 11,004  |  |  |   | 145,105 | 
|Notes issued for future exercise of special
    options     |  |             | 30,700    |           |  |              |        |  |  |   | 30,700  | 
|Other notes                                                 |  |             | 916,391   |           |  |              | 665,704 |  |  |   | 250,687 | 
|                                                            |  |             |           |           |  |              |         |  |  |   |         | 
|Total                                                       |  |             | 1,103,200 |           |  |              | 676,708 |  |  |  | 426,492 | 
|                                                            |  |             |           |           |  |              |         |  |  |   |         | 



| |                   
| | ------------------
| | 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 shares of
the Company. The ADSs of the Company began trading on the
Nasdaq Stock Market on April 26, 2001 (symbol: GNSY). 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 of Massachusetts 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.



| |              
| | -------------
| | Other changes

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.

On May 4, 2001, 100 stocks 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.

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.

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-23



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(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 is valid for 18 months includes a
limit value for purchase (not higher than 200 euros) and
sale (not lower than 30 euros) At December 31, 2000
and 2001, the Company held 2,905 shares and 22,131 shares,
respectively for a total cost of
149 and
678,
respectively. The net loss on disposed treasury shares
(74 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,
1999, 2000 and 2001, the Companys legal reserve was
31,
125 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.

F-24



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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. 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.

F-25



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





Stock option activity under the 1999, 2000 and
2001 plans was as follows:

|                                |  |           |          |             |  |          |           |   |  |  |       | 
|------------------------------- |  | --------- | -------- | ----------- |  | -------- | --------- | - |  |  | ----- | 
|                                |  |           |          |             |  | Weighted
|                                |  | Shares    |          |             |  | average 
|                                |  | available |          | Options     |  | exercise
|                                |  | for grant |          | outstanding |  | price   
|                                |  |           |          |             |  |         
|Balance as of January 1, 1999   |  |           |         |             |  |          | 412,890   |   |  |  | 9.91  | 
|Authorized                      |  |           | 230,504  |             |  |          |          |   |  |  |      | 
|Granted                         |  |           | (251,483 | )           |  |          | 251,483   |   |  |  | 15.32 | 
|Canceled                        |  |           | 70,979   |             |  |          | (70,979   | ) |  |  | 9.91  | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 
|Balance as of December 31, 1999 |  |           | 50,000   |             |  |          | 593,394   |   |  |  | 12.20 | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 
|Authorized                      |  |           | 550,000  |             |  |          |          |   |  |  |      | 
|Granted                         |  |           | (335,500 | )           |  |          | 335,500   |   |  |  | 51.04 | 
|Canceled                        |  |           | 37,542   |             |  |          | (37,542   | ) |  |  | 11.21 | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 
|Balance as of December 31, 2000 |  |           | 302,042  |             |  |          | 891,352   |   |  |  | 26.86 | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 
|Authorized                      |  |           | 550,000  |             |  |          |          |   |  |  |      | 
|Granted                         |  |           | (694,358 | )           |  |          | 694,358   |   |  |  | 21.15 | 
|Exercised                       |  |           |         |             |  |          | (100      | ) |  |  | 15.32 | 
|Canceled                        |  |           | 24,650   |             |  |          | (24,650   | ) |  |  | 37.97 | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 
|Balance as of December 31, 2001 |  |           | 182,334  |             |  |          | 1,560,960 |   |  |  | 23.32 | 
|                                |  |           |          |             |  |          |           |   |  |  |       | 

The following table summarizes the status of
stock options outstanding and exercisable at December 31,
2001:

|                        |  |                     |           |                  |  |             |     |  |  |  |         | 
|----------------------- |  | ------------------- | --------- | ---------------- |  | ----------- | --- |  |  |  | ------- | 
|                        |  |                    
|                        |  | Options outstanding
|                        |  |                    
|                        |  |                     |           | Weighted-        |  |            
|                        |  |                     |           | average          |  |            
|                        |  |                     |           | remaining        |  |            
|                        |  | Number              |           | contractual life |  | Number     
|Range of exercise price |  | outstanding         |           | (in years)       |  | exercisable
|                        |  |                     |           |                  |  |            
|9.91                   |  |                     | 338,869   |                  |  |             | 4.8 |  |  |  | 237,208 | 
|15.32 
    15.86      |  |                     | 647,483   |                  |  |             | 7.1 |  |  |  | 46,697  | 
|22.09 
    25.02      |  |                     | 243,858   |                  |  |             | 7.3 |  |  |  |        | 
|39.38                  |  |                     | 11,000    |                  |  |             | 7.2 |  |  |  |        | 
|50.42 
    53.47     |  |                     | 319,750   |                  |  |             | 6.6 |  |  |  | 63,950  | 
|                        |  |                     |           |                  |  |             |     |  |  |  |         | 
|                        |  |                     | 1,560,960 |                  |  |             | 6.6 |  |  |  | 347,855 | 
|                        |  |                     |           |                  |  |             |     |  |  |  |         | 



| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Stock plan at Genesys Conferencing of
    Massachusetts, 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

F-26



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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:

|                                |  |           |         |              |  |                 |           |                  |  |  |         |   |  |  |       | 
|------------------------------- |  | --------- | ------- | ------------ |  | --------------- | --------- | ---------------- |  |  | ------- | - |  |  | ----- | 
|                                |  |           |         |              |  |                 |           | Equivalent      
|                                |  | Number of |         | Number of    |  | Equivalent      |           | weighted        
|                                |  | options   |         | outstanding  |  | number of       |           | average exercise
|                                |  | available |         | Vialog stock |  | Genesys         |           | price of Genesys
|                                |  | for grant |         | options      |  | ordinary shares |           | ordinary share  
|                                |  |           |         |              |  |                 |           |                 
|Balance as of April 25, 2001    |  |           | 881,659 |              |  |                 | 2,385,362 |                  |  |  | 799,454 |   |  |  | 19.43 | 
|                                |  |           |         |              |  |                 |           |                  |  |  |         |   |  |  |       | 
|Exercised                       |  |           |        |              |  |                 | (261,110  | )                |  |  | (87,510 | ) |  |  | 12.43 | 
|Canceled                        |  |           | 78,406  |              |  |                 | (78,406   | )                |  |  | (26,279 | ) |  |  | 19.68 | 
|                                |  |           |         |              |  |                 |           |                  |  |  |         |   |  |  |       | 
|Balance as of December 31, 2001 |  |           | 960,065 |              |  |                 | 2,045,846 |                  |  |  | 685,665 |   |  |  | 20.65 | 
|                                |  |           |         |              |  |                 |           |                  |  |  |         |   |  |  |       | 

The following table summarizes the status of
stock options outstanding and exercisable at December 31,
2001:

|                                   |  |                     |         |                  |  |                    |     |  |  |  |         | 
|---------------------------------- |  | ------------------- | ------- | ---------------- |  | ------------------ | --- |  |  |  | ------- | 
|                                   |  |                    
|                                   |  | Options outstanding
|                                   |  |                    
|                                   |  |                     |         | Weighted-        |  |                   
|                                   |  | Equivalent          |         | average          |  | Equivalent        
|                                   |  | outstanding number  |         | remaining        |  | exercisable number
|                                   |  | of Genesys          |         | contractual life |  | of Genesys        
|Range of equivalent exercise price |  | ordinary shares     |         | (in years)       |  | ordinary shares   
|                                   |  |                     |         |                  |  |                   
|6.77 
    15.68                  |  |                     | 264,122 |                  |  |                    | 7.2 |  |  |  | 259,591 | 
|16.93 
    23.70                 |  |                     | 186,341 |                  |  |                    | 6.3 |  |  |  | 180,310 | 
|27.08                             |  |                     | 78,004  |                  |  |                    | 3.2 |  |  |  | 73,963  | 
|33.86 
    36.09                 |  |                     | 157,198 |                  |  |                    | 8.6 |  |  |  | 54,991  | 
|                                   |  |                     |         |                  |  |                    |     |  |  |  |         | 
|                                   |  |                     | 685,665 |                  |  |                    | 6.8 |  |  |  | 568,854 | 
|                                   |  |                     |         |                  |  |                    |     |  |  |  |         | 

Stock based compensation

Pro forma information regarding net income and
earnings per share is required by SFAS 123, 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:

|                               |  |      |           |      |  |      |           |   |  |  |           |  
|------------------------------ |  | ---- | --------- | ---- |  | ---- | --------- | - |  |  | --------- | -
|                               |  | 1999 |           | 2000 |  | 2001
|                               |  |      |           |      |  |     
|Expected dividend yield        |  |      | 0         | %    |  |      | 0         | % |  |  | 0         | %
|Expected volatility            |  |      | 0.525     |      |  |      | 0.913     |   |  |  | 0.985     |  
|Risk-free interest rate        |  |      | 4.68      | %    |  |      | 5.40      | % |  |  | 5.05      | %
|Weighted average expected life |  |      | 5.6 years |      |  |      | 5.6 years |   |  |  | 5.5 years |  

F-27



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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,
|                                    |  |                         
|                                    |  | 1999                     |        | 2000 |  | 2001
|                                    |  |                          |        |      |  |     
|Pro forma net loss                  |  |                         | (4,731 | )    |  |     | (9,410 | ) |  |  | (107,993 | )
|Pro forma net loss per common share |  |                          | (0.74  | )    |  |      | (1.20  | ) |  |   | (8.39    | )

The weighted average fair value of options
granted during 1999, 2000 and 2001 was as follows:

|                                                                                                     |  |                          |      |      |  |      |       |  |  |   |       | 
|---------------------------------------------------------------------------------------------------- |  | ------------------------ | ---- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                                                                     |  |                         
|                                                                                                     |  | Years ended December 31,
|                                                                                                     |  |                         
|                                                                                                     |  | 1999                     |      | 2000 |  | 2001
|                                                                                                     |  |                          |      |      |  |     
|Options whose price was less than the market
    price of the underlying shares on the grant date    |  |                         | 8.70 |      |  |     | 46.98 |  |  |  | 18.10 | 
|Options whose price was greater than the market
    price of the underlying shares on the grant date |  |                          |     |      |  |      | 39.93 |  |  |   | 12.62 | 

Note 13.     Income
taxes

The components of the income tax expense
(benefit) provision are as follows:

|                         |  |                          |       |      |  |      |       |   |  |   |        |  
|------------------------ |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  | - | ------ | -
|                         |  |                         
|                         |  | Years ended December 31,
|                         |  |                         
|                         |  | 1999                     |       | 2000 |  | 2001
|                         |  |                          |       |      |  |     
|Current:                 |  |                         | 1,180 |      |  |     | 3,326 |   |  |  | 3,546  |  
| Domestic               |  |                          | 4     |      |  |      | 1,152 |   |  |   | 11     |  
| Foreign                |  |                          | 1,176 |      |  |      | 2,174 |   |  |   | 3,535  |  
|Deferred:                |  |                          | 73    |      |  |      | 263   |   |  |   | (3,062 | )
| Domestic               |  |                          | 84    |      |  |      | (14   | ) |  |   | 2,639  |  
| Foreign                |  |                          | (11   | )    |  |      | 277   |   |  |   | (5,701 | )
|                         |  |                          |       |      |  |      |       |   |  |   |        |  
|Net income tax provision |  |                         | 1,253 |      |  |     | 3,589 |   |  |  | 484    |  
|                         |  |                          |       |      |  |      |       |   |  |   |        |  

F-28



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





The provision for income taxes differs from the
computed expected income tax benefit using the
French statutory tax rate of 37%, 38% and 36% in 1999, 2000 and
2001, respectively, for the following reasons:

|                                                                                        |  |              |       |      |  |      |       |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------------ | ----- | ---- |  | ---- | ----- | - |  | - | ------- | -
|                                                                                        |  |             
|                                                                                        |  | December 31,
|                                                                                        |  |             
|                                                                                        |  | 1999         |       | 2000 |  | 2001
|                                                                                        |  |              |       |      |  |     
|Income tax benefit at statutory rate                                                    |  |             | (962  | )    |  |     | (900  | ) |  |  | (35,717 | )
|Increase (reduction) in taxes resulting
    from                                        |  |              |       |      |  |      |       |   |  |   |         |  
|Foreign income tax rates different from the
    French statutory tax rate               |  |              | (254  | )    |  |      | (192  | ) |  |   | (752    | )
|Amortization of non-deductible goodwill and other
    intangibles                       |  |              | 681   |      |  |      | 1,422 |   |  |   | 9,633   |  
|Non deductible impairment on goodwill and
    identifiable intangible assets            |  |              |      |      |  |      |      |   |  |   | 22,320  |  
|Change in valuation allowance                                                           |  |              | 1,641 |      |  |      | 1,753 |   |  |   | 9,433   |  
|Public offering expenses                                                                |  |              |      |      |  |      |      |   |  |   | (1,826  | )
|Tax on acquisitions costs of companies classified
    in goodwill and intangible assets |  |              |      |      |  |      | 1,174 |   |  |   | 4,796   |  
|Deferred tax due to amortization of identifiable
    intangible assets                  |  |              |      |      |  |      |      |   |  |   | (7,555  | )
|Other                                                                                   |  |              | 147   |      |  |      | 332   |   |  |   | 152     |  
|                                                                                        |  |              |       |      |  |      |       |   |  |   |         |  
|Reported current and deferred income tax provision                                      |  |             | 1,253 |      |  |     | 3,589 |   |  |  | 484     |  
|                                                                                        |  |              |       |      |  |      |       |   |  |   |         |  

The consolidated net deferred tax asset consists
of the following:

|                                      |               |              |        |       |  |      |        |       |  |   |         |        | 
|------------------------------------- | ------------- | ------------ | ------ | ----- |  | ---- | ------ | ----- |  | - | ------- | ------ | 
|                                      |               |             
|                                      |               | December 31,
|                                      |               |             
|                                      |               | 1999         |        | 2000  |  | 2001
|                                      |               |              |        |       |  |     
|Total deferred tax liability          |               |             | 358    |       |  |     | 400    |       |  |  | 36,791  |       
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|Net operating losses carried forward: |               |              |        |       |  |      |        |       |  |   |         |       
|                                      | France        |              |        | 1,007 |  |      |        | 905   |  |   |         | 9,720  | 
|                                      | Belgium       |              |        | 274   |  |      |        | 221   |  |   |         | 244    | 
|                                      | Germany       |              |        | 733   |  |      |        | 796   |  |   |         | 1,673  | 
|                                      | Italy         |              |        |      |  |      |        |      |  |   |         | 67     | 
|                                      | Canada        |              |        |      |  |      |        |      |  |   |         | 7,596  | 
|                                      | United States |              |        | 1,391 |  |      |        | 573   |  |   |         | 21,416 | 
|                                      | Singapore     |              |        | 228   |  |      |        | 353   |  |   |         | 529    | 
|                                      | Australia     |              |        |      |  |      |        | 30    |  |   |         | 110    | 
|                                      | Hong Kong     |              |        | 29    |  |      |        | 58    |  |   |         | 149    | 
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|                                      | Total         |              |        | 3,662 |  |      |        | 2,936 |  |   |         | 41,504 | 
|Other                                 |               |              | 329    |       |  |      | 2,587  |       |  |   | 494     |       
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|Total deferred tax assets             |               |              | 3,991  |       |  |      | 5,523  |       |  |   | 41,998  |       
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|Valuation allowance                   |               |              | (3,489 | )     |  |      | (5,242 | )     |  |   | (41,762 | )     
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|Total deferred tax assets, net        |               |              | 502    |       |  |      | 281    |       |  |   | 236     |       
|                                      |               |              |        |       |  |      |        |       |  |   |         |       
|Deferred taxes, net                   |               |             | 144    |       |  |     | (119   | )     |  |  | (36,555 | )     
|                                      |               |              |        |       |  |      |        |       |  |   |         |       

The deferred tax liability at December 31,
2001 mainly relates to the acquisition of identifiable
intangible assets from Astound (technology and assembled
workforce) and Vialog (customer lists and assembled

F-29



---



##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





workforce). Such liability will be written off at
the same rate as the amortization of the 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:




|                   |  |     |        |        |  |        |        |        |  |       |        |  |  |   |       |  |  |   |         | 
|------------------ |  | --- | ------ | ------ |  | ------ | ------ | ------ |  | ----- | ------ |  |  | - | ----- |  |  | - | ------- | 
|                   |  | USA |        | Canada |  | France |        | Others |  | Total
|                   |  |     |        |        |  |        |        |        |  |      
|2002               |  |     |       |        |  |       | 1,229  |        |  |      | 1,298  |  |  |   |      |  |  |  | 2,527   | 
|2003               |  |     |       |        |  |        | 4,396  |        |  |       | 1,501  |  |  |   |      |  |  |   | 5,897   | 
|2004               |  |     |       |        |  |        | 2,206  |        |  |       |       |  |  |   |      |  |  |   | 2,206   | 
|2005               |  |     |       |        |  |        | 2,345  |        |  |       |       |  |  |   |      |  |  |   | 2,345   | 
|2006               |  |     |       |        |  |        | 4,123  |        |  |       | 9,709  |  |  |  | 1,212 |  |  |   | 15,044  | 
|2007-2008          |  |     |       |        |  |        | 7,200  |        |  |       |       |  |  |   | 1,212 |  |  |   | 8,412   | 
|2018-2022          |  |    | 60,616 |        |  |        |       |        |  |       |       |  |  |   |      |  |  |   | 60,616  | 
|No expiration date |  |     |       |        |  |        |       |        |  |       | 15,003 |  |  |   | 5,424 |  |  |   | 20,427  | 
|                   |  |     |        |        |  |        |        |        |  |       |        |  |  |   |       |  |  |   |         | 
|Total              |  |    | 60,616 |        |  |       | 21,499 |        |  |      | 27,511 |  |  |  | 7,848 |  |  |  | 117,474 | 
|                   |  |     |        |        |  |        |        |        |  |       |        |  |  |   |       |  |  |   |         | 




Note 14.  Commitments and
contingencies

Lease
contracts

The Company leases its facilities under long-term
operating lease agreements expiring on various dates through
November 2010. The Company also leases equipment (mainly
teleconferencing bridges) under long-term operating leases
expiring on various dates through October 2004. The rent
expenses for long-term operating leases amounted to
1,420,
2,783 and
7,464 in 1999,
2000 and 2001, respectively.

As of December 31, 2001, aggregate minimum
lease payments under non cancelable operating leases and
commitments were as follows:

|           |  |  |         | 
|---------- |  |  | ------- | 
|2002       |  |  | 10,347 | 
|2003       |  |  | 7,112   | 
|2004       |  |  | 5,460   | 
|2005       |  |  | 3,425   | 
|2006       |  |  | 2,204   | 
|Thereafter |  |  | 6,651   | 
|           |  |  |         | 
|Total      |  |  | 35,199 | 
|           |  |  |         | 

The Company also leases equipment and cars
through capital leases contracts, which expire at various dates
through 2005.

F-30



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





The amounts of future minimum lease payments
under those contracts are as follows:

|                              |  |  |      |  
|----------------------------- |  |  | ---- | -
|2002                          |  |  | 281 |  
|2003                          |  |  | 164  |  
|2004                          |  |  | 25   |  
|2005                          |  |  | 8    |  
|Thereafter                    |  |  |     |  
|                              |  |  |      |  
|                              |  |  | 478  |  
|Amounts representing interest |  |  | (41  | )
|                              |  |  |      |  
|                              |  |  | 437  |  
|Less current portion          |  |  | (266 | )
|                              |  |  |      |  
|                              |  |  | 171 |  
|                              |  |  |      |  

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 new 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
2,249 at
December 31, 2001.

As of December 31, 2001, the Company expects
to reclassify
704 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, 2001.

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

F-31



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





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, 2001. 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 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, 1999, 2000 and 2001, GCI had established a
reserve of approximately U.S. $195 (equivalent to
208),
U.S. $569 (equivalent to
611) and
U.S. $1,100 (equivalent to
1,248),
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, 2001, but did not, in
the event they become due.

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, Genesys Conferencing of Massachusetts;
|
| |  | security over assets such as accounts receivable,
    inventories and property, plant and equipment of Genesys
    Conferencing of Massachusetts;                       
|
| |  | security over some assets such as accounts
    receivable of Genesys Conferencing Inc.                                                                                  

The Company also entered into other collateral
security agreement in favor of banks amounting to
1,140 and other
security agreements with the French tax administration
(342) and
leasing companies
(100).

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 15.  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 a
defined contribution plan which qualifies under
section 401(k) of the Internal Revenue Code. During 1999,
2000 and 2001, the Company made contributions of approximately
U.S. $43 (equivalent to
46),
U.S. $122 (equivalent to
132) and
U.S. $420 (equivalent to
469) to the
plan, respectively. At Genesys Conferencing Inc, all employees
are eligible to enroll in the plan and can contribute up to 20%
of their eligible wages into the Plan, so long as the total
contributions do not exceed dollar limits established under IRS
regulations. The Company matches 20% of the employee
contributions. At Genesys Conferencing of Massachusetts Inc.,
all employees are eligible to enroll in the plan and may
contribute up to 15 percent of pre-tax annual compensation,
as defined in the Plan. The Company matches 50% of the
participants contribution up to a maximum of 6% of the
participants compensation.

F-32



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





In England, the Company has defined contribution
plans whose assets are held separately from those of the
Company. Costs recognized for these plans were
106,
184 and
233 in 1999,
2000 and 2001, 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, 1999, 2000 and 2001 or for
the years ended December 31, 1999, 2000 and 2001.

Note 16.     Revenues

Revenues consist of the following:

|         |                                     |                          |        |        |  |      |        |        |  |   |         |         | 
|-------- | ----------------------------------- | ------------------------ | ------ | ------ |  | ---- | ------ | ------ |  | - | ------- | ------- | 
|         |                                     |                         
|         |                                     | Years ended December 31,
|         |                                     |                         
|         |                                     | 1999                     |        | 2000   |  | 2001
|         |                                     |                          |        |        |  |     
|Services |                                     |                          |        |        |  |      |        |        |  |   |         |        
|         | Audio conferencing                  |                          |       | 42,788 |  |      |       | 75,541 |  |   |        | 157,707 | 
|         | Video conferencing                  |                          |        | 4,372  |  |      |        | 12,238 |  |   |         | 10,944  | 
|         | Data conferencing and web streaming |                          |        |       |  |      |        | 1,557  |  |   |         | 8,469   | 
|Products |                                     |                          | 835    |        |  |      | 3,083  |        |  |   | 1,831   |        
|         |                                     |                          |        |        |  |      |        |        |  |   |         |        
|Total    |                                     |                         | 47,995 |        |  |     | 92,419 |        |  |  | 178,951 |        
|         |                                     |                          |        |        |  |      |        |        |  |   |         |        

Note 17.     Segment
and geographic information

The Company and its subsidiaries operate in three
geographic reportable segments: Europe, North America and
Asia-Pacific. 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.

F-33



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





The following is a summary of operations by
segment for the years ended December 31, 1999, 2000 and
2001:

|                                     |              |        |         |        |  |         |        |           |  |         |       |       |  |   |         |   |  |  |   |      |   |  |         |        | 
|------------------------------------ | ------------ | ------ | ------- | ------ |  | ------- | ------ | --------- |  | ------- | ----- | ----- |  | - | ------- | - |  |  | - | ---- | - |  | ------- | ------ | 
|                                     |              |        |         | United |  | Asia-   |        |           |  | Inter-  |       |      
|                                     |              | Europe |         | States |  | Pacific |        | Corporate |  | segment |       | Total
|                                     |              |        |         |        |  |         |        |           |  |         |       |      
|1999                                 |              |        |         |        |  |         |        |           |  |         |       |       |  |   |         |   |  |  |   |      |   |  |         |       
|Net sales                            |              |        |         |        |  |         |        |           |  |         |       |       |  |   |         |   |  |  |   |      |   |  |         |       
|                                     | Customers    |        |        | 27,861 |  |         |       | 18,158    |  |         |      | 1,976 |  |   |         |  |  |  |   |     |   |  |        | 47,995 | 
|                                     | Intercompany |        |         | 28     |  |         |        |          |  |         |       | 47    |  |   |         |  |  |  |  | (75  | ) |  |         |       | 
|Gross profit                         |              |        | 18,302  |        |  |         | 8,294  |           |  |         | 844   |       |  |   |        |   |  |  |  |      |   |  | 27,440  |       
|EBITDA                               |              |        | 9,928   |        |  |         | 2,632  |           |  |         |      |       |  |   | (5,748  | ) |  |  |  |      |   |  | 6,812   |       
|Operating income (loss)              |              |        | 6,730   |        |  |         | (975   | )         |  |         | (347  | )     |  |  | (5,895  | ) |  |  |  |      |   |  | (487    | )     
|Net interest expense (income)        |              |        | 1,081   |        |  |         | 1,006  |           |  |         | (4    | )     |  |   |        |   |  |  |  |      |   |  | 2,083   |       
|Equity in loss of affiliated company |              |        | (15     | )      |  |         |       |           |  |         |      |       |  |   |        |   |  |  |  |      |   |  | (15     | )     
|Income (loss) before tax             |              |        | 5,634   |        |  |         | (1,981 | )         |  |         | (343  | )     |  |   | (5,895  | ) |  |  |  |      |   |  | (2,585  | )     
|Income tax expense (benefit)         |              |        | 1,243   |        |  |         | 90     |           |  |         | (80   | )     |  |   |        |   |  |  |  |      |   |  | 1,253   |       
|Total assets                         |              |        | 54,571  |        |  |         | 65,498 |           |  |         | 2,301 |       |  |   | 520     |   |  |  |  |      |   |  | 122,890 |       
|Depreciation                         |              |        | 1,726   |        |  |         | 1,923  |           |  |         | 227   |       |  |   | 147     |   |  |  |  |      |   |  | 4,023   |       
|Additions to property and equipment  |              |        | 3,342   |        |  |         | 3,507  |           |  |         | 392   |       |  |   | 224     |   |  |  |  |      |   |  | 7,465   |       
|                                    
|2000                                 |              |        |         |        |  |         |        |           |  |         |       |       |  |   |         |   |  |  |   |      |   |  |         |       
|Net sales                            |              |        |         |        |  |         |        |           |  |         |       |       |  |   |         |   |  |  |   |      |   |  |         |       
|                                     | Customers    |        |        | 45,886 |  |         |       | 42,097    |  |         |      | 4,436 |  |   |         |  |  |  |   |     |   |  |        | 92,419 | 
|                                     | Intercompany |        |         | 22     |  |         |        | 464       |  |         |       |      |  |   |         |  |  |  |  | (486 | ) |  |         |       | 
|Gross profit                         |              |        | 29,257  |        |  |         | 20,371 |           |  |         | 2,070 |       |  |   |        |   |  |  |  |      |   |  | 51,698  |       
|EBITDA                               |              |        | 14,778  |        |  |         | 9,401  |           |  |         | 434   |       |  |  | (12,884 | ) |  |  |  |      |   |  | 11,729  |       
|Operating income (loss)              |              |        | 7,743   |        |  |         | 2,437  |           |  |         | 75    |       |  |   | (13,217 | ) |  |  |  |      |   |  | (2,962  | )     
|Net interest expense (income)        |              |        | (2,270  | )      |  |         | 1,605  |           |  |         | 10    |       |  |   |        |   |  |  |  |      |   |  | (655    | )     
|Equity in loss of affiliated company |              |        | (76     | )      |  |         |       |           |  |         |      |       |  |   |        |   |  |  |  |      |   |  | (76     | )     
|Income (loss) before tax             |              |        | 9,938   |        |  |         | 832    |           |  |         | 64    |       |  |   | (13,217 | ) |  |  |  |      |   |  | (2,383  | )     
|Income tax expense                   |              |        | 3,231   |        |  |         | 126    |           |  |         | 232   |       |  |   |        |   |  |  |  |      |   |  | 3,589   |       
|Total assets                         |              |        | 134,789 |        |  |         | 66,955 |           |  |         | 3,862 |       |  |   | 1,563   |   |  |  |  |      |   |  | 207,169 |       
|Depreciation                         |              |        | 2,979   |        |  |         | 3,831  |           |  |         | 327   |       |  |   | 334     |   |  |  |  |      |   |  | 7,474   |       
|Additions to property and equipment  |              |        | 5,246   |        |  |         | 3,062  |           |  |         | 678   |       |  |   | 1,607   |   |  |  |  |      |   |  | 10,593  |       

F-34



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





|                                                                      |              |        |         |        |  |         |         |           |  |         |       |       |  |   |         |   |  |  |   |        |   |  |         |         | 
|--------------------------------------------------------------------- | ------------ | ------ | ------- | ------ |  | ------- | ------- | --------- |  | ------- | ----- | ----- |  | - | ------- | - |  |  | - | ------ | - |  | ------- | ------- | 
|                                                                      |              |        |         | United |  | Asia-   |         |           |  | Inter-  |       |      
|                                                                      |              | Europe |         | States |  | Pacific |         | Corporate |  | segment |       | Total
|                                                                      |              |        |         |        |  |         |         |           |  |         |       |      
|2001                                                                  |              |        |         |        |  |         |         |           |  |         |       |       |  |   |         |   |  |  |   |        |   |  |         |        
|Net sales                                                             |              |        |         |        |  |         |         |           |  |         |       |       |  |   |         |   |  |  |   |        |   |  |         |        
|                                                                      | Customers    |        |        | 59,125 |  |         |        | 113,481   |  |         |      | 6,345 |  |   |         |  |  |  |   |       |   |  |        | 178,951 | 
|                                                                      | Intercompany |        |         | 22     |  |         |         | 1,138     |  |         |       | 26    |  |   |         |  |  |  |  | (1,186 | ) |  |         |        | 
|Gross profit                                                          |              |        | 40,520  |        |  |         | 59,044  |           |  |         | 3,211 |       |  |   |        |   |  |  |  |        |   |  | 102,775 |        
|EBITDA before impairment of goodwill and
    identifiable intangibles |              |        | 21,492  |        |  |         | 13,834  |           |  |         | 562   |       |  |  | (18,961 | ) |  |  |  |        |   |  | 16,927  |        
|Operating loss                                                        |              |        | (8,353  | )      |  |         | (62,268 | )         |  |         | (618  | )     |  |   | (20,027 | ) |  |  |  |        |   |  | (91,266 | )      
|Net interest expense                                                  |              |        | 1,409   |        |  |         | 5,247   |           |  |         | 66    |       |  |   |        |   |  |  |  |        |   |  | 6,722   |        
|Equity in loss of affiliated company                                  |              |        | (55     | )      |  |         |        |           |  |         |      |       |  |   |        |   |  |  |  |        |   |  | (55     | )      
|Income (loss) before tax                                              |              |        | (10,512 | )      |  |         | (66,831 | )         |  |         | (673  | )     |  |   | (20,027 | ) |  |  |  |        |   |  | (98,043 | )      
|Income tax expense (benefit)                                          |              |        | 5,848   |        |  |         | (5,365  | )         |  |         | 1     |       |  |   |        |   |  |  |  |        |   |  | 484     |        
|Total assets                                                          |              |        | 84,302  |        |  |         | 316,736 |           |  |         | 3,486 |       |  |   | 5,880   |   |  |  |  |        |   |  | 410,404 |        
|Depreciation                                                          |              |        | 3,445   |        |  |         | 10,945  |           |  |         | 406   |       |  |   | 1,066   |   |  |  |  |        |   |  | 15,862  |        
|Additions to property and equipment                                   |              |        | 6,884   |        |  |         | 6,660   |           |  |         | 355   |       |  |   | 2,053   |   |  |  |  |        |   |  | 15,952  |        

Geographic area information:

|                            |  |        |        |        |  |         |         |        |  |           |        |           |  |       |       |  |  |   |       |  |  |   |       |  |  |   |         | 
|--------------------------- |  | ------ | ------ | ------ |  | ------- | ------- | ------ |  | --------- | ------ | --------- |  | ----- | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                            |  |        |        |        |  |         |         |        |  |           |        | Other     |  |      
|                            |  |        |        | United |  |         |         |        |  |           |        | foreign   |  |      
|                            |  | France |        | States |  | England |         | Sweden |  | Australia |        | countries |  | Total
|                            |  |        |        |        |  |         |         |        |  |           |        |           |  |      
|1999                        |  |        |        |        |  |         |         |        |  |           |        |           |  |       |       |  |  |   |       |  |  |   |       |  |  |   |         | 
|Revenue                     |  |       | 7,386  |        |  |        | 18,158  |        |  |          | 16,021 |           |  |      | 3,152 |  |  |  | 1,519 |  |  |  | 1,759 |  |  |  | 47,995  | 
|Property and equipment, net |  |        | 1,995  |        |  |         | 10,839  |        |  |           | 4,232  |           |  |       | 527   |  |  |   | 374   |  |  |   | 936   |  |  |   | 18,904  | 
|2000                        |  |        |        |        |  |         |         |        |  |           |        |           |  |       |       |  |  |   |       |  |  |   |       |  |  |   |         | 
|Revenue                     |  |       | 10,726 |        |  |        | 42,097  |        |  |          | 26,444 |           |  |      | 5,010 |  |  |  | 2,918 |  |  |  | 5,224 |  |  |  | 92,419  | 
|Property and equipment, net |  |        | 4,346  |        |  |         | 9,139   |        |  |           | 5,022  |           |  |       | 1,240 |  |  |   | 667   |  |  |   | 2,061 |  |  |   | 22,475  | 
|2001                        |  |        |        |        |  |         |         |        |  |           |        |           |  |       |       |  |  |   |       |  |  |   |       |  |  |   |         | 
|Revenue                     |  |       | 13,750 |        |  |        | 113,481 |        |  |          | 30,576 |           |  |      | 7,077 |  |  |  | 4,088 |  |  |  | 9,979 |  |  |  | 178,951 | 
|Property and equipment, net |  |        | 7,698  |        |  |         | 30,575  |        |  |           | 4,524  |           |  |       | 1,432 |  |  |   | 583   |  |  |   | 2,885 |  |  |   | 47,697  | 

Note 18.     Subsequent
events




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.







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.
The Company expects to complete its consolidation of call
centers by the end of the third quarter of 2002. The three
remaining call centers have the capacity to absorb the current
volume and to provide for future growth. Based on preliminary
estimation, the restructuring costs should amount to roughly
8 million.
Of this amount, the Company expects to record a pre-tax
restructuring charge of approximately
3.6 million
in the first quarter ending March 31, 2002. The remaining
amount will be added to the goodwill relating to the




F-35



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)





acquisition of Vialog. Costs include primarily
employee severance, unusable future facility lease commitments
and the write-off of certain leasehold improvements and
equipment as well as other miscellaneous costs associated with
the call center consolidation. The Company estimates that future
annual cost savings from the consolidation will range from
3.5 to
4.0 million
beginning the third quarter of 2002.

Note 19.     Unaudited
proforma information

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 since January 1, 2000. These acquisitions
included:



| |   |                                                   
| | - | --------------------------------------------------
| |  | Genesys Open Media, acquired in July 2000,        
|
| |  | Eureka and Telechoice, acquired in September 2000,
|
| |  | Astound Inc., acquired in March 2001,             
|
| |  | Vialog Corp., acquired in April 2001.             

The consolidated pro forma information has been
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.

F-36



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)







| |                                                                        
| | -----------------------------------------------------------------------
| | Unaudited pro forma condensed consolidated
    statements of operations




|                                                                            |                                                |                         |            |        |  |   |            |         | 
|--------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------- | ---------- | ------ |  | - | ---------- | ------- | 
|                                                                            |                                                |                        
|                                                                            |                                                | Year ended December 31,
|                                                                            |                                                |                        
|                                                                            |                                                | 2000                    |            | 2001  
|                                                                            |                                                |                         |            |       
|Revenue                                                                     |                                                |                        | 181,778    |        |  |  | 212,005    |        
|Cost of revenue:                                                            |                                                |                         | 84,068     |        |  |   | 91,532     |        
|                                                                            |                                                |                         |            |        |  |   |            |        
|Gross profit                                                                |                                                |                         | 97,710     |        |  |   | 120,473    |        
|Operating expenses:                                                         |                                                |                         |            |        |  |   |            |        
|                                                                            | Research and development                       |                         |            | 4,966  |  |   |            | 5,916   | 
|                                                                            | Selling, general and administrative            |                         |            | 86,226 |  |   |            | 113,424 | 
|                                                                            | Impairment of goodwill and other intangibles   |                         |            |       |  |   |            | 61,269  | 
|                                                                            | Amortization of goodwill and other intangibles |                         |            | 39,775 |  |   |            | 39,825  | 
|                                                                            |                                                |                         |            |        |  |   |            |        
|Total operating expenses                                                    |                                                |                         | 130,967    |        |  |   | 220,434    |        
|                                                                            |                                                |                         |            |        |  |   |            |        
|Operating loss                                                              |                                                |                         | (33,257    | )      |  |   | (99,971    | )      
|Financial expense, net                                                      |                                                |                         | (8,648     | )      |  |   | (9,003     | )      
|Equity in loss of affiliated company                                        |                                                |                         | (75        | )      |  |   | (55        | )      
|                                                                            |                                                |                         |            |        |  |   |            |        
|Loss before taxes                                                           |                                                |                         | (41,980    | )      |  |   | (109,019   | )      
|Income tax expense                                                          |                                                |                         | (3,951     | )      |  |   | (555       | )      
|                                                                            |                                                |                         |            |        |  |   |            |        
|Net loss                                                                    |                                                |                        | (45,931    | )      |  |  | (109,574   | )      
|Basic and diluted net loss per share                                        |                                                |                        | (3.67      | )      |  |  | (7.72      | )      
|                                                                            |                                                |                         |            |        |  |   |            |        
|Number of shares used in computing basic and
    diluted net loss per share |                                                |                         | 12,495,893 |        |  |   | 14,191,595 |        
|                                                                            |                                                |                         |            |        |  |   |            |        
|Supplementary information:                                                  |                                                |                         |            |        |  |   |            |        
|EBITDA excluding impairment of goodwill and other
    Intangibles           |                                                |                        | 21,179     |        |  |  | 22,872     |        
|                                                                            |                                                |                         |            |        |  |   |            |        




F-37



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##### Table of Contents



GENESYS S.A.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(in thousands, except share data and when
indicated)







| |                                                              
| | -------------------------------------------------------------
| | Unaudited pro forma condensed consolidated
    balance sheets




|                                               |                                              |                                            |         |        |         | 
|---------------------------------------------- | -------------------------------------------- | ------------------------------------------ | ------- | ------ | ------- | 
|                                               |                                              | 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-38



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##### Table of 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                        
| |  |              |  |                                            
| |  |              |  | Name: François Legros                      
| |  |              |  | Title: Chairman and Chief Executive Officer







Date: June 12, 2002






---



##### Table of Contents






Exhibit Index

|    |  |                                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1 |  | Bylaws (statuts) of Genesys (English translation) (incorporated herein
by reference to Exhibit 3.1 to our Registration Statement on Form F-4,
File No. 333-55392)                                                                                                             
|    |  |                                                                                                                                                                                                                                                                               
|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.                                                                                                
|    |  |                                                                                                                                                                                                                                                                               
|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)
|    |  |                                                                                                                                                                                                                                                                               
|8.1 |  | For a list of our significant subsidiaries, see Item 4 Information on
the Company  Organizational Structure.