Gemplus

Gemplus Reports Strong Second Quarter 2005 Results: Operating Income More Than Triples

    Luxembourg (ots/PRNewswire) -

@@start.t1@@      Second quarter 2005 highlights:
      - Operating income more than tripled, to 22.4 million euros.
      - Strong revenue growth in all core businesses: up 12.2%
         year-on-year, even in comparison to robust sales in the quarter a
         year ago.
      - Highest gross margin in 4 years: 33.9%, up 1.6 percentage point
         year-on-year.
      - Large improvement in attributable net income: 21.8 million euros.
      - Setec acquisition finalized.@@end@@

    Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP), the world's leading provider of smart card solutions, today reported results for the second quarter ended June 30, 2005.

@@start.t2@@      In millions of euros                            Q2 2005 Q2 2004    Year-on-year
                                                                                                    change
      Net sales                                                236.2    210.5          +12.2%
      Adjusted for currency fluctuations,                                      +11.3%
      disposals and acquisitions[1]
      Gross profit                                          80.0      68.0            +17.6%
      Gross margin                                          33.9%    32.3%         +1.6 ppt
      Operating expenses                                 57.6      61.2              -5.8%
      Operating income                                    22.4        6.8            +227.7%
      Operating margin                                    9.5%      3.2%          +6.3 ppts
      Attributable net income                         21.8        1.1                NM
      Free cash flow excluding                        23.7        5.7            +318.8%
      non-recurring items[2]
      Cash and cash equivalents                      373.5    383.1            -2.5%
                                          Per share data (in euros)
      Earnings per share (fully diluted)        0.04      0.00                NM@@end@@

    Commenting on the performance for the second quarter 2005, Alex Mandl, President and Chief Executive Officer, said: "This was the ninth consecutive quarter of continuous strong progress for Gemplus, highlighted by a threefold increase in operating income. The top line grew at a double digit rate, even though we had strong sales for the quarter a year ago. This confirms the positive outlook we have for the remainder of the year. We are also very pleased with the strong customer endorsement of our quantum-leap technology, GemXplore Generations. Regarding ID & Security, the doubling of revenues supports our confidence and strong emphasis on this market."

    Second quarter 2005 financial review

    - Income statement

    Second quarter 2005 highlights:

      - Strong revenue growth led by the Americas and EMEA[3]: up
         11.3%, adjusted[4].
      - Highest gross margin in 4 years: 33.9%, up 1.6 percentage
         points year-on-year.
      - Operating income more than tripled to 22.4 million euros.
      - Large improvement in attributable net income: 21.8 million
         euros.

    Net sales rose 11.3% year-on-year, even compared to robust sales in the second quarter 2004, which were up 25% year-on-year, after adjusting for currency fluctuations, acquisitions and disposals. Sales grew in all core businesses.

    On a geographical basis, wireless drove a 50.7% year-on-year revenue growth in the Americas, after adjusting for currency fluctuations, acquisitions and disposals. In EMEA, adjusted net sales increased by 5.4%, year-on-year, and were down 15.7% in Asia.

    Gross margin was up 1.6 percentage point year-on-year, to 33.9%, the highest in 4 years. This was driven by a favorable business mix and improved manufacturing efficiency.

    Operating expenses[5] decreased 5.8% year-on-year to 57.6 million euros,  mainly due to the reversal of a 5.2 million euros litigation provision.  Excluding this reversal and the consolidation of Setec, operating expenses  were stable.

    Consequently, operating margin tripled to 9.5%. Excluding the reversal of the litigation provision, operating margin was 7.3%, up 4.1 percentage points.

    Attributable net income grew to 21.8 million euros.

    - Balance sheet and cash flow statement

    Second quarter 2005 highlights:

      - Robust free cash flow before non-recurring items of 23.7
         million euros.
      - Continuous strong cash position, at 373.5 million euros.

    The Group's cash position remains strong at 373.5 million euros. Compared to March 31, 2005, cash is down 21.6 million euros, reflecting a  58 million euros net outflow related to the acquisition of Setec, partly  compensated by the release of 22.5 million euros from an escrow account in  relation to the successful outcome of a litigation.

    Segment analysis

    - Telecom

    Second quarter 2005 highlights:

@@start.t3@@      - Record sales in wireless: shipments up 44% year-on-year, to
         85.8 million units.
      - Wireless gross margin remains strong: above 40%.
      - Strong improvement in operating margin: up 3.0 percentage
         points to 12.9%, reflecting strong revenue growth in wireless and
         flat operating expenses.@@end@@

@@start.t4@@      In millions of euros                            Q2 2005 Q2 2004 % change  Adjusted
                                                                                                            Change[4]
                                                                                                                  (%)
      Wireless products & services net sales  150.2    135.0    +11.3%      +13.0%
      Wireless gross profit                              60.6      54.2      +11.8%
      Wireless gross margin                              40.4%    40.2%  +0.2 ppt
      Prepaid phone cards & scratchcards net  13.0      19.0      -31.6%         N/A
      sales
      Prepaid phone cards & scratchcards          0.8        0.9        -7.3%
      gross profit
      Prepaid phone cards & scratchcards         6.4%      4.7%    +1.7 ppts
      gross margin
      Telecom net sales                                    163.2    154.0      +6.0%        +6.7%
      Telecom gross profit                                61.4      55.1      +11.5%
      Telecom gross margin                                37.6%    35.8%  +1.8 ppts
      Telecom operating expenses                      40.3      39.9        +1.2%
      As a % of sales                                        24.7%    25.9%  -1.2 ppt
      Telecom operating profit                         21.1      15.2      +38.5%
      Operating margin                                      12.9%    9.9%    +3.0 ppts@@end@@

    Wireless continues to grow significantly. Adjusted4 revenue increased 13.0% year-on-year, even compared to strong sales in the second quarter 2004, which were up 45.5% year-on-year[4].

    Wireless shipments grew 44% year-on-year to 85.8 million units, driven by market share gains in North and Latin America, and in emerging markets in EMEA.

    Wireless product mix continued to improve: the share of high-end card shipments rose significantly year-on-year, accounting for 48% of the total in the second quarter 2005, compared with 33% in the second quarter 2004 and 44% in the first quarter 2005.

    Wireless average selling price (ASP) was down 20.6% year-on-year and 10.9% quarter-on-quarter, both currency adjusted. Product mix improvement did not fully compensate for strong price pressure.

    Wireless gross margin was stable year-on-year, due to stronger volume, lower chip purchasing prices and improved manufacturing efficiency, compensating for price pressure.

    Telecom gross margin improved 1.8 percentage points year-on-year, led by  a more favorable business mix.

    Operating expenses were almost flat year-on-year. Therefore, operating profit rose 38.5% and the operating margin was up 3.0 percentage points, to 12.9%.

    - Financial Services

    Second quarter 2005 highlights:

      - Strong revenue growth: +16%, adjusted[4].
      - The EMV[6] deployment continues: broad activity in all regions.

@@start.t5@@      In millions of euros                    Q2 2005 Q2 2004  % change    Adjusted
                                                                                                        Change[4]
                                                                                                            (%)
      Net sales                                        50.3      44.7        +12.4%        +16.0%
      Gross profit                                  10.2        8.8        +15.7%
      Gross margin as a % of sales         20.3%    19.7%    +0.6 ppt
      Operating expenses                          7.3      13.5        -46.2%
      As a % of sales                              14.4%    30.2%  -15.8 ppts
      Operating profit                              2.9      -4.7          NM
      Operating margin as a % of sales  5.8%    -10.5%  +16.3 ppts@@end@@

    Bank cards continued to grow very strongly, driven by broad activity in EMV deployment across all regions, particularly in the UK and Turkey. This quarter saw the first EMV shipments by Gemplus to the Netherlands, Italy and Japan.

    In total, Gemplus shipped 16.8 million units of payment microprocessor cards, up 30% year-on-year. Payment microprocessor card revenue rose 31% year-on-year.

    The decline in operating expenses reflects the impact of the reversal of a 5.2 million euros provision related to a litigation.

    - Identity and Security

    Second quarter 2005 highlights:

      - Revenue almost doubled, year-on-year.
      - A major milestone was achieved in the UAE national ID project.

@@start.t6@@      In millions of euros                    Q2 2005 Q2 2004  % change    Adjusted
                                                                                                        Change[4]
                                                                                                          (%)
      Net sales                                        22.7      11.8        +92.1%        +66.5%
      Gross profit                                    8.4        4.1      +103.9%
      Gross margin as a % of sales         37.1%    34.9%  +2.2 ppts
      Operating expenses                         10.0        7.8        +28.1%
      As a % of sales                              44.3%    66.5%  -22.2 ppts
      Operating profit                            -1.6      -3.7          NM
      Operating margin as a % of sales  -7.3%  -31.6%  +24.3 ppts@@end@@

    Revenue almost doubled, led by shipment of ID cards to the United Arab Emirates and the acquisition of Setec, which is consolidated starting June 1st, 2005.

    Even excluding Setec, this quarter is the best quarter ever for this segment, with a 66.5% revenue growth after adjusting for currency fluctuations, acquisitions and disposals. This was mainly driven by substantial high-end card deliveries: UAE and also Royal Oman Police, the US Department of Defense and Boeing.

    The increase in operating expenses is mainly due to Setec.

    First half 2005 financial review

      - Net sales up 5.3%, despite robust sales a year ago.
      - Gross margin up 1.4 percentage points, to 33.1%.
      - Operating income almost tripled, to 29.9 million euros.

@@start.t7@@      In millions of euros                 H1 2005 H1 2004 % change    Adjusted
                                                                                                  Change[4]
                                                                                                        (%)
      Net sales                                    429.3    407.8      +5.3%         +4.6%
      Of which Telecom                         307.5    300.6      +2.3%         +2.3%
      Of which Financial Services        88.2      85.1        +3.7%         +6.8%
      Of which ID & Security                33.6      22.1      +51.8%        +38.7%
      Gross profit                                141.9    129.3      +9.8%          NA
      Gross margin                                33.1%    31.7%  +1.4 ppts        NA
      Operating expenses                      112.0    118.9      -5.8%          NA
      As a % of sales                          26.1%    29.2%  -3.1 ppts        NA
      Operating profit                         29.9      10.4      +188.1%
      Operating margin                         7.0%      2.5%    +4.5 ppts        NA
      Attributable net income              29.0        1.4         NM@@end@@

    Sales in the first half 2005 grew 5.3% compared to a year ago. All core businesses saw favorable revenue momentum.

    On a geographical basis, wireless drove a 27.4% revenue growth in the Americas, after adjusting for currency fluctuations, acquisitions and disposals. In EMEA, adjusted revenue increased by 4.6% but was down 14.6% in Asia.

    Gross margin was up 1.4 percentage points year-on-year, to 33.1%, reflecting a favorable business mix and improved manufacturing efficiency.

    Operating expenses decreased 5.8% mainly driven by the reversal of a  5.2 million euros litigation provision.

    Consequently, operating margin almost tripled to 7.0% and attributable net income quadrupled, to 29.0 million euros.

    Outlook

    The Group continues to see strong momentum in its core markets. Notwithstanding the apparent slow start in the first quarter, Gemplus expects to increase revenue, excluding acquisitions, by around 10% in 2005, despite continuous selling price pressure.

    The Company continues to focus on cost efficiency and is confident to show very strong improvement on operating income in 2005.

    The Group also expects the Financial Services and ID & Security business units to become profitable in 2006.

    With excellent second quarter results, the Group proves it is well on track to realize its mid-term objective of a 10% operating margin in 2007.

    Business Highlights

    - Telecom

    On the strength of Gemplus' quantum-leap technology, GemXplore Generations, which was launched in the first quarter 2005, the Company has been selected as the exclusive development partner by the T-Mobile group for its next generation card platform. This will be the basis for T-Mobile's future card and service deployment for its customers.

    The SIM is increasingly valuable when linked to the wider network infrastructure via Over The Air (OTA) platforms. H3G Australia demonstrated this when it recently deployed a Gemplus OTA platform to link into the high end SIMs already at work on their 3G network. The first use of this platform was to update the preferred roaming lists in each subscriber's SIM, following a new national roaming agreement with another Australian operator.

    In North America, Gemplus was selected by Cingular to provide (U)SIMs for their 3G migration. Cingular is currently using Gemplus' SIMs for Enhanced Network Selection and advanced data services for its GSM subscribers.

    - Financial Services

    Deployments of EMV made good headway, with several new contracts. In Mexico, Banco Azteca selected Gemplus to deliver biometric smart payment cards, which will store the customer's photographs and biometric data for identification purposes. In Italy, Setefi (Intesa Group) chose Gemplus for the country's first mass EMV deployment, with over one million smart payment cards for debit and credit payment applications to be supplied. During the second quarter, Gemplus started the delivery of a new EMV product for JCB, the largest credit card issuer in Japan.

    In addition, MasterCard(R) International granted full certification to Gemplus for its GemInstant PayPassTM solution. This strongly positions Gemplus to take full advantage of the increasing interest from merchants and commercial partners in the MasterCard Paypass scheme in the US and other contactless payment initiatives worldwide.

    - Identity and Security

    In France, Gemplus will participate in the French Government's border control initiative, "Biodev", by supplying its GemBorder contactless smart card technology. The cards use ICAO-compliant contactless chip technology for electronic passports and visas and can be used for contactless authentication.

    In the US, Gemplus continues to receive orders from leading systems integrators such as BearingPoint on behalf of Transportation Security Administration and EDS on behalf of several U.S. Federal Government agencies.

    - Research and Development

    At the JavaOneSM conference in San Francisco, Gemplus announced a new prototype for the future generation of JavaCardTM products, in a joint presentation with SUN Microsystems, Inc. Designed for use in all market sectors, the card represents Gemplus' vision of a universal node within any network architecture, facilitating the deployment of complex architectures and the dialogue with internet-based services.

    Earnings calendar

    Third quarter 2005 results are scheduled to be reported on October 26, 2005, before the opening of Euronext Paris.

    Conference Call:

    The Company has scheduled a conference call for Wednesday, 27 July 2005 at 2:00 pm CET (1:00 pm GMT and 8:00 am New-York time). Callers may participate in the live conference call by dialing:

      +44-(0)-207-365-1850 or +1-718-354-1172 or +33-(0)-1-71-23-04-18
      access code 6834417

    The slide show will be available on the web site at 12:30 CET (11:30 GMT). The webcast will also be available on the IR section of www.gemplus.com.

    Replays of the conference call will be available approximately 3 hours after the conclusion of the conference call until August 10th, 2005 midnight by dialing:

      +44 (0) 207 784 1024 or +1 718 354 11 12 or +33 (0) 1 71 23 02 48
      access Code: 6834417#

    About Gemplus

    Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP) is the world's leading player in the smart card industry in both revenue and total shipments (source: Gartner-Dataquest (2004), Frost & Sullivan, Datamonitor.). It has sold over 5 billion smart cards.

    With security at its core, and 2400 patents and patent applications produced by its innovative R&D team, Gemplus delivers a wide range of portable, personalized solutions in areas including Identity, Mobile Telecommunications, Public Telephony, Banking, Retail, Transport, Healthcare, WLAN, Pay-TV, e-government and access control.

    Gemplus' revenue in 2004 was 865 million euros.

    www.gemplus.com

    For more information:

      Press Gemplus
      Jane Strachey
      Tel: +33-(0)-4-42-36-46-61
      Mob: +33-(0)-6-76-49-35-93
      Email: jane.strachey@gemplus.com
      Investor Relations
      Gemplus
      Celine Berthier
      Tel: +41-(0)-22-544-5054
      Email: celine.berthier@gemplus.com
      Edelman
      Stephen Benzikie
      Tel: +44-(0)-207-344-1325
      Mob: +44-(0)-774-003-8929
      Email: stephen.benzikie@edelman.com
      Fineo
      Tel: +33-(0)-1-56-33-32-31
      Email: investors@gemplus.com

    (c)2005 Gemplus. All rights reserved. Gemplus, the Gemplus logo, are trademarks and service marks of Gemplus S.A. and are registered in certain countries. All other trademarks and service marks, whether registered or not in specific countries, are the property of their respective owners.

    Some of the statements contained in this release constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activities, performance, or achievements expressed or implied by such forward-looking statements. Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this release include, but are not limited to: trends in wireless communication and mobile commerce markets; our ability to develop new technology, and the effects of competing technologies developed and expected intense competition generally in our main markets; profitability of our expansion strategy; challenges to or loss of our intellectual property rights; our ability to establish and maintain strategic relationships in our major businesses; our ability to develop and take advantage of new software and services; and the effect of future acquisitions and investments on our share price. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. The forward-looking statements contained in this release speak only as of this release. We are under no duty to update any of the forward-looking statements after this date to conform such statements to actual results or to reflect the occurrence of anticipated results.

    [1] Setec is consolidated starting June 1st, 2005

    [2] Free cash flow excluding non recurring items is defined as net cash flow from operating activities less the purchase of property, plant and equipment and other investments related to the operating cycle (excluding acquisitions and financial investments).

    [3] Europe, Middle-East, Africa

    [4] After adjusting for currency fluctuations, acquisitions and disposals.

    [5] Includes 2.1 million euros of goodwill amortization and restructuring expenses in the second quarter 2004, and the expensing of stock options from the first quarter 2005.

    [6] EMV is a jointly defined set of specifications adopted by Europay, MasterCard and Visa for the migration of bank cards to smart card technology.

                                            Gemplus International SA
                                Press Release - Financial statements
                            For the quarterly period ended June 30, 2005

@@start.t8@@      Consolidated Statements of Income
                                                                                                              (in
                                                                                                thousands of
                                                                                                         euros,
                                                                                                         except
                                                                                                  shares and
                                                                                                    per share
                                                                                                      amounts)
                                      Three months ended              Six months ended
                                              June 30,                            June 30,
                                        2005              2004              2005              2004
                                            (unaudited)                        (unaudited)
      Net sales                    236,158         210,538         429,260         407,827
      Cost of sales          (156,129)      (142,512)      (287,339)      (278,553)
      Gross Profit                 80,029          68,026         141,921         129,274
      Research and              (16,421)        (16,341)        (29,403)        (32,446)
      development
      expenses
      Selling and                (28,679)        (26,152)        (54,387)        (50,382)
      marketing
      expenses
      General and                (12,352)        (16,623)        (28,453)        (32,284)
      administrative
      expenses
      Restructuring                    478            (161)                916                 27
      expenses
      Other operating              (666)                  -            (718)                  -
      income
      (expense), net
      Goodwill                                -         (1,919)                  -         (3,822)
      amortization and
      impairment
      Operating income          22,389            6,830          29,876          10,367
      Financial income            1,681            1,474            3,477            2,807
      (expense), net
      Share of profit                 (9)         (1,189)            (833)         (3,956)
      (loss) of
      associates
      Other                              (266)         (3,039)                 98         (2,754)
      non-operating
      income
      (expense), net
      Income before                23,795            4,076          32,618            6,464
      taxes
      Income tax                  (1,242)         (2,251)         (2,946)         (3,726)
      expense
      NET INCOME                    22,553            1,825          29,672            2,738
      Attributable to:
      Equity holders              21,760            1,073          29,003            1,403
      of the Company
      Minority                            793                752                669            1,335
      interest
      Net income per share attributable to equity holders of the
      Company (in euros)
      Basic                                0.04              0.00              0.05              0.00
      Diluted                            0.04              0.00              0.05              0.00
      Shares used in net income per share
      calculation:
      Basic                    611,014,686  606,862,474  609,027,112  606,435,835
      Diluted                 624,130,718  619,719,484  623,269,017  621,135,793
      Due to the adoption of IAS 1 (revised 2003) Presentation of
      Financial Statements, the Company has modified its Consolidated Balance
      Sheet and its Consolidated Statement of Income.
      Please refer to Note 2.23 "Comparatives" of our 2004 Annual
      Report for further details.@@end@@

@@start.t9@@      Consolidated Balance Sheets
                                                                                (in thousands
                                                                                      of euros)
                                                         June 30, 2005      December 31,
                                                                                         2004
                                                         (unaudited)
      ASSETS
      Current assets:
      Cash and cash equivalents                 373,527              388,430
      Trade accounts receivable,                181,396              148,512
      net
      Inventory, net                                  111,790              115,610
      Derivative financial                            3,407                33,387
      instruments
      Other current receivables                  75,420                66,160
      Total current assets                         745,540              752,099
      Non-current assets:
      Property, plant and                          157,212              148,916
      equipment, net
      Customer contracts and                        17,911                        -
      technology, net
      Goodwill, net                                      87,664                28,197
      Deferred development costs,                20,487                19,222
      net
      Other intangible assets, net                7,243                 8,965
      Deferred tax assets                              7,270                 6,264
      Investments in associates                  18,970                12,864
      Available-for-sale financial                5,178                 4,752
      assets, net
      Other non-current                                46,087                43,900
      receivables, net
      Total non-current assets                  368,022              273,080
      TOTAL ASSETS                                  1,113,562          1,025,179
      LIABILITIES
      Current liabilities:
      Accounts payable                                107,711                94,025
      Salaries, wages and related                50,078                55,199
      items
      Current portion of provisions            76,901                50,217
      and other liabilities
      Current income tax                              30,322                25,708
      liabilities
      Current obligations under                    5,833                 6,005
      finance leases
      Total current liabilities                 270,845              231,154
      Non-current liabilities:
      Non-current obligations under            30,650                33,663
      finance leases
      Non-current portion of                        26,131                25,696
      provisions
      Other non-current liabilities            16,786                13,353
      Total non-current liabilities            73,567                72,712
      Shareholders' equity:
      Ordinary shares                                 132,925              128,643
      Additional paid-in capital            1,068,100          1,031,558
      Retained earnings                          (434,771)          (459,560)
      Other comprehensive income                (6,748)                11,956
      Less, cost of treasury shares          (1,985)              (1,985)
      Equity attributable to equity          757,521              710,612
      holders of the Company
      Minority interest                                11,629                10,701
      Total shareholders' equity                769,150              721,313
      TOTAL LIABILITIES AND                    1,113,562          1,025,179
      SHAREHOLDERS' EQUITY
      Due to the adoption of IAS 1 (revised 2003) Presentation of Financial
      Statements, the Company has modified its Consolidated Balance Sheet and
      its Consolidated Statement of Income.
      Please refer to Note 2.23 "Comparatives" of our 2004 Annual Report for
      further details.@@end@@

@@start.t10@@      Consolidated Statements of Cash Flows
                                                                                  (in thousands of euros)
                                                                              Six months ended
                                                                                    June 30,
                                                                         2005                                2004
                                                                                  (unaudited)
      Cash flows from operating
      activities:
      Net income                                                 29,672                              2,738
      Adjustments to reconcile net income
      to net cash from operating
      activities:
      Depreciation, amortization and                 18,990                            28,914
      impairment
      Changes in non-current portion of
      provisions and other liabilities,
      excluding restructuring                                 484                              (144)
      Deferred income taxes                              (1,478)                              1,670
      (Gain) / loss on sale and disposal                418                                 787
      of assets
      Share of (profit) loss of                              772                              3,956
      associates
      Other, net                                                (1,471)                          (2,340)
      Changes in operating assets and
      liabilities:
      Trade accounts receivable and                (10,161)                              4,485
      related current liabilities
      Trade accounts payable and related            4,375                            16,125
      current assets
      Inventories                                                16,248                         (24,609)
      Value-added and income taxes                  (2,653)                            11,764
      Salaries, wages and other                      (11,445)                              3,286
      Restricted cash                                         23,427                         (21,952)
      Restructuring reserve payable                 (9,226)                         (19,410)
      Litigation expense payable                                -                                    -
      Management severance expense                            -                                    -
      Provision for a loan to a former                      -                                    -
      director and executive
      Net cash (used for) from operating          57,952                              5,270
      activities
      Cash flows from investing
      activities:
      Sale / (Purchase) of activities net      (60,123)
      of cash disposed / acquired                                                                    -
      Other investments                                        (758)                              (901)
      Purchase of property, plant and              (8,981)                          (9,677)
      equipment
      Purchase of other assets                            (850)                              (970)
      Change in non-trade accounts                      2,612                              (288)
      payable and other
      Net cash used for investing                  (68,100)                         (11,836)
      activities
      Cash flows from financing
      activities:
      Proceeds from exercise of share                 1,256                              1,288
      options
      Payments on long-term borrowings
      Payments on long-term borrowings                (138)                                    -
      Proceeds from sales-leaseback                          -                                 957
      operations
      Principal payments on obligations          (2,952)                          (2,857)
      under finance leases
      Increase (decrease) in bank                        (241)                                 831
      overdrafts
      Dividends paid by subsidiaries to          (1,048)                          (1,214)
      minority shareholders
      Changes in non-trade accounts                        133                                    -
      payables on financing activities
      Change in treasury shares                                 -                                    -
      Interests receivable on loans to                      -                                    -
      senior management
      Net cash (used for) from financing         (2,990)                              (995)
      activites
      Effect of exchange rate changes on         (1,765)                                  14
      cash
      Net increase (decrease) in cash and      (13,138)                          (7,561)
      cash equivalents
      Cash and cash equivalents,                      388,430                          390,684
      beginning of the period
      Cash and cash equivalents, end of          373,527                          383,137
      the period@@end@@

    1) Accounting principles:

    The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS).

    2) Segment information

    2.1) Second Quarter 2005 compared with Second Quarter 2004

    2.1.1) Operating Segments

@@start.t11@@      Three months ended                                                 (in millions of euros)
                                        June                June
                                         30,                 30,                    Adjusted change (%)
      Net sales                  2005                2004    % change                            (1)
      Telecommunications  163.2              154.0          6%                                 7%
      Financial Services    50.3                44.7         13%                                16%
      Identity and
      Security                    22.7                11.8         92%                                67%
      Total                        236.2              210.5         12%                                11%
                                                                                    (in millions of euros)
                                        June  (% of    June      (% of
                                         30,      net      30,         net
      Gross profit              2005 sales)    2004    sales)                        % change
      Telecommunications    61.4      38%    55.1         36%                                12%
      Financial Services    10.2      20%      8.8         20%                                16%
      Identity and
      Security                      8.4      37%      4.1         35%                              104%
      Total                         80.0      34%    68.0         32%                                18%
                                                                                    (in millions of euros)
                                        June  (% of    June      (% of
                                         30,      net      30,         net
      Operating expenses    2005 sales)    2004    sales)                        % change
      Telecommunications (40.3)      25% (39.9)         26%                                 1%
      Financial Services  (7.3)      14% (13.5)         30%                              -46%
      Identity and
      Security                 (10.0)      44%  (7.8)         66%                                28%
      Total                      (57.6)      24% (61.2)         29%                                -6%
                                                                                    (in millions of euros)
                                        June                June
      Operating income         30,                 30,                    Change in Operating
      (loss)                        2005                2004                              income (loss)
      Telecommunications    21.1                15.2                                              5.9
      Financial Services      2.9              (4.7)                                              7.6
      Identity and
      Security                  (1.6)              (3.7)                                              2.1
      Total                         22.4                 6.8                                            15.6
      (1) Adjusted for currency fluctuations, disposals & acquisitions
      2.1.2) Geographical Segments
      Three months ended                                                 (in millions of euros)
                                        June                June
                                         30,                 30,                    Adjusted change (%)
      Net sales                  2005                2004 % change                                (1)
      Europe, Middle
      East and Africa        121.0              109.6         10%                                 5%
      Asia                          41.6                50.1        -17%                              -16%
      Americas                    73.6                50.8         45%                                51%
      Total                        236.2              210.5         12%                                11%@@end@@

@@start.t12@@      2.2) First-half 2005 compared with First-half 2004
      2.2.1) Operating Segments
      Six months ended                                                        (in millions of euros)
                                         June                 June
                                          30,                  30,                    Adjusted change (%)
      Net sales                    2005                 2004    % change                            (1)
      Telecommunications    307.5                300.6          2%                                 2%
      Financial Services      88.2                 85.1          4%                                 7%
      Identity and
      Security                      33.6                 22.1         52%                                39%
      Total                         429.3                407.8          5%                                 5%
                                                                                        (in millions of euros)
                                         June  (% of      June      (% of
                                          30,      net        30,         net
      Gross profit                2005 sales)      2004    sales)                        % change
      Telecommunications    113.7      37%    104.8         35%                                 9%
      Financial Services      16.0      18%      18.0         21%                              -11%
      Identity and
      Security                      12.2      36%        6.5         29%                                87%
      Total                         141.9      33%    129.3         32%                                10%
                                                                                        (in millions of euros)
                                         June  (% of      June      (% of
                                          30,      net        30,         net
      Operating expenses      2005 sales)      2004    sales)                        % change
      Telecommunications  (76.1)      25%  (77.7)         26%                                -2%
      Financial Services  (17.7)      20%  (25.4)         30%                              -30%
      Identity and
      Security                  (18.2)      54%  (15.8)         72%                                15%
      Total                      (112.0)      26% (118.9)         29%                                -6%
                                                                                        (in millions of euros)
                                         June                 June
      Operating income          30,                  30,                    Change in Operating
      (loss)                         2005                 2004                              income (loss)
      Telecommunications      37.6                 27.1                                            10.5
      Financial Services    (1.7)                (7.4)                                              5.7
      Identity and
      Security                    (6.0)                (9.3)                                              3.3
      Total                          29.9                 10.4                                            19.5
      (1) Adjusted for currency fluctuations, disposals & acquisitions
      2.2.2) Geographical Segments
      Six months ended                                                        (in millions of euros)
                                         June                 June
                                          30,                  30,                    Adjusted change (%)
      Net sales                    2005                 2004    % change                            (1)
      Europe, Middle
      East and Africa         220.4                206.0          7%                                 5%
      Asia                            87.9                103.2        -15%                              -15%
      Americas                    121.0                 98.6         23%                                27%
      Total                         429.3                407.8          5%                                 5%@@end@@

ots Originaltext: Gemplus
Im Internet recherchierbar: http://www.presseportal.ch

Contact:
Press Gemplus: Jane Strachey, Tel: +33-(0)-4-42-36-46-61, Mob:
+33-(0)-6-76-49-35-93, Email: jane.strachey@gemplus.com; Investor
Relations, Gemplus, Celine Berthier, Tel: +41-(0)-22-544-5054, Email:
celine.berthier@gemplus.com; Edelman, Stephen Benzikie, Tel:
+44-(0)-207-344-1325, Mob: +44-(0)-774-003-8929, Email:
stephen.benzikie@edelman.com; Fineo, Tel: +33-(0)-1-56-33-32-31,
Email: investors@gemplus.com



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