Gemplus

Gemplus Reports Earnings for the Third Quarter 2006

    Luxembourg (ots/PRNewswire) -

    Third quarter 2006 highlights:

    - Gemalto combination ongoing: tender offer reopened after the successful first round.

    - Gemalto integration process well on-track.

    - Net sales down 11.5% mainly due to strong price pressure in wireless.

    - Gross margin at 26.7%, with lower margins in all business segments.

    - Operating loss at 2.7 million euros, including 4.3 million euros of combination related costs.

    Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP), a world leading provider of secure card solutions, today reported results for the third quarter ended September 30, 2006.

@@start.t1@@      In millions of euros                            Q3 2006 Q3 2005    Year-on-year
                                                                                                    change
      Net sales                                                219.3    247.9          -11.5%
      Adjusted for currency fluctuations,                                        -8.9%
      disposals and acquisitions
      Gross profit                                          58.5      82.8            -29.4%
      Gross margin                                          26.7%    33.4%         - 6.7 pts
      Operating expenses                                 61.2      61.5              -0.5%
      Operating income (loss)                         -2.7      21.3                NM
      Operating margin                                    -1.2%    8.6%          -9.8 pts
      Attributable net income (loss)[1]         -8.0      20.9                NM
      Free cash flow[2]                                  28.0      -20.1              NM
      Cash and cash equivalents                      234.6    400.8          -41.5%
                                          Per share data (in euros)
      Earnings per share (fully diluted)        -0.01    0.03                NM@@end@@

    The combination creating Gemalto, a world leader in digital security, is progressing well: Gemalto owns 94.56% of the share capital of Gemplus (and 94.68% of the voting rights) since the close of the first round of the public exchange tender offer filed by Gemalto for the securities issued by Gemplus. Following this success, the exchange offer was reopened at the same exchange ratio. It remains open to allow for an independent expert to assess the evaluation methodology and price of the sell-out procedure[3]. Gemalto has also indicated its intention to reserve its right to conduct a squeeze-out, either after the close of the reopened offer or during the sell-out period which follows the close of the reopened offer, assuming that more than 95% of the voting rights of Gemplus are held by Gemalto.

    Third quarter 2006 financial review

    - Income statement

    Third quarter 2006 highlights:

    - Net sales down 11.5% (-8.9% currency adjusted) mainly due to Telecom.

    - Gross margin at 26.7%, with lower margins in all business segments.

    - Operating loss at 2.7 million euros, including 4.3 million euros of combination related costs.

    - Attributable net loss at 8.0 million euros.

    Revenue in all regions was strongly impacted by the overall weak performance in Telecom. However, in Asia, strong growth in ID & Security and Financial Services drove a 5.6% year-on-year adjusted[4] revenue growth, even with some decrease in Telecom. In EMEA[5], adjusted[4] net sales were  down 10.8% year-on-year, due to lower sales in Financial Services and in  Telecom. In the Americas, adjusted[4] net sales were down 13.3% year-on-year, notwithstanding good growth in Financial Services.

    Revenue by region

@@start.t2@@      In millions of euros                 Q3 2006 Q3 2005 % change  Adjusted[4]
                                                                                                change (%)
      EMEA                                            118.5    133.3    -11.1%      -10.8%
      Asia                                            39.8      39.2      +1.4%         +5.6%
      Americas                                      61.0      75.4      -19.1%      -13.3%
      Total                                          219.3    247.9    -11.5%        -8.9%@@end@@

    As a result, Asia accounted for 18.1% of Group revenue compared with 15.8% for the third quarter 2005, despite adverse currency fluctuations. Conversely, the share of the Americas decreased to 27.8%, compared with 30.4%, a year ago.

    Despite 3.6 million euros of combination related costs, operating expenses were flat.

    Operating loss was 2.7 million euros, due to lower sales and low gross  margin, in spite of good control of operating expenses.

    Each quarter, the Company reassesses the recognition of its deferred tax assets, which led to an additional income tax charge of 3.2 million euros this quarter.

    - Balance sheet and cash flow statement

    Third quarter 2006 highlights:

    - Free cash flow of 28.0 million euros.

    The Group's cash position remains strong at 234.6 million euros, up 26.3  million euros compared to June 30, 2006. Free cash flow of 28.0 million euros mainly reflects an improvement in working capital requirement.

    Compared to December 31, 2005, cash is down 183.8 million euros, largely  due to a 164.4 million euros outflow related to the distribution in June  2006 of reserves (share premium) to shareholders.

    Segment analysis

    - Telecom

    Third quarter 2006 highlights:

    - Continued strong demand in wireless: shipments up 32% year-on-year, to 116 million units, driven by emerging markets.

    - Wireless ASP down 35% year-on-year, currency adjusted, reflecting heavy price pressure.

@@start.t3@@      In millions of euros                                  Q3        Q3          %    Adjusted[4]
                                                                        2006    2005      change        change
                                                                                                                  (%)
      Wireless products & services net sales  128.6    154.0    -16.5%      -13.8%
      Wireless gross profit                              42.7      62.3      -31.4%
      Wireless gross margin                              33.2%    40.4%  -7.2 pts
      Prepaid phone cards & scratchcards net  11.4      13.5      -16.8%
      sales
      Prepaid phone cards & scratchcards          1.4        0.9      +53.0%
      gross profit
      Prepaid phone cards & scratchcards         12.3%    6.7%    +5.6 pts
      gross margin
      Telecom net sales                                    139.9    167.5    -16.5%      -13.6%
      Telecom gross profit                                44.1      63.2      -30.2%
      Telecom gross margin                                31.5%    37.7%  -6.2 pts
      Telecom operating expenses                      37.0      37.9        -2.4%
      As a % of sales                                        26.4%    22.6%  +3.8 pts
      Telecom operating income                          7.1      25.3         NM
      Operating margin                                      5.1%      15.1%  -10.0 pts@@end@@

    Wireless revenue:

    - Wireless products & services revenue[6] was down 16.5% year-on-year (down 13.8%, currency adjusted), to 128.6 million euros.

    - Wireless shipments grew 32% year-on-year, to 116 million units, largely driven by emerging countries. Volumes were below the Group expectations due to weaker demand in developed economies.

    - High-end card shipments (3G and above) grew 108%. They accounted for 13% of the third quarter total, compared to 8% a year ago, despite delays in migration to high-end products at several customers.

    - Wireless average selling price (ASP) was down 10% quarter-on-quarter and 35% year-on-year, both currency adjusted, due to heavy price pressure and delays in product mix improvement, as well as a shift in the regional mix.

    The decline in Wireless gross margin mainly reflects strong price pressure and delays in product mix improvement.

    - Financial Services

    Third quarter 2006 highlights:

    - This quarter shows a pause in EMV[7] deliveries.

@@start.t4@@      In millions of euros                    Q3 2006 Q3 2005 % change  Adjusted[4]
                                                                                                      change (%)
      Net sales                                        52.2      58.9      -11.3%        -9.6%
      Gross profit                                    8.6      13.7      -37.2%
      Gross margin as a % of sales         16.5%    23.3%  -6.8 pts
      Operating expenses                         12.7      13.1      -2.7%
      As a % of sales                              24.4%    22.2%  +2.2 pts
      Operating income (loss)                 -4.1        0.6         NM
      Operating margin as a % of sales  -7.9%    1.1%    -9.0 pts@@end@@

    EMV deliveries show a pause despite accelerating rollouts in Latin America and in Asia. In total, Gemplus shipped 20.8 million units of payment microprocessor cards during the third quarter, down 6% year-on-year, reflecting maturity of certain markets (UK, France, Turkey) and delays in EMV rollout in Southern Europe and in some emerging countries. However, shipments are up 24% year-to-date at 63.9 million units.

    Payment microprocessor card revenue was down 17% year-on-year and up 8% year-to-date. Revenue for the third quarter reflects price pressure in mature markets and a greater share of modules in emerging countries.

    Gross margin was down 6.8 percentage points mainly due to lower volumes and an unfavourable regional mix in smart payment.

    - Identity and Security

    Third quarter 2006 highlights:

    - Strong growth led by deployment of e-passports.

@@start.t5@@      In millions of euros                    Q3 2006 Q3 2005 % change  Adjusted[4]
                                                                                                    change (%)
      Net sales                                        27.2      21.5      +26.4%      +29.0%
      Gross profit                                    5.8        5.9      -1.9%
      Gross margin as a % of sales         21.3%    27.4%  -6.1 pts
      Operating expenses                         11.4      10.5      +8.5%
      As a % of sales                              41.9%    48.8%  -6.9 pts
      Operating income (loss)                 -5.6      -4.6         NM
      Operating margin as a % of sales -20.6%  -21.3%  +0.7 pt@@end@@

    Growth was driven by Government ID projects, notably the ongoing deployment of e-passports, including the first deliveries in Poland. However, revenue does not meet the Group expectations due to Government ID and Corporate Security projects which did not materialize as quickly as expected.

    Gross margin was down 6.1 percentage points reflecting industrialization ramp-up and some start-up quality issues.

    Year-to-date 2006 financial review (9-months period)

    - Net sales up 2.9%, driven by strong growth in ID and Security.

    - Gross margin at 29.8% reflecting strong price pressure in wireless.

    - Operating margin at 3.1%.

@@start.t6@@      In millions of euros                 YTD 2006 YTD 2005 % change  Adjusted[4]
                                                                                                    change (%)
      Net sales                                    696.9      677.2      +2.9%         -2.2%
      Of which Telecom                         450.5      474.9      -5.2%         -6.4%
      Of which Financial Services        163.7      147.1      +11.3%        +4.5%
      Of which ID & Security                 82.8        55.2      +50.0%      +16.0%
      Gross profit                                207.7      224.7      -7.6%          NA
      Gross margin                                29.8%      33.2%    -3.4 pts        NA
      Operating expenses                      186.2      173.5      +7.3%          NA
      As a % of sales                          26.7%      25.6%    +1.1 pt         NA
      Operating income                          21.5        51.1      -58.0%
      Operating margin                          3.1%        7.6%    -4.5 pts        NA
      Attributable net income                13.4        49.9      -73.1%@@end@@

    Sales in the first nine months 2006 was down 2.2% adjusted[4], due to Telecom, despite strong growth in ID and Security and sustained demand in Financial Services.

    On a geographical basis, ID and Security and Financial Services drove a 4.6% adjusted[4] revenue growth in the Americas. Adjusted[4] revenue was down 4.3% in Asia, and 5.2% in EMEA, due to Telecom.

    Gross margin decrease was due to strong price pressure in wireless, a shift in the business mix, and Setec purchase accounting, in spite of the reversal of a provision for a patent claim for a total amount of 9 million euros.

    Operating expenses were stable excluding the 3.6 million euros combination related costs booked this year, the reversal of a 5.2 million  euros litigation provision booked last year, and the impact of the Setec  acquisition.

    Due to the lower gross margin and notwithstanding good control of operating expenses, operating margin was 3.1%.

    Creation of Gemalto

    On June 2, 2006, Axalto and Gemplus announced a major step of their combination project to create Gemalto. The contribution in kind, by Texas Pacific Group and the Quandt family entities, of their interests in Gemplus International S.A. (in aggregate 43.6% of Gemplus share capital) to Axalto Holding N.V. was completed on the basis of 2 Axalto shares for every 25 Gemplus shares. On the same day, Axalto Holding N.V., renamed Gemalto N.V., filed a public exchange tender offer for the remaining shares and warrants issued by Gemplus. Prior to the contribution in kind, Gemplus had initiated the distribution of reserves (share premium) of EUR0.26 per share to all of its shareholders on record upon market close of the same day.

    On July 6, 2006, the offering document filed by Gemalto received the visa No. 06-252 from the "Autorité des Marchés Financiers" (AMF) in Paris, the French stock market authority.

    Gemalto owns 94.56% of the share capital and 94.68% of the voting rights of Gemplus since the close of the first round of the public exchange tender offer initiated by Gemalto for the shares and warrants issued by Gemplus.

    The exchange offer was reopened on September 12, 2006, at the same exchange ratio of 2 Gemalto shares for every 25 Gemplus shares. It remains open to allow for an independent expert to assess the evaluation methodology and price of the sell-out procedure. Such sell-out price will be communicated to the market immediately after completion of the independent expert's assessment.

    Gemalto has also indicated its intention to reserve its right to conduct a squeeze-out, either after the close of the reopened offer or during the sell-out period which follows the close of the reopened offer, assuming that Gemalto holds more than 95% of the voting rights of Gemplus.

    More information is available at: www.gemalto.com.

    This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Gemalto or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gemplus.

    The exchange offer described above will not be made, directly or indirectly, in or into the United Kingdom, Italy, Netherlands, Canada, Australia, or Japan or in or into any other jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. Accordingly, persons who come into possession of this communication should inform themselves of and observe these restrictions.

    You are strongly advised to read the offering circular relating to the exchange offer and related exchange offer materials regarding the transaction, as well as any amendments and supplements to those documents because they will contain important information. The prospectus/offer to exchange and the other documents are available are available from the Internet websites of the AMF (www.amf-france.org), of Gemalto N.V. (www.gemalto.com) and of Gemplus International S.A. (www.gemplus.com). You can obtain a free paper copy of the prospectus/offer to exchange and other related documents filed by Gemalto (ex-Axalto) upon request to the following:

    - Gemalto N.V.: Koningsgracht Gebouw 1, Joop Geesinkweg 541-542, 1096 AX Amsterdam, the Netherlands.

    - Axalto International S.A.S: 6 rue de la Verrerie, 92190, Meudon, France.

    - Deutsche Bank: 3 avenue de Friedland, 75008, Paris, France.

    - Gemplus International S.A.: 46A, avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg.

    US investors can obtain a copy of the US prospectus/offer to exchange and related offer materials from Mellon Investors Services LLC by telephoning to: +1-866-768-4951 (Call Toll Free) or: +1-201-680-6590 (Call Collect).

    Notice to US investors

    Any solicitation of offers to buy any Gemplus shares in the United States in the exchange offer will only be made pursuant to a prospectus/offer to exchange and related offer materials that Gemalto will make available to holders of Gemplus securities. Investors and security holders are strongly advised to read the prospectus/offer to exchange and related exchange offer materials, as well as any amendments and supplements to those documents because they will contain important information.

    The Gemalto securities referred to herein that will be issued in connection with the exchange offer have not been, and are not intended to be, registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold, directly or indirectly, into the United States except pursuant to an applicable exemption. The Gemalto securities are intended to be made available within the United States in connection with the exchange offer pursuant to an exemption from the registration requirements of the Securities Act.

    The exchange offer will relate to the securities of a non-U.S. company and will be subject to disclosure requirements of a foreign country that are different from those of the United States. Financial statements included in the prospectus/offer to exchange will be prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies.

    It may be difficult for you to enforce your rights and any claim you may have arising under U.S. federal securities laws, since Gemalto and Gemplus have their corporate headquarters outside of the United States, and some or all of their officers and directors may be residents of foreign countries. You may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court's judgment.

    Earnings calendar

    Fourth quarter 2006 revenues are scheduled to be reported on February 1st, 2007, before the opening of Euronext Paris.

    The schedule for the announcement of fourth quarter 2006 results will be communicated on February 1st, 2007.

    About Gemplus

    Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP) is a world leading player in the secure card industry in both revenue and total shipments (source: Gartner-Dataquest, Frost & Sullivan, Datamonitor).

    Gemplus delivers a wide range of portable, personalized solutions in areas including Identity, Mobile Telecommunications, Public Telephony, Banking, Retail, Transport, Healthcare, WiFi, Pay-TV, e-government, and access control.

    Gemplus's revenue in 2005 was 939 million euros.

    In June 2006, Gemplus and Axalto initiated their combination to form Gemalto, a leader in digital security. Gemalto owns 94.56% of the share capital of Gemplus (and 94.68% of the voting rights) since close of the first round of the public exchange tender offer filed by Gemalto for the securities issued by Gemplus.

    www.gemplus.com www.gemalto.com

    For more information:

      Press Gemplus                            Investor Relations
      Remi Calvet                                Gemplus
      Tel: +33-6-22-72-81-58              Céline Berthier
      Email: remi.calvet@gemplus.com Tel: +41-(0)-22-544-5054
                                                        Email: celine.berthier@gemplus.com
                                                        Fineo
                                                        Tel: +33-(0)-1-56-33-32-31
                                                        Email: gemplus@fineo.com

    (c)2006 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 sectors; our ability to develop new technology, and the effects of competing technologies developed and expected intense competition generally in our main segments; 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; changes in our operations and the market for our products arising from our business combination with Gemalto N.V.; 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.

    References:

    [1] Net income (loss) attributable to equity holders

    [2] Free cash flow 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] Right of then remaining Gemplus shareholders to sell their Gemplus shares to Gemalto for three months after the end of the current re-opended exchange offer period.

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

    [5] Europe, Middle East, Africa

    [6] Wireless products & services revenue comprises wireless microprocessor cards and related applications (embedded software and Over The Air platforms) and services (system integration and operated services).

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

@@start.t7@@                                            Gemplus International SA
                                Press Release - Financial statements
                         For the quarterly period ended September 30, 2006
      Consolidated Statements of Income
                                            (in thousands of euros, except shares and per
                                                                      share amounts)
                                                Three months ended                 Nine months ended
                                                      September 30,                         September 30,
                                                 2006                  2005            2006                2005
                                                        (unaudited)                          (unaudited)
      Net sales                        219,321              247,912         696,919         677,172
      Cost of sales              (160,853)          (165,153)      (489,219)      (452,492)
      Gross Profit                    58,468                82,759         207,700         224,680
      Research and                 (16,440)            (14,984)        (48,584)        (44,387)
      development
      expenses
      Selling and                  (27,756)            (30,455)        (90,048)        (84,377)
      marketing
      expenses*
      General and                  (17,119)            (16,943)        (49,505)        (45,860)
      administrative
      expenses*
      Restructuring                          3                    606                474              1522
      expenses
      Other                                    123                    279              1450            (439)
      operating
      income
      (expense), net
      Goodwill                                  -                        -                  -                  -
      amortization
      and impairment
      Operating                        (2,721)                21,262          21,487          51,139
      income
      Financial                          1,057                 1,894            5,608            5,370
      income
      (expense), net
      Share of                                425                 (360)                488          (1193)
      profit (loss)
      of associates
      Other                              (1,280)                  (27)         (1,427)                 71
      non-operating
      income
      (expense), net
      Income before                 (2,519)                22,769          26,156          55,387
      taxes
      Income tax                      (5,240)              (1,457)        (11,978)         (4,403)
      expense
      NET INCOME                      (7,759)                21,312          14,178          50,984
      Attributable
      to:
      Equity holders                (7,970)                20,873          13,375          49,876
      of the Company
      Minority                                211                    439                803              1108
      interest
      Net income per share
      attributable to equity
      holders of the Company (in
      euros)
      Basic                                (0.01)                  0.03              0.03              0.08
      Diluted                            (0.01)                  0.03              0.03              0.08
      Shares used in
      net income per
      share
      calculation:
      Basic                        632,708,693        627,085,562  631,391,381  615,046,595
      Diluted                    632,708,693        645,019,286  647,447,922  630,519,467@@end@@

@@start.t8@@      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 2005 Annual Report for
      further details.
      * Provisions for bad debt have been reclassified from general &
      administrative expenses to selling & marketing expenses as of
      January 1, 2006
      The 2005 operating expenses displayed in the table above have been
      restated in order to be fully comparable to those of 2006.
      This restatement does not change the operating income@@end@@

    Consolidated Balance Sheets

@@start.t9@@                                                                                      (in thousands of euros)
                                                                                      September    December 31,
                                                                                        30, 2006          2005
                                                                                      (unaudited)
      ASSETS
      Current assets:
      Cash and cash equivalents                                              234,572        418,365
      Trade accounts receivable, net                                      179,946        183,022
      Inventory, net                                                                126,985        107,673
      Derivative financial instruments                                      4,202          4,187
      Other current receivables                                                47,587         82,128
      Total current assets                                                      593,292        795,375
      Non-current assets:
      Property, plant and equipment, net                                165,843        158,284
      Goodwill, net                                                                  92,079         90,826
      Deferred development costs, net                                      21,419         21,227
      Other intangible assets, net                                          16,178         23,600
      Deferred income tax assets                                              22,578         32,788
      Investments in associates                                                14,008         16,309
      Available-for-sale financial assets, net                         2,273          2,469
      Other non-current receivables, net                                 45,196         40,846
      Total non-current assets                                                379,574        386,349
      TOTAL ASSETS                                                                  972,866    1,181,724
      LIABILITIES
      Current liabilities:
      Accounts payable                                                            110,433        106,085
      Derivative financial instruments                                            -          2,592
      Salaries, wages and related items                                  46,635         62,641
      Current portion of provisions and other                         44,713         73,434
      liabilities
      Current income tax liabilities                                         3,544          5,228
      Other current tax liabilities                                         19,968         20,821
      Current obligations under finance leases                         5,416          5,539
      Total current liabilities                                              230,709        276,340
      Non-current liabilities:
      Non-current obligations under finance leases                 22,333         26,425
      Non-current portion of provisions                                  15,859         23,482
      Other non-current liabilities                                         12,133         13,417
      Deferred income tax liabilities                                        1,986          4,354
      Total non-current liabilities                                         52,311         67,678
      Shareholders' equity:
      Ordinary shares                                                              134,181        133,466
      Additional paid-in capital                                            904,185    1,063,145
      Retained earnings                                                        (349,816)    (365,940)
      Other comprehensive income                                            (9,796)        (4,407)
      Less, cost of treasury shares                                        (1,395)        (1,395)
      Equity attributable to equity holders of the                677,359        824,869
      Company
      Minority interest                                                            12,487         12,837
      Total shareholders' equity                                            689,846        837,706
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  972,866    1,181,724
      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 2005 Annual Report for
      further details.@@end@@

    Consolidated Statements of Cash Flows

@@start.t10@@                                                                                      (in thousands of euros)
                                                                                              Nine months ended
                                                                                                  September 30,
                                                                                                  2006          2005
                                                                                                 (unaudited)
      Cash flows from operating activities:
      Net income                                                                         14,178        50,984
      Adjustments to reconcile net income to net cash
      from operating activities:
      Depreciation, amortization and impairment                        31,514        30,035
      Changes in non-current portion of provisions and          (7,499)         (292)
      other liabilities, excluding restructuring
      Deferred income taxes                                                         6,947      (1,559)
      (Gain) / loss on sale and disposal of assets                          -      (3,648)
      Share of (profit) loss of associates                                 (195)          ,877
      Share-based compensation                                                    2,750         2,498
      Other, net                                                                          (220)      (4,516)
      Changes in operating assets and liabilities:
      Trade accounts receivable and related current                (2,413)      (2,626)
      liabilities
      Trade accounts payable and related current assets         (2,282)         8,619
      Inventories                                                                    (21,177)         9,390
      Value-added and income taxes                                              (845)            145
      Salaries, wages and other                                                (9,968)      (9,335)
      Restricted cash                                                                  5,775        23,277
      Restructuring reserve payable                                         (2,606)    (12,206)
      Litigation expense payable
      Management severance expense
      Provision for a loan to a former director and
      executive
      Net cash (used for) from operating activities                 13,959        91,643
      Cash flows from investing activities:
      Sale / (Purchase) of activities net of cash                      4,632    (63,401)
      disposed / acquired
      Other investments                                                            (2,570)      (1,463)
      Purchase of property, plant and equipment                    (34,068)    (17,754)
      Purchase of other assets                                                 (1,257)      (1,125)
      Proceeds from sale of non-current assets                                 -         4,803
      Change in non-trade accounts payable and other                 1,238         3,299
      Net cash used for investing activities                         (32,025)    (75,641)
      Cash flows from financing activities:
      Proceeds from exercise of share options                            6,152         1,817
      Payments on long-term borrowings                                         (90)         (176)
      Proceeds from sales-leaseback operations                                 -
      Principal payments on obligations under finance            (4,215)      (4,441)
      leases
      Increase (decrease) in bank overdrafts                              (979)         (551)
      Dividends paid by subsidiaries to minority                    (1,881)      (1,307)
      shareholders
      Changes in non-trade accounts payables on                            286            347
      financing activities
      Change in treasury shares                                                         -
      Interests receivable on loans to senior management                 -
      Cash paid to Shareholders                                            (164,396)
      Net cash (used for) from financing activites              (165,123)      (4,311)
      Effect of exchange rate changes on cash                            (604)            705
      Net increase (decrease) in cash and cash                    (183,189)        11,691
      equivalents
      Cash and cash equivalents, beginning of the period        418,365      388,430
      Cash and cash equivalents, end of the period                 234,572      400,826@@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) Third Quarter 2006 compared with Third Quarter 2005

    2.1.1) Operating Segments

@@start.t11@@      Three months ended                              (in millions of euros)
      Net sales                          September 30,  September        %      Adjusted
                                                      2006          30, 2005    change      change
                                                                                                         (%) (*)
      Telecommunications                 139.9                167.5      -16%         -14%
      Financial Services                  52.2                 58.9      -11%         -10%
      Identity and Security              27.2                 21.5        26%          29%
      Total                                      219.3                247.9      -12%          -9%
                                                                 (in millions of euros)
      Gross profit                    September  (% of net  September  (% of  % change
                                                30, 2006        sales)    30, 2005      net
                                                                                                 sales)
      Telecommunications                  44.1      32%                 63.2      38%         -30%
      Financial Services                    8.6      16%                 13.7      23%         -37%
      Identity and Security                5.8      21%                  5.9      27%          -2%
      Total                                        58.5      27%                 82.8      33%         -29%
                                                                 (in millions of euros)
      Operating expenses          September  (% of net  September  (% of  % change
                                                30, 2006        sales)    30, 2005      net
                                                                                                  sales)
      Telecommunications                (37.0)      26%              (37.9)      23%          -2%
      Financial Services                (12.7)      24%              (13.1)      22%          -3%
      Identity and Security          (11.4)      42%              (10.5)      49%            8%
      Total                                    (61.2)      28%              (61.5)      25%            0%
                                                                 (in millions of euros)
      Operating income (loss)        September 30,          September 30,    Change in
                                                      2006                            2005            Operating
                                                                                                                 income
                                                                                                                 (loss)
      Telecommunications                    7.1                            25.3                 (18.2)
      Financial Services                 (4.1)                              0.6                  (4.7)
      Identity and Security            (5.6)                          (4.6)                  (1.0)
      Total                                        -2.7                            21.3                  -23.9
      (*) Adjusted for currency fluctuations, disposals & acquisitions@@end@@

    2.1.2) Geographical Segments

@@start.t12@@      Three months ended                              (in millions of euros)
      Net sales                         September 30, 2006  September % change Adjusted
                                                                                30, 2005                  change
                                                                                                              (%) (*)
      Europe, Middle East and        118.5                         133.3        -11%        -11%
      Africa
      Asia                                        39.8                          39.2          1%          6%
      Americas                                 61.0                          75.4        -19%        -13%
      Total                                    219.3                         247.9        -12%         -9%@@end@@

    2.2) Nine months 2006 compared with nine months 2005

    2.2.1) Operating Segments

@@start.t13@@      9 months ended                                      (in millions of euros)
      Net sales                              September 30,        September        %    Adjusted
                                                      2006                  30, 2005    change    change
                                                                                                                (%) (*)
      Telecommunications                 450.5                        474.9      -5%          -6%
      Financial Services                 163.7                        147.1      11%            5%
      Identity and Security              82.8                         55.2      50%          16%
      Total                                      696.9                        677.2        3%          -2%
                                                                  (in millions of euros)
      Gross profit                    September  (% of net  September  (% of  % change
                                                30, 2006        sales)    30, 2005      net
                                                                                                 sales)
      Telecommunications                 155.1      34%                176.9      37%         -12%
      Financial Services                  31.1      19%                 29.7      20%            5%
      Identity and Security              21.5      26%                 18.1      33%          19%
      Total                                      207.7      30%                224.7      33%          -8%
                                                                  (in millions of euros)
      Operating expenses          September  (% of net  September  (% of  % change
                                                30, 2006        sales)    30, 2005      net
                                                                                                 sales)
      Telecommunications              (113.9)      25%            (114.1)      24%            0%
      Financial Services                (36.4)      22%              (30.7)      21%          19%
      Identity and Security          (35.8)      43%              (28.7)      52%          25%
      Total                                  (186.2)      27%            (173.5)      26%            7%
                                                                  (in millions of euros)
      Operating income (loss)      September 30,         September 30,      Change in
                                                      2006                         2005              Operating
                                                                                                                income
                                                                                                                (loss)
      Telecommunications                  41.2                         62.8                 (21.6)
      Financial Services                 (5.3)                        (1.1)                  (4.2)
      Identity and Security          (14.3)                      (10.6)                  (3.7)
      Total                                        21.5                         51.1                  -29.5
      (*) Adjusted for currency fluctuations, disposals & acquisitions@@end@@

    2.2.2) Geographical Segments

@@start.t14@@      9 months ended                                      (in millions of euros)
      Net sales                         September 30,      September  % change    Adjusted
                                                  2006                 30, 2005                      change
                                                                                                              (%) (*)
      Europe, Middle East and        363.2                    353.6          3%         -5%
      Africa
      Asia                                      124.0                    127.2         -2%         -4%
      Americas                                209.7                    196.4          7%          5%
      Total                                    696.9                    677.2          3%         -2%@@end@@

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

Contact:
Press Gemplus: Remi Calvet, Tel: +33-6-22-72-81-58, Email:
remi.calvet@gemplus.com



Weitere Meldungen: Gemplus

Das könnte Sie auch interessieren: