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Gemplus

Gemplus Reports Further Sales Growth in the Second Quarter 2006

Luxembourg (ots/PRNewswire)

Second quarter 2006 highlights:
  • Net sales up 4.7% showing good growth in ID & Security and Financial Services.
  • Gross margin at 32.0% reflecting strong price pressure in wireless.
  • Operating margin at 6.4%, sustained by good control of operating expenses.
  • Attributable net income: 15.1 million euros.
  • Distribution of reserves for 164.4 million euros to shareholders.
  • Gemalto combination ongoing: tender offer open until August 14, 2006.
  • Gemalto integration process well on-track.
Gemplus International S.A. (Euronext: LU0121706294 - GEM and
NASDAQ: GEMP), a world leading provider of secure card solutions,
today reported results for the second quarter ended June 30, 2006.
    In millions of euros                  Q2 2006 Q2 2005   Year-on-year
                                                               change
    Net sales                              247.3   236.2        +4.7%
    Adjusted for currency fluctuations,                         -2.4%
    disposals and acquisitions[1]
    Gross profit                           79.0    80.0         -1.3%
    Gross margin                           32.0%   33.9%      - 1.9 pt
    Operating expenses                     63.2    57.6         +9.7%
    Operating income                       15.8    22.4        -29.4%
    Operating margin                       6.4%    9.5%       -3.1 pts
    Attributable net income[2]             15.1    21.8        -30.7%
    Free cash flow[3]                      -34.3   41.9          NM
    Cash and cash equivalents              208.3   373.5       -44.2%
                           Per share data (in euros)
    Earnings per share (fully diluted)     0.02    0.04        -33.5%
Creation of a global leader in digital security: the combination
of Axalto and Gemplus to create Gemalto is effective since June 2,
2006, and the integration process is well on-track. The tender offer
filed by Gemalto N.V. for the remaining securities issued by Gemplus
will remain open until August 14, 2006.
Second quarter 2006 financial review
- Income statement
Second quarter 2006 highlights:
  • Net sales up 4.7% showing good growth in ID & Security and Financial Services.
  • Gross margin at 32.0% reflecting strong price pressure in wireless.
  • Operating margin at 6.4%, sustained by good control of operating expenses.
  • Attributable net income: 15.1 million euros.
Growth was driven by ID & Security and Financial Services,
including good contribution from Setec.
On a geographical basis, ID & Security and Financial Services
drove a 8.3% year-on-year revenue growth in the Americas, after
adjusting for currency fluctuations, acquisitions and disposals.
Adjusted[4] net sales in Asia increased by 0.9%, year-on-year, and
were down 10.4% in EMEA[5], due to Wireless.
Gross margin was influenced by strong wireless price pressure, a
shift in the business mix and the release of a provision for a patent
claim.
Operating margin was 6.4%, sustained by good control of operating
expenses. Excluding the reversal of a 5.2 million euros litigation
provision  booked last year, operating expenses were up only 0.6%
year-over-year  despite the Setec acquisition; as a percentage of
sales, they actually  decreased by 1.0 percentage point
year-over-year.
- Balance sheet and cash flow statement
Second quarter 2006 highlights:
  • Free cash outflow of 34.3 million euros.
  • Net cash outflow of 201.6 million euros reflecting distribution of reserves to shareholders.
The Group's cash position remains strong at 208.3 million euros.
Compared to March 31, 2006, cash is down 201.6 million euros, largely
due to a 164.4 million euros outflow related to the distribution of
reserves (share premium) to shareholders. Free cash outflow of 34.3
million euros reflects an increase in accounts receivable due to
strong sales in June and increased capital expenditures of 19.0
million euros in anticipation of strong volumes for the second half
2006.
Segment analysis
- Telecom
Second quarter 2006 highlights:
  • Record shipments in wireless: volumes up 40% year-on-year, to 120 million units, driven by Asia.
  • Wireless ASP down 29.3% year-on-year, currency adjusted, reflecting fiercer competition following the announcement of the Gemalto combination.
    In millions of euros                      Q2      Q2      %   Adjusted(4)
                                              2006   2005   change   change
                                                                        (%)
    Wireless products & services net sales   150.6   150.2   +0.3%     -1.7%
    Wireless gross profit                    57.7    60.6    -4.7%
    Wireless gross margin                    38.3%   40.4%  -2.1 pts
    Prepaid phone cards & scratchcards net   11.6    13.0    -10.8%
    sales
    Prepaid phone cards & scratchcards        1.2     0.8    +43.1%
    gross profit
    Prepaid phone cards & scratchcards       10.2%   6.4%   +3.8 pts
    gross margin
    Telecom net sales                        162.3   163.2   -0.6%     -1.9%
    Telecom gross profit                     58.9    61.4    -4.1%
    Telecom gross margin                     36.3%   37.6%  -1.3 pt
    Telecom operating expenses               38.6    40.3    -4.3%
    As a % of sales                          23.8%   24.7%  -0.9 pt
    Telecom operating profit                 20.3    21.1    -3.7%
    Operating margin                         12.5%   12.9%  -0.4 pt
Wireless revenue:
  • Wireless products & services revenue[6] was up 0.3% year-on-year (down 1.7%, currency adjusted), to 150.6 million euros.
  • Wireless shipments grew 40% year-on-year, to 120 million units, largely driven by Asia, notably in China.
  • High-end card shipments (3G and above) grew 165%. They accounted for 14% of the second quarter total, compared to 7% a year ago. However, 3G remains concentrated on a limited number of operators.
  • Wireless average selling price (ASP) was down 4.8% quarter-on-quarter and 29.3% year-on-year, both currency adjusted. Improvement in product mix was fully offset by regional mix and heavy price pressure which intensified following the announcement of the Gemalto combination.
The decline in Wireless gross margin reflects strong price
pressure and regional mix. Wireless gross profit included a 6.1
million euros reversal of a provision for a patent claim.
- Financial Services
Second quarter 2006 highlights:
- Growth driven by the contribution from Setec and the EMV[7]
deployment.
    In millions of euros             Q2 2006 Q2 2005 % change  Adjusted(4)
                                                                change (%)
    Net sales                         55.1    50.3    +9.5%      -1.2%
    Gross profit                      12.0    10.2    +18.0%
    Gross margin as a % of sales      21.8%   20.3%  +1.5 pt
    Operating expenses                12.3     7.3    +69.4%
    As a % of sales                   22.3%   14.4%  +7.9 pts
    Operating profit                  -0.3     2.9      NM
    Operating margin as a % of sales  -0.5%   5.8%   -6.3 pts
Payment microprocessor cards continued to grow very strongly,
driven by broad activity in EMV deployment, particularly in Latin
America and, to a lesser extent, Southern Europe and Asia.
In total, Gemplus shipped 20.8 million units of payment
microprocessor cards, up 24% year-on-year. Payment microprocessor
card revenue rose 2% year-on-year. The decline in ASP reflects price
pressure as well as a shift in the regional mix.
Gross margin improved 1.5 percentage point due to lower chip
purchasing prices.
Excluding a reversal of a 5.2 million euros litigation provision
booked last year, operating expenses were stable. As a result,
operating profit was almost breakeven.
- Identity and Security
Second quarter 2006 highlights:
- Revenue driven by Setec and other Government ID projects.
    In millions of euros             Q2 2006 Q2 2005 % change   Adjusted(4)
                                                                 change (%)
    Net sales                         29.9    22.7    +31.7%      -9.9%
    Gross profit                       8.1     8.4     -4.1%
    Gross margin as a % of sales      26.9%   37.1%  -10.2 pts
    Operating expenses                12.3    10.0    +22.7%
    As a % of sales                   41.2%   44.3%  -3.1 pts
    Operating profit                  -4.3    -1.6      NM
    Operating margin as a % of sales -14.2%   -7.3%  -6.9 pts
Revenue was driven by Setec and other Government ID projects.
However, very strong sales in the second quarter 2005 led to a
comparative decrease in sales, after adjusting for currency
fluctuations, acquisitions and disposals.
Gross margin was influenced by a less favourable business mix.
The increase in operating expenses is mainly due to Setec.
First half 2006 financial review
  • Net sales up 11.3%, driven by ID and Security and Financial Services.
  • Gross margin at 31.2% reflecting strong price pressure in wireless.
  • Operating margin at 5.1%, sustained by good control of operating expenses.
    In millions of euros           H1 2006 H1 2005 % change  Adjusted(4)
                                                              change (%)
    Net sales                       477.6   429.3   +11.3%     +1.1%
    Of which Telecom                310.6   307.5   +1.0%      -2.2%
    Of which Financial Services     111.5   88.2    +26.5%    +12.2%
    Of which ID & Security          55.5    33.6    +65.0%     +3.1%
    Gross profit                    149.2   141.9   +5.2%       NA
    Gross margin                    31.2%   33.1%  -1.9 pt      NA
    Operating expenses              125.0   112.0   +11.6%      NA
    As a % of sales                 26.2%   26.1%  +0.1 pt      NA
    Operating profit                24.2    29.9    -19.1%
    Operating margin                5.1%    7.0%   -1.9 pt      NA
    Attributable net income         21.3    29.0    -26.4%
Sales in the first half 2006 grew 11.3% compared to a year
ago, driven by ID and Security and Financial Services.
On a geographical basis, all core activities drove a 15.8% revenue
growth in the Americas, after adjusting for currency fluctuations,
acquisitions and disposals. Adjusted revenue was down 3.1% in EMEA,
and 8.9% in Asia, mainly due to Telecom.
Gross margin was influenced by strong price pressure in wireless,
a shift in the business mix, and Setec purchase accounting, despite
the reversal of a provision for a patent claim for a total amount of
9 million euros.
Operating margin was 5.1%, sustained by good control of operating
expenses. Excluding the reversal of a 5.2 million euros litigation
provision  booked last year, operating expenses grew 6.7%
year-over-year reflecting the  Setec acquisition. As a percentage of
sales, operating expenses decreased by  1.1 percentage point
year-over-year.
Outlook
The Group continues to see strong momentum in its core segments
and will maintain its focus on cost efficiency.
Gemplus confirms that it is actively working to achieve 10%
operating margin in 2007, before taking into account the effects of
the combination with Gemalto.
The Group remains confident in its ability to further improve its
operating income in 2006 taking into account the usual seasonality
effect of stronger organic growth in the second half than in the
first half.
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 43.4% 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. The public exchange
tender offer initiated by Gemalto for the shares and warrants issued
by Gemplus was opened on July 11, 2006, at the same exchange ratio of
2 Gemalto shares for every 25 Gemplus shares.
This tender offer will remain open until August 14, 2006. The
result of the offer should be published at the latest on August 25,
2006. On the basis of the current indicative timetable, it is
envisaged that the settlement will occur on or about August 30, 2006.
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.
Business Highlights
- Telecom
Gemplus has been selected by 3 Italia as its exclusive supplier
for USIM cards for the first world commercial Mobile TV service which
was launched prior to the 2006 FIFA World Cup. GemXplore Generations
cards provide high security for TV content delivered to mobile phones
and therefore protect 3 Italia's Mobile TV revenue streams.
Oi is delivering 128Kb SIM cards from Gemplus to all new
subscribers in their Brazilian GSM network. Oi launched their GSM
network in 2002 and the SIM has always played a key role in marketing
their brand and value added services to all their customers which now
number more than 9 million. This SIM offers new applications and
content that optimize mobile phone use and promote Oi's products and
services. 45% of Oi's data traffic now comes from easy-to-use SIM
menus.
- Financial Services
Gemplus has been chosen by Commonwealth Bank of Australia for
Australia's first MasterCard PayPass pilot. The six-month trial will
be rolled out in New South Wales, with the first phase involving
33,000 cardholders who will be able to use their MasterCard PayPass
cards at more than 150 participating merchants.
- Identity and Security
Gemplus has been selected as one of the main suppliers to deliver
smart cards and personalization services for next generation
e-healthcare nationwide patient cards in France. The contract calls
for the supply of a minimum of 8 million cards over two years, with
possible extension over two more years.
Gemplus also won a contract for 3.7 million secure healthcare
ID cards, software and services to Seguro Popular, one of the Mexican
government's social security organizations, for patient data storage.
Gemplus launched its SafesITe Government solution compliant with
the US federal government's FIPS 201 regulations. Gemplus'
SafesITe(TM) smart cards and software were first to receive US
government certification. They are now ready to help US federal
agencies to meet the HSPD-12 requirements for interoperability for
government employees and contractors to access federal buildings and
IT networks. As set forth in the presidential directive and
regulations, all federal agencies must start to issue FIPS 201
compliant identity credentials by October 26 2006.
Earnings calendar
Third quarter 2006 results are scheduled to be reported on
October 25, 2006, before the opening of Euronext Paris.
Conference Call:
The Company has scheduled a conference call for Thursday, 27 July
2006 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)207-365-1847 or +1-718-354-1153 or +33-(0)1-71-23-04-17
access code: 1752146
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,
2006 midnight by dialing:
+44-(0)207-806-1970, or +1-718-354-1112 or +33(0)1-71-23-02-48
access Code: 1752146#
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.
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
    Edelman
    Frédéric Boullard                   Fineo
    Tel: +33-(0)-1-56-69-73-95          Tel: +33-(0)-1-56-33-32-31
    Email:                              Email:  gemplus@fineo.com
     frederic.boullard@edelman.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;
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] Setec is consolidated starting June 1st, 2005
[2] Net income attributable to equity holders
[3] 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).
[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.
                            Gemplus International SA
                    Press Release - Financial statements
                  For the quarterly period ended June 30, 2006
       Gemplus
    International
         SA
    Consolidated
    Statements of
    Income
                 (in thousands of euros, except shares and per share amounts)
                           Three months ended                Six months ended
                                June 30,                         June 30,
                         2006               2005        2006      2005
                              (unaudited)                  (unaudited)
    Net sales              247,265           236,158     477,597      429,260
    Cost of sales         -168,263          -156,129    -328,367     -287,339
    Gross Profit            79,002            80,029     149,230      141,921
    Research and
    development expenses   -16,186           -16,421     -32,144      -29,403
    Selling and
    marketing expenses     -31,284           -28,679     -62,292      -54,387
    General and
    administrative
    expenses               -16,775           -12,352     -32,386      -28,453
    Restructuring
    expenses                   404               478         471          916
    Other operating
    income (expense),
    net                        636              -666        1327         -718
    Goodwill
    amortization and
    impairment                   -                 -           -            -
    Operating income        15,797            22,389      24,206       29,876
    Financial income
    (expense), net           2,300             1,681       4,551        3,477
    Share of profit
    (loss) of associates       -57                -9          63         -833
    Other non-operating
    income (expense),
    net                        432              -266        -147           98
    Income before taxes     18,472            23,795      28,673       32,618
    Income tax expense      -3,619            -1,242      -6,738       -2,946
    NET INCOME              14,853            22,553      21,935       29,672
    Attributable to:
    Equity holders of
    the Company             15,092            21,760      21,344       29,003
    Minority interest         -239               793         591          669
    Net income per share
    attributable to
    equity holders of
    the Company (in
    euros)
    Basic                     0.02              0.04        0.03         0.05
    Diluted                   0.02              0.04        0.03         0.05
    Shares used in net
    income per share
    calculation:
    Basic              631,327,771       611,014,686 630,367,494  609,027,112
    Diluted            650,564,398       624,130,718 650,367,494  623,269,017
Consolidated Balance Sheets
                                                    (in thousands of euros)
                                            June 30,        December 31, 2005
                                             2006
                                                   (unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents                208,336                  418,365
    Trade accounts receivable, net           201,045                  183,022
    Inventory, net                           119,093                  107,673
    Derivative financial instruments           7,403                    4,187
    Other current receivables                 55,028                   82,128
    Total current assets                     590,905                  795,375
    Non-current assets:
    Property, plant and equipment, net       167,747                  158,284
    Goodwill, net                             92,160                   90,826
    Deferred development costs, net           21,215                   21,227
    Other intangible assets, net              18,240                   23,600
    Deferred income tax assets                27,151                   32,788
    Investments in associates                 13,603                   16,309
    Available-for-sale financial assets, net   2,469                    2,469
    Other non-current receivables, net        44,407                   40,846
    Total non-current assets                 386,992                  386,349
    TOTAL ASSETS                             977,897                1,181,724
    LIABILITIES
    Current liabilities:
    Accounts payable                         109,331                  106,085
    Derivative financial instruments           2,592                    2,592
    Salaries, wages and related items         46,800                   62,641
    Current portion of provisions and
    other liabilities                         39,550                   73,434
    Current income tax liabilities             4,727                    5,228
    Other current tax liabilities             17,188                   20,821
    Current obligations under finance leases   5,397                    5,539
    Total current liabilities                225,585                  276,340
    Non-current liabilities:
    Non-current obligations under
    finance leases                            23,695                   26,425
    Non-current portion of provisions         15,111                   23,482
    Other non-current liabilities             12,090                   13,417
    Deferred income tax liabilities            2,693                    4,354
    Total non-current liabilities             53,589                   67,678
    Shareholders' equity:
    Ordinary shares                          134,001                  133,466
    Additional paid-in capital               903,535                1,063,145
    Retained earnings                       (342,769)               (365,940)
    Other comprehensive income                (6,904)                 (4,407)
    Less, cost of treasury shares             (1,395)                 (1,395)
    Equity attributable to equity
    holders of the Company                   686,468                  824,869
    Minority interest                         12,255                   12,837
    Total shareholders' equity               698,723                  837,706
    TOTAL LIABILITIES AND
    SHAREHOLDERS' EQUITY                     977,897                1,181,724
Consolidated Statements of Cash Flows
                                                      (in thousands of euros)
                                                         Six months
                                                           ended
                                                          June 30,
                                                  2006               2005
                                                           (unaudited)
    Cash flows from operating activities:
    Net income                                21,935                   29,672
    Adjustments to reconcile net income
    to net cash from operating
    activities:
    Depreciation, amortization
    and impairment                            21,305                   18,990
    Changes in non-current portion
    of provisions and other
    liabilities, excluding restructuring     (8,636)                      484
    Deferred income taxes                      3,335                  (1,478)
    (Gain) / loss on sale and
    disposal of assets                             -                      418
    Share of (profit) loss of associates        ,210                      772
    Share-based compensation                   1,828                     1666
    Other, net                                (,124)                  (1,471)
    Changes in operating assets
    and liabilities:
    Trade accounts receivable and
    related current liabilities             (24,946)                 (10,161)
    Trade accounts payable and
    related current assets                    (,347)                    4,375
    Inventories                             (13,094)                   16,248
    Value-added and income taxes             (6,243)                  (2,653)
    Salaries, wages and other               (14,773)                 (13,111)
    Restricted cash                            2,000                   23,427
    Restructuring reserve payable            (2,224)                  (9,226)
    Litigation expense payable                     -                        -
    Management severance expense                   -                        -
    Provision for a loan to a
    former director and executive                  -                        -
    Net cash (used for) from
    operating activities                    (19,774)                   57,952
    Cash flows from investing activities:
    Sale / (Purchase) of activities
    net of cash disposed / acquired            4,632                 (60,123)
    Other investments                        (2,513)                    (758)
    Purchase of property,
    plant and equipment                     (27,582)                  (8,981)
    Purchase of other assets                 (1,584)                    (850)
    Change in non-trade
    accounts payable and other                  ,878                     2612
    Net cash used for investing activities  (26,169)                 (68,100)
    Cash flows from financing activities:
    Proceeds from exercise of share options    5,321                    1,256
    Payments on long-term borrowings
    Payments on long-term borrowings            (60)                   (,138)
    Proceeds from sales-leaseback operations       -                        -
    Principal payments on obligations
    under finance leases                     (2,872)                  (2,952)
    Increase (decrease) in bank overdrafts     (979)                    (241)
    Dividends paid by subsidiaries
    to minority shareholders                 (1,881)                  (1,048)
    Changes in non-trade accounts
    payables on financing activities              35                      133
    Change in treasury shares                      -                        -
    Interests receivable on
    loans to senior management                     -                        -
    Cash paid to Shareholders              (164,396)
    Net cash (used for) from
    financing activites                    (164,832)                  (2,990)
    Effect of exchange rate changes on cash     ,746                   (1765)
    Net increase (decrease) in
    cash and cash equivalents              (210,775)                 (13,138)
    Cash and cash equivalents,
    beginning of the period                  418,365                  388,430
    Cash and cash equivalents,
    end of the period                        208,336                  373,527
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 2006 compared with Second Quarter 2005
2.1.1) Operating Segments
    Three months ended                                 (in millions of euros)
                        June 30,            June 30,
    Net sales             2006             2005   % change      Adjusted
                                                               change (%) (1)
    Telecommunications    162.3            163.2        -1%        -2%
    Financial Services     55.1             50.3        10%        -1%
    Identity and Security  29.9             22.7        32%       -10%
    Total                 247.3            236.2         5%        -2%
                                                       (in millions of euros)
                        June 30,  (% of net June 30,  (% of net
    Gross profit           2006     sales)  2005     sales)     % change
    Telecommunications     58.9        36%  61.4        38%        -4%
    Financial Services     12.0        22%  10.2        20%        18%
    Identity and Security   8.1        27%   8.4        37%        -4%
    Total                  79.0        32%  80.0        34%        -1%
                                                       (in millions of euros)
                        June 30,  (% of net June 30,  (% of net
    Operating expenses     2006     sales)  2005     sales)     % change
    Telecommunications   (38.6)        24% (40.3)        25%       -4%
    Financial Services   (12.3)        22%  (7.3)        14%       69%
    Identity and Security(12.3)        41% (10.0)        44%       23%
    Total                (63.2)        26% (57.6)        24%       10%
                                                       (in millions of euros)
                        June 30,            June 30,     Change in Operating
                                                                income
    Operating income (loss) 2006             2005                (loss)
    Telecommunications     20.3             21.1                  (0.8)
    Financial Services    (0.3)              2.9                  (3.2)
    Identity and Security (4.3)             (1.6)                 (2.7)
    Total                  15.8             22.4                  -6.6
    (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                       2006   2005 % change                  (1)
    Europe, Middle East and Africa 122.7  121.0       1%                 -10%
    Asia                            43.0   41.6       3%                   1%
    Americas                        81.6   73.6      11%                   8%
    Total                          247.3  236.2       5%                  -2%
2.2) First-half 2006 compared with First-half 2005
2.2.1) Operating Segments
    Six months ended                                   (in millions of euros)
                               June 30,         June 30,             Adjusted
                                                                   change (%)
    Net sales                      2006             2005 % change         (1)
    Telecommunications            310.6            307.5       1%       2%
    Financial Services            111.5             88.2      26%      12%
    Identity and Security          55.5             33.6      65%       3%
    Total                         477.6            429.3      11%       1%
                                                       (in millions of euros)
                                         (% of              (% of
                               June 30,    net  June 30,      net
    Gross profit                   2006 sales)      2005   sales)    % change
    Telecommunications            111.0    36%     113.7      37%      -2%
    Financial Services             22.5    20%      16.0      18%      41%
    Identity and Security          15.7    28%      12.2      36%      29%
    Total                         149.2    31%     141.9      33%       5%
                                                       (in millions of euros)
                                         (% of              (% of
                               June 30,    net  June 30,      net
    Operating expenses             2006 sales)      2005   sales)    % change
    Telecommunications           (76.9)    25%    (76.1)      25%       1%
    Financial Services           (23.7)    21%    (17.7)      20%      34%
    Identity and Security        (24.4)    44%    (18.2)      54%      34%
    Total                       (125.0)    26%   (112.0)      26%      12%
                                                       (in millions of euros)
                               June 30,         June 30,  Change in Operating
    Operating income (loss)        2006             2005     income (loss)
    Telecommunications             34.1             37.6         (3.5)
    Financial Services            (1.2)            (1.7)          0.5
    Identity and Security         (8.7)            (6.0)         (2.7)
    Total                          24.2             29.9         -5.7
    (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                       2006   2005 % change                  (1)
    Europe, Middle East and Africa 244.7  220.4      11%           -3%
    Asia                            84.2   87.9      -4%           -9%
    Americas                       148.7  121.0      23%           16%
    Total                          477.6  429.3      11%            1%
(1) Adjusted for currency fluctuations, disposals & acquisitions

Contact:

Press Gemplus, Remi Calvet, Tel: +33-6-22-72-81-58, Email:
remi.calvet@gemplus.com, Edelman, Frédéric Boullard, Tel:
+33-(0)-1-56-69-73-95, Email: frederic.boullard@edelman.com, Investor
Relations, Gemplus, Céline Berthier, Tel: +41-(0)-22-544-5054, Email:
celine.berthier@gemplus.com, Fineo, Tel: +33-(0)-1-56-33-32-31,
Email: gemplus@fineo.com

Weitere Storys: Gemplus
Weitere Storys: Gemplus
  • 26.05.2006 – 07:05

    Gemplus and Axalto Schedule First Steps to Close the Gemalto Combination on June 2, 2006

    Amsterdam and Luxemburg (ots/PRNewswire) - Axalto Holding N.V. (Euronext: NL0000400653 - AXL) and Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP) announce today that, subject to completion of customary contractual conditions, the first steps to close the Gemalto combination are expected to occur on June 2, 2006 in Amsterdam. On that date, ...

  • 19.05.2006 – 22:12

    European Commission Approves Merger of Axalto-Gemplus

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  • 18.05.2006 – 08:05

    Gemplus Chosen by Commonwealth Bank of Australia for First MasterCard PayPass Pilot

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