FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Report of Foreign Private Issuer Pursuant to Rule
13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the month of May 2002
GEMPLUS INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)
Gemplus International S.A.
(Translation of registrant's name in English)
Aerogolf Center
1 Hohenhof
L-2633 Senningerberg
Grand Duchy of Luxembourg
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
--- ---
(Indicate by check mark whether the registrant by
furnishing the information contained in this form
is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes No X
--- ---
Gemplus International SA
Press Release - Financial Statements
For the quarterly period ended March 31, 2002
GEMPLUS FIRST QUARTER 2002 FINANCIAL RESULTS
o Results in line with expectations
o Restructuring on track to deliver more than expected
o Return to profitability expected by year end
Luxembourg - April 30, 2002 - Gemplus International S.A. (Paris Euronext:
Euroclear 5768 and Nasdaq: GEMP) today reported results for fiscal year 2002
first quarter ended March 31, 2002.
First quarter revenue was 176.5 million Euros; gross profit was 36.2 million
Euros; operating expenses were 83.5 million Euros; and the net loss was 62.5
million Euros, including an exceptional 19.3 million Euros restructuring charge.
Net loss per share was 0.10 Euro on a fully diluted basis. Adjusting for
exceptional costs, net loss was 0.07 Euro per share.
Commenting, the company said:
"These results are not attractive; but they are very much in line with our
expectations. We're reporting against last year which was Gemplus' strongest
ever first quarter and included the SkiData and Tag businesses which have
subsequently been sold. We also signalled in February that the first quarter
this year would suffer from the absence of 28 million Euros of financial
services project work in the US, which was completed before Christmas. In
addition, and also as expected, there is no benefit in the first quarter from
the restructuring programme announced in February, and gross margin has
continued to be held back by the need to complete running down our inventory of
high cost chips bought at year end 2000 prices. From the current quarter
onwards, both our gross and operating margin will progressively benefit from the
restructuring and from the use of lower cost chips."
Gemplus' balance sheet remains strong with cash and cash equivalents of 450
million Euros. Net cash outflow, excluding exceptional costs, was limited -
under 10 million Euros. This includes 12.2 million Euros of capital expenditure,
reflecting the lower run-rate of capital expenditure indicated in February.
Inventory levels were down by 12 million Euros, representing some 90 days'
sales. Only around 20% of chip inventory was chips bought at year-end 2000
prices. Accounts receivable dropped by 42 million Euros, reflecting the lower
revenue levels, and Day Sales Outstanding were 63 days, within the normal range
of Day Sales Outstanding of between 60 and 65 days.
On a regional basis, 52% of revenues were generated in Europe, 23% in the
Americas and 25% in Asia. On a market sector basis, 69% of revenues were
generated from telecoms and 31% from financial services.
Restructuring
Good progress has been made with the restructuring programme announced in
February. Gemplus is now confident of achieving at least the 100 million Euros
annualised savings forecast and achieving the full annualised rate of savings by
the end of calendar 2002 - some 3 months earlier than initially indicated. The
impact within the current year should be around half the full annualised run
rate. The great majority of the balance of the exceptional 65 million Euros
restructuring charge is planned to be taken in the second quarter.
Commenting, Chief Executive Officer, Ron Mackintosh, said:
"These results are very much in line with our expectations. 2002 will be a year
of two halves - significant losses in the first half, followed by a progressive
build-up of profitability in the second half. We are confident we will return
Gemplus to profitability by year end."
"The restructuring programme is more than meeting expectations, and we will see
the benefits of this and of lower cost inventory starting to feed through from
the second quarter onwards. The marketplace continues to be tough, but the
indications from our own information and from independent surveys are that
Gemplus is now at least holding, and perhaps increasing, its market share.
Management focus is resolute both on improving Gemplus' operating efficiency and
on working with our customers over time to improve the sales mix and accelerate
adoption of more advanced smart cards, particularly Java based cards for mobile
operators."
END
Conference Call
The company has scheduled a conference call for Tuesday 30 April, 2002 starting
at 2.00pm Paris time.
Callers may participate in the live conference call by dialling:
Europe: +44 (0) 208 240 8243
North America: +1 (415) 217 0050
The live conference call will also be available on the Internet at
www.companyboardroom.com.
Replays of the conference call will be available approximately 2 hours after the
conclusion of the live conference call for 2 weeks at: +44 (0) 208 288 4459
(Access Code: 670012).
Enquiries:
Media
Gemplus:
Flavie Gil Tel.: +33 4 42 36 56 83 Email: flavie.gil@gemplus.com
Citigate
Dewe Rogerson: Tel.: +44 (0) 207 638 9571
Anthony Carlisle Tel.: +44 (0) 797 361 1888 Email:anthony.carlisle@citigatedr.co.uk
Laure Lagrange Tel.: +44 (0) 207 282 2988
Mobile: +44 (0) 776 869 8731 Email: laure.lagrange@citigatedr.co.uk
Investor Relations Gemplus:
Yves Guillaumot Tel.: +33 4 42 36 52 98 Email: yves.guillaumot@gemplus.com
Fineo:
Anne Guimard Tel.: +33 1 45 72 20 96 Email: guimard@fineo.com
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.
About Gemplus
GEMPLUS: the world's number one provider of solutions empowered by Smart Cards
Gemplus helps its clients offer an exceptional range of portable, personalized
solutions that bring security and convenience to people's lives. These include
mobile Internet access, inter-operable banking facilities, e-commerce, and a
wealth of other applications.
Gemplus is the only completely dedicated, truly global player in the Smart Card
industry, with the largest R&D team, unrivalled experience, and an outstanding
track record of technological innovation.
Gemplus trades its shares on Euronext Paris S.A. First Market and on the Nasdaq
Stock Market as GEMP in the form of ADSs. Its revenue in 2001 was 1.023 Billion
Euros. It employs 6721 people in 37 countries throughout the world.
Gemplus: Beyond Smart
www.gemplus.com
(C)2002 Gemplus International S.A. All rights reserved. Gemplus, the Gemplus
logo, GemXpresso, and Your Passport to the Digital Age 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.
Gemplus International SA
--------------------------------------------------------------------------------
Condensed Consolidated Statement of Income
(in thousands of euros, except share and per share data)
-----------------------------
Three months ended March 31,
2002 2001
(unaudited)
-----------------------------
Net sales 176,532 293,631
Cost of sales (140,356) (193,727)
Gross Profit 36,176 99,904
Research and development expenses (27,376) (29,663)
Selling and marketing expenses (32,097) (45,690)
General and administrative expenses (24,054) (27,070)
Operating income (loss) before restructuring (47,351) (2,519)
Restructuring expenses (19,324) -
Operating income (loss) (66,675) (2,519)
Interest income and (expense), net 4,763 8,422
Other income (expense), net (5,199) (5,157)
Income (loss) before taxes and goodwill amortization (67,111) 746
Income taxes benefit (provision) 10,784 (179)
Income (loss) before goodwill amortization (56,327) 567
Goodwill amortization (6,136) (7,726)
------------------------------------------------------------------------------------------
Net income (loss) (62,463) (7,159)
------------------------------------------------------------------------------------------
Net income (loss) per share
Basic (0.10) (0.01)
Diluted (0.10) (0.01)
Shares used in net income (loss) per share calculation
Basic 605,789,994 638,712,082
Diluted 605,789,994 638,712,082
Gemplus International SA
--------------------------------------------------------------------------------
Condensed Consolidated Balance sheets
(in thousand of euros)
----------------------------------
March 31, 2002 December 31, 2001
Assets ----------------------------------
(unaudited)
Current assets:
Cash and cash equivalents 450,073 490,652
Trade accounts receivable, net 146,888 188,635
Inventory, net 127,773 139,794
Other current assets 97,816 103,733
Total current assets 822,550 922,814
Non-current assets:
Property, plant and equipment, net 265,505 268,784
Goodwill, net 110,791 116,580
Other non-current assets 231,678 222,514
Total non-current assets 607,974 607,878
-----------------------------------------------------------------------------------
Total assets 1,430,524 1,530,692
-----------------------------------------------------------------------------------
Liabilities
Current liabilities:
Accounts payable 111,648 109,661
Accrued liabilities and other 126,837 168,905
Current portion of long-term debt - -
Current obligations under capital leases 3,650 3,734
Total current liabilities 242,135 282,300
Non-current liabilities:
Long-term obligations under capital leases 38,414 32,581
Long-term debt, less current portion - 14
Other non-current liabilities 24,404 30,859
Total non-current liabilities 62,818 63,454
Minority interest 18,364 17,176
Shareholders' equity
Ordinary shares no legal par value, 2,000,000,000
shares authorized, 641,993,097 and 641,396,497
shares issued and outstanding at March 31, 2002
and December 31, 2001, respectively 127,056 127,056
Additional paid-in capital 1,028,699 1,027,850
Retained earnings 62,553 125,016
Other comprehensive income (2,909) (3,968)
Less, cost of treasury shares (108,192) (108,192)
Total shareholders' equity 1,107,207 1,167,762
----------------------------------------------------------------------------------
Total liabilities and shareholders' equity 1,430,524 1,530,692
----------------------------------------------------------------------------------
Gemplus International SA
--------------------------------------------------------------------------------
Condensed Consolidated Statement of Cash Flows
(in thousands of euros)
-----------------------------
Three months ended March 31,
2002 2001
-----------------------------
(unaudited)
Cash flows from operating activities:
Net income (loss) (62,463) (7,159)
Depreciation and amortization 25,827 28,426
Other adjustments to reconcile net income to net cash
from operating activities (15,822) 1,479
Change in inventories 13,159 (45,504)
Other changes in operating activities 25,999 (26,134)
Restructuring reserve 9,550 -
Litigation expenses (18,120) -
Management severance expenses (10,515) -
--------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (32,385) (48,892)
Cash flows from investing activities:
Sale/(Purchase) of activities net of cash disposed/(acquired) - (262)
Purchase of property, plant and equipment (12,152) (40,276)
Other changes in investing activities 4,662 (24,091)
--------------------------------------------------------------------------------------------
Net cash used for investing activities (7,490) (64,629)
Cash flows from financing activities:
Proceeds from sales-leaseback operations 6,617 -
Other changes in financing activities (4,543) (5,053)
--------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,074 (5,053)
Effect of exchange rate changes on cash (2,778) (12,804)
Net increase (decrease) in cash and cash equivalents (37,801) (118,574)
Cash and cash equivalents, beginning of period 490,652 636,284
--------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 450,073 504,906
--------------------------------------------------------------------------------------------
Gemplus International SA
--------------------------------------------------------------------------------
Business segment reporting
First Quarter 2002 Compared with First Quarter 2001
Revenues Three months ended
March 31,
------------------- ----------
2002 2001 % change
------------------- ----------
(millions of euros)
Telecommunications ........................ 121.4 213.3 (43%)
Financial services and security ........... 55.1 62.4 (12%)
Disposed operations (*) ................... - 17.9 (100%)
Total ..................................... 176.5 293.6 (40%)
=====
Gross margin Three months ended
March 31,
------------------- ----------
2002 2001 % change
------------------- ----------
(millions of euros)
Telecommunications ........................ 31.9 84.4 (62%)
Financial services and security ........... 4.3 9.8 (56%)
Disposed operations (*) ................... - 5.7 (100%)
Total ..................................... 36.2 99.9 (64%)
==== ==== ======
(*) including SkiData and Tag activities which disposals occurred during the
third quarter of 2001.
Geographic reporting
First Quarter 2002 Compared with First Quarter 2001
Revenues Three months ended
March 31,
------------------- ----------
2002 2001 % change
------------------- ----------
(millions of euros)
Europe, Middle East and Africa............. 91.6 138.6 (34%)
Asia ..................................... 44.3 97.3 (54%)
Americas ............................... 40.6 39.8 2%
Disposed operations .......................(*) - 17.9 (100%)
Total .................................... 176.5 293.6 (40%)
===== ===== ======
(*) including SkiData and Tag activities which disposals occurred during the
third quarter of 2001.
First Quarter
Fiscal 2002 Financial
Results Conference Call
Presenters: Ron Mackintosh - Chief Executive Officer
Yves Guillaumot - Chief Financial Officer
April 30, 2002 GEMPLUS
Disclaimer
Some of the statements contained in this presentation constituteforward-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 differentfrom any future results,
levels of activities, performance, or achievements expressed or implied bysuch
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 presentation 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 suchforward-looking statements. The forward-looking
statements contained in this presentation speak only as of this presentation. 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.
Introduction
o Results in line with expectations
o 1Q2001 was first quarter record for revenues and included SkiData and Tag
o Benefits from restructuring and lower cost inventory start in 2Q/2002
onwards
o Restructuring programmeon track to deliver at least (euro)100 million
o Gemplus should return to profitability by year end
o Significant losses in the 1H/2002, followed by progressive build-up of
profitability in 2H/2002
1Q/2002 Revenue
o Revenue at(euro)176.5 million,
o vs. 1Q/2001: down 40% nominally and 36% adjusted
- Difficult comparison versus 1Q/2001 as Q1 last year was Gemplus'
strongest ever first quarter
o vs. 4Q/2001: down 30%
- 4Q/2001 FSS sales were flattered by some (euro)28 million of one-off
U.S. card projects
- Despite high SIM cards volumes, sales mix and pressure on sales
prices affected revenue
Gross Margin
o Gross Margin at 20.5% (24.8% in 4Q/2001)
- Sales Mix
- Completion of Financial Services U.S. projects
o 1Q/2002 Gross Margin not indicative of future run-rate
o 32K inventory should fully cleared by 3Q/2002
o Progressively positive margin impacts:
- Lower cost chips (up to 5 pp benefit)
- Restructuring of manufacturing
o Expected margin improvement despite pricing pressures
Cost Structure
o Operating Expenses under (euro)84 million -better than February `02 guidance
o 2001 Restructuring Programmefully delivered -(euro)40million annualised
savings
o 2002 restructuring on track
o (euro)19 million of the projected (euro)65 million restructuring charge
- Cost of headcount reductions so far negotiated,
- Selective property savings
o Headcount down by 346 employees from December 31, 2001, at 6,375 employees
Strong Balance Sheet
o Limited operating cash outflow
o Cash and Cash Equivalents (euro)450 million
o Day Sales Outstanding (DSOs) at 63 days, within the Group's objective
o Inventory down (euro)12 million
- Closer in line with current shipment demand
- 20% of inventory is now chips bought at year end 2000 prices
o Under (euro)10 million net operating cash outflow, despite 1Q/2002 operating
losses
o Exceptional cash outflow relating to the Humetrix law suit and management
severance costs
Segmented Revenue Results
------------------------------------------------------------------------
%
EUR (millions) 1Q/2002 1Q/2001* Change
------------------------------------------------------------------------
Revenue by Segment
Telecommunications 121.4 213.3 -43%
Financial Services & 55.1 62.4 -12%
Security
Revenue by Geography
EMEA 91.6 138.6 -34%
Americas 40.6 39.8 +2%
Asia 44.3 97.3 -54%
* Restated from Skidata and Tag
------------------------------------------------------------------------
Financial Summary
o Results more than meet internal forecasts
o Benefits of restructuring and lower cost inventory still to come
o On track for profitability by year end
Changing Gemplus
o Good progress on core objectives
- Cost competitive operations
- High, consistent levels customer service
- Innovations and moving up margin chain
- Profitable growth
o A change of culture and direction as well as a change of operating
efficiency and business process
Restructuring Set to Exceed Expectations
o More than (euro)100 million annualised savings
o Full run rate of savings by end of 2002
o 50% of annualised savings within 2002
o 430 person reduction in resources starting 2Q
o Potential to do more in future
Marketplace
o Volumes of cards remain strong
o Addressing sales mix
o Holding and improving market share
o Financial Services deploying smarter cards
- Combat fraud, additional customer services
o Telecom lag in take-off of 2.5G and 3G
o Working with customers to provide adoption of higher margin, advanced and
Java cards
Summary
o Confident of delivering on restructuring
o Confident of achieving profitability by year end
o Focus on sales mix and margins
o Foundation of recovery firmly established
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 1, 2002
GEMPLUS INTERNATIONAL S.A.
By: /s/ Stephen Juge
---------------------------------
Name: Stephen Juge
Title: Executive Vice President and
General Counsel