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 August 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 SECOND QUARTER 2002 FINANCIAL RESULTS
o Strong sequential revenue growth with improved margin
o Restructuring delivering more than expected
o On track for profitability in Q4 2002
o Non-cash write-down of a director's loan
Luxembourg - July 31, 2002 - Gemplus International S.A. (Paris Euronext:
Euroclear 5768 and Nasdaq: GEMP), the world's leading provider of smart
card-enabled solutions, today reported results for fiscal year 2002 second
quarter ended 30 June, 2002.
Compared with the first quarter, revenue was up 19% to 209.8 million euros, and
gross profit was up 34% to 48.4 million euros, a 2.6 percentage point
improvement, reflecting a combination of an improved sales mix and new lower
cost chip inventory more than offsetting pressure on selling prices. Operating
expenses were down 13% to 72.6 million euros, beginning to show the first
impacts of this year's restructuring programme. The operating loss for the
quarter was 24.2 million euros pre-restructuring charge, almost half the first
quarter level. A restructuring charge of 43.1 million euros was taken as
expected. Including a positive tax variance of 18.1 million euros, the net loss
after interest and other income, but before a non-cash write down, was 48.9
million euros and 56.1 after amortisation of goodwill. Taking into account the
non-cash write down of a director loan, the net loss was 115.8 million euros and
123.1 million euros after amortisation of goodwill. Net loss per share was 0.20
euros and 0.02 euros excluding the exceptional items for the restructuring
charge and the provision for the director's loan.
Cash and cash equivalents remain strong at 412 million euros and net cash used
during the quarter was 38.3 million euros. Working capital management produced
further improvements with inventory levels down 16% against the first quarter,
representing 71 days supply compared to 94 at the end of Q1 and 135 at the end
of June last year. Day sales outstanding were 53, compared to 63 at the end of
Q1 and 75 at the end of June last year.
Ron Mackintosh, Interim Chief Executive Officer, said:
"These results show good progress towards our immediate goal of restoring
Gemplus to profitability. We are reasonably confident that we shall achieve this
in the fourth quarter of this year."
"As important, we have also made good progress in our planning for the next
stages of Gemplus' development towards our goal of becoming a low cost producer
and to position Gemplus both to benefit from new areas of smart card growth and
to move up the margin chain in our existing core markets of telecoms and
financial services. Our task is now to refine and then implement these plans."
"There is much still to be done, we operate in an highly competitive marketplace
and the economic environment is not helpful. Nevertheless, Gemplus can have
pride in its operating achievements this year to date and confidence in its
potential."
Restructuring Up-date
The restructuring programmes announced in February are fully on track. Their
positive impact has begun to be seen in the second quarter results, during which
they contributed 10.9 million euros of the reduced operating costs, split
equally between reduction in the number of employees and other cost reduction.
To date, some 67 million euros of the initially targeted savings have been
secured on an annualised basis, and Gemplus is confident of achieving the
balance. This will bring total annualised savings achieved by year end to some
110 million euros and the total restructuring charge to around 67 million euros.
In addition, planning on business re-engineering programmes is advanced with a
view to completing planning and commencing programme execution by this year end.
It is considered that these further programmes should achieve cost reduction and
efficiency gains which will help us attain our objective of being a low cost
producer.
Write-down of loan to a Board Director
Upon the advice of its external auditors, the Company has decided to include in
its consolidated accounts for the second quarter ended June 30, 2002 a provision
to cover the risk of possible non-reimbursement of a loan granted to Dr Marc
Lassus, former Chairman and a current Board member, by one of its indirect
subsidiaries in 2000. This provision, which has no impact either on the
operating income or on the cash position of the Company, amounts to 66.9 million
euros. By taking this provision the Company is obviously not indicating any
forgiveness of the loan. The Company expects to be fully reimbursed by Dr
Lassus. The Board has established a special committee to examine the appropriate
actions in relation to this situation. The committee will be the Chairman, the
Vice Chairman and the Company's General Counsel. The committee will make a
recommendation to the Board by August 31.
Management
Mr Ron Mackintosh has decided to step down as Interim Chief Executive Officer on
August 15. Mr Mackintosh will continue to serve as a non-executive director. The
Board will make an announcement on his successor prior to August 15.
Ron Mackintosh, said:
"I believe I have done the job I came to Gemplus to do. The business is
performing as planned and is well advanced on its longer term objective as well
as fully confident of achieving its short-term goals. Gemplus knows where it's
heading and how to get there.
Dominique Vignon, Chairman, said:
"Ron has done a first class job and the Board and the business are deeply
appreciative and wish him all the very best in the next stages of his
distinguished career. We are also delighted he will be retaining continuity with
Gemplus by continuing as a director.
"For all the issues Gemplus obviously faces, make no mistake that Gemplus is a
leading force in the smart card industry. The company has made strong progress
this year and has the capacity, capability and strong commitment to be a
profitable winner in the growing smart card market worldwide. Gemplus'
foundations run deep and I am proud and privileged to be its Chairman."
Ends
Conference Call:
The company has scheduled a conference call for Wednesday, 31 July 2002 starting
at 2.00pm Paris time.
Callers may participate in the live conference call by dialling:
Europe: +44 (0) 20 7984 7582
North America: +1 (913) 981 5517
Access Code: 209401
The live conference call will also be available on the Internet at
www.companyboardroom.com.
Replays of the conference call will be available approximately two hours after
the conclusion of the live conference call for five days on: +44 (0) 20 7984
7578 (Europe) or +1 (719) 457 0820 (US). Access Code: 209401.
Enquiries:
Media
Gemplus:
Martin Crocker Tel: +33 4 42 36 30 46
email: martin.crocker@gemplus.com
Citigate Dewe Rogerson: Tel: +44 (0) 20 7638 9571
Anthony Carlisle Tel: +44 (0) 7973 611888
email: anthony.carlisle@citigatedr.co.uk
Laure Lagrange Tel: +44 (0) 20 7282 2988
Mob: +44 (0) 7768 698731
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
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.
In 2001, Gemplus was the worldwide smart card leader in both revenue and total
smart card shipments (source: Gartner-Dataquest, Frost and Sullivan, BNP
Paribas). Gemplus was also awarded Frost and Sullivan's 2002 Market Value Award
for its exceptional performance.
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
Press Release - Financial statements
Second Quarter 2002 ending June 30, 2002
Gemplus International SA
Consolidated Statements of Income
--------------------------------------------------------------------------------
Condensed Consolidated Statements of Income
(in thousands of euros, except share and per share data)
-----------------------------------------------------------
Three months ended Six months ended
June 2002 June 2001 June 2002 June 2001
(unaudited) (unaudited)
-----------------------------------------------------------
Net sales 209,798 252,252 386,330 545,883
Cost of sales (161,430) (159,567) (301,786) (353,295)
Gross Profit 48,368 92,685 84,544 192,588
Research and development expenses (23,126) (32,645) (50,502) (62,309)
Selling and marketing expenses (28,491) (46,913) (60,588) (92,603)
General and administrative expenses (20,978) (25,492) (45,032) (52,562)
Operating loss before restructuring (24,227) (12,365) (71,578) (14,886)
Restructuring expenses (43,129) (28,466) (62,453) (28,466)
Operating loss (67,356) (40,831) (134,031) (43,352)
Interest income and (expense), net (62,253) 1,652 (57,490) 10,074
Other income (expense), net (4,345) (9,480) (9,544) (14,636)
Loss before taxes and goodwill
amortization (133,954) (48,659) (201,065) (47,914)
Provision for income taxes 18,129 15,579 28,913 15,400
Loss before goodwill amortization (115,825) (33,080) (172,152) (32,514)
Goodwill amortization (7,242) (6,711) (13,378) (14,436)
------------------------------------------------------------------------------------------------
Net loss (123,067) (39,791) (185,530) (46,950)
------------------------------------------------------------------------------------------------
Net loss per share
Basic (0.20) (0.06) (0.31) (0.07)
Diluted (0.20) (0.06) (0.31) (0.07)
Shares used in net loss per share
Calculation
Basic 606,619,119 641,804,505 606,204,557 640,258,293
Diluted 606,619,119 641,804,505 606,204,557 640,258,293
Gemplus International SA
Condensed Consolidated Balance Sheets
--------------------------------------------------------------------------------
Condensed Consolidated Balance Sheets
(in thousand of euros)
-------------------------------------
June 30, 2002 December 31, 2001
-------------------------------------
Assets (unaudited)
Current assets:
Cash and cash equivalents 411,752 490,652
Trade accounts receivable, net 145,468 188,635
Inventory, net 106,865 139,794
Other current assets 112,661 103,733
Total current assets 776,746 922,814
Non-current assets:
Property, plant and equipment, net 246,516 268,784
Goodwill, net 101,464 116,580
Other non-current assets 206,576 222,514
Total non-current assets 554,556 607,878
--------------------------------------------------------------------------------------------
Total assets 1,331,302 1,530,692
--------------------------------------------------------------------------------------------
Liabilities
Current liabilities:
Accounts payable 106,518 109,661
Accrued liabilities and other 146,337 168,905
Current portion of long-term debt - -
Current obligations under capital leases 3,676 3,734
Total current liabilities 256,531 282,300
Non-current liabilities:
Long-term obligations under capital leases 42,656 32,581
Long-term debt, less current portion - 14
Other non-current liabilities 24,484 30,859
Total non-current liabilities 67,140 63,454
Minority interest 13,222 17,176
Shareholders' equity
Ordinary shares no legal par value, 2,000,000,000 shares
authorized, 637,756,588 and 641,396,497 shares issued
and outstanding at June 30, 2002 and December 31, 2001,
Respectively 127,268 127,056
Additional paid-in capital 1,029,153 1,027,850
Retained earnings (74,997) 125,016
Other comprehensive income 6,694 (3,968)
Less, cost of treasury shares (93,709) (108,192)
Total shareholders' equity 994,409 1,167,762
--------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity 1,331,302 1,530,692
--------------------------------------------------------------------------------------------
Gemplus International SA
Condensed Consolidated Statement of Cash Flows
--------------------------------------------------------------------------------
Condensed Consolidated Statement of Cash Flows
(in thousand of euros)
--------------------------
Six months ended June 30
--------------------------
2002 2001
--------------------------
(unaudited)
Cash flows from operating activities:
Net loss (185,530) (46,950)
Depreciation and amortization 52,418 59,536
Other adjustments to reconcile net income to net cash from
operating activities 39,340 (7,407)
Change in inventories 26,484 (49,359)
Other changes in operating activities (16,608) (30,974)
Restructuring reserve 41,799 25,994
Litigation expenses (18,120) -
Management severance expenses (10,629) -
------------------------------------------------------------------------------------------------
Net cash used in operating activities (70,846) (49,160)
Cash flows from investing activities:
Sale / (Purchase) of activities net of cash disposed / (acquired) - (122)
Purchase of property, plant and equipment (22,258) (71,535)
Other changes in investing activities (10,839) (51,131)
------------------------------------------------------------------------------------------------
Net cash used in investing activities (33,097) (122,788)
Cash flows from financing activities:
Proceeds from sale-leaseback operations 11,762 -
Other changes in financing activities (9,219) (6,944)
------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,543 (6,944)
Effect of exchange rate changes on cash 22,500 (27,460)
Net increase (decrease) in cash and cash equivalents (101,400) (178,892)
Cash and cash equivalents, beginning of period 490,652 636,284
------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 411,752 429,932
------------------------------------------------------------------------------------------------
Gemplus International SA
Business segment and geography reporting
--------------------------------------------------------------------------------
Business segment reporting
Second Quarter 2002 Compared with second Quarter 2001
Revenues Three months ended
June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Telecommunications....................... 141.8 166.7 (15%)
Financial services and security.......... 68.0 69.2 (2%)
Disposed operations (*).................. - 16.4 (100%)
Total.................................... 209.8 252.3 (17%)
===== ===== =====
Three months ended
Gross margin June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Telecommunications........................ 34.6 66.7 (48%)
Financial services and security........... 13.8 18.5 (26%)
Disposed operations (*)................... - 7.5 (100%)
Total..................................... 48.4 92.7 (48%)
==== ==== =====
(*) including Skidata and Tag activities which disposals occurred during the
third quarter of 2001.
Six Months 2002 Compared with Six Months 2001
Six months ended
Revenues June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Telecommunications........................ 263.2 380.0 (31%)
Financial services and security........... 123.1 131.6 (6%)
Disposed operations (*)................... - 34.3 (100%)
Total..................................... 386.3 545.9 (29%)
===== ===== =====
Gemplus International SA
Business segment and geography reporting
--------------------------------------------------------------------------------
Six months ended
Gross margin June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Telecommunications........................ 66.5 151.1 (56%)
Financial services and security........... 18.1 28.3 (36%)
Disposed operations (*)................... - 13.2 (100%)
Total..................................... 84.6 192.6 (56%)
==== ===== =====
(*) including Skidata and Tag activities which disposals occurred during the
third quarter of 2001.
Geographic reporting
Second Quarter 2002 Compared with second Quarter 2001
Three months ended
Revenues June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Europe, Middle East and Africa............ 104.3 106.6 (2%)
Asia...................................... 63.2 74.6 (15%)
Americas.................................. 42.3 54.7 (23%)
Disposed operations (*)................... - 16.4 (100%)
Total..................................... 209.8 252.3 (17%)
===== ===== =====
Six Months 2002 Compared with Six Months 2001
Six months ended
Revenues June 30,
----------------------------- --------
2002 2001 % change
------------ ------------ --------
(millions of euros)
Europe, Middle East and Africa............ 195.8 245.2 (20%)
Asia...................................... 107.5 171.9 (38%)
Americas.................................. 83.0 94.5 (12%)
Disposed operations (*)................... - 34.3 (100%)
Total..................................... 386.3 545.9 (29%)
===== ===== =====
(*) including Skidata and Tag activities which disposals occurred during the
third quarter of 2001.
Second Quarter Fiscal
2002 Results
Conference Call
Presenters: Ron Mackintosh - Chief Executive Officer
Yves Guillaumot - Chief Financial Officer
July 31, 2002
Disclaimer
Some of the statements contained in this presentation 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 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 such forward-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.
Second Quarter Fiscal 2002 Financial Results
Introduction
o Strongest quarterly growth for a year, with improved margin:
o solid volume growth in Telecom,
o improved momentum in Financial Services and Security
o Restructuring delivering more than expected
o On track for profitability in Q4 2002
o Non-cash write-down of a loan to Dr Marc Lassus
Second Quarter Fiscal 2002 Financial Results
2Q/2002 Revenue
o Revenue at 209.8 M EUR, up 19% sequential
o Geographical breakdown (as a % of sales)
o Asia-Pacific: 30.1%
o EMEA: 49.7%
o Americas: 20.2%
o Breakdown by activity
o Telecom
o Wireless volume up 41% vs. Q1 02
o Telecom applications up 145%
o Financial Services & Security
o Sequential revenue growth exceeds 23%
o Smart card banking business up 71%
Second Quarter Fiscal 2002 Financial Results
Gross Margin
o Gross Margin at 23.1% (up 2.6 pt on Q1/2002)
o Favorable business mix with Banking at FSS
o Lower purchasing cost of chips offset by price pressure in Telecom
Second Quarter Fiscal 2002 Financial Results
Cost Structure
o Operating Expenses: 72.6 M EUR (down 13% on Q1/2001 and 31% year on year
nominally reported)
o Positive impacts of cost cutting measures and of restructuring plan
generated 10.9 MEUR savings
o 2002 restructuring on track
o 62 M EUR of the projected 65 M EUR restructuring charge
o To date:
o 615 departures
o headcount reduction plans in Germany and France mostly in Q3
o on track to reach target of 1,140 people reduction
Second Quarter Fiscal 2002 Financial Results
Operating and net losses
o Operating Loss
o Pre-restructuring charges: - 24.2 M EUR
o Post restructuring charges: - 67.4 M EUR
o Net Loss
o Before amortization of goodwill
and non-cash write-down of a
loan to Dr Lassus: - 48.9 M EUR
o Post amortization and non-cash
write-down of a loan to
Dr Lassus: - 123.1 M EUR
Second Quarter Fiscal 2002 Financial Results
Strong Balance Sheet
o Strong Cash and Cash Equivalents at 412 M EUR
o Net cash outflow: 38.3 M EUR, excluding exceptional items limited to 9.1 M
EUR
o Capital expenditure contained at 10.1 M EUR
o Inventory level down 16% or 21 M EUR
o Day Sales Outstanding (DSOs) at a record low of 53 days
Second Quarter Fiscal 2002 Financial Results
Segmented Revenue Results
--------------------------------------------------------------------------------
%
EUR (millions) Q2/2002 Q2/2001* Change
--------------------------------------------------------------------------------
Revenue by Segment
Telecommunications 141.8 166.7 -15%
Financial Services &
Security 68.0 69.2 -2%
Disposed operations - 16.4 -100%
Revenue by Geography
EMEA 104.3 106.6 -2%
Americas 42.3 54.7 -23%
Asia 63.2 74.6 -15%
Disposed operations - 16.4 -100%
--------------------------------------------------------------------------------
*Restated from Skidata and Tag
--------------------------------------------------------------------------------
Second Quarter Fiscal 2002 Financial Results
Financial Summary
o Further strengthening of leadership position in smart card market
o All fundamentals in place to return to profitability by Q4 '02
o Revenue growth
o Improved gross margin
o Expense control
o Strong balance sheet
o Limited cash outflow
Second Quarter Fiscal 2002 Financial Results
Continuing Good Progress on Core Objectives
o Restructuring will deliver profitability in Q4 2002
o Business re-engineering low cost producer goal
o Detailed review of manufacturing, procurement and systems base
o Planning to achieve a further 100 M EUR cost savings / efficiency
gains by mid 2004
o Strategic planning to increase value added
o "Design to cost" re-engineering of processes
o Developing Gemplus customer relationships at strategic level
o Potential partnerships and strategic moves
Second Quarter Fiscal 2002 Financial Results
Card Marketplace 1/2
o Continued sales price pressure Gemplus objectives of "low cost" and "value
added" producer
o Strong volume growth of card shipments in FSS and Telecom plus new markets,
e.g. personal identification
o FSS:
o EMV migration (230 million estimated chip cards by January 2005)
o Migration concentrated in 2003 and 2004
o Geld Karte impact this year - second half weighted
o 2 - 3 year card replacement cycle
Second Quarter Fiscal 2002 Financial Results
Card Marketplace 2/2
o Telecom:
o Pressures for mobile operators to upgrade installed SIM cards
o Impact expected 2003 onwards
o Telecom Application growth
o Personal identification cards trials growing
o Gemplus tendering
o Gemplus strong market share
o 33.6% card volume share *
o 27.8% card value share *
(*Source: Frost and Sullivan)
Second Quarter Fiscal 2002 Financial Results
Summary
o Confident of achieving profitability in Q4 2002
o Gemplus - a leaner and stronger business
o On track to achieve longer term business objectives in a growing and
changing card market
o Successor to interim CEO to be announced by August 15
Second Quarter Fiscal 2002 Financial Results
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: August 2, 2002
GEMPLUS INTERNATIONAL S.A.
By: /s/ Stephen Juge
--------------------------------
Name: Stephen Juge
Title: Executive Vice President and
General Counsel