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GEMPLUS REPORTS FIRST QUARTER RESULTS
Company Announces Plans to Increase Financial Competitiveness
LUXEMBOURG, (May 2, 2001) -- Gemplus International S.A. (Euronext: Sicovam 5768 and NASDAQ:GEMP) today reported results for the first quarter ended March 31, 2001. Revenue for the first quarter was 294 million Euros, up 27% from the same quarter a year ago. Operating loss was 2.5 million Euros, compared with an operating profit of 14 million Euros for the same quarter a year ago. Net loss for the first quarter was 7 million Euros, or 0.01 Euros per diluted share.
"Our 27% revenue growth this quarter was very solid in what clearly have been challenging business conditions," said Antonio Perez, president and chief executive officer. "Dataquest's recent industry summary for the year 2000 clearly shows Gemplus as the market share leader for both the entire smartcard market and the SIM card segment. Moreover, the report showed a 3 percentage point gain in our overall marketshare. We believe this trend continued into the first quarter."
Gemplus noted that it was also pleased with the performance of the smart card portion of its Financial Services business which grew 48%. "I believe this business is beginning to demonstrate its potential as another source of growth for the company," said Perez.
The company also announced plans to restructure its operations and forecasted a 35 million Euro charge in the second quarter. The restructuring includes a project to close its Seebach, Germany facility and a rebalancing of its worldwide production facilities. The company also said it would organizationally combine its Financial Services business with its E-business Security business while continuing to maintain a distinct focus on each of these important market segments. The move is expected to leverage technology trends, overlapping market requirements and partnerships. It will also better integrate company resources to capitalize on the rapidly emerging Financial Services opportunity. The Company stated that it expects these actions to result in an annual savings of approximately 40 million Euros and that the positive impacts would begin to manifest themselves in the second half of the year.
"These actions are absolutely necessary," added Perez. "They will enable Gemplus to be much more financially competitive and better align our resources to capitalize on exciting market opportunities."
Looking forward, Gemplus indicated that it expects revenue for its second quarter to increase 7% from the same quarter a year ago with operating income at about the breakeven level before restructuring. For the year 2001, the company expects revenue growth to be approximately 12-14% with operating profit, before restructuring, at about 90-100 million Euros.
"Given all that is happening in the macro-economic environment and our ecosystem in particular, we feel that conservative guidance is appropriate", Perez said.
As a result, the company was reducing their expectation for worldwide demand of GSM SIM modules. While new subscriber growth remained relatively strong from a unit growth perspective, the company indicated that demand would continue to be impacted by operator inventory corrections in the second quarter. The company also noted that it expects its Financial Services business to continue the strong performance of the first quarter.
Cash and cash equivalents were 505 million Euros at March 31, 2001. The company's financial results were derived from its consolidated financial statements which have been prepared in accordance with International Accounting Standards (IAS).
The company will hold a conference call later today starting at 1:00 p.m. (CET). Investors can listen to the live conference call on the Internet at www.streetfusion.com or by dialing:
Europe: 44 (0) 20 8781 0563
North America: 1 415 217 0050
Replays of the conference call will be available two hours after the call on the Internet at www.streetfusion.com or by telephone until May 16, 2001. The replay telephone number and access code are:
Worldwide: 44 (0) 20 8288 4459 (Access Code: 632322)
Some of the statements contained in this release or our conference call of May 2, 2001 constitute forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934. The statements relate to the 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 materially differ 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 or our conference call include, but are not limited to: trends in wireless communication and financial services markets and trends in the growth of mobile commerce, mobile banking and internet business; our ability to develop and market new chip card technologies to meet market demands and the effects of the adoption of competing technologies in our target markets, particularly in the telecommunications industry and expected intense competition generally in our main markets; profitability of our market expansion strategy; challenges to or loss of our intellectual property rights regarding chip card technologies; our ability to establish and maintain strategic relationships in our major businesses (i.e. with wireless network operators, financial service providers, internet business infrastructure providers and security technology developers); our ability to develop and take advantage of new software and services; the effect of future acquisitions and investments on our share price; the effect of industry wide chip shortages; defects in our products or errors in our services and our ability to attract and maintain qualified executives and personnel, particularly in our research and development division. You are cautioned not to place undue reliance on the forward-looking statements. 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
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GEMPLUS: the world's leading smart card solutions provider
Since its creation in 1988, Gemplus International S.A. (Euronext: Sicovam 5768 and NASDAQ:GEMP) has driven the global marketing and deployment of smart card-based applications for telecommunications, financial services and e-business security.
Gemplus is instrumental throughout the value chain - chip design, card management systems, software development, and consulting - delivering integrated custom-made solutions for the security, personalization and privacy management needs of clients and partners worldwide.
Gemplus technology has played a defining role in the development of wireless telephony since the introduction of SIM cards into the GSM standard in 1990. For more than a decade, Gemplus has pioneered applications that enable network operators around the world to answer the changing needs of their customers. Gemplus was first to market with a 3G card and supplies a product range compliant with new and emerging transmission standards - 2.5G, 3G.
In 2000, revenue was 1.205 BE, up 57% from the previous year's 767ME. Net income was 99 ME. Gemplus employs more than 7800 people in 37 countries worldwide. Since 11 December 2000, Gemplus shares have been trading on Euronext Paris S.A. First Market and on Nasdaq in the form of ADSs.
Press contacts
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GEMPLUS
Séverine Percetti
Tel: 33 4 42 36 67 67
E-mail: severine.percetti@gemplus.com
Investor Relations
GEMPLUS
Michael Look
Tel: 1 650 654 2940
E-mail: michael.look@gemplus.com
French Retail Investors
GAVIN ANDERSON & CO.
Rozenn Pivet Claire-Valerie Guillen
Tel: 33 1 53 83 31 75 Tel: 33 1 53 83 31 76
Gemplus International SA
Press Release - Financial statements
For the quarterly period ended March 31, 2001
Gemplus International S.A.
Business Segment Reporting
Revenue
Three months ended
March 31,
2001
2000
% change
(millions of euros)
Telecommunications
213 315
170 594
25%
Network systems
51 743
35 533
46%
Other
28 573
25 609
12%
Total
293 631
231 736
27%
Gross margin
Three months ended
March 31,
2001
2000
% change
(millions of euros)
Telecommunications
84 398
70 808
19%
Network systems
13 745
10 636
29%
Other
1 761
1 563
13%
Total
99 904
83 007
20%
Geography Reporting
Three months ended
March 31,
2001
2000
% change
(millions of euros)
Americas
39 773
34 891
14%
EMEA
156 527
143 791
9%
Asia
97 331
53 054
83%
Total
293 631
231 736
27%
©2001 Gemplus All rights reserved. Gemplus,
the Gemplus logo and GemSense 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.
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