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Gemplus reports fourth quarter and fiscal 2001 results
LUXEMBOURG, - February 6,
2002 - Gemplus International S.A. (Euronext: Sicovam 5768 and Nasdaq:GEMP)
today reported results for the fiscal year ended December 31, 2001.
Revenue for the fiscal year 2001 was 1.023 billion
Euros, down 15% from the previous year's 1.205 billion Euros. Operating
loss was 154 million Euros and includes exceptional charges totaling 72
million Euros (28 million Euros in restructuring charges, 18 million Euros
in litigation expenses associated with our Humetrix lawsuit and 26 million
Euros for management severance expenses). Excluding these exceptional
charges, operating loss for the year was 81 million Euros compared to
an operating profit of 127 million Euros in 2000. Net loss for 2001 was
100 million Euros compared to a net profit of 99 million Euros for the
year 2000. Interest and other income was strongly up on year 2000, the
latter due to proceeds from the disposal of the SkiData and Tags businesses.
Financial
Statements for the quarterly period ended December 31, 2001 
(224K)
"Our financial results reflect the significant downturn in the global
wireless telecommunications industry during 2001," said Ron Mackintosh,
chief executive officer. "Throughout the year, it became evident
that industry projections for the market were far too optimistic resulting
in numerous revisions to forecasts from many participants in the industry.
This had a compounded impact on Gemplus, and consequently our 2001 financial
performance was far below initial expectations and frankly, very disappointing."
"Despite stringent hiring and expense controls, the divestiture
of non-core businesses (SkiData and Tags) and the commencement of a restructuring
programme in Q2 last year, we continue to have a cost structure that is
too high for the current business environment," Mackintosh added.
"Further proposed action is being announced today to address this."
For the fourth quarter, Gemplus reported revenues of 251 million Euros,
a decline of 35% from the same quarter one year ago. Mackintosh noted
that the fourth quarter of 2000 was unusually strong and included the
revenues of the SkiData and Tags businesses which Gemplus divested in
the third quarter of 2001. Adjusting the results to remove the consolidation
of SkiData and Tags, shows a 28% decline in revenue on a like-for-like
basis.
Without the effects of SkiData and Tags businesses, Gemplus revenues
grew 16% sequentially from the third quarter. "This was the result
of seasonally stronger SIM card sales and strong shipments for our Financial
Services business, which completed a major customer programme. Revenue
for the business will return to lower, more normal levels in the first
quarter based on our plans," said Mackintosh.
Fourth quarter gross margin performance improved to 24.8%, up 1.6 points
from the previous quarter. Stronger GSM SIM card volumes and strong shipments
of Multi-application cards in the financial Services business were the
primary contributors to the improvement. Mackintosh also noted that competitive
pricing pressures continued in the GSM SIM market, but were offset by
a favourable shift in product mix and favourable currency effects.
Operating expenses were reported at 117 million Euros. These expenses
included 25.7 million Euros associated with the severance of Mr. Perez
and Mr. Lassus which the company announced on December 19, 2001. The current
quarterly run-rate of operating expenses is marginally below 90 million
Euros. The company reported that employment as of December 31, was 6,721
employees, down 141 employees from the end of Q3 and 1,149 employees lower
than the beginning of the year.
Operating loss reported in the fourth quarter was 55 million Euros. Removing
the management severance expenses, the operating loss would have been
29.3 million Euros. This compares to our operating profit of 47.3 million
Euros in the fourth quarter of the previous year.
Gemplus net loss for the quarter was 59.9 million Euros or 0.10 per fully
diluted share. Adjusting for management severance costs, the loss would
have been 34.2 million Euros or 0.05 per fully diluted share, compared
to a net profit of 40.6 million Euros or 0.06 per diluted share for Q4
2000.
Gemplus' balance sheet remains very strong. Cash and cash equivalents
at year end were 491 million Euros. Accounts receivable Days Sales Outstanding
(DSO) improved by 6 days to finish at 57 days. In addition, inventory
levels declined by 43 million Euros as material purchases continued to
be tightly managed. Gross capital spending fell to 17 million euros, its
lowest level of the year, reflecting the completion of major programmes.
"We have made progress in the management of assets throughout last
year," said Mackintosh. "Our strong balance sheet gives us a
very solid financial foundation."
The company is also announcing that it is initiating a project to restructure
its operations and improve its financial competitiveness. The company
expects this project to generate annual savings of approximately 60 million
Euros with the impact starting from Q3 this year. By rationalising its
production and sourcing strategy, Gemplus also intends to achieve an additional
40 million annual savings. The company forecasts a 65 million Euro charge,
of which approximately 70% will be cash. "We are working with our
employees and their representatives to fully understand the economic and
social implications of these proposed actions," commented Mackintosh.
"We will also be looking into re-engineering a number of processes
to ensure Gemplus remains a low cost provider of solutions and services."
"2002 will be a transition year; but I am confident we are putting
the right strategy in place to exploit Gemplus' considerable strengths,
restore Gemplus to sustained profitable growth and provide higher value
to our customers," concluded Mackintosh. "We have a solid financial
base, a strong market position and an exceptional pool of talent and experience
in our people. We have put in place initiatives to correct our business
economics and accelerate Gemplus' move to more value added products and
services. Executing our strategy is what the management team will be focussing
on this year".
The company also announced that Steve Gomo, its Chief Financial Officer,
has decided to leave Gemplus to pursue other opportunities. He will remain
at the company through to the middle of March to provide a smooth transition.
Financial
Statements for the quarterly period ended December 31, 2001
(224K)
Conference Call
The company has scheduled a conference call for Wednesday, February
6, 2002 starting at 2.00pm Paris time.
Callers may participate in the live conference call by dialling:
Europe: +44 (0) 208 240 8241
North America: +1 (415) 217 0050
The live conference call will also be available on the Internet at www.companyboardroom.com.
Relays 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 614792).
About Gemplus
Gemplus is 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, interoperable 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 2000 was 1.205 Billion Euros. It employs 6721 people in 37
countries throughout the world.
Gemplus: Beyond smart
Contacts
Media
Gemplus
Flavie Gil Tel.: +33 4 42 36 56 83
flavie.gil@gemplus.com
Séverine Percetti Tel.: +33 4 42 36 67 67
severine.percettti@gemplus.com
Citigate Dewe Rogerson
Tel.: +44 (0) 207 638 9571
Anthony Carlisle Tel.: +44 (0) 797 361 1888
anthony.carlisle@citigatedr.co.uk
Michael Berkeley Tel.: +44 (0) 207 282 2883
Mobile: +44 (0) 771 350 9316
michael.berkeley@citigatedr.co.uk
Laure Lagrange Tel.: +44 (0) 207 282 2988
Mobile: +44 (0) 776 869 8731
laure.lagrange@citigatedr.co.uk
Investor Relations
Gemplus
Michael Look Tel.: +1 650 654 2940
michael.look@gemplus.com
Fineo
Anne Guimard Tel.: +33 1 45 72 20 96
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.
©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.
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