Adjusted measures

Adjusted income statement and profit from operations non-GAAP measure

The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards. To better assess its past and future performance, the Company also prepares an adjusted income statement where the key metric used to evaluate the business and take operating decisions over the period 2010 to 2013 is the profit from operations.

Profit from operations (PFO) is a non-GAAP measure defined as the IFRS operating result adjusted for the amortization and depreciation of intangibles resulting from acquisitions, for equity-based compensation charges, and for restructuring and acquisition-related expenses. These items are further explained as follows:

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with IFRS.

In the adjusted income statement, Operating Expenses are defined as the sum of Research and Engineering, Sales and Marketing and General and Administrative expenses, and Other income (expense) net.

EBITDA is defined as PFO plus depreciation and amortization expenses, excluding the above amortization and depreciation of intangibles resulting from acquisitions.

Return on capital employed (ROCE) is defined as after-tax PFO divided by capital employed.

Adjusted income statement for ongoing operations

For a better understanding of the current and future year-on-year evolution of the business, the Company also provides an adjusted income statement for the “ongoing operations”.

Adjusted information for ongoing operations by segment, assets held for sales by segment, adjusted financial information and discontinued operation

  Year ended December 31, 2009
  Ongoing operations:   Assets held for sale:   Discontinued operation:  
In thousands of Euro Mobile Commu-nication M2M Secure Trans-actions Security Others Adjusted financial information for ongoing operations Secure Trans-actions
(JV)
Security
(JV)
Adjusted financial information   Others
(POS)
Adjusted financial information as reported previously
Revenue 888,070 411,418 235,978 24,484 1,559,950 29,963 12,102 1,602,015   52,354 1,654,369
Gross profit 383,452 99,115 85,237 6,017 573,821 9,477 4,506 587,804   14,044 601,848
Operating expenses (232,753) (87,281) (81,091) (2,259) (403,384) (3,347) (384) (407,115)   (11,414) (418,529)
Profit from operations 150,699 11,834 4,146 3,758 170,437 6,130 4,122 180,689   2,630 183,319
  Year ended December 31, 2010
Ongoing operations:   Assets held for sale:     Pro-forma
In thousands of Euro Mobile Commu-nication M2M Secure Trans-actions Security Others Adjusted financial information for ongoing operations Secure Trans-actions
(JV)
Security
(JV)
Adjusted
financial
information
  Discontinued operation: Others
(POS)
Revenue 980,871 81,329 462,072 318,077 19,493 1,861,842 41,298 2,428 1,905,568   50,776
Gross profit 375,885 26,531 140,193 129,0 4,349 676,023 12,548 789 689,360   14,577
Operating expenses (258,191) (19,431) (99,030) (89,673) (2,233) (468,558) (4,955) (184) (473,697)   (13,912)
Profit from operations 117,694 7,100 41,163 39,392 2,116 207,465 7,593 605 215,663   665

Reconciliation between adjusted financial information and IFRS financial information

  Year ended December 31, 2009
In thousands of Euro Adjusted
financial
information
for ongoing
operations
Contribution
from JV and POS
Adjusted
financial
information
Adjustments IFRS
financial
information
Revenue 1,559,950 42,065 1,602,015 (122) 1,601,893
Cost of sales (986,129) (28,082) (1,014,211) (1,709) (1,015,920)
Gross profit 573,821 13,983 587,804 (1,831) 585,973
Operating expenses          
Research and engineering (91,114) (178) (91,292) (1,017) (92,309)
Sales and marketing (223,651) (3,193) (226,844) (4,631) (231,475)
General and administrative (92,199) (793) (92,992) (6,488) (99,480)
Other income (expense), net 3,580 433 4,013 4,013
Profit from operations (PFO) 170,437 10,252 180,689    
Equity-based compensation charges       (13,967)  
Restructuring & acquisition-related expenses       (9,316) (9,316)
Amortization and depreciation of intangibles resulting from acquisitions       (23,699) (23,699)
Operating result (EBIT)       (46,982) 133,708
Financial income (expense), net (2,246)   (2,246)   (2,246)
Share of profit of associates 1,380   1,380   1,380
Gain on sale of investment in associate 78   78   78
Profit before income tax 169,649 10,252 179,901 (46,982) 132,919
Income tax (expense) credit (19,649) (1,998) (21,647) 4,222 (17,425)
Profit from continuing operations 150,000 8,254 158,254 (42,760) 115,494
           
Profit from discontinued operation
(POS) (net of income tax)
  2,630 2,630   2,630
Profit for the period
(Net profit)
150,000 10,884 160,884 (42,760) 118,124
           
Attributable to:          
Owners of the Company 149,014 8,542 157,556   114,796
Non-controlling interests 986 2,342 3,328   3,328
           
Earnings per share
(€ per share)
         
Basic 1.81   1.91   1.39
Diluted 1.78   1.88   1.37
  Year ended December 31, 2010
In thousands of Euro Adjusted
financial
information
for ongoing
operations
Contribution
from JV and POS
Adjusted
financial
information
Adjustments IFRS
financial
information
Revenue 1,861,842 43,726 1,905,568 1,905,568
Cost of sales (1,185,819) (30,389) (1,216,208) (2,512) (1,218,720)
Gross profit 676,023 13,337 689,360 (2,512) 686,848
Operating expenses          
Research and engineering (103,546) (255) (103,801) (811) (104,612)
Sales and marketing (256,222) (4,146) (260,368) (7,177) (267,545)
General and administrative (117,067) (867) (117,934) (9,687) (127,621)
Other income (expense), net 8,277 129 8,406 8,406
Profit from operations (PFO) 207,465 8,198 215,663    
Equity-based compensation charges       (20,187)  
Restructuring & acquisition-related expenses       (9,268) (9,268)
Amortization and depreciation of intangibles resulting from acquisitions       (22,792) (22,792)
Operating result (EBIT)       (52,247) 163,416
Financial income (expense), net 796   796   796
Share of profit of associates 1,717   1,717   1,717
Gain on sale of investment in associate    
Profit before income tax 209,978 8,198 218,176 (52,247) 1,929
Income tax (expense) credit 2,519 (1,904) 615 3,256 3,871
Profit from continuing operations 212,497 6,294 218,791 (48,991) 169,800
           
Loss from discontinued operation (POS) (net of income tax)   (2,422) (2,422)   (2,422)
Profit for the period
(Net profit)
212,497 3,872 216,369 (48,991) 167,378
           
Attributable to:          
Owners of the Company 211,243 1,669 212,912   163,920
Non-controlling interests 1,254 2,203 3,457   3,458
           
Earnings per share
(€ per share)
         
Basic 2.54   2.56   1.97
Diluted 2.50   2.52   1.94