Gemplus Reports Further Sales Growth in the Second Quarter 2006

Luxembourg (ots/PRNewswire) -

Second quarter 2006 highlights:

- Net sales up 4.7% showing good growth in ID & Security and
Financial Services.

- Gross margin at 32.0% reflecting strong price pressure in
wireless.

- Operating margin at 6.4%, sustained by good control of operating
expenses.

- Attributable net income: 15.1 million euros.

- Distribution of reserves for 164.4 million euros to
shareholders.

- Gemalto combination ongoing: tender offer open until August 14,
2006.

- Gemalto integration process well on-track.

Gemplus International S.A. (Euronext: LU0121706294 - GEM and
NASDAQ: GEMP), a world leading provider of secure card solutions,
today reported results for the second quarter ended June 30, 2006.

In millions of euros Q2 2006 Q2 2005 Year-on-year
change
Net sales 247.3 236.2 +4.7%
Adjusted for currency fluctuations, -2.4%
disposals and acquisitions[1]
Gross profit 79.0 80.0 -1.3%
Gross margin 32.0% 33.9% - 1.9 pt
Operating expenses 63.2 57.6 +9.7%
Operating income 15.8 22.4 -29.4%
Operating margin 6.4% 9.5% -3.1 pts
Attributable net income[2] 15.1 21.8 -30.7%
Free cash flow[3] -34.3 41.9 NM
Cash and cash equivalents 208.3 373.5 -44.2%
Per share data (in euros)
Earnings per share (fully diluted) 0.02 0.04 -33.5%

Creation of a global leader in digital security: the combination
of Axalto and Gemplus to create Gemalto is effective since June 2,
2006, and the integration process is well on-track. The tender offer
filed by Gemalto N.V. for the remaining securities issued by Gemplus
will remain open until August 14, 2006.

Second quarter 2006 financial review

- Income statement

Second quarter 2006 highlights:

- Net sales up 4.7% showing good growth in ID & Security and
Financial Services.

- Gross margin at 32.0% reflecting strong price pressure in
wireless.

- Operating margin at 6.4%, sustained by good control of
operating expenses.

- Attributable net income: 15.1 million euros.

Growth was driven by ID & Security and Financial Services,
including good contribution from Setec.

On a geographical basis, ID & Security and Financial Services
drove a 8.3% year-on-year revenue growth in the Americas, after
adjusting for currency fluctuations, acquisitions and disposals.
Adjusted[4] net sales in Asia increased by 0.9%, year-on-year, and
were down 10.4% in EMEA[5], due to Wireless.

Gross margin was influenced by strong wireless price pressure, a
shift in the business mix and the release of a provision for a patent
claim.

Operating margin was 6.4%, sustained by good control of operating
expenses. Excluding the reversal of a 5.2 million euros litigation
provision booked last year, operating expenses were up only 0.6%
year-over-year despite the Setec acquisition; as a percentage of
sales, they actually decreased by 1.0 percentage point
year-over-year.

- Balance sheet and cash flow statement

Second quarter 2006 highlights:

- Free cash outflow of 34.3 million euros.

- Net cash outflow of 201.6 million euros reflecting
distribution of reserves to shareholders.

The Group's cash position remains strong at 208.3 million euros.
Compared to March 31, 2006, cash is down 201.6 million euros, largely
due to a 164.4 million euros outflow related to the distribution of
reserves (share premium) to shareholders. Free cash outflow of 34.3
million euros reflects an increase in accounts receivable due to
strong sales in June and increased capital expenditures of 19.0
million euros in anticipation of strong volumes for the second half
2006.

Segment analysis

- Telecom

Second quarter 2006 highlights:

- Record shipments in wireless: volumes up 40% year-on-year,
to 120 million units, driven by Asia.

- Wireless ASP down 29.3% year-on-year, currency adjusted,
reflecting fiercer competition following the announcement of the
Gemalto combination.

In millions of euros Q2 Q2 % Adjusted(4)
2006 2005 change change
(%)
Wireless products & services net sales 150.6 150.2 +0.3% -1.7%
Wireless gross profit 57.7 60.6 -4.7%
Wireless gross margin 38.3% 40.4% -2.1 pts
Prepaid phone cards & scratchcards net 11.6 13.0 -10.8%
sales
Prepaid phone cards & scratchcards 1.2 0.8 +43.1%
gross profit
Prepaid phone cards & scratchcards 10.2% 6.4% +3.8 pts
gross margin
Telecom net sales 162.3 163.2 -0.6% -1.9%
Telecom gross profit 58.9 61.4 -4.1%
Telecom gross margin 36.3% 37.6% -1.3 pt
Telecom operating expenses 38.6 40.3 -4.3%
As a % of sales 23.8% 24.7% -0.9 pt
Telecom operating profit 20.3 21.1 -3.7%
Operating margin 12.5% 12.9% -0.4 pt

Wireless revenue:

- Wireless products & services revenue[6] was up 0.3%
year-on-year (down 1.7%, currency adjusted), to 150.6 million euros.

- Wireless shipments grew 40% year-on-year, to 120 million units,
largely driven by Asia, notably in China.

- High-end card shipments (3G and above) grew 165%. They accounted
for 14% of the second quarter total, compared to 7% a year ago.
However, 3G remains concentrated on a limited number of operators.

- Wireless average selling price (ASP) was down 4.8%
quarter-on-quarter and 29.3% year-on-year, both currency adjusted.
Improvement in product mix was fully offset by regional mix and heavy
price pressure which intensified following the announcement of the
Gemalto combination.

The decline in Wireless gross margin reflects strong price
pressure and regional mix. Wireless gross profit included a 6.1
million euros reversal of a provision for a patent claim.

- Financial Services

Second quarter 2006 highlights:

- Growth driven by the contribution from Setec and the EMV[7]
deployment.

In millions of euros Q2 2006 Q2 2005 % change Adjusted(4)
change (%)
Net sales 55.1 50.3 +9.5% -1.2%
Gross profit 12.0 10.2 +18.0%
Gross margin as a % of sales 21.8% 20.3% +1.5 pt
Operating expenses 12.3 7.3 +69.4%
As a % of sales 22.3% 14.4% +7.9 pts
Operating profit -0.3 2.9 NM
Operating margin as a % of sales -0.5% 5.8% -6.3 pts

Payment microprocessor cards continued to grow very strongly,
driven by broad activity in EMV deployment, particularly in Latin
America and, to a lesser extent, Southern Europe and Asia.

In total, Gemplus shipped 20.8 million units of payment
microprocessor cards, up 24% year-on-year. Payment microprocessor
card revenue rose 2% year-on-year. The decline in ASP reflects price
pressure as well as a shift in the regional mix.

Gross margin improved 1.5 percentage point due to lower chip
purchasing prices.

Excluding a reversal of a 5.2 million euros litigation provision
booked last year, operating expenses were stable. As a result,
operating profit was almost breakeven.

- Identity and Security

Second quarter 2006 highlights:

- Revenue driven by Setec and other Government ID projects.

In millions of euros Q2 2006 Q2 2005 % change Adjusted(4)
change (%)
Net sales 29.9 22.7 +31.7% -9.9%
Gross profit 8.1 8.4 -4.1%
Gross margin as a % of sales 26.9% 37.1% -10.2 pts
Operating expenses 12.3 10.0 +22.7%
As a % of sales 41.2% 44.3% -3.1 pts
Operating profit -4.3 -1.6 NM
Operating margin as a % of sales -14.2% -7.3% -6.9 pts

Revenue was driven by Setec and other Government ID projects.
However, very strong sales in the second quarter 2005 led to a
comparative decrease in sales, after adjusting for currency
fluctuations, acquisitions and disposals.

Gross margin was influenced by a less favourable business mix.

The increase in operating expenses is mainly due to Setec.

First half 2006 financial review

- Net sales up 11.3%, driven by ID and Security and Financial
Services.

- Gross margin at 31.2% reflecting strong price pressure in
wireless.

- Operating margin at 5.1%, sustained by good control of operating
expenses.

In millions of euros H1 2006 H1 2005 % change Adjusted(4)
change (%)
Net sales 477.6 429.3 +11.3% +1.1%
Of which Telecom 310.6 307.5 +1.0% -2.2%
Of which Financial Services 111.5 88.2 +26.5% +12.2%
Of which ID & Security 55.5 33.6 +65.0% +3.1%
Gross profit 149.2 141.9 +5.2% NA
Gross margin 31.2% 33.1% -1.9 pt NA
Operating expenses 125.0 112.0 +11.6% NA
As a % of sales 26.2% 26.1% +0.1 pt NA
Operating profit 24.2 29.9 -19.1%
Operating margin 5.1% 7.0% -1.9 pt NA
Attributable net income 21.3 29.0 -26.4%

Sales in the first half 2006 grew 11.3% compared to a year
ago, driven by ID and Security and Financial Services.

On a geographical basis, all core activities drove a 15.8% revenue
growth in the Americas, after adjusting for currency fluctuations,
acquisitions and disposals. Adjusted revenue was down 3.1% in EMEA,
and 8.9% in Asia, mainly due to Telecom.

Gross margin was influenced by strong price pressure in wireless,
a shift in the business mix, and Setec purchase accounting, despite
the reversal of a provision for a patent claim for a total amount of
9 million euros.

Operating margin was 5.1%, sustained by good control of operating
expenses. Excluding the reversal of a 5.2 million euros litigation
provision booked last year, operating expenses grew 6.7%
year-over-year reflecting the Setec acquisition. As a percentage of
sales, operating expenses decreased by 1.1 percentage point
year-over-year.

Outlook

The Group continues to see strong momentum in its core segments
and will maintain its focus on cost efficiency.

Gemplus confirms that it is actively working to achieve 10%
operating margin in 2007, before taking into account the effects of
the combination with Gemalto.

The Group remains confident in its ability to further improve its
operating income in 2006 taking into account the usual seasonality
effect of stronger organic growth in the second half than in the
first half.

Creation of Gemalto

On June 2, 2006, Axalto and Gemplus announced a major step of
their combination project to create Gemalto. The contribution in
kind, by Texas Pacific Group and the Quandt family entities, of their
interests in Gemplus International S.A. (in aggregate 43.4% of
Gemplus share capital) to Axalto Holding N.V. was completed on the
basis of 2 Axalto shares for every 25 Gemplus shares. On the same
day, Axalto Holding N.V., renamed Gemalto N.V., filed a public
exchange tender offer for the remaining shares and warrants issued by
Gemplus. Prior to the contribution in kind, Gemplus had initiated the
distribution of reserves (share premium) of EUR0.26 per share to all
of its shareholders on record upon market close of the same day.

On July 6, 2006, the offering document filed by Gemalto received
the visa no. 06-252 from the "Autorité des Marchés Financiers" (AMF)
in Paris, the French stock market authority. The public exchange
tender offer initiated by Gemalto for the shares and warrants issued
by Gemplus was opened on July 11, 2006, at the same exchange ratio of
2 Gemalto shares for every 25 Gemplus shares.

This tender offer will remain open until August 14, 2006. The
result of the offer should be published at the latest on August 25,
2006. On the basis of the current indicative timetable, it is
envisaged that the settlement will occur on or about August 30, 2006.

More information is available at: www.gemalto.com.

This communication does not constitute an offer to purchase or
exchange or the solicitation of an offer to sell or exchange any
securities of Gemalto or an offer to sell or exchange or the
solicitation of an offer to buy or exchange any securities of
Gemplus.

The exchange offer described above will not be made, directly or
indirectly, in or into the United Kingdom, Italy, Netherlands,
Canada, Australia, or Japan or in or into any other jurisdiction in
which such offer, solicitation, sale or exchange would be unlawful
prior to the registration or qualification under the laws of such
jurisdiction. Accordingly, persons who come into possession of this
communication should inform themselves of and observe these
restrictions.

You are strongly advised to read the offering circular relating to
the exchange offer and related exchange offer materials regarding the
transaction, as well as any amendments and supplements to those
documents because they will contain important information. The
prospectus/offer to exchange and the other documents are available
are available from the Internet websites of the AMF
(www.amf-france.org), of Gemalto N.V. (www.gemalto.com) and of
Gemplus International S.A. (www.gemplus.com). You can obtain a free
paper copy of the prospectus/offer to exchange and other related
documents filed by Gemalto (ex-Axalto) upon request to the following:

- Gemalto N.V.: Koningsgracht Gebouw 1, Joop Geesinkweg 541-542,
1096 AX Amsterdam, the Netherlands.

- Axalto International S.A.S: 6 rue de la Verrerie, 92190, Meudon,
France.

- Deutsche Bank: 3 avenue de Friedland, 75008, Paris, France.

- Gemplus International S.A.: 46A, avenue J.F. Kennedy, L-1855
Luxembourg, Grand Duchy of Luxembourg.

US investors can obtain a copy of the US prospectus/offer to
exchange and related offer materials from Mellon Investors Services
LLC by telephoning to: +1-866-768-4951 (Call Toll Free) or:
+1-201-680-6590 (Call Collect).

Notice to US investors

Any solicitation of offers to buy any Gemplus shares in the United
States in the exchange offer will only be made pursuant to a
prospectus/offer to exchange and related offer materials that Gemalto
will make available to holders of Gemplus securities. Investors and
security holders are strongly advised to read the prospectus/offer to
exchange and related exchange offer materials, as well as any
amendments and supplements to those documents because they will
contain important information.

The Gemalto securities referred to herein that will be issued in
connection with the exchange offer have not been, and are not
intended to be, registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered or sold, directly or
indirectly, into the United States except pursuant to an applicable
exemption. The Gemalto securities are intended to be made available
within the United States in connection with the exchange offer
pursuant to an exemption from the registration requirements of the
Securities Act.

The exchange offer will relate to the securities of a non-U.S.
company and will be subject to disclosure requirements of a foreign
country that are different from those of the United States. Financial
statements included in the prospectus/offer to exchange will be
prepared in accordance with foreign accounting standards that may not
be comparable to the financial statements of United States companies.

It may be difficult for you to enforce your rights and any claim
you may have arising under U.S. federal securities laws, since
Gemalto and Gemplus have their corporate headquarters outside of the
United States, and some or all of their officers and directors may be
residents of foreign countries. You may not be able to sue a foreign
company or its officers or directors in a foreign court for
violations of the U.S. securities laws. It may be difficult to compel
a foreign company and its affiliates to subject themselves to a U.S.
court's judgment.

Business Highlights

- Telecom

Gemplus has been selected by 3 Italia as its exclusive supplier
for USIM cards for the first world commercial Mobile TV service which
was launched prior to the 2006 FIFA World Cup. GemXplore Generations
cards provide high security for TV content delivered to mobile phones
and therefore protect 3 Italia's Mobile TV revenue streams.

Oi is delivering 128Kb SIM cards from Gemplus to all new
subscribers in their Brazilian GSM network. Oi launched their GSM
network in 2002 and the SIM has always played a key role in marketing
their brand and value added services to all their customers which now
number more than 9 million. This SIM offers new applications and
content that optimize mobile phone use and promote Oi's products and
services. 45% of Oi's data traffic now comes from easy-to-use SIM
menus.

- Financial Services

Gemplus has been chosen by Commonwealth Bank of Australia for
Australia's first MasterCard PayPass pilot. The six-month trial will
be rolled out in New South Wales, with the first phase involving
33,000 cardholders who will be able to use their MasterCard PayPass
cards at more than 150 participating merchants.

- Identity and Security

Gemplus has been selected as one of the main suppliers to deliver
smart cards and personalization services for next generation
e-healthcare nationwide patient cards in France. The contract calls
for the supply of a minimum of 8 million cards over two years, with
possible extension over two more years.

Gemplus also won a contract for 3.7 million secure healthcare
ID cards, software and services to Seguro Popular, one of the Mexican
government's social security organizations, for patient data storage.

Gemplus launched its SafesITe Government solution compliant with
the US federal government's FIPS 201 regulations. Gemplus'
SafesITe(TM) smart cards and software were first to receive US
government certification. They are now ready to help US federal
agencies to meet the HSPD-12 requirements for interoperability for
government employees and contractors to access federal buildings and
IT networks. As set forth in the presidential directive and
regulations, all federal agencies must start to issue FIPS 201
compliant identity credentials by October 26 2006.

Earnings calendar

Third quarter 2006 results are scheduled to be reported on
October 25, 2006, before the opening of Euronext Paris.

Conference Call:

The Company has scheduled a conference call for Thursday, 27 July
2006 at 2:00 pm CET (1:00 pm GMT and 8:00 am New-York time). Callers
may participate in the live conference call by dialing:

+44-(0)207-365-1847 or +1-718-354-1153 or +33-(0)1-71-23-04-17

access code: 1752146

The slide show will be available on the web site at 12:30 CET
(11:30 GMT). The webcast will also be available on the IR section of
www.gemplus.com.

Replays of the conference call will be available approximately 3
hours after the conclusion of the conference call until August 10th,
2006 midnight by dialing:

+44-(0)207-806-1970, or +1-718-354-1112 or +33(0)1-71-23-02-48

access Code: 1752146#

About Gemplus

Gemplus International S.A. (Euronext: LU0121706294 - GEM and
NASDAQ: GEMP) is a world leading player in the secure card industry
in both revenue and total shipments (source: Gartner-Dataquest, Frost
& Sullivan, Datamonitor).

Gemplus delivers a wide range of portable, personalized solutions
in areas including Identity, Mobile Telecommunications, Public
Telephony, Banking, Retail, Transport, Healthcare, WiFi, Pay-TV,
e-government, and access control.

Gemplus's revenue in 2005 was 939 million euros.

In June 2006, Gemplus and Axalto initiated their combination
to form Gemalto, a leader in digital security.

www.gemplus.com

www.gemalto.com

For more information:

Press Gemplus Investor Relations
Remi Calvet Gemplus
Tel: +33-6-22-72-81-58 Céline Berthier
Email: remi.calvet@gemplus.com Tel: +41-(0)-22-544-5054
Email: celine.berthier@gemplus.com
Edelman
Frédéric Boullard Fineo
Tel: +33-(0)-1-56-69-73-95 Tel: +33-(0)-1-56-33-32-31
Email: Email: gemplus@fineo.com
frederic.boullard@edelman.com

(c)2006 Gemplus. All rights reserved. Gemplus, the Gemplus logo,
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.

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 sectors; our ability to
develop new technology, and the effects of competing technologies
developed and expected intense competition generally in our main
segments; 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.

References:

[1] Setec is consolidated starting June 1st, 2005

[2] Net income attributable to equity holders

[3] Free cash flow is defined as net cash flow from operating
activities less the purchase of property, plant and equipment and
other investments related to the operating cycle (excluding
acquisitions and financial investments).

[4] After adjusting for currency fluctuations, acquisitions and
disposals.

[5] Europe, Middle East, Africa

[6] Wireless products & services revenue comprises wireless
microprocessor cards and related applications (embedded software and
Over The Air platforms) and services (system integration and operated
services).

[7] EMV is a jointly defined set of specifications adopted by
Europay, MasterCard and Visa for the migration of bank cards to smart
card technology.

Gemplus International SA
Press Release - Financial statements
For the quarterly period ended June 30, 2006
Gemplus
International
SA
Consolidated
Statements of
Income
(in thousands of euros, except shares and per share amounts)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
(unaudited) (unaudited)
Net sales 247,265 236,158 477,597 429,260
Cost of sales -168,263 -156,129 -328,367 -287,339
Gross Profit 79,002 80,029 149,230 141,921
Research and
development expenses -16,186 -16,421 -32,144 -29,403
Selling and
marketing expenses -31,284 -28,679 -62,292 -54,387
General and
administrative
expenses -16,775 -12,352 -32,386 -28,453
Restructuring
expenses 404 478 471 916
Other operating
income (expense),
net 636 -666 1327 -718
Goodwill
amortization and
impairment - - - -
Operating income 15,797 22,389 24,206 29,876
Financial income
(expense), net 2,300 1,681 4,551 3,477
Share of profit
(loss) of associates -57 -9 63 -833
Other non-operating
income (expense),
net 432 -266 -147 98
Income before taxes 18,472 23,795 28,673 32,618
Income tax expense -3,619 -1,242 -6,738 -2,946
NET INCOME 14,853 22,553 21,935 29,672
Attributable to:
Equity holders of
the Company 15,092 21,760 21,344 29,003
Minority interest -239 793 591 669
Net income per share
attributable to
equity holders of
the Company (in
euros)
Basic 0.02 0.04 0.03 0.05
Diluted 0.02 0.04 0.03 0.05
Shares used in net
income per share
calculation:
Basic 631,327,771 611,014,686 630,367,494 609,027,112
Diluted 650,564,398 624,130,718 650,367,494 623,269,017

Consolidated Balance Sheets

(in thousands of euros)
June 30, December 31, 2005
2006
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents 208,336 418,365
Trade accounts receivable, net 201,045 183,022
Inventory, net 119,093 107,673
Derivative financial instruments 7,403 4,187
Other current receivables 55,028 82,128
Total current assets 590,905 795,375
Non-current assets:
Property, plant and equipment, net 167,747 158,284
Goodwill, net 92,160 90,826
Deferred development costs, net 21,215 21,227
Other intangible assets, net 18,240 23,600
Deferred income tax assets 27,151 32,788
Investments in associates 13,603 16,309
Available-for-sale financial assets, net 2,469 2,469
Other non-current receivables, net 44,407 40,846
Total non-current assets 386,992 386,349
TOTAL ASSETS 977,897 1,181,724
LIABILITIES
Current liabilities:
Accounts payable 109,331 106,085
Derivative financial instruments 2,592 2,592
Salaries, wages and related items 46,800 62,641
Current portion of provisions and
other liabilities 39,550 73,434
Current income tax liabilities 4,727 5,228
Other current tax liabilities 17,188 20,821
Current obligations under finance leases 5,397 5,539
Total current liabilities 225,585 276,340
Non-current liabilities:
Non-current obligations under
finance leases 23,695 26,425
Non-current portion of provisions 15,111 23,482
Other non-current liabilities 12,090 13,417
Deferred income tax liabilities 2,693 4,354
Total non-current liabilities 53,589 67,678
Shareholders' equity:
Ordinary shares 134,001 133,466
Additional paid-in capital 903,535 1,063,145
Retained earnings (342,769) (365,940)
Other comprehensive income (6,904) (4,407)
Less, cost of treasury shares (1,395) (1,395)
Equity attributable to equity
holders of the Company 686,468 824,869
Minority interest 12,255 12,837
Total shareholders' equity 698,723 837,706
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 977,897 1,181,724

Consolidated Statements of Cash Flows

(in thousands of euros)
Six months
ended
June 30,
2006 2005
(unaudited)
Cash flows from operating activities:
Net income 21,935 29,672
Adjustments to reconcile net income
to net cash from operating
activities:
Depreciation, amortization
and impairment 21,305 18,990
Changes in non-current portion
of provisions and other
liabilities, excluding restructuring (8,636) 484
Deferred income taxes 3,335 (1,478)
(Gain) / loss on sale and
disposal of assets - 418
Share of (profit) loss of associates ,210 772
Share-based compensation 1,828 1666
Other, net (,124) (1,471)
Changes in operating assets
and liabilities:
Trade accounts receivable and
related current liabilities (24,946) (10,161)
Trade accounts payable and
related current assets (,347) 4,375
Inventories (13,094) 16,248
Value-added and income taxes (6,243) (2,653)
Salaries, wages and other (14,773) (13,111)
Restricted cash 2,000 23,427
Restructuring reserve payable (2,224) (9,226)
Litigation expense payable - -
Management severance expense - -
Provision for a loan to a
former director and executive - -
Net cash (used for) from
operating activities (19,774) 57,952
Cash flows from investing activities:
Sale / (Purchase) of activities
net of cash disposed / acquired 4,632 (60,123)
Other investments (2,513) (758)
Purchase of property,
plant and equipment (27,582) (8,981)
Purchase of other assets (1,584) (850)
Change in non-trade
accounts payable and other ,878 2612
Net cash used for investing activities (26,169) (68,100)
Cash flows from financing activities:
Proceeds from exercise of share options 5,321 1,256
Payments on long-term borrowings
Payments on long-term borrowings (60) (,138)
Proceeds from sales-leaseback operations - -
Principal payments on obligations
under finance leases (2,872) (2,952)
Increase (decrease) in bank overdrafts (979) (241)
Dividends paid by subsidiaries
to minority shareholders (1,881) (1,048)
Changes in non-trade accounts
payables on financing activities 35 133
Change in treasury shares - -
Interests receivable on
loans to senior management - -
Cash paid to Shareholders (164,396)
Net cash (used for) from
financing activites (164,832) (2,990)
Effect of exchange rate changes on cash ,746 (1765)
Net increase (decrease) in
cash and cash equivalents (210,775) (13,138)
Cash and cash equivalents,
beginning of the period 418,365 388,430
Cash and cash equivalents,
end of the period 208,336 373,527

1) Accounting principles:

The consolidated financial statements of the Company have been
prepared in accordance with International Financial Reporting
Standards (IFRS).

2) Segment information

2.1) Second Quarter 2006 compared with Second Quarter 2005

2.1.1) Operating Segments

Three months ended (in millions of euros)
June 30, June 30,
Net sales 2006 2005 % change Adjusted
change (%) (1)
Telecommunications 162.3 163.2 -1% -2%
Financial Services 55.1 50.3 10% -1%
Identity and Security 29.9 22.7 32% -10%
Total 247.3 236.2 5% -2%
(in millions of euros)
June 30, (% of net June 30, (% of net
Gross profit 2006 sales) 2005 sales) % change
Telecommunications 58.9 36% 61.4 38% -4%
Financial Services 12.0 22% 10.2 20% 18%
Identity and Security 8.1 27% 8.4 37% -4%
Total 79.0 32% 80.0 34% -1%
(in millions of euros)
June 30, (% of net June 30, (% of net
Operating expenses 2006 sales) 2005 sales) % change
Telecommunications (38.6) 24% (40.3) 25% -4%
Financial Services (12.3) 22% (7.3) 14% 69%
Identity and Security(12.3) 41% (10.0) 44% 23%
Total (63.2) 26% (57.6) 24% 10%
(in millions of euros)
June 30, June 30, Change in Operating
income
Operating income (loss) 2006 2005 (loss)
Telecommunications 20.3 21.1 (0.8)
Financial Services (0.3) 2.9 (3.2)
Identity and Security (4.3) (1.6) (2.7)
Total 15.8 22.4 -6.6
(1) Adjusted for currency fluctuations, disposals & acquisitions

2.1.2) Geographical Segments

Three months ended (in millions of euros)
June June
30, 30, Adjusted change (%)
Net sales 2006 2005 % change (1)
Europe, Middle East and Africa 122.7 121.0 1% -10%
Asia 43.0 41.6 3% 1%
Americas 81.6 73.6 11% 8%
Total 247.3 236.2 5% -2%

2.2) First-half 2006 compared with First-half 2005

2.2.1) Operating Segments

Six months ended (in millions of euros)
June 30, June 30, Adjusted
change (%)
Net sales 2006 2005 % change (1)
Telecommunications 310.6 307.5 1% 2%
Financial Services 111.5 88.2 26% 12%
Identity and Security 55.5 33.6 65% 3%
Total 477.6 429.3 11% 1%
(in millions of euros)
(% of (% of
June 30, net June 30, net
Gross profit 2006 sales) 2005 sales) % change
Telecommunications 111.0 36% 113.7 37% -2%
Financial Services 22.5 20% 16.0 18% 41%
Identity and Security 15.7 28% 12.2 36% 29%
Total 149.2 31% 141.9 33% 5%
(in millions of euros)
(% of (% of
June 30, net June 30, net
Operating expenses 2006 sales) 2005 sales) % change
Telecommunications (76.9) 25% (76.1) 25% 1%
Financial Services (23.7) 21% (17.7) 20% 34%
Identity and Security (24.4) 44% (18.2) 54% 34%
Total (125.0) 26% (112.0) 26% 12%
(in millions of euros)
June 30, June 30, Change in Operating
Operating income (loss) 2006 2005 income (loss)
Telecommunications 34.1 37.6 (3.5)
Financial Services (1.2) (1.7) 0.5
Identity and Security (8.7) (6.0) (2.7)
Total 24.2 29.9 -5.7
(1) Adjusted for currency fluctuations, disposals & acquisitions

2.2.2) Geographical Segments

Six months ended (in millions of euros)
June June
30, 30, Adjusted change (%)
Net sales 2006 2005 % change (1)
Europe, Middle East and Africa 244.7 220.4 11% -3%
Asia 84.2 87.9 -4% -9%
Americas 148.7 121.0 23% 16%
Total 477.6 429.3 11% 1%

(1) Adjusted for currency fluctuations, disposals & acquisitions

ots Originaltext: Gemplus
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Press Gemplus, Remi Calvet, Tel: +33-6-22-72-81-58, Email:
remi.calvet@gemplus.com, Edelman, Frédéric Boullard, Tel:
+33-(0)-1-56-69-73-95, Email: frederic.boullard@edelman.com, Investor
Relations, Gemplus, Céline Berthier, Tel: +41-(0)-22-544-5054, Email:
celine.berthier@gemplus.com, Fineo, Tel: +33-(0)-1-56-33-32-31,
Email: gemplus@fineo.com