FILED PURSUANT TO RULE 425
Filed by Axalto Holding N.V.
Pursuant to Rule 165 and Rule 425(a) under the United States Securities Act of 1933,
as amended
Subject Company: Gemplus International S.A.
Commission File No. 000-31052
Date: January 26, 2006
On January 26, 2006, Axalto Holding N.V. issued the following press release.
Important information
Investors and security holders are strongly advised to read, when they become available, the
prospectus/offer to exchange and related exchange offer materials regarding the business
combination transaction referenced in this press release, as well as any amendments and supplements
to those documents because they will contain important information. When available, the
prospectus/offer to exchange and the other documents may also be obtained from Axalto Investor
Relations. If required, the prospectus/offer to exchange will be filed with the Securities and
Exchange Commission (SEC) by Axalto. To the extent the prospectus/offer to exchange is filed
with the SEC, security holders may obtain a free copy of the prospectus/offer to exchange (when
available) and other related documents filed by Axalto at the
SECs website at www.sec.gov.
Forward-Looking Statements
This communication contains certain statements that are neither reported financial results nor
other historical information and other statements concerning Axalto, Gemplus and their combined
businesses after completion of the proposed combination. These statements include financial
projections and estimates and their underlying assumptions, statements regarding plans, objectives
and expectations with respect to future operations, events, products and services and future
performance. Forward-looking statements are generally identified by the words expects,
anticipates, believes, intends, estimates and similar expressions. These and other
information and statements contained in this communication constitute forward-looking statements
within the safe harbor provisions of U.S. federal securities laws. Although management of the
companies believe that the expectations reflected in the forward-looking statements are reasonable,
investors and security holders are cautioned that forward-looking information and statements are
subject to various risks and uncertainties, many of which are difficult to predict and generally
beyond the control of the companies, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the forward-looking information and
statements, and the companies
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 communication include, but are not limited to: the ability of the
companies to integrate according to expectations; the ability of the companies to achieve the
expected synergies from the transaction; trends in wireless communication and mobile commerce
markets; the companies ability to develop new technology and the effects of competing technologies
developed and expected intense competition generally in the companies main markets; profitability
of expansion strategy; challenges to or loss of intellectual property rights; ability to establish
and maintain strategic relationships in their major businesses; ability to develop and take
advantage of new software and services; the effect of the transaction and any future acquisitions
and investments on the companies share prices; changes in global, political, economic, business,
competitive, market and regulatory forces; and those discussed by Gemplus in its filings with the
SEC, including under the headings Cautionary Statement Concerning Forward-Looking Statements and
Risk Factors. Moreover, neither the companies nor any other person assumes responsibility for the
accuracy and completeness of such forward-looking statements. The forward-looking statements
contained in this communication speak only as of this communication and the companies 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 or otherwise.
****
Full Year 2005 Revenue: $ 992 million, new record for the company
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130 million microprocessor cards delivered in Q4, new volume record |
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440 million microprocessor cards delivered in 2005, also a new record |
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Fourth quarter 2005 revenue: $ 267 million |
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8% operating margin expected for 2005 |
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Net cash position further improved, to reach $ 250 million |
Amsterdam, January 26, 2006 - Axalto (Euronext NL0000400653 AXL) today reported that its
full year 2005 revenue came in at $992 million, a new record for the company, and a 3% increase at
historical and constant exchange rates over the $960 million revenue recorded in the full year of
2004.
Axalto posted fourth quarter 2005 revenue of $267 million, a 5% reduction at constant exchange
rates compared with last years comparable period, which was the strongest quarter in Axaltos
history.
Olivier Piou, Axaltos Chief Executive Officer mentioned: As anticipated in July, after an
excellent first semester performance Axaltos second part of the year was more difficult,
especially in the public sector and in Asia where the market temporarily contracted and finished at
significantly lower levels than had been expected at the beginning of the year. Despite this lesser
than planned growth, Axalto posted in 2005 new records in terms of revenue and volume, further
improved its net cash position, and continued to increase its investments in research and new
products development. Based on this level of activity we confirm our guidance to deliver
approximately 8% operating margin in 2005. We announced last December our merger project with
Gemplus to create a leader in digital security, focused at bringing superior customized products
and services with enhanced global delivery capabilities to our customers, wider opportunities to
our employees and additional returns to our shareholders. Delivering on this ambition will
constitute our dedication for the coming years.
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Fourth quarter Full year |
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Axalto |
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2005 |
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2004 |
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Percentage of the |
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2005 2004 |
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quarters Total Revenue |
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Cards |
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(US$ million) |
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(US$ million) |
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Mobile
Communication |
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167.3 |
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171.7 |
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63 |
% |
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598.0 |
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548.8 |
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Financial Cards |
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52.0 |
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51.7 |
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19 |
% |
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200.2 |
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196.2 |
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Public Sector,
Access and Other |
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21.1 |
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36.9 |
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8 |
% |
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79.8 |
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98.4 |
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Prepaid (memory)
Phone Cards |
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9.7 |
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8.7 |
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4 |
% |
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39.1 |
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39.7 |
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Total Cards |
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250.1 |
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269.0 |
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94 |
% |
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917.0 |
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883.1 |
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-1-
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Point-of-sale
Terminals |
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17.1 |
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22.4 |
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6 |
% |
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75.4 |
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77.3 |
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Total Revenue |
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267.2 |
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291.5 |
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100 |
% |
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992.3 |
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960.4 |
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Cards segment
Revenue in the Cards segment came to $250 million. Full-year growth in revenue stands at 4% at
$917 million.
During the fourth quarter Axalto delivered over 130 million microprocessor cards, a 21% increase
year-on-year. Total shipments for the full year amounts to 440 million units, a 24% growth compared
with the 2004 volume.
The fourth quarter and total year microprocessor cards volume performances both set new records for
Axalto.
Mobile Communication
The Mobile Communication product line revenue reached $167 million in the quarter, down by 1% at
constant exchange rates on last years record-setting figure. For the year, this product line has
accounted for $598 million in revenue, a 9% increase on last year at historical and constant
exchange rates.
During the quarter, Axalto recorded a 25% increase in volumes of SIM cards sold, which topped 105
million units.
The average sales price at constant exchange rates declined 22% compared with the fourth quarter of
2004.
During this quarter, sales volumes almost doubled in EMEA. Revenue grew by 27% at historical
exchange rates, and 34% at constant exchange rates.
Mobile Communication revenue recorded in Asia on the other hand decreased significantly, with
activity contracting by 25% when compared with the fourth quarter of 2004.
Revenue in the Americas was down on the back of a decrease in volumes relative to an outstanding
fourth quarter of 2004. Overall in 2005, activity in this region grew by 38%, with high-end cards
representing three quarters of the shipments, against half in
2004.
Financial Cards
Axaltos revenue in this product line reached $52 million this quarter, up 5% at constant exchange
rates. Full year revenue of $200 million was up 2% at historical exchange rates and 1% at constant
exchange rates. Axalto delivered over 22 million microprocessor cards during the last quarter, and
over 78 million units for the full year.
The Americas posted a tremendous performance during this quarter. Regional revenue more than
doubled, with large-scale Paypass contactless cards deployments in North America and the
acceleration of the EMV migration in Latin America accounting for the strong gains. These more than
offset the relatively lower levels of activity recorded in the EMEA region that had benefited from
strong EMV migration in the UK a year ago.
Public
Sector, Access and Other
Revenue in this product line for the quarter was $21 million. Full year revenue stands at $80
million, down 19% at historical and constant exchange rates.
This product line disappointed this year, as large national projects for electronic identity and
passports took much longer to materialize than had initially been anticipated. Its performance
during the second half of the year also suffered in comparison with the same period of 2004, when a
large patent licensing contract and significant Pay TV revenue had been recorded.
-2-
This quarter, the Americas and Asia regions continued to grow, but EMEA revenue was down 57% at
constant exchange rates when compared with the last quarter of
2004.
Prepaid Phone Cards (memory cards, without a microprocessor)
Revenue in this non-strategic product line decreased by 2% on a full year basis, and represent now
only 4% of Axaltos total revenue in the quarter and in the year.
Point-of-sale Terminals segment
The Point-of-sale Terminals segments revenue decreased by 20% this quarter at constant
exchange rates when compared to the strong fourth quarter performance of last year. For the year,
this segments level of activity was essentially stable, as growth in Asia and in new EMEA markets
were able to compensate for the expected decrease of deliveries of EMV compatible terminals in the
UK.
Geographical break-down of 2005 fourth quarter revenue
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Europe, Middle |
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Axalto |
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East, Africa |
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Asia |
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Americas |
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Revenue |
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Revenue |
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Fourth quarter 2005 |
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Revenue ($ million) |
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($ million) |
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($ million) |
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Cards |
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139.5 |
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49.7 |
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60.9 |
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Point-of-sale
Terminals |
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13.4 |
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3.1 |
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0.7 |
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Total |
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152.9 |
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52.8 |
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61.6 |
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% Region |
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57 |
% |
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20 |
% |
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23 |
% |
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Full Year 2005
2005 Full Year Revenue split by product line and segment
Axalto Full Year Revenue
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% of Total Full year 2005 |
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2005 |
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2004 |
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Change |
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Revenue |
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($ million) |
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($ million) |
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Mobile Communications |
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598.0 |
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548.8 |
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+ 9 |
% |
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60 |
% |
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Financial Cards |
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200.2 |
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196.2 |
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+ 2 |
% |
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20 |
% |
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Public
Sector, Access and Other |
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79.8 |
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98.4 |
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(19 |
%) |
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8 |
% |
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Prepaid (memory) Phone Cards |
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39.1 |
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39.7 |
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(2 |
%) |
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4 |
% |
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Total Cards |
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917.0 |
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883.1 |
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+ 4 |
% |
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92 |
% |
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Point-of-sale Terminals |
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75.4 |
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77.3 |
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(3 |
%) |
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8 |
% |
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Total Revenue |
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992.3 |
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960.4 |
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+ 3 |
% |
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100 |
% |
2005 Full Year Revenue split by geographic region
Axalto Full
Year 2005 EMEA Asia NSA
-3-
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Segment |
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Revenue ($ m) |
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Change |
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Revenue ($ m) |
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Change |
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Revenue ($ m) |
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Change |
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Cards |
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482.4 |
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+ 2 |
% |
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193.6 |
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(15 |
%) |
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241.0 |
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+ 32 |
% |
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Point-of-Sale
Terminals |
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59.6 |
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(6 |
%) |
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13.1 |
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+ 39 |
% |
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2.6 |
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(38 |
%) |
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Total |
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542.0 |
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+ 1 |
% |
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206.8 |
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(13 |
%) |
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243.6 |
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+ 30 |
% |
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Unless stated otherwise, all comparisons in this document are shown on a historical exchange
rate basis.
Important information
Investors and security holders are strongly advised to read, when they become available, the
prospectus/offer to exchange and related exchange offer materials regarding the business
combination transaction referenced in this press release, as well as any amendments and supplements
to those documents because they will contain important information. When available, the
prospectus/offer to exchange and the other documents may also be obtained from Axalto Investor
Relations. If required, the prospectus/offer to exchange will be filed with the U.S. Securities and Exchange Commission by Axalto. To the extent the prospectus/offer to exchange
is filed with the Securities and Exchange Commission, security holders may obtain a free copy of
the prospectus/offer to exchange (when available) and other related documents filed by Axalto at
the Commissions website at www.sec.gov.
Forward-Looking
Statements
This communication contains certain statements that are neither reported financial results nor
other historical information and other statements concerning Axalto, Gemplus and their combined
businesses after completion of the proposed combination. These statements include financial
projections and estimates and their underlying assumptions, statements regarding plans, objectives
and expectations with respect to future operations, events, products and services and future
performance. Forward-looking statements are generally identified by the words expects,
anticipates, believes, intends, estimates and similar expressions. These and other
information and statements contained in this communication constitute forward-looking statements
within the safe harbor provisions of U.S. federal securities laws. Although management of the
companies believe that the expectations reflected in the forward-looking statements are reasonable,
investors and security holders are cautioned that forward-looking information and statements are
subject to various risks and uncertainties, many of which are difficult to predict and generally
beyond the control of the companies, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the forward-looking information and
statements, and the companies 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 communication include, but are not limited to: the
ability of the companies to integrate according to expectations; the ability of the companies to
achieve the expected synergies from the transaction; trends in wireless communication and mobile
commerce markets; the companies ability to develop new technology and the effects of competing
technologies developed and expected intense competition generally in the companies main markets;
profitability of expansion strategy; challenges to or loss of intellectual property rights; ability
to establish and maintain strategic relationships in their major businesses; ability to develop and
take advantage of new software and services; the effect of the transaction and any future
acquisitions and investments on the companies share prices; changes in global, political,
economic, business, competitive, market and regulatory forces. Moreover, neither the companies nor
any other person assumes responsibility for the accuracy and completeness of such forward-looking
statements. The forward-looking statements contained in this communication speak only as of this
communication and the companies 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 or otherwise.
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Axalto |
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Media
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Investor Relations
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TBWA\Corporate |
Emmanuelle Saby
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Stéphane Bisseuil
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Emlyn Korengold |
T: + 33 1 46 00 71 04
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T: + 33 1 46 00 70 70
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T: + 33 1 49 09 66 51 |
-4-
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M: + 33 6 09 10 76 10
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M: + 33 6 86 08 64 13
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M: + 33 6 08 21 93 74 |
esaby@axalto.com
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sbisseuil@axalto.com
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emlyn.korengold@tbwa-co
rporate.com |
About
Axalto
Axalto (AXAL.PA Euronext: NL0000400653 AXL) is the worlds leading provider (Gartner 2005,
Frost & Sullivan 2004) of microprocessor cards the key to digital networks and a major supplier
of point-of-sale terminals. Its 4,500 employees, from over 60 nationalities, serve customers in
more than 100 countries, with worldwide sales reaching over 3 billion smart cards to date. The
company has 25 years experience in smart card innovation and leads its industry in security
technology and open systems.
Axalto creates new generations of products for use in a variety of applications in the
telecommunications, finance, retail, transport, entertainment, healthcare, personal identification,
information technology and public sector markets. Microprocessor cards provide convenience,
security and privacy to public and private services operators, their
customers and end users.
For more information, please visit www.axalto.com
5