FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of December 2004

GEMPLUS INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)

GEMPLUS INTERNATIONAL S.A.
(Translation of registrant’s name in English)

46A, Avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
(Address of Principal Executive Offices)

     (Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F      X               Form 40-F           

(Indicate by check mark whether the registrant by
furnishing the information contained in this form
is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)

Yes                     No      X     

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

1

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Item 1. Financial Statements

Condensed Consolidated Statements of Income

The accompanying notes are an integral part of these condensed financial statements

2

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these condensed financial statements

3

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Condensed Consolidated Statements of Cash Flows

The accompanying notes are an integral part of these condensed financial statements

4

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Consolidated Statement of Changes in Shareholders’ Equity

The accompanying notes are an integral part of these condensed financial statements

5

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Notes to the Condensed Consolidated Financial Statements

1/  Basis of presentation and accounting policies

These unaudited interim financial statements prepared in accordance with International Financial Reporting Standards (IFRS), reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly, in all material respects, the financial position of Gemplus International S.A. (the “Company”) and its subsidiaries as of September 30, 2004, and the results of operations for the three-month and nine-month periods ended September 30, 2004 and 2003. All material intercompany balances have been eliminated. Because all of the disclosures required by IFRS are not included, these interim statements should be read in conjunction with the audited financial statements and accompanying notes in the Company’s annual report for the year ended December 31, 2003. The year-end condensed balance sheet data was derived from the audited financial statements and does not include all of the disclosures required by generally accepted accounting principles. The statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year.

2/  Inventories

Inventories are stated at the lower of cost or net realizable value, with cost being determined principally on the weighted average cost basis.

Inventory consists of the following:

3/  Common control transactions

As at September 30, 2004, certain shares of Gemplus S.A. held mainly by employees have not yet been contributed to Gemplus International S.A.. The total amount of shares to be issued by Gemplus International S.A. upon the contribution of Gemplus S.A. shares amounted to 1,130,450 shares, representing 0.19 % of the shareholdings of Gemplus International S.A., which in total was represented by 608,355,450 shares outstanding as at September 30, 2004.

6

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

4/  Net loss per share

A reconciliation of the numerator and denominator of basic and diluted net loss per share is provided in the following table:

5/  Segment reporting

In 2004, the Company realigned its reporting segment in three operating segments: (i) Telecommunications segment, (ii) Financial Services segment, and (iii) Identity and Security segment, accordingly to its new operating structure.

The Telecommunications segment remains unchanged and includes the wireless products and services, comprising wireless microprocessor cards and related applications (embedded software and Over The Air platforms) and services (system integration and operated services), prepaid phone cards and scratchcards.

The former Financial Services and Security segment has been divided into:

These three segments have a different customer base, and each of them has separate financial information available. The management evaluates these segments regularly, decides how to allocate resources and assesses performance. The Company’s management makes decisions about resources to be allocated to the segments and assesses their performance using revenues and gross margins. The Company does not identify or allocate assets to the operating or geographic segments nor does management evaluate the segments on this criterion on a regular basis.

7

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

The following tables present selected data for the three-month and nine-month periods ended September 30, 2004 and 2003:

The following is a summary of sales by geographic area for the three-month and nine-month periods ended September 30, 2004 and 2003:

8

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

6/  Ordinary shares

As mentioned in Note 3, as at September 30, 2004, the total amount of shares to be issued by Gemplus International S.A. upon the contribution of Gemplus S.A. shares amounted to 1,130,450 shares, representing 0.19 % of the shareholdings of Gemplus International S.A., which in total was represented by 608,355,450 shares outstanding as at September 30, 2004.

7/  Restructuring

Following the restructuring program that was implemented in the second quarter of 2001 (the “first restructuring program”), the Company announced two additional restructuring and rationalization programs in 2002, one on February 6 (the “second restructuring program”), and the other on December 9 (the “third restructuring program”).

During the third quarter of 2004, the Company recorded a total pre-tax restructuring net charge of € 8,638 thousand in the quarterly Consolidated Statement of Income, mainly related to the third restructuring program.

First restructuring program (announced on May 2, 2001)

During the third quarter of 2004, the Company recorded a net restructuring charge of € 987 thousand with respect to the first restructuring program mainly due to an impairment loss in Germany for a building. The total net charge of the first restructuring program amounts to € 31,056 thousand and represents:

The remaining reserve of € 435 thousand is a provision for ongoing rents for closed sites, mainly in the United States of America and Germany.

Second restructuring program (announced on February 6, 2002)

During the third quarter of 2004, the Company recorded a net reversal of restructuring provision for € 5,488 thousand with respect to the second restructuring program. The refund of a debt fully provisioned for a ceased activity led the Company to reverse € 1,900 thousand. The anticipated exit from a French lease could permit to reverse € 1,100 thousand. The conditions of social plans in France allow employees to elect over time within a large scope of compensation schemes, each of them having different costs. Since most employees have now left the Company, the provision was adjusted to reflect their decisions. As part of the second restructuring program, the employment of 1,318 employees was terminated. The total net charge of the second restructuring program amounts to € 74,917 thousand and represents:

The remaining reserve of € 3,893 thousand is a provision for ongoing rents for closed sites and for payment obligations for employee terminations.

9

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Third restructuring program (announced on December 9, 2002)

During the third quarter of 2004, linked to the worldwide rationalization of manufacturing plants and sales offices, the Company recorded a € 13,139 thousand restructuring net charge with respect to the third restructuring program mainly due to the closure of a plant in Germany. Since December 2002, the total net charge of the third restructuring program amounts to € 83,080 thousand and represents:

839 employees were terminated as part of the third restructuring program including 777 people who left the company in 2003 and 62 in 2004. 104 employees are expected to leave the company in 2004 and early 2005.

The remaining reserve of € 20,433 thousand is a provision for ongoing rents for closed sites and for payment obligations for employee termination.

10

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Restructuring activity at the end of September 2004 was as follows:

11

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

12

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

8/ Comprehensive income

Certain items defined as other comprehensive income, such as foreign currency translation adjustments, are reported separately from retained earnings and additional paid-in-capital in the shareholders’ equity section of the balance sheets.

The components of cumulative other comprehensive income in the shareholders’ equity section of the balance sheets as at September 30, 2004 and December 31, 2003, respectively, were as follows:

The components of comprehensive income for the three-month and nine-month periods ended September 30, 2004 and 2003, respectively, were as follows:

13

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

9/ Differences between International Financial Reporting Standards and US Generally Accepted Accounting Principles

The Company’s consolidated financial statements are prepared in accordance with IFRS, which differ in certain respects from generally accepted accounting principles in the United States (US GAAP).

The principal differences between IFRS and US GAAP are presented below:

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GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

10/ Presentation of the consolidated statement of income

The operating income (loss) would have been as follows under US GAAP:

15

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

11/ New accounting pronouncements under US GAAP

For the presentation of its consolidated net income and total shareholders’ equity under US GAAP, the Company adopted the following new standards:

SFAS 143

In July 2001, the FASB issued FAS No. 143, “Accounting for Asset Retirement Obligations” (“FAS 143”). FAS 143 prescribes the accounting for retirement obligations associated with tangible long-lived assets, including the timing of liability recognition and initial measurement of the liability. FAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. FAS 143 is effective for fiscal years beginning after June 15, 2002 (January 1, 2003 for the Company). The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

SFAS 145

In April 2002, the FASB issued FAS No. 145, “Revision of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Connections” (“FAS 145”). Among other amendments and rescissions, FAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect, unless such gains and losses meet the criteria in paragraph 20 of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operation — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions”. FAS 145 is partially effective for transactions occurring after May 15, 2002 and partially effective for fiscal years beginning after May 15, 2002. The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

SFAS 146

In June 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal activities” (“SFAS 146”). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF 94-3 “Liability Recognition for Certain Employee Termination Benefits and other Costs to Exit an Activity (including Certain Costs Incurred in a restructuring)”. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity to be recognized when the liability is incurred. SFAS 146 states that a commitment to a plan, by itself, does not create an obligation that meets the definition of a liability. SFAS No. 146 also addresses recognition of certain costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 makes a clear distinction between what constitutes a one-time benefit arrangement and what constitutes an ongoing benefit arrangement. For plans that are deemed to be ongoing benefit plans, the guidance in SFAS 112 should be followed. The guidance in SFAS 112 for ongoing benefit plans will apply to situations where there are statutory requirements for providing employee benefit arrangements. Under SFAS 112, a liability will be recorded when it is probable and reasonably estimable that a liability has been incurred. For employee termination benefits provided over and above statutory minimums that are not systematic in nature, the requirements in SFAS 146 are followed and the liability would be recorded when communication is made to employees, provided all other necessary criteria are met. SFAS 146 also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

16

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

SFAS 148

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123”. SFAS 148 amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in the financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and annual disclosure provisions of SFAS 148 are effective for financial statements issued for fiscal years ending after December 15, 2002. The Company has elected to continue accounting for employee stock-based compensation in accordance with APB 25 and related interpretations and has applied the disclosure-only provisions of SFAS 148 in Note 31 of its Consolidated Financial Statements.

SFAS 149

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No. 133 on “Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

SFAS 150

In May 2003, FASB issued SFAS 150, “Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity”. The release establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. This statement reporting requirement shall be effective for financial instruments entered into or modified after May 31, 2003. The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

FIN 45

In November 2002, the FASB issued FASB Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires the guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. It also elaborates on the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees that it has issued. However, the initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. Adoption of this standard does not currently have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

FIN 46

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” which addresses consolidation by business enterprises of variable interest entities (“VIEs”) either: (1) that do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support; or (2) in which the equity investors lack an essential characteristic of a controlling financial interest. The new requirements of this Interpretation were effective immediately for new variable interest entities (VIEs) created after January 31, 2003.

17

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 “FIN 46R — Revised December 2003”) resulting in multiple effective dates based on the nature as well as the creation date of the VIE. The Company has performed a review of potential VIEs and has determined that it does not have any interests in VIEs as of the issuance of these financial statements. Adoption of FIN 46 in 2003 and the adoption of FIN 46R in 2004 do not currently have a material impact on the Company’s consolidated net income and total Shareholders’ equity under US GAAP.

Others

In November 2002, the FASB issued EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF Issue No. 00-21”). This guidance requires companies with deliveries that include multiple revenue generating activities to separately value the revenues related to each element of the process and provides guidance on when and how to account for such arrangements. The provisions of EITF Issue No. 00-21 applied to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of this standard does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

In May 2003, the EITF reached a consensus on EITF 01-8, “Determining whether an arrangement contains a lease”, relating to new requirements on identifying leases contained in contracts or other arrangements that sell or purchase products or services. The evaluation of whether or not an arrangement contains a lease within the scope of SFAS 13, “Accounting for leases”, should be based on the evaluation of whether an arrangement conveys the right to use property, plant and equipment. Purchaser’s arrangements which previously would have been considered service or supply contracts, but are now considered leases, could affect the timing of their expense recognition and the classification of assets and liabilities on their balance sheet as well as require footnote disclosure of lease terms and future minimum lease commitments. This consensus is effective prospectively for contracts entered into or significantly modified after July 1, 2003. The adoption of this EITF does not have a material impact on the Company’s consolidated net income and total shareholders’ equity under US GAAP.

In September 2004, the EITF reached a consensus on EITF Issue No. 04-10 (EITF 04-10), “Applying Paragraph 19 of FAS 131 in Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds”. Paragraph 19 of FAS 131 permits an entity to combine information about segments, which individually do not meet the quantitative thresholds in paragraph 18 of FAS 131 to produce a reportable segment (e.g. revenue of the segment is less than 10% of the entity’s revenue), only if segments share a majority of the aggregation criteria listed in paragraph 17 of FAS 131 (i.e. similarity in the nature of the products and services, the production processes, the type or class of customers for their products and services, and if applicable the nature of the regulatory environment). EITF 04-10 clarified that operating segments can be aggregated only if aggregation is consistent with the objective and basic principles of Statement 131, the segments have similar economic characteristics, and the segments share a majority of the aggregation criteria listed in paragraph 17 of FAS 131. When the consensus in this Issue is applied, the corresponding information for earlier periods, including interim periods, will have to be restated unless it is impractical to do so. The Company determined that adoption of this EITF does not have any impact on its currently reportable segments.

18

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

12/ Related party transactions

On March 9, 2004, Apeera Inc. entered into a Share and Asset Purchase Agreement with Intuwave Ltd. by which the shares of Apeera France SAS, a wholly owned subsidiary of Apeera Inc., and certain assets were sold to Intuwave for a total consideration of € 4,000 thousand. GemVentures 1 N.V. (a wholly owned subsidiary of the Company) and TPG Ventures, L.P., both shareholders of Apeera Inc., were parties to such agreement for the purposes of guaranteeing the obligations of Apeera Inc., in respect of the warranties and indemnities given by Apeera Inc. TPG Ventures, L.P. is managed by Texas Pacific Group, which is a shareholder of our Company. Three of our directors are respectively managing partners and a principal of the Texas Pacific Group. The initial consideration, payable on completion, was to be satisfied by the issuance of shares to Apeera Inc., which designated, according to its liquidation and dissolution plan, GemVentures 1 N.V. and TPG Ventures, L.P. to receive the shares instead on March 31, 2004.

On March 31, 2004, GemVentures 1 N.V. entered into an investment agreement with Intuwave, its investors and managers, which provides for the investment of US$ 2,000 thousand in consideration for the issuance of shares in Intuwave. Both TPG Ventures, L.P. and GemVentures 1 N.V. are represented on Apeera Inc.’s board of directors, however GemVentures 1 N.V. abstained from voting with respect to the share and asset sale given its planned investment in Intuwave.

On July 30, 2004, Certplus S.A., a French company in which Gemplus Trading S.A., indirectly a wholly owned subsidiary of our Company, holds 99.9% of the shares, and Infrasec, a French company which was in the course of being registered (subsequently registered with the commercial register of Paris on August 11, 2004), entered into a contribution agreement. As a result of this agreement, Certplus contributed to Infrasec its certification services operator business division. In return, Certplus S.A. received 19.1% of the shares of Infrasec. Dassault Multimedia SAS became shareholder of Infrasec with 1.2% of the share capital of Infrasec, and Mr. Thierry Dassault, who was one of the Company’s directors until April 2004, has become Chairman of the board of directors of Infrasec.

13/ Litigation

In September 2000, one of our indirect subsidiaries made a loan to Mr. Lassus to assist him in exercising stock options, pursuant to his then current terms of employment. We did not receive the guarantees of reimbursement (including a pledge of Mr. Lassus’s option shares) that Mr. Lassus was required to provide, inter alia, as confirmed in a letter agreement dated December 19, 2001. Although we recorded an expense of € 67.6 million effective June 30, 2002, following the write-down of the loan, we did not forgive the loan. An ad hoc arbitration proceeding was commenced by our Company and its indirect subsidiary against Mr. Lassus in London, England, in January 2003. In April 2004, the tribunal issued a final award in favor of the Company and its indirect subsidiary. The arbitrators held that they had “no doubt” that there was a loan based upon “abundant evidence” and no contrary evidence of a gift or reward, and found Mr. Lassus in breach of his obligations. In its final award, the tribunal ordered Mr. Lassus to make repayment in full of the loan in the amount of € 71.9 million, plus interest of approximately € 7.0 million to date, attorneys’ fees and costs as well as the costs of the arbitration, all in a total amount of approximately € 80.9 million as of today. Since the second quarter of 2002, the Company has maintained a provision for the entire principal of the loan plus accrued interest (less a severance liability of US$ 10 million due to Mr. Lassus if he were to make payment of all sums due pursuant to the arbitration award), since the potential for any repayment of the loan would depend on the financial strength of Dr. Lassus, which is uncertain.

Certain subsidiaries of the Company are currently under tax audit, in Germany and Singapore. The Singapore affiliate has received a tax reassessment relating to the deductibility of financial expenses. This reassessment has been contested and the tax provision has been adjusted to management’s best estimate. Pursuant to an agreement with the UK Inland Revenue at the end of the first quarter 2004, the tax audit in the UK was closed with a tax reassessment of € 218 thousand. The closing of this UK tax audit had a positive effect on group income in the first quarter 2004, resulting from a recapture of € 200 thousand of the tax provision.

19

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

In July 2004, Gemplus finalized an agreement with the French tax authority on its tax assessment in France. As previously disclosed, three French subsidiaries of the group received a tax assessment in 2002 relating primarily to the fiscal years 1998 through 2000. This agreement did not have any material impact on the income tax expense of the first, second and third quarters of 2004, and generated an additional operating expense of € 0.8 million related to VAT and other tax liabilities in the second quarter of 2004. Under the terms of this agreement, Gemplus will pay, before the end of 2004, the majority of the € 34.0 million of taxes related to corporate income tax and € 2.6 million of VAT and other tax liabilities. As a result, € 34.0 million of long-term liabilities have been reclassified as short-term liabilities. The reassessment allowed Gemplus to ask for tax-loss carry-backs in an amount of € 22.8 million during the third quarter of 2004, which Gemplus should recover before the end of 2007.

In December 1997, Mr. Alain Nicolaï brought a legal action before the Marseille Commercial Court against Gemplus S.A., our main French subsidiary, and other parties alleging a breach of contract relating to the promotion of a smart card reading system and device in the area of casino slot machines. In June 2000, the Court found Gemplus S.A. liable for breach of contract and ordered Gemplus S.A. to make a provisional payment of € 137 thousand as an advance on damages, and appointed an expert to make an analysis and provide a report on estimated actual damages. Gemplus S.A. appealed. In April 2003, the expert filed a preliminary report estimating actual damages within a range of € 10,975 thousand to € 14,944 thousand. Gemplus S.A. contested the expert’s preliminary report on various grounds, including absence of any substantial market for the products at issue. In August 2003, the expert transmitted to the parties his definitive report indicating that the amount estimated by him of the plaintiffs’ damages would be in the range of € 6,792 thousand to € 25,100 thousand. Gemplus S.A. maintained its position and contested the definitive report of the expert and the related estimate of damages, as well as the merits of this case, on various grounds. Based on the expert’s report, on March 18, 2004, the Marseille Commercial Court ordered Gemplus S.A. to pay € 21,952 thousand to the plaintiffs. Gemplus S.A. filed an appeal on the merits. At the further request of Gemplus S.A., on April 2, 2004, the Aix-en-Provence Court of Appeal suspended the order of the Marseille Commercial Court directing Gemplus S.A. to make the payment to the plaintiffs, and instead, ordered Gemplus S.A. to make a cash deposit in the same amount into an escrow account by June 1, 2004, as security pending a decision on the appeal on the merits. On March 31, 2004, we recorded the amount of this deposit under the caption “Other Non-Current Assets” based on the anticipated timing of the resolution of this litigation. Although there can be no assurance of how the appellate court may rule or as to the amount of damages that could be assessed, based on the Company’s analysis and advice of counsel, we recorded a provision for this litigation of € 5,200 thousand in the 2003 Consolidated Statement of Income, and recorded such amount in our Consolidated Balance Sheet under the caption “Other Current Liabilities”. Since March 31, 2004, we have reclassified the amount of this provision in our Consolidated Balance Sheet to “Other Non-Current Liabilities” based on the anticipated timing of the resolution of this litigation.

In addition to the litigations mentioned above, the Company is involved in litigation from time to time in the ordinary course of business. The Company believes that none of the ordinary course litigation in which it is currently involved will have a material adverse effect on the results of its operations, its liquidity or financial condition.

20

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements reflecting management’s current expectations regarding our future financial performance. Such expectations are based on certain assumptions and involve risks and uncertainties. These uncertainties include, but are not limited to:

You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date hereof. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent that as a result of fulfilling our disclosure obligations under the U.S. securities laws and regulations, we determine that such an update is necessary.

OVERVIEW

During the third quarter of 2004, and for the sixth consecutive quarter, sales continue to progress. The healthy growth evidences the Company’s ability to capture market opportunities and take advantage of the strong momentum that we see in our core businesses. Net sales increased 13.0% to € 214.7 million in the third quarter 2004, from € 190.0 in the third quarter 2003.

Moreover, after adjusting for currency fluctuations, net sales of the third quarter of 2004 were up 15.5%. As a global business, operating in numerous currencies, changes in exchange rates of the euro may result in an increase or decrease in our consolidated net sales as reported in our financial statements. We provide this information to enable investors to follow the year-to-year changes in our operations with a focus on providing such information on our underlying business. We calculate the impact of currency variances by converting the figures from the current year as reported in their local currencies using the exchange rate for the previous year. After adjusting for currency fluctuations and on a geographical basis, revenue in the Americas rose 44.3%, EMEA (Europe, Middle East and Africa) grew 15.7% and Asia was down 8.2%. In the nine months period ended September 30, 2004, sales increased by 20.5% to € 622.5 million, from € 516.6 million in the same period in 2003.

21

GEMPLUS INTERNATIONAL S.A.
Quarterly Report on Form 6-K
For the period ended September 30, 2004

In the third quarter 2004, the gross margin increased by 1.2 percentage points to 29.8%, compared to the third quarter 2003. This was mainly driven by a favorable business mix, which fully offset declines in the selling price. In the nine month period ended September 30, 2004, the gross margin increased by 4.0 percentage points to 31.0 %, compared to the same period in 2003.

Excluding restructuring expenses and goodwill amortization and impairment, quarterly other operating expenses, comprising research and development expenses, selling and marketing expenses and general and administrative expenses, decreased by 1.6% year on year to € 53.5 million. Other operating expenses represented 24.9% of sales during the third quarter 2004, compared to 28.6% a year ago. In the nine month period ended September 30, 2004, other operating expenses, excluding restructuring and goodwill amortization and impairment decreased by 6.4% to € 169.5 million compared to the same period in 2003.

Restructuring expenses for the third quarter 2004 amounted to € 8.6 million comprising a provision of 14.3 million euros related to the planned restructuring of operations in Germany, partly compensated by a net reversal of 5.7 million euros mainly related to the previous restructuring plan. Consistent with previous announcements, this provision reflects the final step of the restructuring plan, which was presented in December 2002.

The operating loss for the third quarter of 2004 was therefore € 0.1 million including € 1.9 million of goodwill amortization.

Income tax charges were € 6.6 million, of which € 5.1 million are one-time mainly non-cash items. This includes mainly a charge of € 3.0 million relating to the discounting of a carry back of tax losses in France, and a partial write-down of deferred tax assets.

In the third quarter of 2004, the net loss of € 8.5 million reflects restructuring expenses and mostly non-cash income-tax charges. In the nine months period ended September 30, 2004, the net loss decrease by € 126.2 million to € 7.1 million, compared to the net loss of € 133.3 million incurred in the same period in 2003. This improvement is mainly driven by revenue growth, improved gross margin, lower operating expenses and no impact from goodwill impairment testing.

At September 30, 2004, the Group cash position remains strong and is down € 1.6 million compared to December 31, 2003. The improved level of profit from operations and lower restructuring outflows provided cash used mainly in investing activities.

Results of Operations

Quarterly and nine month periods ended respectively September 30, 2003 and 2004.

Net Sales

Net sales for the third quarter ended September 30, 2004, amounted to € 214.7 million, a 13.0% increase compared with net sales of € 190.0 million for the third quarter ended September 30, 2003.

The following table shows the breakdown of our net sales for the three months and nine months period, ended respectively September 30^th, 2004 and 2003 by reporting segment.