Cash proceeds received from employees having exercized share options in 2012 was €33,428 (€33,848 in 2011).
Note 26. Other income (expense), net
Year ended December 31, 2012 2011
Fixed assets write-offs and
net gains/losses on sales 522 504
Compensation from customers
and suppliers, net 2,015 4,159
Release of a tax risk and related interests 7,290 –
Other (337) (4,630)
Total 9,490 33
Note 27. Financial income (expense), net
Financial income/(expense) details are as follows:
Year ended December 31, 2012 2011
Interest expense (4,494) (3,214)
Interest income 3,478 3,203
Foreign exchange transaction gains (losses): Foreign exchange gains (losses), including
derivative instruments not designated as
cash flow hedges (4,413) (2,897)
Ineffective part of derivative instruments
designated as cash flow hedges (309) (3,938)
Other financial income (expense), net (5,695) (5,658)
Financial income (expense), net (11,433) (12,504)
Other financial income (expense) are mainly composed of: (i) reassessment to fair value of several financial liabilities,
including liabilities related to commitments to non- controlling interests; and
(ii) transfer from Other Comprehensive Income of accumulated translation currency upon liquidation or loss of control over subsidiaries.
Note 28. Net foreign exchange gains (losses)
The foreign exchange differences charged/credited to the income statement detail as follows:
Year ended December 31, 2012 2011
Net sales (5,293) 10,575
Cost of sales 3,214 54
Financial income (expense), net (4,722) (6,835)
Net foreign exchange gains (losses) (6,801) 3,794
Foreign exchange gains or losses arising from the Company’s qualified hedges under IAS 39 (see note 4) are recorded in sales if the underlying net exposure is a revenue (net selling position) and in cost of sales if the underlying net exposure is a cost (net buying position).
Note 29. Taxes
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority. Net amounts are as follows:
Year ended December 31, 2012 2011
Deferred tax assets:
Deferred tax asset to be recovered after more
than 12 months 80,015 67,368
Deferred tax asset to be recovered
within 12 months 28,012 22,353
108,027 89,721
Deferred tax liabilities:
Deferred tax liabilities due after more
than 12 months (21,490) (23,387)
Deferred tax liabilities due within 12 months (10,504) (418)
(31,994) (23,805)
Deferred tax assets (liabilities), net 76,033 65,916
The changes in the net deferred income tax assets (liabilities) are as follows:
Year ended December 31, 2012 2011
Beginning of the period 65,916 32,105
Acquisition of subsidiary and business (4,705) (3,087)
Reclassification to assets/liabilities held for
sale 625 –
Credited to income statement 19,629 37,642
Tax credit (debit) recognized in other
comprehensive income (5,972) 288
Tax credit on past service costs
recognized in equity 708 –
Cumulative translation adjustment (168) (1,032)
End of the period 76,033 65,916
In 2012, the Company recorded an income tax charge of €28.2 million on a pretax profit of €229.1 million. Deferred income tax assets are recognized for tax loss carry-forwards and other future deductions to the extent that the realization of the related tax benefit through the future taxable profits is probable.
As of December 31, 2012, Gemalto did not recognize tax assets amounting to €321.3 million (€330.7 million as of December 31, 2011) relating to tax losses and other future tax deductions. Of this amount, €294.8 million19 related to
tax loss carry-forwards amounting to €1,028.2 million20 of
which €918.3 million can be used indefinitely. In 2011 those amounts were €296.7 million, €1,038.0 million and €943.3 million respectively. Deferred income tax liabilities have been recognized for withholding taxes and other tax payables according to applicable laws on the unremitted earnings of subsidiaries when Gemalto does not intend to reinvest its earnings and when such taxes cannot be recovered. Deferred taxes are accrued on unremitted earnings of associates when Gemalto does not control the dividend distribution process.
19 Including €227.5 million (€234.3 million in 2011) related to Gemplus
International S.A. (Luxemburg) tax loss carry-forwards.
20 Including €795.7 million (€818.8 million in 2011) for Gemplus International
S.A. (Luxemburg).
Note 30. Earnings per share
Year ended December 31, 2012 2011
Profit attributable to Owners
of the Company 201,041 160,115
Weighted average number of ordinary
shares – basic 83,310 83,086
Effect of dilution from share options 3,820 2,297
Weighted average number of ordinary
shares – diluted 87,130 85,383
Basic earnings per share 2.41 1.93
Diluted earnings per share 2.31 1.88
The Company presents both basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period ended.
Diluted EPS is calculated according to the Treasury Stock method by dividing net income by the average number of ordinary shares outstanding including those dilutive. Share-based compensation plans are considered dilutive when they are vested and in the money. They are assumed to be exercised at the beginning of the period and the proceeds are used by the Company to purchase treasury shares at the average market price for the period. Deferred tax assets and liabilities for the years ended
December 31, 2012 and 2011 detail as follows:
Year ended December 31, 2012 2011
Assets
Loss carry-forwards 61,214 57,451
Excess book over tax depreciation
and amortization 19,924 12,371
Employee and retirement benefits 17,725 8,939
Warranty reserves and accruals 1,166 2,331
Other temporary differences 44,841 32,601
Total Assets 144,870 113,693
Liabilities
Excess tax over book depreciation and
amortization (49,904) (32,834)
Other temporary differences (18,933) (14,943)
Total Liabilities (68,837) (47,777)
Deferred tax assets (liabilities), net 76,033 65,916
The income tax credit (expense) is as follows:
Year ended December 31, 2012 2011
Current tax (47,835) (51,312)
Deferred tax 19,629 37,642
(28,206) (13,670)
The reconciliation between the income tax credit (expense) on Gemalto’s profit (loss) before tax and the amount that would arise using the tax rate applicable in the country of incorporation of the Holding Company, i.e. the Netherlands, is as follows:
Year ended December 31, 2012 2011 € % € %
Profit (loss) before
income tax 229,127 176,592
Tax calculated at the rate
of the Holding Company (57,282) (25.0) (44,148) (25.0)
Effect of difference in nominal tax rate between the holding
and the consolidated entities 9,874 29,982
Effect of the reassessment of the recognition of deferred
tax assets 24,951 30,683
Effect of utilization of tax assets not recognized
in prior years 13,181 6,842
Effect of unrecognized deferred tax assets arising
in the year (7,840) (24,073)
Other permanent differences (11,090) (12,956)
Income tax credit
(expense) (28,206) (12.3) (13,670) (7.7) Fin anc ial s ta te m en ts