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Innovators in image processing

JP Tanghe: VP Corp Comm & Inv Rel

BARCOGeneral Presentation

February 20, 2003

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BARCO• Founded as the Belgian American Radio

Corporation in Poperinge, Belgium, in 1934

• International company, headquartered in Kortrijk, Belgium, with a global presence

• Listed on Euronext Brussels, part of BEL 20, Next 150 and component of Dow Jones Sustainability Indexes

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Worldwide Presence

Europe

Germany

United Kingdom

France

The Netherlands

Italy

Spain

Switzerland

Czech Republic

Denmark

Poland

Russia

Israel

North America

Charlotte (North Carolina)

Kennesaw (Georgia)

Duluth (Georgia)

Xenia (Ohio)

Beaverton (Oregon)

South America

Sao Paulo (Brazil)

Buenos Aires (Argentina)

Asia

Japan

Tokyo, Osaka, Nagoya

India

Delhi, Noida

Singapore

China

Beijing, Shanghai, Chengdu, Guangzhou

Hong Kong

Thailand

Bangkok

Malaysia

Kuala Lumpur

Australia

Melbourne, Sydney

Taiwan

Shinzu, Taipei

South-Korea

Seoul

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World Leader in Image Processing• Large screen visualization (BarcoProjection)• Visualization for life critical decision-making

(BarcoView)• Visual inspection and quality control (BarcoVision)

BCD12%

BPI19%

BCI22%

Subc7%

dotrix1%

View25%

Vision14%

1H02

Projection

53%

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Leading Edge Technology in Vertical Markets

Technologies

Markets

……

Vision

ATC

Defe

nse

Medic

al

Uti

litie

s

Tele

com

Bro

ad

cast

Surv

eill

ance

Media

Even

ts

Cin

em

a

Flig

ht

++

+

Oil

& G

as

Auto

moti

ve

Leis

ure

Texti

le

Food

View

Networking/Software/Systems

Image Processing

LCD CRT LED DLP Sensors

Control Rooms Media & Events Simulation

Avio

nic

s

Projection

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BarcoProjection

BarcoVision

BarcoView

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Market Overview

- Control Rooms

- Simulation Products- Virtual & Augmented Reality- Edutainment- Intelligent Displays

- Media- Events- High End Home Theater- Digital Cinema

Barco Control Rooms

Barco Projector Innovators

Barco Creative Imaging

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Control Rooms• Expansion of application markets from Telecom

and Utilities towards Broadcast, Traffic, Surveillance

• Worldwide leader with 43% of market

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Simulation and Virtual & Augmented Reality• Simulation

Flight, ATC, Ship Bridge, Drive, Gunnery

• V&ARVirtual Prototyping: Automotive, AECOil & Gas Molecular Modeling, Medical Scientific Research and Education

• EdutainmentMuseums, Science Centers, AquariumsTheme Parks and Leisure CentersPlanetariums

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Intelligent Displays• Presentations can be sent to projectors via

standard network or Internet, even wireless• Projector functions can be controlled via network

or Internet• User can view information on status of all

projectors connected to the network

• Intelligent Displays to replace standard projectors in market for corporations and other organizations

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Events• Combines LED, projection

and control equipment to provide customized events control solutions to the events and rental & staging industries

• A recognized market leader whose products grace the shows of Madonna, U2, Jennifer Lopez and many more

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Media• Development and

production of LED display systems and peripheral equipment targeted at the specific needs of the media and sports markets

LED Wall for Coca Cola on Piccadilly Circus in London

LED Wall Reliant Stadium, Houston, Texas

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Digital Cinema• Market with a huge potential of ±118.000 theaters

worldwide, but still waiting for a business model acceptable by all stakeholders in this market

• Increasing number of agreements signed with Cinema theater equipment dealers

• Regular “individual” sales of Digital Cinema projectors• First quantity buy by Boeing

Digital Cinema• Promising Chinese market

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High End Home Theater

• Sales in High End Home Theater market going strong with new product introductions

• April 2002: launch of revolutionary home theater concept “Cine VERSUM”, bringing unparalleled digital video quality and flexibility to the home theater of the future

Cine VERSUM

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BarcoProjection

BarcoVision

BarcoView

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Market Overview

- Air Traffic Control- Defense

- Airborne- Naval- Landbased

- Medical Imaging- PACS- Modalities

- Avionics

Command & Control

Medical Imaging Systems

Avionics

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Air Traffic Control

• ISIS LCD flat panel turning into commercial success as anticipated at introduction in Europe early 2001

• Now also breaking through in Asia and US

• Replacement market of some 12,000 workstations worldwide

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Defense • High quality ruggedized flat panels, graphic

boards, consoles and visualization (sub)systems that can be used in a variety of defense applications, reconnaissance, surveillance and intelligence gathering

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Medical Imaging• Significant market share in PACS (Picture Archiving

and Communication Systems)

• To be continued and strengthened by introduction of Coronis family of flat panels and ImageTile

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Avionics• Clear acceptance of system concept as adopted

over recent years, made possible thanks to important R&D investment

• Production series based on this concept are part of long term projects

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BarcoProjection

BarcoVision

BarcoView

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Market Overview• Textiles: sensors & systems

• Spinning• Weaving• Finishing (dyeing)

• Plastics• Production monitoring

• Optical sorting• Food (French fries, nuts,

seafood, vegetables…)• Non food (tobacco,

plastic flakes and pellets)

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Strategy of Barco (1)Consolidate our nr. 1 or nr. 2 position in our key growing markets

• Medical (20% to 25% CAGR)• Events (14% on the longer term)• Defense• Simulation and V&AR (6% to 8% CAGR)

through internal growth by investing in R&D to improve in

• System approach• functionalities• Cost containment

through external growth: acquisitions by means of strong net cash position of > 60 M€

• TAN in August 2002• ORTHOGON in October 2002

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Strategy of Barco (2)• Expand in new markets

• Air Traffic Control: build on change from CRT to LCD (increased market share in 2002 from 5% to 80% of new installations)

• Digital Cinema: build on change from analog to digital with a potential of 118.000 theatres (CAGR: 100%, but in its infancy)

• Media: use and adapt technology leadership from Events market (14% CAGR)

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Innovators in image processing

Results third quarter

2002

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Operational results Q302

in € million Q302 YTD02 Q301 YTD01

Orders 163.6 521.8 146.8 525.3

Sales 145.8 474.2 153.7 492.5

EBIT 11.2 39.9 2.2 42.9

EBIT % 7.7% 8.4% 1.4% 8.7%

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Orders higher than Sales for 3rd consecutive quarter

* Results 2001 “pro forma” i.e. incl. dotrix n.v., Barco Graphics not consolidated

0

50

100

150

200

Q101 Q201 Q301 Q401 Q102 Q202 Q302

OrdersSalesEBI T

(in € million)

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Results Barco

• Orders: order book has further increased in Q302 by € 18 million

• Sales: sales Q302 traditionally weak because of reduction in shipments to European customers due to holiday seasonAdditional impact from• Delayed internal deliveries due to transfer of mechanical

manufacturing from Belgium to Czech Republic• Yield problems with external suppliers

• EBIT: • Slight increase of gross margin from 55% for 1H02 to 56% in

Q302 by• Ongoing introduction of new features, compensating price pressure• Ongoing cost improvement

• Further reduction of manpower from 4132 end 2001, to 4000 employees worldwide

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BarcoProjection (1)

0

10

20

30

40

50

60

70

80

90

100

Q101 Q201 Q301 Q401 Q102 Q202 Q302

Orders

Sales

EBI T

(in € million )

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BarcoProjection (2)• Sales

• Control Rooms: • Growth in new markets compensates low investments from Telecom• Orders Telecom picking up again in Q4

• New stand-alone projector iQ • Has won several awards• Not taking off fast enough yet

• Higher market share in V&AR thanks to growth in US market and TAN acquisition

• Events: • Q3: weaker investments by Events customers, picking up again in Q4

• Media• Media projects delayed• New product for Media applications available as of begin ‘03

• Hopeful signs from Digital Cinema, particularly in China

• EBIT: margin well maintained at 10.1% vs comparable quarters, Q301 (2.1%) and Q102 (9.3%), despite lower sales

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BarcoView (1)

-10

0

10

20

30

40

50

60

70

80

Q101 Q201 Q301 Q401 Q102 Q202 Q302

Orders

Sales

EBI T

(in € million)

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BarcoView (2)

• Orders: • Orders in Security and Defense picking up again for existing and

new programs• Ongoing strong orders for ATC and Medical

• Sales: ongoing successes in • Air Traffic Control (ATC)

• Further market penetration of flat LCD panel, also in USA• Strengthening of market position by acquisition of Orthogon

• Medical• Introduction of high-end flat screens for Medical of 1, 2 and 5

megapixel besides 3 megapixel

• EBIT: much better than Q301

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Orthogon joined Barco (Oct 1, 2002)Strategy:ATC is extending its portfolio with software and integration services, also towards end users

Market Share Orthogon:• Mainly ATC (80%) and expanding into Security & Defense to offer software and integration services• System integrators and end users• Mainly Europe (80%) with market

leadership• Short term growth potential in

USA in ATC• Long term growth potential

in Security & Defense

ATC I ndustry74%

Security & Defense

2%

Others14%

Eurocontrol10%

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BarcoVision

• Textile machine market in China and Turkey continues to go strong

• Sales weaker in Q3 due to seasonal effect

0

5

10

15

20

25

30

Q101 Q201 Q301 Q401 Q102 Q202 Q302

Orders

Sales

EBI T

(in € million)

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Barco Subcontracting

• Increase in manufacturing with components in consignment results in lower sales but yields higher gross margin

0

5

10

15

20

25

30

Q101 Q201 Q301 Q401 Q102 Q202 Q302

Orders

Sales

EBI T

(in € million)

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Geographical breakdown of Turnover per Activity (%)

EU Nafta Asia ROW

BarcoProjection 37 35 24 4BarcoView 28 57 13 3BarcoVision 60 11 17 12

Total Q302 42 35 19 5

Total 1H02 46 32 16 6

Total 2001 48 30 16 6

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OWC: Inventory• Inventory on same level as end Q202 due to slack in deliveries

and in preparation of higher sales in Q402

in € million

143132

126 128119

0

20

40

60

80

100

120

140

160

End 01 Mar J une Sept Target Dec

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OWC: Accounts Receivable

92

84

7580

0

10

20

30

40

50

60

70

80

90

100

End 01 Mar J une Sept

(incl. BG)

Days outstanding

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Net cash position

67.8

5655.2

11.8

0

10

20

30

40

50

60

70

80

end 01 Q102 Q202 Q302

in € million

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Results Q3 & YTD

in € million Q302 YTD02 Q301* YTD01*

EBIT 11.2 39.9 2.2 42.9

Current Result 11.6 40.7 1.4 42.3

Taxes (3.2) (9.6) (0.3) (12.9)

Curr. Res. after Taxes 8.4 31.1 1.1 29.4

Extra-Ordinaries 0 (28.1) 0 (0.4)

Amort. Of goodwill 1.4 3.6 1.7 5.1

Net result 7.0 (0.5) (0.6) 23.9

Current EPS** 0.68 2.51 0.09 2.37

Current cash Flow 23.7 77.5 15.8 74

*”pro forma”, i.e. incl. dotrix n.v., Barco Graphics not consolidated

** in euro

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Preview Q402

Sales Q402: 193.9 mio euro vs 175/185 expected = +7% vs Q401

• Better supply of certain components• More deliveries from backlog• More orders to be delivered still in 2002

EBIT Q402: > 31 mio euro vs 21/25 expected

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Preview Full Year 2002

Sales FY2002: 668 mio euro vs 673 in 2001 = -0.8% despite low USD

Orders FY2002 vs FY2001: -0.8%

EBIT FY 2002: + > 30% vs 2001> 10% vs sales

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Innovators in Image Processing

www.barco.com