Océ Annual Report 2001 (Web...

2001Océ Annual Report

Océ supplies a broad range of high quality

products and services to meet professional

needs for the management of document

flows. In this way Océ enables people and

organisations to exchange information

efficiently and effectively.

Océ ..

Report for the financial year

December 1, 2000

to November 30, 2001

More copies of the English translation of this

Annual Report or of the Dutch-language original

version are available on request from

Océ, Corporate Communications Department

telephone (+31) (0)77 3594000,

e-mail [email protected].

Enclosed in this Annual Report is a cd-rom, see

inside of back cover. The cd-rom contains the

entire Annual Report plus detailed background

information about Océ and its operations. Also

included on the cd-rom are a video about Océ and

interviews with customers plus various internet

links that will give you direct access to the very

latest information on our website www.oce.com.

2

mailto:[email protected]

http://www.oce.com

Contents

4 Océ Profile

6 The world of Océ

8 Key figures

9 Report of the Board of Supervisory Directors

10 Report of the Chairman of the Board of

Executive Directors

Report of the Board of Executive Directors

14 Trends and strategy

Financial review19 Results

19 Dividend

20 Prospects

20 Finance

Operational developments by market segment31 Wide Format Printing Systems

33 Document Printing Systems

35 Production Printing Systems

38 Facility Services

39 Imaging Supplies

Technology and Innovation43 Research & Development

44 Manufacturing and Logistics

Sustainable business practices49 Personnel and Organisation

51 Safety, Environment and Health ()

Management aspects53 Risk profile

55 Corporate Governance

Annual Financial Statements

57 Consolidated Statement of Operations

58 Consolidated Balance Sheet

60 Consolidated Statement of Cash Flow

62 Summary of Significant Accounting Principles

66 Notes to the Consolidated Statement of

Operations

69 Notes to the Consolidated Balance Sheet

84 Company Balance Sheet

84 Company Statement of Operations

86 Notes to the Company Balance Sheet and

Statement of Operations

Other information

89 Net income appropriation

90 Authorised capital

91 Auditors’ report

Miscellaneous

92 Board of Supervisory Directors

93 Board of Executive Directors

94 Directors Central Services

95 Principal companies and their chief executives

97 Supplementary information for shareholders

100 Océ 1992-2001

102 List of terms and abbreviations

3

Océ Profile

Océ is one of the world's leading companies in the

area of document management. In advanced re-

search centres and high-tech production facilities

the company develops products and services for

the efficient and effective exchange of information.

These comprise products for the reproduction,

presentation, distribution and management of

documents.

The range of products and services offered by Océ

is characterised by its recognised high quality,

which is based on reliability, productivity, dura-

bility, ease of use and environmental friendliness.

Océ’s products and services are mainly offered

direct via the company's own sales and service

organisations; a limited number of them are also

distributed via third parties.

Océ focuses on professional user environments,

particularly on those in which high document

volumes are processed.

In 2001 Océ achieved total revenues of € 3.2

billion and a net income before exceptional items

of € 105 million.

Product range Océ supplies:

– printers (black-and-white and colour), copiers,

scanners, software and supplies;

– professional services: consultancy relating to the

organisation of document management systems

and system integration in customer environments;

– Facility Services: organisation and operational

execution of document management in various

customer environments;

– maintenance and after sales service;

– financing of purchases of hardware and software.

These products and services can be supplied sepa-

rately, but also in combination with each other in

the form of total document management

solutions.

Customers Océ supplies its products mainly to

professional users in office environments and indus-

try in which high productivity and high volumes

are required, as well as to the printing industry.

In these environments Océ is characterised by its

unique approach which focuses on providing

customer-specific solutions in hardware, software

and services.

Organisation Océ largely develops and manu-

factures its products itself.

The company can draw on a strong technology

base thanks to its many years of expertise and its

programmes of consistent investment in .

This basic strength is further enhanced via alliances

with strategic partners and through systematic

cooperation with co-developers and suppliers.

The company's own sales and service organisation

provides a constant flow of up-to-date market in-

formation, allowing Océ to anticipate and respond

in good time to changing market requirements.

Océ has research and manufacturing centres in

the Netherlands, Germany, Belgium, France, the

Czech Republic, the United States and Japan.

The company operates in over eighty countries

and is active via its own sales companies in thirty-

one of these countries.

World-wide Océ has more than 22,000 employ-

ees, more than half of whom work in sales, main-

tenance and services.

Ambition Océ seeks to ensure continuity by pur-

suing a pro-active technological and commercial

strategy. This is aimed at enabling the company to

strengthen its position in existing and new markets

in the field of document management.

In the strategic markets in which the company

operates, Océ seeks to achieve a top-three position.

Its principal objective is to create value for cus-

tomers, employees and investors.

Part of this strategy is the improvement of profit-

ability, through autonomous growth and acqui-

sitions, in combination with efficiency improve-

ments and optimisation of the use of capital.

To measure this, Océ uses the return on capital

invested as principal yardstick.

Océ aspires to grow in a world in which the

preconditions for sustainable development take

priority.

Océ wants to be an attractive employer. Océ there-

fore invests world-wide in a healthy, inspirational

working environment with good career oppor-

tunities.

4

Océ Profile

Board of Supervisory H.B. van Liemt, chairmanDirectors M. Ververs, vice-chairman

L.J.M. Berndsen

P. Bouw

J.L. Brentjens

J.V.H. Pennings

F.J. de Wit

Board of Executive R.L. van Iperen, chairmanDirectors J. van den Belt

J.F. Dix

G.B. Pelizzari

Staff Director/ J.M.M. van der Velden (until November 30, 2001)

Company Secretary H.J. Huiberts (as from December 1, 2001)

Financial year The company’s financial year runs from December 1

to November 30.

Articles of Association The present Articles of Association were confirmed

by a notarial deed dated April 9, 1999. Océ .. is

an international holding company within the

meaning of Article 153, para. 3b, Book 2 of the

Dutch Civil Code.

Registered office and The company has its registered office in Venlo, the

commercial registry Netherlands, and is registered in the Commercial

Registry in Venlo under No. 12002283.

Head office The head office is at St. Urbanusweg 43, Venlo,

the Netherlands

Postal address: .. Box 101, 5900 Venlo,

the Netherlands

Telephone (+31) (0)77 3592222,

fax (+31) (0)77 3544700

Océ on Internet: http://www.oce.com

E-mail: [email protected]

For general information about Océ:

telephone (+31) (0)77 3592000

5

Banks

Telecom businesses

Insurers

Public utilities

Industrial companies

Government institutions

Education

Consultancy

Legal profession

Consultancy

Government institutions



Construction companies

Architectural firms

Job printers

Copyshops and printshops

Printing industry businesses

(document printing)

Printing industry businesses

(Display Graphics)

Customers (examples)

Corporate printing

Commercial printing

Data centres

Central repro depart-

ments (document

production)

Professional office

environments

Engineering office

Design departments

Customer environments

Technology leader in high volume printing

All data flows

Integrated systems

Archiving of print data

Production monitoring

Output management software

24-hour service, 7 days a week

Distributed printing

Professional Services

High volume digital printers/copiers

Production printers

High speed scanners

Workflow software

Professional Services and Facility Services

Departmental printers and copiers

Workflow software

Professional Services and Facility Services

Print management and document archiving software

Productive black-and-white and colour printers

Integrated copying systems



Productive wide format black-and-white printers

and copiers

Services (training courses, installation and consultancy)


Black-and-white and colour production printers/copiers


Very high volume black-and-white and colour printers



Productive printers for the outdoor market

Wide format print solutions (billboards/colour posters)

Dedicated media and colour management support

Print management software


Océ’s areas of expertise

The world of Océ

Remain number one in Continuous Feed Systems

Achieve number two position in Cutsheet Systems

One of the top-three suppliers in:

High volume applications

Document management systems

Facility Services

One of the top-three suppliers in:

Production printers and copiers

Document management systems

Remain market leader in wide format black-and-

white printing and copying

Become market leader in mid- and high volume

wide format colour printing and copying

Significant growth in software and services

Remain market leader in wide format black-and-

white printing and copying


wide format colour printing and copying

Significant growth in software and services

Significant growth, resulting in a top position

One of the top-three suppliers


printers

Remain market leader in print management

software for graphics applications

Océ’s ambitions

Océ’s products and services

Hardware

Output devices:Wide range of production printers and copiers

For wide format and smaller formats

On roll or for cutsheet

For black-and-white and colour

From low to very high speeds

For all commonly used printer languages and data flows

For mid- to very high volumes

Finishing equipment for:Document finishing

Binding of documents

Order handling

Preparing for despatch

Software

Input management:Image digitisation (scanning)

Character recognition

Document interpretation

Document composition

Digital data and process management:Document creation and revision

Digital archiving

Document flow management

Making documents ready for print

Output management:Printing of documents

Personalised mail shots

Digital book printing

Distributed printing

Production planning, monitoring and control

Document distribution

Accounting, invoicing

Business Services

Document flow analysis

System design

System installation and integration

User training

Professional maintenance

Facility Services

Financing

Xerox

Xerox

Heidelberg Digital

Canon

Ricoh

Xerox

Hewlett Packard

Canon

Ricoh

Xerox

Hewlett Packard

Ricoh

Xerox

Hewlett Packard

Ricoh

Xerox

Canon

Ricoh

Xerox

Hewlett Packard

Epson

Nur

Vutek

Scitex

Competitors include

The world of Océ

8

Key figures

2001 2000 › € million

Total revenues 3,233.6 3,223.9

Increase on previous year (%) 0.3 13.6

Autonomous increase on previous year (%) –1.3 4.0

Gross margin 1,317.1 1,349.1

As % of total revenues 40.7 41.8

Operating income () 224.7 282.4

Increase on previous year (%) –20.4 13.8


As % of average balance sheet total 7.1 9.1

Operating income before depreciation and amortisation goodwill () 418.9 476.9

Net income* 105.1 151.7

Increase on previous year (%) –30.8 15.0


As % of average shareholders’ equity 11.1 16.8

Total assets 3,127.5 3,215.7

Equity 908.6 989.4

Dividend (ordinary shares) 48.8 49.5

Net capital expenditure 156.9 144.6

Number of employees at November 30 22,472 22,253 employees

Per € 0.50 ordinary shareBasic earnings** 1.19 1.76 euro

* 4.87 5.61

Cash flow** 3.47 4.06

Shareholders’ equity 10.13 10.91

Dividend 0.58 0.58

Number of € 0.50 ordinary sharesAverage number outstanding 85,241,097 84,400,936 shares

Potential increase from conversion/options 714,355 1,130,982

Diluted earnings per € 0.50 ordinary share 1.18 1.74 euro

Share pricesYear’s highest 18.90 18.90

Year’s lowest 6.15 11.55

Year end 10.20 17.75

* Key figures are based on figures excluding exceptional items.

** Basic earnings after exceptional items amount to € 0.08 (2000: € 1.76) and cash flow

after exceptional items amounts to € 2.35 (2000: € 4.06).

Report of the Board of Supervisory Directors

To the Annual General Meeting of Shareholders ofOcé N.V., Venlo.

Annual Report We present to you the Annual

Report for 2001 as drawn up by the Board of

Executive Directors. The Annual Financial State-

ments included herein have been examined by the

auditors PricewaterhouseCoopers .. in close

cooperation with Océ’s Internal Audit Department.

As can be seen from the Annual Financial State-

ments, Océ closed the financial year with a modest

positive result, after making a provision of € 125

million (gross). The Supervisory Board supports

the measures of the Board of Executive Directors

which have led to this provision and which should

lead to a structural recovery in the position and

results of Océ.

We have discussed the Annual Financial State-

ments with the auditors. The auditors have issued

an unqualified opinion which is set out on page

91 of this Annual Report. We have approved these

Annual Financial Statements and recommend

that you adopt them, as well as the dividend pro-

posal, in accordance with the proposal by the

Board of Executive Directors.

Supervision In 2001 the Supervisory Board held

consultations at regular intervals and also met

formally on six occasions.

Apart from the general course of affairs within the

business, including the commercial, financial and

technological developments, we also discussed the

acquisitions and cooperation policy. Special

attention was devoted to the corporate strategy,

involving discussions of the positions of each of

the Strategic Business Units. In particular we

looked at the growing importance of software and

services in the area of information technology and

assessed the related issues. We also talked with the

Board of Executive Directors about plans to re-

align the company's organisation structure. The

objective of this realignment is to make the orga-

nisation link up better with the corporate strategy,

which focuses on the ongoing digitisation of the

markets in which Océ operates.

At a separate meeting the Human Resources

Policy of the Board of Executive Directors was

discussed. The Supervisory Board also discussed

– in the absence of the Board of Executive Direc-

tors – the composition and functioning of that

Board and matters relating to its remuneration as

well as the functioning of the Supervisory Board

itself.

Supervisory Board changes Mr. P. Bouw and

Mr. J.V.H. Pennings are due to retire by rotation

this year. They have made themselves available

for re-election and we propose that they be re-

appointed for a further four-year period of office.

As announced at last year's Annual General

Meeting, the undersigned will retire as a super-

visory director of the Company with effect from

the close of the Annual General Meeting on

March 6, 2002. Our Board has decided to appoint

our fellow supervisory director, Mr. J.L. Brentjens,

as its chairman with effect from the same time.

Developments The year 2001 turned out to be a

difficult year because of the declining economy,

which was further exacerbated by the dramatic

attacks in the United States. Nevertheless Océ

was able to maintain revenues at the previous

year’s level and achieve an operating result which

was acceptable given the circumstances. The

Board of Executive Directors has taken drastic

measures to support the fastest possible recovery

in revenues and income growth. We therefore

view the future developments with confidence.

The Board would like to express its special ap-

preciation to the Chairman and members of the

Board of Executive Directors and to all employees

for the many efforts they made and the results

they achieved over the past year.

January 29, 2002

H.B. van Liemt, Chairman

9

Report of the Chairman of the Board of Executive Directors

During the year 2001 the positive development

shown in the previous year did not continue.

This was largely due to the slowdown in economic

growth that occurred in all markets. As a result of

this slowdown many companies postponed invest-

ment decisions, which was also reflected in sales of

new document and information systems and of

hardware. In all Strategic Business Units sales of

new machines were lower than in the previous

year, albeit to differing degrees. Depending on the

Business Unit the decrease was between 13 and

17%. Against this, however, revenues from main-

tenance, supplies and services (Facility Services

and Professional Services) increased, which com-

pensated in full for the lower machine sales. This

part of revenues is less affected by the economic

cycle and currently represents 63% of total

revenues.

Océ’s revenues in 2001 equalled those of the year

2000, which can be described as a good achieve-

ment given the economic circumstances. There

was an autonomous decline of 1% in revenues.

Lower relative margins resulted in a decrease of

31% in net income before exceptional items to

€ 105 million.

During the year the average exchange rate of the

Euro weakened against the American dollar but

strengthened against the Japanese yen.This meant

that Océ’s international competitive position

improved compared to its American competitors

but deteriorated compared to those in Japan.

Despite the decrease in the results, Océ’s market

position has not deteriorated.The company has

anticipated market developments in good time,

and as a result, it has an excellent portfolio of hard-

ware, software and services. Operational effective-

ness and efficiency have been further improved.

Océ in 2001: implementation of the strategic

direction Océ’s strategy is based on value creation,

which enhances the company’s market value.

This implies:

– supplying products with higher added value;

– working to the highest operational standard;

– investments, disposals, acquisitions, joint

ventures and alliances.

During 2001 this strategy was implemented.

Océ introduced a great many new products in all

Business Units. Particularly the 100 ppm Océ

400 black-and-white printer/copier for the

office market and the Océ 700 colour printer

were very important product launches. These

products have been excellently received by the

market. New machines were also introduced for

the technical printing market, featuring substan-

tially extended functionality for operating in net-

works. In high volume Production Printing Océ

developed major new software products in 2001.

The fact that the effect of these introductions was

not reflected in an increase in the gross margin is

the result of lower revenues from machine sales.

On the operational side a number of develop-

ments led to visible results in 2001. Excluding

acquisitions and exchange rate effects, operational

expenses remained constant compared to 2000,

which reflects the increased attention that was

devoted to cost reduction.

Stocks were reduced as a result of specific logistics

programmes for direct delivery of pre-configured

machines and for centralising and outsourcing the

distribution of components. Expressed as a per-

centage of revenues, stocks decreased from 13.7%

in 2000 to 11.3% in 2001. The aim is to achieve a

level of stocks that is equivalent to 11% of

revenues.

During 2001 programmes for outsourcing the

lease activities were initiated. This is a multi-year

process which must result above all in an im-

proved level of service to customers and a higher

return on capital invested for Océ. These activities

are progressing well. The initial results will start to

show in 2002. Contracts have been concluded

with Telia Finans and De Lage Landen Inter-

national .. for the outsourcing of the lease

portfolio.

10


The past financial year also saw the successful

integration of the operational activities in Scandi-

navia, in Spain and Portugal, and in the United

Kingdom and Ireland.

Also in terms of investments and acquisitions,

2001 was an important year. During the year an

investment of € 40 million was made in the processdrum plant and the colour toner plant in Venlo.

From mid-2002 onwards these will handle the

manufacture of the drums and toners that have

been developed by Océ for the Océ 700

colour printer.

Fully in line with our aspirations in the high-

growth segment of Display Graphics, the Profes-

sional Imaging Division of Gretag was acquired

shortly after balance sheet date. This acquisition,

which also comprises Raster Graphics and Onyx

Graphics, is of great strategic value for Océ.

Via this acquisition Océ has achieved a top-three

position in the mid-volume and high volume

segments of Display Graphics.

In the important growth market of Facility Ser-

vices, Practical Print Solutions Ltd. was acquired

in the United Kingdom in November 2001.

This company, which is active in print manage-

ment and print procurement, adds a new activity

to the facility services package that Océ has to

offer.

Restructuring: consequence of the strategic

direction Océ is committed to strengthen its po-

sition further in 2002 by anticipating the changes

that are taking place in our markets. Via an inten-

sive reallocation and restructuring process Océ

will shift the focus of its activities towards the

market segments in which the company, given its

market position, its range of products and services

and its level of technology, can achieve substan-

tially profitable growth. In particular these are the

markets which require a combination of high pro-

ductivity with high print quality. The customer-

specific hardware and software solutions that Océ

can offer in these areas give the company a very

strong basic position.

That means that in the years ahead Océ will

gradually restructure certain segments of its activi-

ties in the office market. This relates to those acti-

vities that do not contribute sufficiently to the

sought-after value creation. This repositioning

will be accompanied by disposals.

At the same time we are also implementing a re-

structuring operation which is a consequence of

changes in the markets in which we operate. By

doing this we are anticipating the convergence of

the operational areas of two of our Strategic

Business Units: Document Printing Systems and

Production Printing Systems.

The products and systems of these Strategic

Business Units are increasingly being deployed in

the same user environments. Amalgamation of

activities in these markets will lead to growth

thanks to new product/market combinations and

synergy benefits in development programmes,

marketing, sales and service.

This will require a number of changes in the or-

ganisation of the head office and of the operating

companies. In 2002 the integration of the activi-

ties will result in the creation of a new Strategic

Business Unit: Digital Document Systems ().

Within separate business groups will con-

centrate on Corporate Printing, Commercial

Printing, Software & Professional Services and

Facility Services. Furthermore the Strategic

11


Business Unit Wide Format Printing Systems will

comprise the business groupsTechnical Document

Systems, Display Graphics Systems and Imaging

Supplies.

These developments, which are a logical conse-

quence of Océ’s long-term strategic objectives,

will be accompanied by a reduction in personnel

and a write-off of stocks and residual values of

products in the segments in which the activities

are to be restructured. This calls for a provision for

exceptional charges of € 125 million, charged to

the profit of the 2001 financial year.

Implementation of this restructuring process will

be handled with the greatest care as regards the

social consequences.

In the year 2001 Océ did not achieve the results

that we had in mind. However, this in no way de-

tracts from the company’s strength. Océ is a pro-

fitable organisation with a good market position

and a very robust portfolio of products and tech-

nologies. This, combined with implementation of

the measures described above, gives us firm

confidence in the future.

Over the past year Océ asked a lot of its employ-

ees. They responded to the challenges with great

dedication and we would like to express our thanks

to them for their efforts.

We are also grateful to our customers, suppliers

and partners for the confidence they placed in

Océ. Our thanks also go to our shareholders for

their undiminished support for Océ.

R.L. van Iperen, Chairman

12


Trends and strategy

The strategic direction of the Océ Group is closely

linked to market and technological developments

and to Océ’s objectives. This has major organisa-

tional consequences.

Océ’s operations involve information management

and, more specifically, document management

activities. In those activities several clear trends can

be distinguished. First of all, the output of infor-

mation will grow very rapidly as a consequence of

digital processing and distribution. Although by no

means all documents are printed out, the volume

growth of printed documents will still amount to

some 5% per year over the years ahead. In addi-

tion, the use of internet, decentralised printing

and the application of advanced technologies will

change the way in which documents are distri-

buted and printed and the way in which they are

used. The storage and retrieval of electronic

documents has also become an essential element

in the document management solutions that Océ

specialises in.

All of this implies an expansion of activities in the

areas of software and services. Specifically for Océ

this means that over the next four years the share

of services will increase from 63% to 80% of

revenues. Despite this, hardware (particularly

printers) will always remain a central element in

Océ’s product offerings and its specific compe-

tencies.

In addition to these market developments, tech-

nological developments are also of importance to

the Océ Group. As a result of the fast pace of di-

gitisation, copying is very quickly being replaced

by printing, whilst software developments are the

drivers of the principal changes in numerous as-

pects of document management. Hardware will

remain important; however the differentiation in

market offerings will be determined by module-

based and flexible document management

systems.

Colour will become increasingly important.

However, the use of colour is still far from ma-

ture; significant developments are expected in the

next few years. In black-and-white printing

growth will mainly continue to take place in high

volume cutsheet printing.

The diagram below illustrates the expected growth

in the activity areas in which Océ operates and the

relative share of these activities in total revenues.

14

Copying/printing products

Software & Professional Services

Service & Support

Facility Services

5

20

11

26

37

3

49

11

Annual Average Growth Rate in %

till 2005 (Europe and )

Océ’s revenues as %


As a strategic objective Océ seeks to achieve a

top-three position in all market segments in

which the company is active.

Over the medium term Océ also seeks an annual

growth of 10% or more in revenues and income.

The aim is to increase profitability in terms of

return on total assets and return on equity to a

sustainable level of 12% and 18% respectively in

2005. All activities that do not contribute to

achieving these objectives will be restructured;

however, activities that can make this contri-

bution will receive extra attention in terms of

investments and expansion. Alliances and acqui-

sitions will continue to be required so as to meet

the objectives.

The Océ business model is based on the company’s

strategic strengths in technology and market ap-

proach. Océ’s products are characterised by their

reliability, productivity, durability and low totalcost of ownership. Via a direct customer approach

in sales and services it is possible to anticipate and

respond immediately to market needs.

This is the background against which the strategic

actions described in the report of the Chairman

of the Board of Executive Directors have to be

seen. An organisation that is focused on specific

market segments will underpin the achievement

of the objectives within the framework of the

market and technological developments outlined

above.

The organisational consequences of the restruc-

turing operation, which will materialise in 2002,

are shown in diagram form below.

15

Wide Format Printing SystemsDigital Document SystemsStrategic Business Units

Operating Companies

Research & Development

Market segments

Cutsheet Systems

Océ organisation with effect from December 2002

Continuous Feed Systems Wide Body Systems Software

Corporate

Printing

Commercial

Printing

Software &

Professional

Services

Facility

Services

Technical

Document

Systems

Display

Graphics

Systems

Imaging

Supplies

The crucial difference between good and excellent: Océ creates it

Financial review


Results

Total revenues were € 3,234 million, equal to the

previous financial year. Excluding the effect of

exchange rates, revenues decreased by 1%.

Operating income went down by 20% to € 225

million. Cash flow (net income plus depreciation)

decreased by14% and amounted to € 299 million.

On a per ordinary share basis net income before

exceptional items was 32% lower at € 1.19 (2000:

€ 1.76) and cash flow decreased by 15% to € 3.47

(2000: € 4.06). Expenditure on Research &

Development rose by 2% to € 203 million, which

corresponds to 6.3% of total revenues (2000:

€ 199 million and 6.2% of total revenues).

Gross capital expenditure on Property, plant and

equipment amounted to € 130 million (2000:

€ 114 million). An amount of € 115 million

(2000: € 136 million) was released from depreci-

ation and disposals.

In the market forWide Format Printing Systemsrevenues rose during the year by 1% to € 912

million. If acquisitions and exchange rate effects

are excluded, revenues were equal to those of the

previous year. Sales of machines were down by

13%. This decrease was due to the postponement

of investment decisions by customers. Thanks to

the improved range of products for Technical

Document Systems Océ was able to retain its

leading position and market share. Software and

services fully compensated for the decrease in

machine sales.

In Display Graphics, Océ’s position has been

strengthened by acquisitions, with the result that

Océ now occupies a top-three place in the mid-

volume and high volume segments.

In the market for Document Printing Systems re-

venues declined by 1% to € 1,529 million. On an

autonomous basis revenues were 3% lower than

in the previous year. Sales of machines were down

by 17%. During the year the 100 ppm Océ

400 black-and-white printer/copier and the

colour printer, the Océ 700, were introduced.

Sales of the Océ 400 were clearly affected by

the global slowdown in economic growth. In view

of the positive market reception for this machine,

its sales are expected to pick up speed in 2002.

Sales of the Océ 700 were still limited as a

result of the production start-up.

In the market for Production Printing Systemsrevenues grew by 3% to € 793 million. Machine

sales were 15% lower than in 2000. Strong growth

in software and services meant that revenues,

after adjustment for acquisitions and exchange

rate effects, were equal to those for 2000. In this

professional market, too, Océ’s position and

market share have remained unaffected.

In the Printing & Publishing segment Océ’s reve-

nues went up by 19%.

In the market for Facility Services revenues in-

creased by 25%. This increase occurred both in

the United States and in Europe.

Revenues from Imaging Supplies were practically

the same as those in the year 2000. The rationali-

sation and renewal of the product range and of

the logistics operations, as described in the pre-

vious year’s annual report, was successfully con-

tinued during the year under review.

Dividend

For the 2001 financial year Océ proposes to dis-

tribute a dividend of € 0.58 (2000: € 0.58) per

ordinary share of € 0.50 nominal.This dividend in-

volves an amount of € 48.8 million (2000: € 49.5

million). If the General Meeting of Shareholders

adopts this proposal the final dividend will amount

to € 0.43; the interim dividend amounted to

€ 0.15. It is proposed to distribute the final divi-

dend fully in cash. The pay-out ratio amounting

to 48.1% of the net income before exceptional

items (2000: 33.4%) is higher than the standard

set in our dividend policy.

An unchanged dividend per ordinary share is

warranted since the Board of Executive Directors

takes the view that the lower net income in 2001

is not of a structural nature.

19


Prospects

The results for 2001 were strongly affected by the

global slowdown in economic growth. This re-

sulted in the postponement of investment deci-

sions by customers. Océ responded to this by

implementing a tight control of operating costs

and working capital. In addition a number of

important new hardware and software products

were introduced over the past financial year. New

products are also scheduled for launch in the year

ahead.

In 2002 Océ will initiate a major restructuring

process which will make the organisation link up

better with the ongoing digitisation in the

markets in which Océ operates. Océ is preparing

to benefit immediately from an improvement in

economic circumstances. However, such im-

provement is not expected to occur before the

second half of 2002.

During the first half of 2002 the results are

expected to be below those of the corresponding

period of 2001. Océ expects that the results in

the second half of the year, supported in part by

the initial effects of the restructuring operation,

will be higher than in the second half of 2001.

Finance

Revenues In 2001 total revenues amounted to

€ 3,234 million. On an autonomous basis reve-

nues decreased by 1%.

Revenues from sales amounted to € 1,836 million,

which was 3% down on the previous year.

Earnings from rental and service rose by 5% to

€ 1,272 million. Interest income from financial

leases increased by 8% to € 125 million.

Facility Services activities currently contribute

11% of revenues, as compared to 9% in 2000.

For Imaging Supplies these percentages are 12%

in 2001 as well as 12% in 2000.

The share of digital in total revenues rose from

54% in 2000 to 56% in 2001. Calculated as a

percentage of total earnings from machines and

the related earnings from software and service –

i.e. excluding Imaging Supplies – the share of

digital increased to 65% of revenues (2000: 63%).

Gross margin As a percentage of total revenues

the gross margin was 40.7% (2000: 41.8%). The

main reasons for this decrease are:

– the still growing importance of Facility Services

in total revenues; Facility Services has a lower

gross margin than Océ’s other activities, but it

also has a different operational cost structure;

– sales of machines were lower than in 2000. In ad-

dition there were product mix effects and some

pressure on prices. In the fourth quarter the posi-

tive influence of the new products clearly showed

through in the gross margin.

The net effect of exchange rates and the hedging

policy that was pursued was positive.

20

3500

2800

2100

1400

700

0 97

Total revenues

› € million

98 99 00 01

300

240

180

120

60

0 97

Operating income

› € million

98 99 00 01


The average interest realised on the lease portfolio

amounted to 10.7% (2000: 10.5%). In the

financial lease contracts the interest percentage is

fixed for the entire duration of the contracts.

Operating income Operating income decreased

by 20% to € 225 million (2000: € 282 million).

This is equivalent to 6.9% of total revenues

(2000: 8.8%) and corresponds to 7.1% of the

average balance sheet total (2000: 9.1%).

Development of total revenues by 2001 2000

Strategic Business Unit total revenues total revenues

› € million as % › € million as %

Wide Format Printing Systems 912 28 901 28

Document Printing Systems 1,529 47 1,551 48

Production Printing Systems 793 25 772 24

Total 3,234 100 3,224 100

Total revenues by geographical areas 2001 2000total revenues total revenues


Germany 392 12 405 13

Netherlands 279 9 260 8

United Kingdom 219 7 219 7

France 220 7 220 7

Rest of Europe 568 17 595 18

United States 1,333 41 1,287 40

Rest of the world 223 7 238 7

Total 3,234 100 3,224 100

Research & Development () Expenditure on

rose to € 203 million (2000: € 199 million),

which corresponds to 6.3% of total revenues

(2000: 6.2%). In 2001 a repayment liability in

respect of development credits was added to

expenditure for the colour printer launched during

the year (€ 2.3 million). Further repayment lia-

bilities are dependent on the success of this

colour printer.

21

10

8

6

4

2

0 97

Operating income as % of

total revenues

98 99 00 01

250

200

150

100

50

0 97


› € million

expenditure

costs

98 99 00 01


General administrative and selling expenses

The general administrative and selling expenses

increased from € 877 million in 2000 to € 893

million (+1.8%). Expressed as a percentage of

total revenues these expenses rose to 27.6% (2000:

27.2%). On an autonomous basis these expenses

remained constant thanks to tight cost control.

Financial expense (net) Financial expense (net) –

the balance of interest paid and other interest

received – rose from € 61 million in 2000 to € 69

million in 2001. Based on an average interest rate

of 5.65% (2000: 5.30%) the average interest-

bearing capital decreased by € 23 million to € 1,161

million.The increase in the interest charges is

largely attributable to the effects of using

derivatives.

Interest income from financial leases amounted

to € 125 million in 2001 (2000: € 115 million).

Income taxes The average taxation charge

amounted to 31.1% (2000: 30.3%). A further

increase in the tax charge is expected in the years

ahead.

Net income Net income from ordinary activities

fell by 31% to € 105 million; this corresponds to

11.1% of the average shareholders’ equity (2000:

€ 152 million and 16.8%). As a percentage of

total revenues, net income before exceptional

items amounted to 3.2% (2000: 4.7%). Basic

earnings per share, calculated on the basis of the

average number of ordinary shares outstanding,

decreased by 32% to € 1.19 (2000: € 1.76).

After exceptional items of € 95 million, net

income decreased to € 10 million.

Commercial and financial activities

In 2001 Océ’s activities were again characterised

by a combination of commercial and financial

services, each with their own income profile and

balance sheet characteristics.

In assessing the financial position of the company

as a whole, a distinction must be made between

these two types of activities. The revenue from

financial activities is formed by the interest from

financial leases. The costs comprise the costs of

financing the lease portfolio and the administra-

tive and selling expenses. Where the financial

activities are financed from interest-bearing capi-

tal, it has been assumed that this has been done

fully on a fixed-interest basis.

The costs of financing are then allocated on the

basis of the average amount of fixed interest-

bearing capital. For the administrative and selling

expenses, including provisions for doubtful debt-

ors, a cost level has been applied which corre-

sponds to that of external captive lease companies

with similar activities. After expiry of the lease

contracts the machines, provided they have not

been written off in full, are transferred to the

commercial activities at their residual book value.

For the financing of the financial activities a ratio

of 0.15 between the equity and the balance sheet

total is used. This ratio is likewise derived from

captive companies in the financial services in-

dustry which publish their own annual accounts.

The remaining part of the equity is allocated to

the commercial activities.

The table on the next page gives a breakdown of

the salient financial figures for the two company

activities.

22


23

2001 2000 › € million

CommercialRevenues 3,109 3,109

Gross margin 1,192 1,234

Operating income 135 200

Financial expense (net) 17 13

Result before taxation 118 187

Income taxes 37 57

Result after taxation 81 130

Net income* 79 128

Shareholders’ equity 732 809

Minority interest 41 42

Group equity 773 851

Interest-bearing liabilities 254 200

Provisions and other liabilities 925 905

Balance sheet total 1,952 1,956

RatiosOperating income as % of average balance sheet total 6.8 10.5 per cent

Net income as % of average shareholders’ equity 10.2 17.4

Shareholders’ equity as % of balance sheet total 37.5 41.4

FinancialInterest from financial leases 125 115

General administrative and selling expenses 35 32

Financial expense (net) 52 48

Result before taxation 38 35

Income taxes 12 11

Result after taxation 26 24

Shareholders’ equity 176 180

Interest-bearing and other liabilities 1,000 1,019

Balance sheet total 1,176 1,199

RatiosOperating income as % of average balance sheet total 7.5 7.4 per cent

Net income as % of average shareholders’ equity 14.7 14.3

Shareholders’ equity as % of balance sheet total 15.0 15.0

* Based on figures before exceptional items.


Use of funds and finance

Gross capital expenditure In 2001 Océ’s gross

capital expenditure on Property, plant and equip-

ment amounted to € 130 million (2000: € 114

million). An amount of € 115 million (2000:

€ 136 million) was released from depreciation and

disposals.

Rental equipment and financial lease receivables

The book value of rental equipment decreased by

€ 54 million to € 179 million (a decrease of 23%).

The capitalised value of financial lease receivables

(including short term accounts receivable) de-

creased from € 1,175 million in 2000 to € 1,153

million (a decrease of 2%). The aggregate value of

rental equipment and financial lease receivables

decreased by 5% and represented 42.6% of the

balance sheet total (2000: 43.8%).

The balance sheet value of rental equipment is

calculated on the basis of the all-in costs, less

depreciation. Financial lease receivables are valued

at the net present value of the contracted lease

instalments plus the residual value.

Geographical spread of assets 2001 2000


Germany 538 17 498 15

Netherlands 586 19 609 19

United Kingdom 262 8 257 8

France 201 6 183 6

Rest of Europe 422 14 439 14

United States 1,000 32 1,087 34

Rest of the world 119 4 143 4

Total 3,128 100 3,216 100

Interest-bearing capital At the 2001 year end the

interest-bearing capital amounted to € 1,141

million (2000 year end: € 1,220 million). Of this

amount, € 754 million (66%) had been taken out

over the long term.

Group equity Group equity decreased to € 949

million (2000: € 1,031 million). This decrease was

the result of distribution of dividend charged to

General reserve (- € 42 million), foreign currency

translations (- € 21 million), conversion of deben-

tures (+ € 6 million), purchase of shares in the

company (– € 24 million) and other movements

(– € 1 million).

Group equity as a percentage of the balance sheet

total amounted to 30.4% (2000: 32.1%). The

ratio between interest-bearing borrowings and

Group equity was 120:100 (2000: 118:100).

The shareholders’ equity per ordinary share, calcu-

lated on the basis of the average number of ordi-

nary shares outstanding at the end of the financial

year, amounted to € 10.13 (2000: € 10.91).

24

1500

1200

900

600

300

0 97

Rentals and leases

› € million

rental equipment

financial lease receivables

including short term financial

leases

98 99 00 01


Cash flow The cash flow from operational acti-

vities amounted to € 348 million and improved

strongly by € 309 million compared to the pre-

vious financial year.

This improvement was the net result of the de-

crease in net income, lower trade creditors and

movements in other working capital items on the

one hand, and of lower (net) investments in rental

machines and of the significantly lower levels of

stocks and debtors on the other. The measures

taken to reduce stocks clearly made themselves felt.

Financial lease receivables were also lower.

The cash flow for investment activities amounted

to € 175 million, which was considerably higher

than in the preceding year (2000: € 58 million).

This development is due to acquisitions (€ 37

million), investments in intangible assets and in

property, plant and equipment and other invest-

ments (€ 54 million) and fewer disposals of fixed

assets (€ 26 million).

The cash flow from financing activities amounted

to € 147 million negative. Long term debt was

substantially reduced compared to the previous

year. The increase in short term loans was less

than in the previous financial year. Purchase of the

company’s own shares to cover commitments

under the stock option plan involved a cash out-

flow of € 24 million. The dividend paid in cash

was € 37 million higher than in the previous year,

mainly as a consequence of terminating the

optional dividend in 2001.

25

5

4

3

2

1

0 97 98 99* 00 01*

Cash flow and basic earnings

per share

amounts in euro per € 0.50

ordinary share

cashflow per share

basic earnings per share

before exceptional items

0.75

0.60

0.45

0.30

0.15

0 97 98 99 00 01

Dividend per share

amounts in euro per € 0.50

ordinary share

*

Statement of cash flow* 2001 2000 › € million

Cash flow from operations 348 39

Cash flow from investment activities –175 –58

Free cash flow (before dividends and financing activities) 173 –19

Financing activities and dividends –147 9

Exchange rate effects –7 –6

Change in cash 19 –16

* For details see pages 60 and 61.


Credit facilities At the end of the financial year a

total of € 892 million of unused credit facilities

were available to the Océ Group, which are in the

form of multi-year stand-by credit contracts.

Financial leases

In the markets in which Océ operates, financing is

an essential component of the product offering.

Océ offers the possibility of financial leasing and

can therefore be regarded as a one stop supplier.The company offers financing via lease program-

mes comprising a wide range of choices.

Océ’s strength lies in the combination of leasing

and possible remarketing after expiry of the con-

tract. For this purpose the company operates re-

manufacturing programmes which extend the

technical and economic lifetimes of its machines.

Outsourcing of lease activities Financing via lease

programmes is a very important marketing in-

strument for Océ and will remain so. In addition,

this activity generates a stable and profitable flow

of interest income and provides fiscal financing

benefits.

However, it makes a high demand on capital; its

balance sheet value represents approximately 40%

of the total assets. Besides, the return on these

assets (), although stable, is below the return

that Océ seeks to achieve. Furthermore, financing

is not one of Océ’s core competencies. For these

reasons it has been decided that the announced

study into the possibilities for transferring the lease

portfolios to an external lease company should

not be limited to the smaller countries.

The study, which was conducted in 2001, showed

that the services provided by potential partners

are in line with what Océ wants to offer its cus-

tomers, such as a fast settlement of contracts and

administrative processes. In addition, thanks to

their specialisation and economies of scale, the

partners can provide additional benefits, such as

the development of systems and improved access

to the capital market. Océ has therefore decided

that the bigger countries will also be included in

these developments.

At the end of 2001 Océ signed an agreement with

Telia Finans for the provision of private label

leases for the Scandinavian market. A Letter of

Intent has been effectuated with De Lage Landen

International .. relating to cooperation in the

form of a joint venture in a number of important

European countries.

The further details of these partnership agree-

ments will be worked out during the forthcoming

financial year. The parties intend to start the co-

operation with customers that sign new leases.

The basic principle is that the relationship with

customers will not be disrupted. After the start-up

phase the existing portfolio will, where possible,

also be transferred. In Europe this cooperation

will be structured further over the next two years.

26

750

600

450

300

150

0 97

Investments

› € million

98 99 00 01

2001 2000 › € million

Investments in:Property, plant and equipment (net) 107 65

Intangible fixed assets 43 –

Rental equipment (net) 50 80

New financial lease receivables 438 520

Total 638 665


As regards the portfolio in North America and

the rest of the world the experiences gained in

Europe will serve as a guidance for actions to be

taken.

The financial resources that are released due to

the outsourcing of the lease portfolios will be used

in part to reduce external funding. In addition,

the expansion of Océ’s commercial activities will

be financed from those proceeds.

The financial consequences of the above measures

will depend on the speed with which they are im-

plemented and on the utilisation of the resources

that are released. However, there will be substan-

tially lower income from interest, but also lower

interest costs and other charges linked to finan-

cial lease activities. On balance the income from

financial leasing will decrease. Initially this will

possibly lead to a temporary decrease in earnings

per share.The longer term influence will depend

on how the released financial resources are utilised.

The return on capital invested will, however,

show a structural increase as a result of the

outsourcing of the lease portfolio.

Accounting The lease programmes that are avail-

able on the market can be split into financial

leases and operational leases. The latter type are

also referred to as rentals. In the case of financial

leases the economic risk passes to the customer.

The duration of these lease contracts is three to

six years and is usually nearly equal to and some-

times even longer than the depreciation period

applicable to the relevant machines. As a result,

the residual value risk is limited.

At the moment when the financial lease contract

is signed, the selling price of the machine is re-

corded as revenue in the form of the net present

value of the financial lease instalments. During

the contract period the interest income is booked

as revenue. Revenues from maintenance and

service are accounted for separately.

Machines for which an operational lease contract

has been concluded are rented to customers for

durations of, normally, one to three years.

The rental instalments from these contracts are

included in the revenue for the reporting period

in which they fall due. The rental instalments

cover the cost of use, servicing and interest.

In 2001 51% (2000: 50%) of all direct sales of

machines were installed on the basis of financial

leases. In Document Printing Systems this per-

centage was considerably higher than in Wide

Format Printing Systems and Production

Printing Systems.

Interest income from financial leases went up by

8% to € 125 million (2000: € 115 million).

27

The world of Océ is expanding, creating space for its users

Operational developments by market segment


Océ’s activities in 2001 can be subdivided into

the following market segments:

Wide Format Printing Systems

Document Printing Systems

Production Printing Systems

Facility Services

Imaging Supplies

This organisational subdivision was still in place

during the entire year under review and will

therefore be used in this report.

The revenues of Facility Services and Imaging

Supplies are included in the revenues of the three

Strategic Business Units: Wide Format Printing

Systems, Document Printing Systems and

Production Printing Systems.

Wide Format Printing Systems

The Strategic Business Unit Wide Format

Printing Systems comprises two business groups,

i.e. Technical Document Systems and Display

Graphics.

Océ’s position in the Technical Document

Systems segment Especially for technical printing

environments Océ supplies a range of wide format

printers, scanners, software, supplies and services

for the printing and reproduction of big drawings,

mainly in black-and-white but to an increasing

extent also in colour. In this environment Océ is

market leader, offering a complete range of hard-

ware, software and services.

The machines, which have been almost solely

digital for some time now, are principally used in

industrial companies, mechanical engineering

works, construction companies, architectural

offices, public utilities and governments.

Many Océ machines can also be found in special-

ised printshops (job printers), which are increas-

ingly handling the printing activities for busi-

nesses. Since the introduction of the Océ 9800

high volume wide format printer/copier in 1995,

Océ has steadily strengthened its leading position

in this market. Job printers have further expanded

their services by offering scanning and poster

printing. The growing use of internet provides job

printers with the infrastructure to extend their

customer base further. For the past few years job

printers have been offering their customers the

possibility of using Océ Repro Desk software to

prepare and check print assignments which are

then sent to them via internet.

Océ is able, by means of regular updates and ex-

panded software versions, to protect the relatively

high investments made by the customer and thus

keep the cost of ownership at a competitive level.

31


Market developmentsThe need for new products,

particularly for software to control the hardware,

increased sharply during the year under review.

As ever more sophisticated programs became

available for such tasks as printing and distribution

management, archiving and document manage-

ment, the need for consultancy also increased.

The growing importance of internet has brought

a rapid increase in the need for special software

for the remote access of Océ printers via internet

to transmit print assignments; the software that

Océ supplies for these applications links up well

with that need. In addition, numerous organi-

sations are in the process of converting collections

of drawings into a digital archive. Océ’s software

and services for the scanning of analogue docu-

ments and the management of digital documents

provide the ideal solution.

The job printing segment is also continuing to

grow, partly due to an outsourcing trend in big

companies, in which printing does not form one

of the primary processes. In these cases Océ is

eminently able to provide its customers with the

instruments they need to optimise their revenues

and margins.

Although the printing volume of technical docu-

ments is still chiefly in black-and-white, the share

of colour is growing. In a number of specialist

applications (such as drawings of energy net-

works or circuit boards) colour has become highly

functional. In many organisations, therefore,

Océ’s wide format black-and-white and colour

printers are used in combination with each other.

Océ in 2001 Océ further reinforced its leading

position during the year under review. However,

the market conditions were not easy. A weakening

economy immediately translates into a lower

level of activity in technical printing environ-

ments and into the postponement of investment

decisions. Although Océ experienced stagnation

in its own growth, its market position has been

strengthened, particularly thanks to the strength

of the renewed range. Once again Océ was awarded

a number of prestigious prizes in recognition of

the outstanding properties of its new machines

and software.

Océ’s market share in Japan, though still rela-

tively small, is of great strategic value.The market

has very great potential and with a view to the

ultimate recovery of the Japanese economy it is

important in all respects to invest in the further

’japanisation’ of the wide format range.

With the Océ 400, Océ 600 and Océ

800, a range that comprises a new machine

(the Océ 600) and two highly updated

machines, Océ put a timely and very complete

family of products on the technical printing

market during the year under review. The new

systems are characterised by an improved print

quality, higher productivity and wider deploy-

ability, thanks to new possibilities for linking up

with the internet. The software and service re-

lating to the machines have also been expanded

and updated, as has the range of supplies.

Océ has strengthened its position in this segment

through the further development of Océ Engi-

neering Exec, a family of software applications

for the digital archiving, retrieval, distribution

and printing of technical documents. In this area,

too, the activities of Océ Facility Services are

steadily expanding further.

Océ’s position in the Display Graphics segment

Océ decided several years ago to enter this highly

promising market in a forceful manner. Appli-

cations are mainly to be found in advertising, the

building of displays and professional digital

photography. Océ refers to this segment as

Display Graphics.

32


Market developments The development of wide

format inkjet technology has also had major

consequences in the printing industry segment.

This technology enables the cost-effective pro-

duction of wide format graphic illustrations in

small print-runs, since it eliminates the need for

the costly print preparation stages that are re-

quired in traditional technologies such as offset

and silkscreen printing.

The use of colour in advertising is growing fast,

also because of the growth in the available possi-

bilities, and supply is keeping pace with that

demand. This area of activities has a very high

potential.

Océ in 2001 Océ is vigorously working on the

development of Display Graphics and is doing

this successfully, despite the fact that the market

profile differs from that of Océ’s other markets in

terms of players, technology and dynamics.

In June 2001 Océ acquired the business Espace

Graphic in France, the most important distri-

butor of wide format printers, peripherals and

supplies in this market.

At the beginning of November 2001 Océ an-

nounced the acquisition of the Professional

Imaging Division of Gretag Imaging Group Inc.

This acquisitionwascompletedearly inDecember.

Gretag Professional Imaging Division owns vari-

ous businesses, including Raster Graphics and

Onyx Graphics. This acquisition also brings Océ

an important series of inkjet printers and soft-

ware for image processing and workflow manage-

ment, as well as direct sales organisations in the

UnitedStates, theUnitedKingdom andGermany.

Océ sees these acquisitions as a crucial step

towards substantially speeding up the growth

tempo in this strategically important segment.

Following these acquisitions, Océ occupies a top-

three position in the mid- and high volume

segments.

Document Printing Systems

Océ’s position in the market for Document

Printing Systems Océ can boast more than thirty

years of experience in office environments,

especially with products that are designed for in-

tensive use. Océ’s greatest strength lies in the

productivity and reliability of machines which

produce large numbers of prints but in which

simplicity of operation is given high priority. Océ

offers added value in these products via volume

concentration, system integration and integral

document management. The office market offers

a huge potential for Océ’s concepts and products.

The competitive playing field reveals a very mixed

picture. As regards machines that are aimed at the

lower and medium volumes there are various

suppliers who, as a result of over-supply, mainly

compete on price. In the higher segments (more

than 50,000 prints per printer per month) the

number of suppliers is limited. The user environ-

ments are central repro departments and pro-

ducers of office documents.

Market developments In the lower volume seg-

ments the equipment is seen more and more as a

commodity, which is leading to sharp price ero-

sion. Océ is responding to this by shifting the em-

phasis increasingly towards the higher volumes;

here the related software and services offer higher

added value. As a result of this shift in emphasis,

the intensive attention that Océ has devoted to

the development of software and the training of

specialists will yield the desired effect. In the

meantime, especially in the office market, there

has been a strong increase in interest for the use of

colour in documents. Customers today are asking

for cost-efficient full colour printing and copying.

Océ in 2001 In a market that is dictated more and

more by price considerations, Océ has changed

course and moved towards a vertical market ap-

proach. It is possible to make a clear distinction

between customer categories, such as industry,

government, education and banks/insurance

companies.

Océ’s guiding principle is customer intimacy, incontrast to the more technology-led product ap-

proach. Approaching the problems on the basis of

the customer-specific document processes means

33


that software and consultancy play a more im-

portant role.

The strength of Océ’s solutions is based on the

combination of machines, software, supplies and

services. Operationally, Océ takes care of the main-

tenance and management of document manage-

ment systems. Océ therefore retains a direct sales

and service channel, as this is the only way to en-

sure optimum feedback from the customer to .

In a few cases Océ opts for indirect sales, particu-

larly where the distance from Océ locations is so

big that the response time would become too long.

In the United States, for instance, Océ has been

working together for quite some time with the

dealership organisation. During the year

under review Océ also concluded contracts with

seven other distributors in the United States and

Canada.This has extended the coverage in 38 states

in the United States and Canada. The intention is

that this network will be further extended in the

years ahead.

During the year under review Océ launched two

important new machines: the Océ 400

printer/copier and the Océ 700 colour printer/

copier. Both machines are based on Océ’s own

advanced technology. This relates to both the

hardware and the software.

The Océ 400 is a 100 ppm cutsheet black-and-

white printer for use in high volume environ-

ments. It is a flexible and user-friendly machine,

complete with a high speed scanner, which can

process both originals and print jobs rapidly and

in random order via the network. The system is

suitable for central repro departments, where it

can very productively and easily process both con-

ventional copy assignments and digital documents.

The Océ 400 is of modular design and its

functionality is constantly being expanded via

new software releases. The Océ 400 was well

received by the market. However, the number of

placements of this machine was adversely affected

by the slowdown in economic growth.

The Océ 700, Océ’s colour printer/copier

based on the company’s own, highly advanced

technology, also met with a very good reception.

The first machines were shipped to market in

September 2001, after a series of machines in-

stalled on trial with highly demanding customers

had already produced exceptional performances.

Because of the special way in which the image is

formed using seven basic colours, the picture and

colour quality of all prints is always exactly the

same, also for big print-runs and for repeated

prints and at a constant high speed, irrespective

of the material to be printed on.

The productivity of the Océ 700 is much

higher than that of conventional colour machines

with a higher speed. In addition, the Océ 700

technology offers great advantages compared to

traditional offset printing. Offset is characterised

by high preparation costs for variable printing

work, lengthy retooling times and waiting times

during the printing of fully filled areas, whilst

printing on plastics is very expensive. The Océ

700 technology therefore represents a

breakthrough in terms of productivity for these

applications in the printing industry market.

Although the machine can also be used as a

copier, expectations are that it will mainly be

used as a printer.

Océ’s first fully digital printer/copier product

family for the office, the Océ 31x5, continues to

sell well. However, this is taking place in environ-

ments in which the competition is also strong.

In the meantime Océ has made good progress

with preparations for higher-speed successors to

this machine.

The Océ 31x5 series, together with the Océ

400 and part of the Océ Demandstream

series (mainly used in production printing en-

vironments), forms the cornerstone of Océ’s

document management approach. The concepts

for this approach are supplied and implemented

by Océ’s system specialists, who represent the

added value that Océ provides alongside the

know-how that is incorporated in its machines

and software.

Océ supplies a large number of software products,

such as Océ Doc Works, Océ Com Works, Océ

Find Logic, Océ Intra Logic, Océ Scan Logic and

Océ Office Exec. Océ Office Exec was brought to

market in the United States in 2001. In 2002 this

program will also be sold in Europe.

34


Production Printing Systems

The Strategic Business Unit Production Printing

Systems consists of two business groups:

Electronic Production Printing and Printing &

Publishing.

Océ’s position in the market segment for Elec-

tronic Production Printing For printing environ-

ments, which set high demands and in which

many prints are continuously produced, Océ

supplies printers that meet the highest require-

ments in terms of speed, quality, reliability, pro-

ductivity, flexibility and stability. Printers of this

type are deployed in such areas as big central

repro departments and in environments,

specifically those of banks and insurance com-

panies, energy suppliers and telecom providers,

which produce large numbers of statements of

account, policies and invoices day after day.

Other major users are direct mail businesses. World-wide, Océ has a share of over 22% in this

segment, which makes it one of the three most

important suppliers, not only thanks to the quality

and robustness of its machines but also because

they can operate in a great many different en-

vironments. This is also attributable to the soft-

ware which has been specially developed for such

applications and which handles input manage-

ment, the processing and organisation of docu-

ments, output management and the archiving of

print data. At an early stage software applications

were developed that enable data flows from various

competing systems, including those that are self-

contained, to be printed on Océ machines.

Almost without exception, the machines that are

supplied to this market are also coupled to other

hardware, either for the feeding in of plain or

pre-printed paper or for the further finishing of

the prints. Thanks to the modular construction

of the machines it is possible to keep them up-to-

date by means of various upgrades and new soft-

ware releases. In this way Océ protects the cus-

tomer’s substantial investments in equipment of

this type. Océ offers a complete and competitive

range of services, such as consulting, training and

customer support.

Océ occupies a leading position in the field of

character recognition technology. Its RecoStar

character recognition software is regarded as a

first-rate solution for use in the high volume

segment (passports/bank cheques).

Market developments The volume in the segment

for Electronic Production Printing is still growing

and is being accompanied by an ever greater con-

centration of print volume on fewer, but much

higher capacity machines. This trend works to

Océ’s advantage. However, this is a market in which

the number of customers is steadily decreasing as

a result of mergers and acquisitions. Expectations

are that the availability of alternative forms of

communication (such as electronic banking) and

the broad thrust to boost efficiency will ultimately

also lead to a decrease in the use of paper in this

segment. The competitive position of Océ as one

of the leading players was once again strengthened

in 2001, despite the decline in machine sales.

The slowdown in economic growth had a clear

impact on this segment. Due to the reluctance by

companies to make major investments, the number

of new machines sold declined substantially in

2001. To a large extent, however, total revenues

are determined by the continuous flow of income

generated by the installed population of machines.

Océ’s market share remained stable. Océ sees great

potential in sophisticated document management

solutions. At the moment some 10% of the in-

formation available world-wide is stored in struc-

tured databases. The remaining 90% can be ac-

cessed and rationalised using the solutions offered

by Océ, after which it will form an extensive

knowledge base for the customer.

A comparatively new development in this segment

is the use of spot or support colour. This feature

has been available since 2000 on all high-volume

Océ printers. In the meantime the range of stan-

dard colours has been considerably extended, so

that users can now even produce their own house-

style colour in prints with the aid of the Custom-

Tone system. Widespread interest exists for this

unique Océ technology. Although the trend to-

wards the increased use of colour has also become

an established fact in production printing, price

considerations mean that it will still take a while

before full colour also makes its entry into this

market. Océ is therefore focusing initially on an

35


optimisation of its black-and-white range. In the

meantime Océ continues to develop techniques

for multi-colour printing at high speeds.

Océ in 2001 At the end of the year under review

Océ launched two major innovations in the Océ

Pagestream/Demandstream series: a resolution of

600 dpi at full capacity operation and automatic

adaptation of the print quality to a resolution of

240, 300 or 600 dpi. This latter feature makes it

possible for data flows with differing resolutions

to be processed without operator intervention.

In practice this yields substantial time savings.

During the course of the year various new soft-

ware releases in the extensive Océ server

family were issued.

In 2001 Océ introduced theTriplex configuration

of three series-switched Océ Pagestream printers,

which allows full-speed, single-pass duplex

printing together with spot colour.

In a market in which high demands are made on

the printing process and in which the document

flow process and the document finishing process

have also become extremely complex, expert

support is of great value. Océ has a large number

of specialists who can translate the customer’s

problems and needs into a tailor-made printing

system configuration. Their expertise is also in-

corporated in the successful Océ Audit

product, an extensive software system which can

be used to create a complete print production

facility. Océ identifies the system integration

which best fits in with the customer’s individual

wishes and needs.

Océ’s position in the Printing & Publishing

segment The special qualities of Océ’s high-speed

printers – their print quality, connectivity and

the way they can be controlled flawlessly from

within networks – make them eminently suitable

for digital printing in small print-runs. For many

years Océ printers have been used for printing

documents which are regularly changed, such as

manuals and catalogues. These are stored in elec-

tronic form and kept updated until the moment

when they are required in printed form, usually

in a small print-run. In 1996 Océ started out on

a targeted development of this application area

by marketing complete solutions based on speci-

alised machine configurations and software

applications developed in-house. For Océ this

represented a substantial step forward into a new

area which had traditionally formed part of the

(offset) printing market. Over the past five years

Océ has extended this working area to include the

printing of books in small print-runs and, during

2001, also the printing of (international editions

of ) newspapers. In cooperation with Roland,

Océ also supplies digital colour printing equip-

ment. On the basis of its (information) techno-

logy in the printing industry sector Océ has built

a clear market position during the year under

review, particularly in the segments that are less

suitable for offset due to the required speed of

document make-up and the small print-runs.

Market developments The printing industry sec-

tor is about to start experiencing a strong digital

development, though the high-volume segments

will continue to be dominated by the traditional

techniques. The market for electronic printing

has a bright future, as is underlined by the fact

that suppliers of conventional printing presses are

also putting out feelers in this segment. The key

to success, however, is the combination of the

hardware with specialised software and a perfect

link-up with the finishing equipment. Océ has

done a great deal of work in this area.

36


Océ in 2001The software that Océ has developed

specifically for these applications within the Océ

family was further expanded and im-

proved during 2001. This software is mainly used

in combination with printers from the Océ

Demandstream/Pagestream series. It enables users

to optimise both the document make-up process

and the control over the printing and finishing

process. Demand for the more commonly used

printing applications is showing distinct growth,

and this was also reflected in the sales of machines

and software.

Several years ago, in 1999, various publishing

houses embarked on the electronic printing of

small series of books in a limited print-run.

The costs of an initial (limited) edition, possibly

followed by smaller reprint runs, are substantially

lower than those of conventional offset printing.

There is also a gain in speed: the page body of a

200-page book can normally be printed, folded

and cut to size within a couple of minutes.

During the year under review Océ presented

successful new software for this market.

A critical success factor in these new market areas

is the ability to work closely together with parties

which handle both the preparatory work and the

finishing work involved in electronic printing.

In many instances this relates to a joint develop-

ment of new applications that strengthen the

position of all the players in this market.

The annualOcé Open House in Poing (Germany)

comprised a display of the products of various

suppliers who, in combination with Océ products,

offer complete solutions for this sector.

A new activity in 2001 was the launch of the

electronic printing of newspapers in tabloid for-

mat. Thanks to this application newspapers that

are published in Europe can also be made avail-

able almost simultaneously in limited print-runs

for readers in more remote areas of the world.

Electronic printing is in such cases an economic

alternative for physical despatch, which is usually

accompanied by high transport costs and consid-

erable delays. The electronic newspaper is hardly

distinguishable from the original.To ensure that

this opportunity is efficiently exploited, Océ has

initiated a series of strategic partnerships with

printers/printshops which have the required

equipment. In the year under review four such

cooperation agreements were concluded, in

London,NewYork,Johannesburg and Melbourne.

In the new year these are expected to be joined by

a great many more.

37


Facility Services

Facility Services is the fastest growing activity

within Océ. The term indicates a form of out-

sourcing in which the customer, usually a big

organisation, transfers all its activities in the area

of printing and copying management as well as

document management to Océ. In most cases Océ

also takes over the relevant employees within these

organisations as well as their production resources.

Facility Services is not only a marketing and sales

concept, but more than anything a standardised

method used by Océ to approach its customers.

This approach, known as the Solution Delivery

Process, comprises the following stages:

– Consultancy: analysis of the document process,

including recommendations for improvements;

– Design: developing a system that offers the best

solution for the customer;

– Implementation: system integration, training and

education;

– Support: maintenance, but also taking over

responsibility for the document management

process from the customer.

Via Facility Services Océ offers its customers the

possibility of concentrating fully on their own core

activity. At the same time customers can benefit,

without having to invest in this themselves, from

the processing and technical improvements that

Océ can implement in the area of document

management.

A good example of the strength of the Facility

Services concept is the contract that was concluded

this year with Rolls-Royce. Particularly the pro-

vision of services for the management and distri-

bution of technical drawings in the engineering

process for new aircraft engines can be described

as state-of-the-art document management.

Océ’s position in the market for Facility Services

Customers are found both in the profit and the

non-profit sector. In Europe the bulk of the busi-

ness is in industry, education and government; in

the United States it is chiefly in the financial

services sector. In this extensive and still strongly

growing market Océ has quickly built up a strong

position. In Europe Océ is a top player in the

Netherlands, Italy, France, the United Kingdom,

Germany and Belgium.

In November 2001 Océ acquired Practical Print

Solutions Ltd. This company is active in the

United Kingdom in the area of print procurement

and print management and has developed unique

software programs for this work.

In the United States Océ operates under the name

Archer Management Services. Although the acti-

vities in the United States still largely comprise the

full range of mailroom activities, one of the strong

distinguishing features of Océ in that market, too,

is the focus on document management as an

integrated process.

Market developments The growth trend in the

market continued unabated during the year under

review, both in the United States and in Europe.

Whilst the market grew on average by around

20%, Océ showed growth of approximately 25%

compared to 2000. For large, globally operating

businesses the management and control of the

total document flow is an important area of at-

tention. They are increasingly contracting out this

activity and making use of the possibility offered

by Océ of tackling this on a global scale. In this

market Océ operates alongside a number of

strong competitors.

Océ in 2001 For more and more businesses the

integral control of document processes is becoming

essential: the exchange of information and know-

how calls for the organisation of the document

flow to be coordinated with the business pro-

cesses. This coordination, including the choice

and deployment of resources, requires a specific

expertise which can be provided by Océ Facility

Services. As a result the working area of Océ

Facility Services is gradually shifting away from

operational services towards more integrated

managed services. Océ is therefore developing new

service concepts, in which an important place is

occupied by the operational performance of ser-

vices and their integration within the customer’s

business process. However, Facility Services also

brings benefits for Océ in numerous other

respects, including the close relationship with the

customer.

38


Imaging Supplies

Océ’s position in the market for Imaging Supplies

Océ traditionally has an excellent reputation

when it comes to the provision of supplies for

both its own machines and systems and those of

third parties. In a market that is experiencing very

many changes Océ has maintained its position.

Selling activities are principally channelled via the

operating companies, where the close customer

relationships form a solid basis for generating

sales. Océ is able to offer its customers a range of

more than 3,000 articles, varying from plain

paper in 4-size and wide format rolls to highly

specialised transparent sheets and other specialities

in many formats.The very extensive and complete

range of Display Graphics supplies, comprising

canvas, vinyl, glossy films and backlit varieties,

meets a growing need for short-run applications,

such as posters and floor graphics. The breadth of

the range and Océ’s delivery reliability give the

company a good position in this area.

Market developments The market for Imaging

Supplies is highly fragmented. However, Océ

undoubtedly holds a good position in the area of

wide format paper and 4-size paper, a commo-

dity which often provides an entry for the sale of

other types of supplies.

In Display Graphics the already important role

that Océ also plays in the area of supplies is be-

coming increasingly stronger, substantially sup-

ported by recent acquisitions in France and the

United States, as already described in the section

on Wide Format Printing Systems. This segment,

which is still relatively new for Océ, is growing by

25% to 35% a year. Océ’s American subsidiary

Arkwright has in recent years developed an ex-

tensive range of highly specialised products for

Display Graphics.

Océ in 2001 The year under review brought con-

siderable growth in sales of wide format paper.

Against this, however, the emphasis in plotter

supplies shifted further towards in-line, coated

and uncoated paper varieties. Sales of 4 media

remained constant in Europe. The degree of

coverage of Océ’s own machines showed a con-

siderable increase, thanks especially to a more

targeted approach to the sale of supplies in the

operating companies. Internet plays an impor-

tant role here in that it provides efficient contact

with customers and makes it simple for them to

order supplies from Océ.

At the same time as the launch of the Océ

700 colour printer, Océ introduced a com-

plete package of print supplies for this machine.

In 2001 Océ placed greater emphasis on the in-

direct sale of supplies, particularly for wide format

applications. The Océbrand has been effectively

used for this. The intention is that the number of

distributors will be gradually expanded, the main

aim being to ensure optimum provision of Océ

supplies to the very big category of small and

medium-sized customers.

So as to offer the customer a clear one-stop so-

lution, deliveries of photoconductors and toners

were also transferred in 2001 from the Strategic

Business Units and to the business

group Imaging Supplies.

39

In the world of Océ there is no room for imitation

Technology and Innovation



The foundation of Océ’s competitive strength is

formed by the company’s own technological devel-

opment work. The distinguishing characteristics

of practically all Océ products can be traced back

to technologies that have been developed within

the organisation itself. These technological inno-

vations are the fruits of consistent activity.

Some 1,850 people work in . Each year Océ’s

investment in amounts to 6% of its revenues.

Océ’s activities are established in eight loca-

tions. The centre in Venlo focuses on the de-

velopment of machines, strategic supplies (toners

and photoconductors) and software. The

activities in Poing (Germany) concentrate on the

development of fast, high volume printers and

software. In Fiskeville, in the United States the

department of Arkwright is the centre for

the development of speciality carrier materials.

Créteil (France), Namur (Belgium), Konstanz

(Germany), Cleveland and Boise (United States)

and Tokyo (Japan) are the homes of Océ

centres for the development of specialised soft-

ware.

Vision Océ’s is aimed at providing users with

optimum support in their activities. This is done

by offering hardware and software which have been

developed by Océ in-house and which possess

unique properties. In all cases the following prop-

erties are key: reliability, productivity, ease of use

and environmental friendliness and low cost ofownership. Océ’s guiding principle is that the most

complicated technical processes can be reduced to

one simple action for the user. The green button

(always a good image whatever the original) epito-

mises this approach. The same applies to the

control of the colour printers, which guarantees

that the colours of a print are always the same,

everywhere.

Océ of course devotes much attention to making

sure that its products dovetail perfectly with the

customer’s system environments and organisation.

To do this, the company develops document

management software. This approach resulted in

Océ again being awarded a number of prizes for

well thought-out product design during the year

under review.

Developments Océ has consistently maintained

the technological lead it built up since the early

1990s in the area of wide format black-and-white

printers. Today, its black-and-white printers and

the related software are amongst the most ad-

vanced in the world.They work fast, are of high

quality, come complete with an extensive range of

software and function optimally in customer net-

works. During the year under review the entire

line of printers was updated. Much attention was

devoted in particular to the scanning function as a

separate activity.

An important new development, albeit one that

has featured in the programme for many

years, is wide format colour printing on the basis

of inkjet technology.

Following the successful introduction of the Océ

400 printer for office use, Océ is working on

the modular extension of the support software for

this product’s scanning and printing function-

alities. In 2002 Océ will be presenting a highly

versatile high volume printer for the office market,

a machine that is particularly suitable for use in

smaller central repro departments.

The development of new printers featuring Océ’s

own unique colour technology is progressing at

full speed. The Océ 700 is the first of a com-

plete series of colour printers which is especially

aimed at handling short-run colour print jobs.

This means that the Océ 700 can also be de-

ployed in printing industry environments.

In the area of high speed printers a number of

projects are under way and these will result in a

new generation of printers towards the end of

2002. These products, for continuous and cut-

sheet paper feed, will again confirm our techno-

logical lead. They can be universally applied in

various market segments, also in those in which

Océ is as yet not strongly represented. Colour plays

an important role. In addition to one or two spot

colours, the applications will also offer customer-

specific colours and high-quality multi-colour

printing.

43


One of the areas in which Océ’s activities

have booked outstanding success is in the devel-

opment of supplies, notably photoconductors,

transfer material and toners.The newly developed

organic photoconductor (), featuring an im-

proved and stable print quality, has also demon-

strated in practice that it has a much longer use-

ful lifetime than the previous generation of in-

organic photoconductors. Besides this, a new and

unique Océ drum technology will be developed

for colour applications. Just like the majority of

the black toners, the colour toners for the Océ

700 were also developed by Océ itself. The

transfer materials that were developed in-house

contribute to the quality that is typical of Océ: a

constant print quality on a wide variety of carrier

materials.

Software In the complete systems that Océ offers

to its customers, the application software is a

major element that distinguishes the quality of

the offerings. Using the machines as a productive

basis, the software is able to steer the preparation,

organisation, finishing and control of the com-

plete document process in such a way that the

customer’s printing capacity is utilised to opti-

mum effect. Océ can translate its many years of

experience in the area of document management

within organisations into interlinked series of

applications. In response to the dynamics of the

market the internal organisation of the software

development activities was radically revised during

the year under review.This reorganisation enables

maximum use to be made of the know-how that

is available within the Océ organisation. This has

resulted in unrestricted interconnectivity of all

software products and a shorter reaction time.

Cooperation The centres inVenlo and Poing

work together closely in the area of printer tech-

nology. Considerable progress has been achieved

on the joint development of organic photocon-

ductor belts. The knowledge base of both centres

is also being combined in the area of cutsheet

technology for the development of new, high

speed machines. This development links up well

with the company’s new organisation structure

which will be implemented in 2002.

Manufacturing and logistics

Océ’s own production of machines and strategic

supplies is a major cornerstone of the company.

Machines are assembled in the Netherlands and

Germany, in close cooperation with a number of

carefully selected suppliers. In many cases they

supply not only components but also completely

assembled modules. Final assembly takes place at

Océ, after which the configuration is put together

and delivered in accordance with the customer’s

order and specification.

In view of the great importance of Océ products to

customers, a perfect logistics operation is crucial.

Particularly in recent years Océ has implemented

new, and more efficient logistics concepts. Those

have led to substantial advances in the speed and

reliability of delivery as well as to a reduction of

the costs. The need for intermediate storage of

machines and components has been steadily

reduced. For supplies the number of locations

where stocks are held is limited.

Manufacturing Strategic supplies such as toners

and photoconductors are manufactured almost

entirely by Océ itself. In 2001 manufacturing

operations were mainly focused on the launch of

the Océ 400 and the Océ 700. In the

photoconductor plant that was opened last year

the production of the organic photoconductor

for the Océ 400 is meanwhile fully opera-

tional.

During the year an amount of € 40 million was

invested in the production of supplies for the

Océ 700. The plant for the manufacture of

the process drum, the image-forming drum for the

colour printer, is currently under construction.

A completely new toner production line will

produce the seven colour toners for the Océ

700.

44


The decline in machine sales was immediately re-

flected in the level of plant utilisation in assembly

activities. This brought a sharp reduction in the

number of employees, specifically temporary

contract employees. Assembly work involves a

combination of technical and organisational re-

sources, such as the introduction of what is known

as flow production. A number of drastic changes

in the way of working in assembly have resulted

in a shortening of the assembly time and a reduc-

tion of the stocks of work in hand. A particularly

important feature is that, even when production

has to be scaled up quickly, Océ is still able to

achieve stable delivery reliability. Manufacture of

the Océ 700 is taking place using an advanced,

new process. All these changes were also accom-

panied by a change in culture, which was re-

flected in a strong sense of commitment and a

low rate of absenteeism.

In the production facilities in the Czech Republic

not only remanufactured machines but also com-

plete modules are produced for Océ products.

This relates, for example, to complex machine

components such as sheet trays and finishers.

Re-use Remanufacturing and recycling form an

integral part of the production operations.

Machines that are returned from the market are

placed with customers again after modifications

and upgrading, or they are disassembled so that the

parts can be used for new machines. Most com-

ponents have a technical lifetime that is longer

than their economic lifetime.

The remanufacturing activities have meanwhile

been centralised in the Czech Republic. A trading

desk which was set up in 2001 ensures that the

various countries can exchange surplus compo-

nents and machines. The environmental aspect

has traditionally played an important role for

Océ; an effective use of raw materials and energy

is important in that respect, as are cost and

efficiency aspects.

Logistics During the year under review the

Direct Machines Delivery logistics approach was

further implemented. As part of this concept the

machines are delivered direct from the produc-

tion locations to the customer. As a result it has

been possible to reduce local stocks. One of the

objectives, a reduction of the working capital tied

up in stocks, was largely achieved during the year

under review. Because of the new approach the

reaction speed of the supply chain has also been

increased, enabling Océ to respond quickly to

changes in market demand.

In total, partly as a result of the new concepts, the

number of Océ employees involved in logistics

world-wide has been reduced by about 300.

In Europe, the United States and the Far East the

Océ companies are now supported with stocks

of components and machines held regionally

by the centres in Venlo en Poing.

45

Océ makes a firm choice for People, Planet and Profit

and acts accordingly

Sustainable business practices


Océ’s ambition within the framework of sus-

tainable business practices is the desire to grow in

a world in which the precondition is safeguarding

a healthy environment for future generations.

The basis for achieving this lies within the com-

pany itself and in the way it conducts its business.

Océ wants to share its know-how, experience and

possibilities with those sections in society which

share the same vision of the future and actually

want to implement that vision in practice.

Océ’s activities, the company’s success and the

well-being of employees, the environment and

society cannot be seen in isolation. A document

on the ethical principles on which the functioning

of the Océ organisation is based was already drawn

up in 1994. This indicates which corporate ob-

jectives Océ seeks to achieve, how those objectives

have to be attained and which standards Océ

complies with in doing so.

This document is regularly updated and serves as

a guide for the actions of Océ and its employees.

Personnel and organisation

Corporate Human Resources Policy The Corpo-

rate Human Resources () Policy of Océ is aimed

at developing and acquiring those competencies

that are needed to achieve the company’s ambi-

tions, also over the longer term.

For Océ, as an organisation that relies strongly on

know-how, experience and skills, the employee is

crucial in the conduct of the business. Specifically

now, in a period when the consequences of the

new strategic direction will lead to far-reaching

organisational changes, the policy plays an

essential role. Only a focused policy which is

supported in all departments and locations will

contribute to achieving the objectives of Océ’s

strategy.

Implementation of the Human Resources Policy

To achieve the foregoing the policy will for the

greater part be developed and implemented by the

line management itself. The latest insights in the

areas of competencies management, self-assessment

and training will be used.

The company’s strategic objectives are being trans-

lated into concrete targets for the teams that have

to achieve those objectives. This is done on the

basis of an analysis of the existing competencies

and the future tasks. Then a plan is developed to

bridge over the differences that have been identi-

fied and to complete this within an agreed time-

frame. In this way the development of the em-

ployees is accurately attuned to strategic change

processes.

Pilot In the meantime a pilot project for this ap-

proach has been started. A Task Force headed by

the directors is putting the new approach

into practice in the five biggest European coun-

tries. This group is translating the Solution

Delivery Process, a marketing and sales concept

that specifically supports consultancy selling and

solutions selling, into concrete competencies

requirements for sales and service teams. The roles

that the teams have to fulfil will then be translated

into the required team composition and

competencies.

49


Recruitment, selection and guidance The recruit-

ment of talented new employees, the education

and retraining of present employees and providing

guidance to employees who move to a job outside

Océ, has once again proved to be an essential acti-

vity. The recruitment and selection of new per-

sonnel, particularly specialists, has not been

easy. Nevertheless Océ has succeeded almost

everywhere in the world in always attracting and

retaining the required employees.

Development In the year under review the

number of employees amounted to more than

22,000. The number of employees grew as a

result of expansion of the activities in the area of

Facility Services and through the acquisition of

several businesses.

In a number of places in the organisation, however,

the number of employees has also been strongly

reduced. This resulted in part from the Columbusproject, a new approach and a new organisation

for service and maintenance. In addition the

number of employees decreased because of the

Distribution of employees by 2001 2000

geographical areasnumber as % number as %

Netherlands 4,059 18 3,962 18

Germany 3,299 15 3,417 15

France 1,388 6 1,491 7

United Kingdom 1,111 5 1,075 5

Rest of Europe 3,301 14 3,349 15

United States 8,234 37 7,810 35

Rest of the world 1,080 5 1,149 5

Total 22,472 100 22,253 100

Distribution of employees by 2001 2000

type of functionnumber as % number as %

Research & Development 1,840 8 1,863 8

Manufacturing & Logistics 2,887 13 3,258 15

Facility Services 6,046 27 5,279 24

Sales 4,653 21 4,753 21

Service 4,914 22 5,059 23

Accounting and other 2,132 9 2,041 9

Total 22,472 100 22,253 100

reduction in the level of activity in the manufac-

turing plants during the year under review.

The strategic restructuring of the Océ organisation

in 2002 will be accompanied by a considerable

reduction in the number of jobs. Throughout the

entire Océ Group this process will require the

optimum provision of guidance and support by

the departments.

Education and training In the area of education

and training a new structure has been developed

which uses three training centres (Venlo, Chicago

and Singapore) to meet the regional training re-

quirements. Because of the rapid change-over to

digital technologies and processes and because of

the increased importance of consultancy within

the Océ range of products, the average level of

knowledge required has increased substantially.

In that respect Océ is becoming more and more a

knowledge organisation. The training methods

have also been brought into line with this.

50


Safety, environment and health (SEH)

Océ’s choice for sustainable development implies

that it opts to conduct its business on the basis of

a number of concrete principles as regards the

protection of people and the environment. All

groups involved in every place in the world receive

the care that this approach calls for. In practice

these are the company’s own employees, the people

who live in the vicinity of the (production) loca-

tions and the users, each in their own environment.

Similarly, the availability – now and in the future –

of raw materials and energy is a focus of such care.

In terms of the protection of people and the

environment Océ has a track record that can be

described in many respects as remarkable and

pioneering. For many years a substantial propor-

tion of the research and innovation activities has

been aimed at minimising the negative effect of

manufacturing and of products on the environ-

ment and health. The company’s history therefore

features many milestone achievements in the areas

of waste reduction, recovery and recycling of

materials and supplies and a series of environ-

mental and quality certificates.

For a number of years Océ has pursued an active

corporate policy in the area of safety, the environ-

ment and health. To improve the coordination of

a number of more or less separate initiatives in this

area, a structure was set up during the year under

review for measuring and steering the progress

that has been achieved. This structure provides for

direct reporting to the Board of Executive Direc-

tors. The responsibility for submitting regular

reports lies with the management of the operating

companies. The central guideline for the policy is

the fact that safety, health and the environment

are very closely interlinked and must therefore be

approached in this mutual context.

The implementation of the policy is taking

place in eight basic areas which correspond to the

interfaces between Océ and the world around it:

– Improving the commitment and the (environ-

mental and safety) awareness of employees through

training and information.

– Preventive measures to minimise the negative

effect of Océ’s activities on the world around it.

– Ensuring the safety and health of customers and

employees in all activities.

– Designing products and production processes on

the basis of the total lifecycle approach.

– Ongoing improvement of the performances

of products and processes.

– Providing information about all relevant

aspects.

– Actively involving partners and suppliers in Océ’s

programmes of care for the world around it.

– Informing customers about the proper, safe and

environmentally friendly use of Océ’s products.

By clearly setting out its environmental policy,

Océ emphatically indicates that it wants its growth

and development to take place in a sustainable

manner.

For those who are interested, the Environmental

Annual Report of Océ-Technologies .. is avail-

able on request. That report treats a number of

the above themes in greater detail.

51

Management aspects


Risk profile

Risk management Océ is faced with the commer-

cial and technological risks of a company which

specialises in the development, manufacture,

sale, distribution and servicing of advanced pro-

ducts and services on a world-wide scale. Océ

concentrates on serving high-value professional

markets, mainly with technological concepts

which have been developed within the business

and which allow the company to profile itself

clearly.

Market risks Océ has to date demonstrated that it

can cope with the specific market risks that the

company faces, or can even turn them to its ad-

vantage. None the less a number of these risks will

also continue to be present in future. By identi-

fying these and responding pro-actively to them,

the risks can be reduced to a minimum. Recent

acquisitions and operational measures, and the

restructuring operations, which will be com-

pleted in 2002, are examples of this.

– The shift in our markets from analogue to digital

technology, from copying to printing. As regards

this change-over Océ is continuously one of the

pacemakers. The related change in market ap-

proach remains a challenge for the entire

industry. Océ has made the strategic choice of

aiming to grow in the provision of service and

high-value customer solutions with the aid of

software developments, Professional Services and

Facility Services. That implies a radical change

process in which Océ will see its field of work

shift towards more complex activities with a

higher income contribution. This requires a

realignment of the skills within the entire

organisation and of the structure of the

organisation itself.

– At the same time a low volume growth for part of

our traditional print volume leads to the need to

keep a tighter control over costs and working

capital. The price pressure, which is the conse-

quence of the market trends, will no longer be

automatically absorbed by higher volumes.

– As part of its growth objectives Océ has defined a

number of growth segments, which means that

the company will enter new sub-markets. Océ has

high expectations of these and believes that they

should in due course contribute to an increased

profitability of the company. The strategic em-

phasis on growth in new markets, such as Soft-

ware & Professional Services, Facility Services and

Display Graphics, is a prerequisite for the

development of profitability of Océ.

– The growing importance of software in our total

product offerings creates its own dynamics. Lead

times and lifecycles of software are very different

from those of hardware.

– The increasing need to improve and change the

technology that is being used, indicates the impor-

tance of a tightly focused time-to-market man-

agement. Together with the above-mentioned

change-over from analogue to digital, this leads

to a risk in terms of population management

(i.e. the financed fleet of machines installed with

customers) for companies like Océ, which retain

part of the obsolescence risk by means of multi-

year rental/lease contracts.

– Océ’s broad technology base, the variety of

markets on which the company operates and the

links, mostly on a long-term basis, with highly

diverse customer categories ensure a spread of the

risks.The revenues from rentals, servicing, Facility

Services and Software & Professional Services, as

well as the sale of supplies, the highly diversified

customer base and the wide geographical spread,

help to create stability in the total revenue flow.

53


Technological risks Océ has in recent years de-

liberately and continuously invested in .

That has resulted in a range of self-developed

core technologies and products and highly market-

focused innovations in the area of applications,

operating concepts, and environmental and safety

features. Those core technologies also encompass

a number of unique components and processes

for new generations of printers and copiers for

both black-and-white and colour applications.

In the professional markets for and

Océ is one of the market leaders. Here the invest-

ments made in in the past have led to a

strong position. The current efforts in these areas

are also such that Océ can safeguard, if not further

strengthen, that position in future.

Since Océ is smaller than its competitors in the

market, Océ has always concentrated its

efforts on sub-segments of this market, especially

on the high-production environments. This also

applies to the future. Endeavours will be made to

avoid the drawbacks faced by a relatively small

company by responding to market trends, by

making the right selection from them and – where

meaningful – by entering into partnerships.

To guarantee the closest possible contact with the

market, service and sales employees are involved

in the product development of hardware and

software at an early stage. As a result this has

steadily reduced the learning curve further over

the course of the years. In addition, recent

changes in the way that product development is

steered have strongly boosted the company’s

reaction speed and the flexibility of its response

to new circumstances and customer needs.

Foreign exchange risks Due to the nature of the

high-value technology that Océ offers its cus-

tomers, its revenues are largely made in countries

within the Euro zone (38% in 2001), in the

United States (in 2001: 41% ) and also in the

United Kingdom (7% in 2001). Revenues

achieved in the rest of the world are relatively

small for Océ (14% in 2001). It should be noted

that the competing suppliers also operate on a

global scale, but that they are principally based in

the United States or Japan.

The prices charged to the customers in our

markets are denominated in the customer’s own

currency.

The biggest possible proportion of the costs of

what are – generally speaking – multi-year

contracts between Océ and the customer are

incurred in these local currencies.

Because the manufacture and development of

new products mainly takes place in the Euro

zone, with purchasing costs denominated partly

in other currencies, a foreign exchange risk arises

for the flows of goods from the Euro zone to the

sales areas where the currency is the dollar, the

Pound sterling or the Japanese yen.

At Océ these net currency flows are the subject of

an active foreign exchange management policy.

This management policy is implemented in close

consultation with the Board of Executive

Directors.

In order to control the effects on the margin of

short-term exchange rate fluctuations – usually

defined within Océ as the foreign currency posi-

tions which fall due over the next 12 months –

these positions can be hedged for up to 80%

(principally the dollar, Pound sterling and

Japanese yen). It has already been the policy for

several years always to hedge the 12-months

position of the dollar and the Pound sterling

on a roll-over basis.

54


Corporate Governance

Océ endorses the importance of corporate gover-

nance, in which accountability and transparency

are the most significant elements. The forty re-

commendations on corporate governance, effec-

tive supervision and accountability published by

the Peters Committee in the Netherlands were

extensively discussed at the General Meeting of

Shareholders. Océ acts, where reasonably possible,

in accordance with these recommendations.

Within the framework of corporate governance it

is important that a relationship of trust exists

between the Executive Board and the Supervisory

Board on the one hand and the shareholders on

the other. The General Meeting of Shareholders

serves in this respect as a forum for the exchange

of ideas, the provision of information and man-

agement accountability.

Océ takes the view that, to ensure a substantial im-

provement in the quality of the General Meeting

of Shareholders, a representative attendance of

the providers of the company’s capital is required.

Océ is therefore following with interest the Dutch

developments with regard to an efficient proxysolicitation system.The provisions in Océ’s Articles

of Association relating to proxy representation

certainly make the use of such a system possible.

Since 1984, when s were introduced in the

United States, Océ has gained experience on a

modest scale with the system of proxy voting.

A small proportion of the holders of s cast

their votes each year by means of proxy voting.

Since the end of the 1980s American institutional

investors which hold ordinary Océ shares have

been making wide-scale use of proxies to take part

in the decision-making at the General Meeting.

This implies that the resolutions adopted at the

Océ General Meeting are also supported to a

large extent by American institutional investors.

Dutch institutional investors are for the time

being reticent about proxy voting. To improve

this situation, various initiatives have been taken

in recent years. In the Netherlands, for example,

the Stichting Communicatiekanaal Aandeel-houders (Shareholders Communication Channel

Foundation) is actively working to facilitate

proxy voting. Océ has followed the activities of

this Foundation with great interest, but has

noted that the system still has teething troubles,

is expensive and cannot as yet meet the wishes of

foreign shareholders.

In December 1999 a statutory system was intro-

duced which makes it possible to use a record date

in order to prevent shareholders from not having

their shares at their disposal during the period

when those shares have to be placed in deposit.

This system links up with the general practice in

the United States and also meets the wishes of

institutional investors in particular. To enable the

use of a record date the authorisation of the

General Meeting of Shareholders is required.

Océ obtained this authorisation for a period of

five years at the Shareholders’ Meeting held on

March 7, 2001.

Apart from the exchange of ideas at the General

Meeting of Shareholders, there are of course

other important forms of communication that

Océ has long been using, such as the publication

of the annual report, quarterly reports, issuing

prospectuses and interim reports. In addition,

Océ pursues an active Investor Relations policy,

as described on page 99 of this report.

Venlo, January 29, 2002

The Board of Executive Directors

R.L. van Iperen, chairmanJ. van den Belt

J.F. Dix

G.B. Pelizzari

55

Annual Financial Statements

Consolidated Statement of Operations

2001 2000 › € 1,000

Net sales 1,836,061 1,892,829

Rentals and service 1,272,467 1,215,612

Interest from financial leases 125,109 115,491

Total revenues [1] 3,233,637 3,223,932

Cost of sales 1,100,111 1,072,521

Cost of rentals and service 816,401 802,302

1,916,512 1,874,823

Gross margin 1,317,125 1,349,109

Selling expenses 728,423 707,366

Research and development expenses [2] 199,585 190,059

General and administrative expenses 164,411 169,321

1,092,419 1,066,746

Operating income 224,706 282,363

Financial expense (net) [3] 68,925 60,702

Income before income taxes, equity in income of unconsolidated companies and minority interest 155,781 221,661

Income taxes 48,484 67,166

Income before equity in income of unconsolidated companies and minority interest 107,297 154,495

Equity in income of unconsolidated companies 121 229

Income before minority interest 107,418 154,724

Minority interest in net income of subsidiaries 2,348 2,983

Net income before exceptional items 105,070 151,741

Exceptional items (net of tax) [4] 95,000 –

Net income 10,070 151,741

Dividend preference shares 3,551 3,551

Net income attributable to holders of ordinary shares 6,519 148,190

57

The figures [ ] refer to

the notes

Consolidated Balance Sheet November 30

Assets 2001 2000 › € 1,000

Intangible fixed assets [5] 43,352 –

Tangible fixed assets Property, plant and equipment [6] 458,006 445,492

Rental equipment [7] 179,153 233,475

637,159 678,967

Financial fixed assets Unconsolidated companies [8] 3,881 4,321

Financial lease receivables [9] 663,239 732,283

Other long term assets [10] 84,032 62,519

751,152 799,123

Current assets Inventories [11] 364,721 442,409

Accounts receivable [12] 1,260,950 1,246,415

Prepaid expenses 30,036 27,693

Cash and cash equivalents [13] 40,133 21,125

1,695,840 1,737,642

Total assets 3,127,503 3,215,732

58

after net income

appropriation

Consolidated Balance Sheet November 30

Liabilities 2001 2000 › € 1,000

Group equity Ordinary shares [14] 43,630 43,337

Priority shares [15] 2 2

Financing preference shares [16] 10,000 10,000

Paid-in capital [17] 511,392 505,387

Legal reserve [19] 1,679 1,750

Other reserves [20] 341,874 428,969

Total shareholders’ equity 908,577 989,445

Minority interest [21] 40,802 41,868

949,379 1,031,313

Long term liabilities (provisions) [22] 427,999 319,496

Long term debt [23] 754,132 853,577

Current liabilities Short term debt [24] 387,274 365,975

Other liabilities [25] 310,730 332,706

Accrued liabilities [26] 250,407 262,515

Deferred income 47,582 50,150

995,993 1,011,346

Total liabilities 3,127,503 3,215,732

59

Consolidated Statement of Cash Flow

2001 2000 › € 1,000

Cash flow from Net income 10,070 151,741

operating activities Adjustments to reconcile net income to cash flow

generated by operating activities:

Depreciation 194,191 194,487

Installed in rental equipment –136,503 –179,474

Divestments in rental equipment 86,038 99,564

Financial lease receivables 10,543 –87,443

Equity in income of unconsolidated companies 208 –5

Long term liabilities (provisions) 110,112 –27,124

Trade accounts receivable and other receivables 47,023 –67,534

Inventories 78,886 –43,557

Trade accounts payable –20,926 7,419

Net change in other working capital accounts* –31,197 –8,918

Total cash flow from operating activities 348,445 39,156

Cash flow from Capital expenditure:

investing activities Intangible assets (software) –15,178 –

Property, plant and equipment –130,329 –114,309

Other investments –22,362 283

Divestments:

Property, plant and equipment 23,931 49,630

Acquisition of unconsolidated companies – –79

Movement from unconsolidated companies to

consolidated companies – 534

Acquisitions (net of cash) –30,941 6,010

Total cash flow from investing activities –174,879 –57,931

60

* See page 61 for the specification of net change in other working capital accounts.


2001 2000 › € 1,000

Cash flow from Long term debt:

financing activities Proceeds from long term debt 82,330 195,579

Repayment of long term debt –172,624 –231,059

Borrowings and current portion of long term debts 20,833 63,175

Repurchase of shares –24,081 –74

Dividends paid –52,943 –19,108

Optional dividend – 2,685

Minority interest –1,066 –344

Other – –1,992

Total cash flow from financing activities –147,551 8,862

Effect of exchange rate changes –7,007 –5,816

Changes in cash and cash equivalents 19,008 –15,729

Specification of net change in other working capital accounts:Prepaid expenses –2,338 –7,469

Income taxes –10,259 –8,714

Value added taxes, social security and other taxes payable –628 –3,353

Pension liabilities 6,190 1,268

Other liabilities –9,391 1,196

Accrued liabilities –12,203 –929

Deferred income –2,568 9,083

Balance –31,197 –8,918

61

Summary of Significant Accounting Principles

Introduction

The following summary of significant accounting

principles is intended as a guide in interpreting

the financial statements.

Compared to the previous financial year, the

accounting principles have undergone the follow-

ing changes.

Goodwill arising upon acquisitions is capitalised

and written off over its estimated useful lifetime,

subject to a maximum of 20 years. Internal and

external costs of the development of software for

internal operational use are capitalised to the

extent that such software systems meet success

criteria. The above changes have led to a new

balance sheet asset item, referred to as ‘Intangible

assets’.

The valuation principle used for ‘Property, plant

and equipment’ has been changed. These assets

are now stated at acquisition value. The existing

book value of assets that were revalued in the past

now serves as a basis to which straight-line depre-

ciation is further applied.

The presentation of current and deferred taxation

has been modified. Tax positions that were

aggregated in the past are now shown separately,

which has led to an important extension of the

balance sheet.

The Group’s financial year commences on December 1and closes on November 30 of the subsequent year.

Principles of consolidation

The consolidated financial statements combine

the financial data for Océ .. and its subsidiaries.

The financial data of subsidiaries are fully con-

solidated; the minority interest is stated separately.

Joint ventures are consolidated pro rata.

A company is considered to be a subsidiary if Océ

directly or indirectly holds a majority controlling

interest in it.

The financial data of a company joining the Océ

Group in the course of a financial year are consol-

idated from the date of the Group’s entitlement to

that company’s results.

Where the acquisition cost is higher than the net

asset value determined on the basis of our ac-

counting principles, then the difference – being

the goodwill paid – has been capitalised with

effect from December 1, 2000. Previously this

goodwill was charged directly to Shareholders’

equity.

The principal companies affiliated to the Group

are listed on pages 95 and 96 of this report.

A number of affiliated companies of minor im-

portance have been omitted by virtue of the

provisions of Article 379, para. 2c, Book 2 of the

Dutch Civil Code.

Balance sheet items of subsidiaries are translated

into euro. As the opening assets and movements

in assets during the year are recalculated on the

basis of the closing exchange rate at the end of the

reporting period, differences arise as compared to

the calculation based on the exchange rate used

for the previous period. Such differences are

charged against or added to the Shareholders’

equity (under Accumulated translation

adjustment).

Statement of operations items of subsidiaries are

translated into euro at the average exchange rate

during the reporting period. The result calculated

on this basis differs from that calculated on the

basis of the closing exchange rate for the reporting

period. This difference is debited or credited

directly to the Shareholders’ equity (under

Accumulated translation adjustment).

62


Consolidated Statement of Operations

Total revenues These are the proceeds from the

sale of goods and services to third parties, excluding

turnover taxes. Receipts from sales also include

the receipts from the financial leasing contracts

concluded during the financial year. Interest

income arising from these contracts is included

under total revenues.

Receipts from rental and service contracts for

equipment are included in revenues as far as they

relate to the reporting period. Where rental and

service contracts have been invoiced in advance,

the relevant amounts are shown in the balance

sheet under ‘Deferred income’.

Costs Consumption of raw materials and other

cost items are based on historic cost.

Depreciation on fixed production assets is charged

at a fixed percentage of the acquisition value of

the relevant asset. Depreciation on rental

equipment is charged at a fixed percentage of the

all-in cost. Government contributions to oper-

ating costs are deducted directly from these costs.

Provisions are made to cover risks linked to

business operations.

Research and development expenses Expenditure

on research and development, including pur-

chased know-how, is charged directly to income.

Development credits and subsidies Development

credits received from the government are subject

to a contingent repayment liability. This contin-

gent liability, to which a contractual mark-up is

applied each year, is not included in the balance

sheet. According as the relevant projects prove

successful, the liability ceases to be contingent in

nature and a real liability arises. A provision to

cover these liabilities is set up in the year in which

the liability arises. The actual repayments fall due

pro rata to the revenues achieved on the relevant

project. These repayments are charged to the

provision for development credits. Each year the

balance of credits received and the repayment

liabilities that have arisen in respect of successful

projects are included in the results under

‘Research and development expenses’.

Subsidies received from the government are in-

cluded in the statement of operations as an income

item in the year of the entitlement thereto.

Financial expense (net) Besides interest received

and interest paid, also expenses relating to raising

of loan capital are included. The effect of interest

rate instruments and interest on loans are also

included under this heading.

Income tax This is calculated on the commercial

results at the rates applicable in the various

countries. This method implies that provisions are

made for deferred income taxes. The entitlement

to loss compensation is taken into consideration

in so far as there is a reasonable expectation that it

can be realised. Allowance is made for non-

offsettable dividend withholding tax at the

moment of dividend distribution by an affiliated

company.

63


Consolidated Balance Sheet

Assets and liabilities are included at face values,

unless stated otherwise.

Foreign currencies Receivables and payables

denominated in a foreign currency are translated

into local currency at the exchange rate ruling at

year end. These exchange rate differences, in-

cluding results on forward exchange contracts

relating to the positions of subsidiaries are re-

corded under Shareholders’ equity. The differ-

ences relating to operational cash flows, including

those arising on the relevant forward exchange

contracts, are included in income.

Intangible assets Goodwill arising upon the

acquisition of new interests in group companies,

is written off on a straight-line basis over the

estimated useful lifetime, subject to a maximum

of twenty years. The development and purchase

costs of certain types of software for internal use

are capitalised and written off over a three-year

period after first use. Capitalisation must comply

with stringent success criteria.

Property, plant and equipment With effect from

the 2001 financial year ‘Property, plant and

equipment’ are valued at acquisition value, less

cumulative depreciation. Some of these fixed

assets were previously valued on a current cost

basis. This value has been maintained and will

not be subject to any further adjustment.

Depreciation is provided for according to the

straight-line method based on the expected use-

ful lifetime of the relevant asset. Depreciation of

specific pieces of equipment used for the manu-

facture of machines takes place pro rata to the

expected number of units to be manufactured.

Rental equipment These are valued at the all-in

cost less cumulative depreciation on a straight-

line basis.

Unconsolidated companies These are included at

the attributable net asset value, calculated where

possible on the basis of the valuation principles

applied in these Financial Statements and taking

into account the specific risks connected with the

company’s nature and location.

Financial lease receivables These comprise the

long-term receivables and residual values in

respect of financial lease contracts. They are

valued at the present value of the contracted

receivables, taking into account the risk of

uncollectability.

Other long term assets These comprise assets that

are not immediately realisable, such as mortgage

debtors, cash advances and guarantee deposits as

well as deferred tax benefits. They are valued at

expected realisable value.

Inventories Purchased inventories are valued at

purchase price by the First-in-First-out method.

Inventories of finished and semi-finished pro-

ducts and spare parts are valued at manufacturing

cost inclusive of a surcharge for indirect costs

related to the manufacturing, no interest being

charged. The risk of obsolescence is allowed for.

Results on transactions between consolidated

companies are eliminated.

Accounts receivable Trade debtors, financial

leases, other debtors and amounts receivable

from unconsolidated companies are shown at

face value less an allowance for bad and doubtful

accounts.

Prepaid expenses These are shown at face value.

Cash and cash equivalents These are shown at

face value.

Minority interest The minority interest in sub-

sidiary companies is included at the net asset

value determined in accordance with the valua-

tion principles used in these Financial State-

ments.

64


Long term liabilities (provisions) The provision

for deferred income taxes is calculated on the

differences between valuation of assets and lia-

bilities for commercial and tax purposes, based

on the effective rate of income tax in the various

countries and is stated at face value. Capitalised

entitlements to fiscal loss compensation are in-

cluded to the extent that they are considered to

be realisable.

The self insurance franchise provision relates to

uninsured potential future losses that have not

yet occured.

The provision for retirement benefits and sever-

ance payments relates to the commitments, de-

termined on an actuarial basis, which are not

covered by separate pension or redundancy funds,

as well as to other non-activity schemes. In the

Netherlands and in most other countries the

pension schemes are administered by separate

funds which apply local arrangements and prac-

tices. On aggregate the liabilities of € 853 million

are offset by separately held assets of € 783

million. The liabilities have been calculated on

the basis of the present salary level of the relevant

employees. The provision for non-activity

schemes relates to employees who have opted to

make use of such a scheme.

The restructuring provision relates to costs

connected with the reorganisation of business

activities.

Other long term liabilities (provisions) among

others relate to (legal) proceedings and guarantee

commitments.

Long term debt These include loans available for

longer than one year.

Current liabilities These commitments comprise

liabilities falling due within one year.

Commitments and contingent liabilities not

stated in the balance sheet These are commit-

ments and contingent liabilities arising from

contracts, mostly of more than one year (leasing

contracts, rental contracts, capital expenditure

commitments, repayable development credits,

financial instruments, etc.).


The figures in this statement are derived from the

movements in the Consolidated Balance Sheet.

In the event of a major acquisition, however, the

acquired net asset value, net of cash, is shown

separately.

The movement in the portions of long term debt

falling due within one year is shown under ‘Long

term debt: repayment of long term debt’.

65

Notes to the Consolidated Statement of Operations

Total revenues 2001 2000 › € 1,000

[1]Total revenues 3,233,637 3,223,932

Segmental information

Wide Format Printing Systems Document Printing Systems Production Printing Systems total › € million

2001 2000 2001 2000 2001 2000 2001 2000

Total revenues 912 901 1,529 1,551 793 772 3,234 3,224

Operating income

before research and

development expenses 152 165 137 168 135 139 424 472

Assets 772 828 1,727 1,754 629 634 3,128 3,216

revenues per geographical area geographical spread of assets employees

› € million › € million

2001 2000 2001 2000 2001 2000

Countries Germany 392 405 538 498 3,299 3,417

Netherlands 279 260 586 609 4,059 3,962

United Kingdom 219 219 262 257 1,111 1,075

France 220 220 201 183 1,388 1,491

Rest of Europe 568 595 422 439 3,301 3,349

United States 1,333 1,287 1,000 1,087 8,234 7,810

Rest of the world 223 238 119 143 1,080 1,149

Total 3,234 3,224 3,128 3,216 22,472 22,253

Exchange rates of a average rate in euro balance sheet rate in euro

number of currenciesof importance to Océ 2001 2000 2001 2000

Pound sterling 0.62 0.61 0.62 0.61

American dollar 0.89 0.93 0.89 0.86

Australian dollar 1.72 1.58 1.71 1.65

Japanese yen (10,000) 107.53 99.18 109.82 95.92

66


Costs and expenses 2001 2000 › € 1,000

Depreciation Intangible assets 112 –

Property, plant and equipment 91,372 86,116

Rental equipment 102,707 108,371

194,191 194,487

Payroll expenses Wages and salaries 1,051,528 996,865

Social security 206,283 195,606

Pensions 51,901 49,086

1,309,712 1,241,557

periodic pay performance-related pension contributions total in europay

R.L. van Iperen 463,074 137,333 238,235 838,642

J. van den Belt 320,815 25,484 55,361 401,660

J.F. Dix 358,783 114,444 216,453 689,680

G.B. Pelizzari 360,027 114,444 189,680 664,151

The remuneration costs and pension scheme contribu-

tions of former Executive Board members are € 111,174

(2000: nil).

Under the Océ Stock Option Plan 91,000 unconditional

options were granted to the members of the Board of

Executive Directors (2000: 112,000 units). A table showing

the interests of the Executive Board members in the option

plans can be found on page 81 of this annual report. At the

end of the financial year the members of the Board of

Executive Directors held no ordinary shares in Océ

(2000: nil) and no rights to options listed on the

Options Exchange.

The remuneration for the 2001 financial year of the

present and former members of the Board of Supervisory

Directors amounted to € 196,714 (2000: € 193,443). At

the end of the financial year the members of the Board of

Supervisory Directors held 2,969 ordinary shares in Océ

(2000: 2,969) and no rights to options listed on the

Options Exchange.

67

The individual remuneration of the members of the Board

of Executive Directors in function this year is:


2001 2000 › € 1,000

[2] Research and Total expenditure on research and development 203,254 198,875

development Development credits repayable and net subsidies received –3,669 –8,816

199,585 190,059

[3] Financial expense (net) Interest and similar income items –5,404 –8,584

Interest charges and similar expenses 72,125 67,571

Other financial expenses 2,204 1,715

68,925 60,702

Income taxes A reconciliation of the Dutch statutory income tax rate

to the effective income tax rate is set forth below:

Dutch statutory tax rate 35.0 35.0 per cent

Non-deductible expenses 2.1 1.8

Foreign tax rate deviating from the Dutch tax rate 2.8 –1.6

Tax credits –2.0 –1.5

Change valuation allowance –5.8 –4.3

Other –1.0 0.9

Effective income tax rate 31.1 30.3

[4] Exceptional items The extraordinary charges relate to a restructuring pro-

vision for redundancy costs of employees and the intended

write-off of assets that will be taken out of use.

Restructuring provision 125,000 – › € 1,000

Income taxes 30,000 –

Exceptional items (net) 95,000 –

Employees by category 2001 2000 employees

Research & Development 1,840 1,863

Manufacturing & Logistics 2,887 3,258

Facility Services 6,046 5,279

Sales 4,653 4,753

Service 4,914 5,059

Accounting and other 2,132 2,041

Number of employees at November 30 22,472 22,253

Average number of employees 22,363 22,005

68

Notes to the Consolidated Balance Sheet

[5] Intangible fixed assets goodwill software total › € 1,000

At December 1, 2000

Acquisition value – – –

Accumulated depreciation – – –

Book value – – –

Movements in book valueExpenditure 28,286 15,178 43,464

Depreciation 85 27 112

Foreign currency translations – – –

At November 30, 2001 28,201 15,151 43,352

Acquisition value 28,286 15,178 43,464

Accumulated depreciation 85 27 112

Book value 28,201 15,151 43,352

The estimated useful lives of the various

classes of assets are as follows:

– goodwill: 10 to 20 years;

– software: 3 years.

69

70


Tangible fixed assets

[6] Property, plant › € 1,000 property and production other fixed under fixed assets total

and equipment plant machines assets constructionand not in

prepayments production

process

At December 1, 2000

Acquisition value 331,903 396,911 376,203 51,095 3,127 1,159,239

Accumulated depreciation 145,151 301,218 265,409 1,154 815 713,747

Book value 186,752 95,693 110,794 49,941 2,312 445,492

Movements in book valueExpenditure 20,774 47,433 64,662 –2,540 – 130,329

Divestments 10,495 4,254 8,180 1,002 – 23,931

Net expenditure 10,279 43,179 56,482 –3,542 – 106,398

Acquisition of companies – 45 564 – – 609

Depreciation 9,033 33,506 48,833 – – 91,372

Foreign currency translations –678 –1,073 –958 –393 –19 –3,121

At November 30, 2001 187,320 104,338 118,049 46,006 2,293 458,006

Acquisition value 334,360 413,875 405,215 46,006 5,436 1,204,892

Accumulated depreciation 147,040 309,537 287,166 – 3,143 746,886

Book value 187,320 104,338 118,049 46,006 2,293 458,006

The estimated useful lives of the various classes of fixed assets are as follows:

– property and plant: 20 to 50 years;

– production machines: 8 or 10 years;

– equipment: 3 to 10 years;

– vehicles: 4 or 5 years.

The above overview contains an amount of € 11.6 million for financial

leases (2000: € 11.9 million).


2001 2000 › € 1,000

[7] Rental equipment At December 1, 2000/1999

Cost 596,304 588,924

Accumulated depreciation 362,829 331,726

Book value 233,475 257,198

Movements in book valueInstalled on rental 136,513 179,474

Divestments –86,038 –99,564

Depreciation –102,707 –108,371

Foreign currency translations –2,090 4,738

At November 30 179,153 233,475

Cost 551,656 596,304

Accumulated depreciation 372,503 362,829

Book value 179,153 233,475

The estimated useful life of the various types of machines

ranges from 3 to 5 years.

Financial fixed assets 2001 2000 › € 1,000

[8] Unconsolidated Book value at December 1, 2000/1999 4,321 4,367

companiesChanges due to Equity in income 121 229

Increase in/acquisition of companies – 85

Divestments – –6

Decrease resulting from addition to

consolidated companies – –534

Dividends declared –329 –224

Foreign currency translations –232 404

Book value at November 30 3,881 4,321

[9] Financial lease Lease amounts receivable at December 1, 2000/1999 937,648 799,028

receivables New lease amounts receivable 438,477 520,095

To current lease amounts receivable –489,643 –443,035


Lease amounts receivable at November 30 874,589 937,648

Residual values 20,890 33,052

Unearned income –232,240 –238,417

At November 30 663,239 732,283

71


2001 2000 › € 1,000

[10] Other long Book value at December 1, 2000/1999 62,519 58,101

term assets New amounts receivable 26,148 5,426

Repayments –3,647 –1,255



Other financial assets include an amount of € 0.4 million

(2000: € 0.3 million) for loans provided to the Board of

Executive Directors. An amount of € 2.5 million

(2000: € 1.8 million) was provided to personnel in the

form of loans.

Current assets 2001 2000 › € 1,000

[11] Inventories Raw and other materials 31,147 37,075

Semi-finished products and spare parts 130,922 129,279

Finished products and trade stock 202,652 276,055

Total 364,721 442,409

[12] Accounts receivable Trade accounts receivable 649,169 696,344

Discounted trade bills –179 –424

Lease receivables 489,643 443,035


Other 94,993 87,833

Total 1,260,950 1,246,415

[13] Cash and cash Cash and bank balances 35,948 15,459

equivalents Time deposits 4,185 5,666

Total 40,133 21,125

72


Group equity 2001 2000 › € 1,000

Authorised capital* Ordinary shares 72,500 72,500

Priority shares 2 2

Financing preference shares 15,000 15,000

Protective preference shares 87,500 87,500

Total 175,002 175,002

Paid-up share capital [14] Ordinary sharesAmount at December 1, 2000/1999 43,337 42,224

Conversion of convertible loans 293 180

Stock dividend – 933

Amount at November 30 43,630 43,337

Number at December 1, 2000/1999 86,674,380 84,450,154 shares

Conversion of convertible loans 587,129 359,218

Stock dividend – 1,865,008

Number at November 30 87,261,509 86,674,380

[15] Priority sharesAmount at November 30 2 2

Number at November 30 30 30 shares

[16] Financing preference sharesAmount at November 30 10,000 10,000

Number at November 30 20,000,000 20,000,000 shares

[17] Paid-in capital Amount at December 1, 2000/1999 505,387 502,695

Conversion of convertible loans 6,005 3,625

Stock dividend – –933

Amount at November 30** 511,392 505,387

[18] Revaluation reserve Amount at December 1, 2000/1999 – 37,155

To Provision for deferred income taxes – –1,992

To Retained earnings – –35,163

Amount at November 30 – –

[19] Legal reserve Reserve for non-distributed income of unconsolidated companiesAt December 1, 2000/1999 1,750 1,733

To (from) Retained earnings –71 17

At November 30 1,679 1,750

73

* For further information about the authorised capital see page 90.

** If distributed in the form of shares, this amount is available to shareholders without attracting Dutch income tax.


2001 2000 › € 1,000

[20] Other reserves Accumulated translation adjustmentAt December 1, 2000/1999 21,695 –39,586


At November 30 876 21,695

Retained earningsAt December 1, 2000/1999 429,823 286,231

From (to) Legal reserve 71 –17

Added from net income – 98,661

Goodwill – –1,667

Repurchase of shares – –74

Dividend –42,266 –

Optional stock dividend – 11,526

From Revaluation reserve – 35,163

At November 30 387,628 429,823

Repurchased shares relating to the Stock Option PlanAmount at December 1, 2000/1999 –22,549 –22,549

Repurchased –24,081 –

Amount at November 30 –46,630 –22,549

Repurchased shares are valued at cost.

Number at December 1, 2000/1999 1,149,840 1,149,840 shares

Repurchased 2,000,000 –

Number at November 30 3,149,840 1,149,840

Total other reserves 341,874 428,969

[21] Minority interest At December 1, 2000/1999 41,868 42,213

Capital distribution/contribution –3,102 –3,474

Share in income 2,348 2,983


At November 30 40,802 41,868

74


[22] Long term liabilities (provisions)

Provision for deferred The composition of deferred 2001 2000 › € 1,000

income taxes income tax assets and liabilitiesis as follows assets liabilities assets liabilities

Intangible fixed assets 38,477 – 49,352 –

Leasing – 112,123 – 123,179

Other fixed assets 14,059 4,471 13,170 9,894

Current assets 52,740 671 69,814 601

Long term liabilities (provisions) 45,039 98 1,296 1,496

Current liabilities 23,292 21,433 19,612 9,562

Total deferred assets/liabilities 173,607 138,796 153,244 144,732

Deferred assets/liabilities

(netted by fiscal entity) 93,294 58,483 80,510 71,998

Carry forward losses 23,676 – 22,380 –

Valuation allowance –53,265 – –62,268 –

Provision for deferred income

tax assets and liabilities 63,705 58,483 40,622 71,998

Deferred tax assets form part of the balance sheet caption

‘Other long term assets’.

Other provisions The composition of the other self insurance retirement bene- development reorganisation other total

provisions is as follows fits and severance credits provision provisions

(› € 1,000) obligations

At December 1, 2000 1,815 188,096 142 27,776 29,669 247,498

Movements due toAdditions –907 21,205 2,269 125,000 11,668 159,235

Withdrawals – –6,169 –286 –44,811 –2,888 –54,154

From ‘Short term’ – – – 18,549 – 18,549

Foreign currency translations – –1,319 – – –293 –1,612

At November 30, 2001 908 201,813 2,125 126,514 38,156 369,516

The short term part of these provisions is approximately € 75 million.

2001 2000 › € 1,000

Total long term liabilities 427,999 319,496

(provisions)

75

Loans principal amount average interest rate redemption amounts due after › € 1,000at November 30 (%) more than five years

Euro debenture loan 113,445 6.38 2006 –

Euro debenture loan 136,134 6.25 2007 136,134

Euro 13,613 7.20 2003 –

Euro 22,867 3.80 2003 –

Euro 9,077 6.74 2004 –

Euro 22,689 6.84 2005 –

Euro 77,143 6.35 2006 –

Euro 4,538 5.84 2013 4,538

Euro 21,760 4.05 2003/5 –

American dollars 56,433 6.39 2005 –


American dollars 38,600 2.51 2003/5 –

British pounds 54,991 4.60 2005 –

Swiss francs 66,161 2.34 2003/5 –

Norwegian crowns 38,378 7.24 2003/5 –

Swedish crowns 3,636 4.07 2003/5 –

Other 6,893 3.62 2003/5 –

Total 742,791 5.53 140,672

The fixed interest rates of the euro (debenture) loans

have been fully swapped into variable interest rates.

The heading ‘Loans’ also includes multi-year stand-by

credit facilities. Where these relate to loans of a short term

nature, they are accounted for as ‘Short term borrowings’

under short term debt. In 2001 these amounted to € 189

million (2000: nil).


[23] Long term debt 2001 2000 › € 1,000

Convertible euro debentures to Company personnel 9,726 8,145

Loans 742,791 841,708

Capitalised lease obligations 1,615 3,724

Total 754,132 853,577

76

Convertible eurodebentures to Company personnel The average conversion price is € 20.31 (2000: € 22.43).


Current liabilities 2001 2000 › € 1,000

[24] Short term debt Borrowings under bank lines of credit 4,638 15,914

Current portion of long term debt 136,115 142,353

Short term borrowings 246,521 201,397

Convertible subordinated euro debentures – 6,311

Total 387,274 365,975

Under ‘Short term borrowings’ loans payable on call

amounting to € 84 million are included after deduction of

a deposit in respect of such loans which was settled on the

first working day after balance sheet date.

[25] Other liabilities Trade accounts payable 143,330 147,630

Notes payable 9,423 20,204


Value added taxes, social security and other taxes payable 54,321 54,950

Pension liabilities 8,685 2,495

Dividend 39,719 40,326

Other 47,329 56,613

Total 310,730 332,706

[26] Accrued liabilities Salary expenses and payroll taxes 140,951 144,432

Other 109,456 118,083

Total 250,407 262,515

77


78

Commitments and contingent liabilities 2001 2000 › € million

not stated in the Balance Sheet

Collateral security Collateral security for liabilities 0.1 1.2

Contingent liabilities Guarantee commitments 2.7 3.6

Government development credits 47.8 50.1

Interest risks Interest rate instruments are used to

achieve the desired risk profile in terms of fixed

and variable interest exposures. A central objec-

tive of the policy is to prevent a mismatch between

the portfolio of rentals and leases and the finan-

cing of the Group. Efforts are made to achieve a

ratio of 60 to 80% between the above fixed-

interest assets and liabilities. At balance sheet

date the contract value/notional principal amount

and the market value of interest rate instruments

(interest rate swaps) were as follows (in millions):

€ 1,311.2 and € 18.3 (2000: € 1,435.4 and € 9.4).

Credit risks These risks are reduced by doing

business solely with financial institutions which

have a high credit rating, with fixed limits being

applicable to each institution.

Financial instruments

Financial instruments are used to hedge against

the financial risks that are inherent to the Group’s

underlying commercial activities. For an explan-

ation of the foreign exchange management policy,

see page 54.

Foreign exchange risks The policy for the man-

agement of foreign exchange risks is aimed at pro-

tecting the operating income and participations

held in foreign currencies. Forward foreign ex-

change contracts have been entered into to control

these foreign exchange risks. The contract value

and the result of forward foreign exchange

contracts at balance sheet date were as follows (in

millions):

– in respect of cash flows: € 228.6 and € 0.2

(2000: € 347.2 and € –30.8);

– in respect of participations: € 465.9 and € 9.2

(2000: € 442.5 and € –5.3).

Guarantee commitments include guarantees

given in respect of import duties and loans from

third parties.

Other commitments Repurchase commitments

of € 10.1 million (2000: € 9.6 million) exist on

the lease contracts with third parties. Of this

amount, the expected amount to be paid within

one year is € 0.4 million (2000: nil) and € 9.7

million within five years (2000: € 9.6 million). As

a result of these commitments the machines can

be sold again upon their return. The estimated

market value upon return is higher than the

repurchase commitment.

Recourse liabilities in respect of bills discounted

amount to € 0.2 million (2000: € 0.4 million).

Total contracted lease commitments amount to

€ 316 million (2000: € 233 million).

These commitments fall due over the next

20 years. The maturity dates over the next years

are as follows:

2002 88 › € million

2003 64

2004 43

2005 31

2006 23

Other commitments, such as buying contracts etc.,

have been entered into solely as part of normal

business operations.


Option plan

To encourage the long term achievement of the

Company’s objectives, Océ operates a stock

option plan under which decisions are taken each

year on the granting to directors and certain senior

company executives of option rights and/or Share

Appreciation Rights (s) in respect of ordinary

shares in Océ. A is the right to receive payment

of the share price gain, whereby the share price

gain is the difference between the stock market

price of the share on the day of exercise and the

exercise price fixed on the day of grant. Instead of

receiving payment of the share price gain, a

participant may also request delivery of a share.

Océ Stock Option Plan 2002 In contrast to the

previous Océ Stock Option Plans, the Océ Stock

Option Plan 2002 comprises not only unconditi-

onal (fixed) stock options and s, but also con-

ditional (variable) stock options. These conditi-

onal options have been granted to a limited

number of executives and officers within the total

group of participants in the Océ Stock Option

Plan 2002.

Unconditional option rights/s During the

financial year an aggregate of 666,000 unconditio-

nal option rights and 15,000 s were granted

to a total of 178 participants for the Océ Stock

Option Plan 2002. For participants in the Nether-

lands and Belgium the unconditional options

have a duration of nine years, whilst the duration

for participants in other countries amounts to

eight years. The s were granted to the Swiss

participants and have a duration of eight years.

Participants in the Océ Stock Option Plan are

expected to abide by a code of conduct or waiting

period. This code stipulates that, where the dura-

tion of the unconditional options or s amounts

to eight years, they will not exercise option rights

or s within two years after grant and, where the

duration of the unconditional options amounts to

nine years, they will not exercise within three

years after grant.

Conditional option rights A limited group of

executives and officers within the group of parti-

cipants have been awarded conditional option

rights in addition to unconditional option rights.

As compared to previous Océ Stock Option

Plans, the relevant participants have been granted

half the former number of unconditional option

rights, whilst the other half consists of option

rights that are conditional in nature. The duration

of these conditional option rights is nine years for

Dutch participants and eight years for non-Dutch

participants. The relevant option rights are condi-

tional in nature because they can only be exercised

three years after grant, subject to the condition

that a performance criterion has been met.

The performance criterion applied by Océ is the

average growth in Earnings Per Share () for the

three financial years as from the moment of grant.

Depending on the extent of the average

growth, the conditionally granted option rights

either become unconditional or lapse. The

norm applied is 10%. If the average growth

amounts to less than 5%, all conditionally granted

option rights will lapse. If there is an average

growth of between 5% and 10%, part of the con-

ditional option rights will become unconditional

and part will lapse. If the norm of at least

10% is achieved, all conditional option rights

become unconditional, whilst the number of

unconditional option rights may at most be

doubled if the average growth in amounts to

15% or more.

In the Océ Stock Option Plan 2002 conditional

option rights were granted to 32 participants. If

the norm of 10% is achieved, 196,000 option

rights will become unconditional. The maximum

possible number of option rights that may

become unconditional is 392,000.

79


Exercise price For the conditional and uncon-

ditional options or s granted in this financial

year to participants outside the Netherlands the

exercise price is equal to the opening share price of

the Océ share on Euronext Amsterdam on the

date of grant and amounts to € 9.77.

For the conditional options granted in this finan-

cial year to participants in the Netherlands the

exercise price is likewise equal to the opening share

price of the Océ share on Euronext Amsterdam

on the date of grant and amounts to € 9.77.

When participants in the Netherlands were

granted the unconditional option rights, they

were offered a choice between an exercise price of

€ 9.77, € 10.75, € 11.72 or € 13.19. The higher the

exercise price compared to the price of the Océ

share upon grant, the lower the taxable amount

that has to be added to the taxable income for

Dutch participants. Against this, however, the

potential result upon exercise will also be lower.

Since 2001, as a consequence of the new tax

legislation, it has also been possible to opt not to

pay wages tax upon grant or when the options

become unconditional, but to pay tax upon

exercise over the entire benefit actually received as

a result of the exercise of the option rights.

Regulations Participation in the Océ Stock Option

Plan is subject to regulations so as to prevent the

misuse of inside information. Participants are

prohibited from trading in Océ options on the

Options Exchange in Amsterdam and from

disposing of or pledging the options they have

been granted. Participants have to transfer the

exercise of their options to an independent

Trustee designated by the company. This Trustee

will then exercise the options according to the

instructions given by the participants. Participants

can only give such instructions if they are not in

possession of inside information during the desig-

nated periods. A designated period is a period of

at most nine stock exchange trading days after

publication of the quarterly results.

Total number of options/s As at November

30, 2001 a total of 3,798,000 unconditional

options or s in respect of ordinary shares have

been granted at an average exercise price of € 20.72

and a total of 196,000 conditional options, based

on an norm of at least 10%, at an average

exercise price of € 9.77.

The remaining duration of these options is 4.5

years on average.

Purchase of shares The company's policy is to

purchase the shares required to satisfy the Océ

Stock Option Plan either before or upon exercise.

Shares may also be issued to cover commitments

under existing stock option plans.

For the delivery of ordinary shares as a result of

the exercise of options, nil shares (2000: 17,000

shares) were purchased in 2001 and nil shares

(2000: nil shares) were issued at the moment of

exercise.

The table on the next page gives an overview of

the information relating to the outstanding

options and s in respect of shares as at

November 30, 2001.

80


81

Stock issued number of options exercise price in euro options exercised outstanding at expiration date

Option forfeited number of November 30,

Plan in options 2001

year

1997 806,400 21.05 125,800 680,600 – 25-11-2001

1998 807,000 24.85 63,000 26,000 718,000 28-11-2002

1999 872,500 30.40-41.15 65,000 – 807,500 29-11-2003/2004

2000 791,000 16.85-22.98 37,000 – 754,000 26-11-2004/2005

2001 847,500 18.10-24.44 10,000 – 837,500 29-11-2005/2006

2002 fixed 681,000 9.77-13.19 – – 681,000 28-11-2009/2010

2002 variable 392,000 9.77 – – 392,000 28-11-2009/2010

5,197,400 300,800 706,600 4,190,000

The table below shows the rights granted under

this option plan to the members of the Executive Board

after their appointment.

Stock issued number of options outstanding at exercise price expiration date

Option November 30, 2001 in euro

Plan in

year

R.L. van Iperen 1998 50,000 50,000 24.85 28-11-2002

1999 35,000 35,000 30.40 29-11-2004

2000 42,000 42,000 17.02 26-11-2005

2001 42,000 42,000 18.10 29-11-2006

2002 fixed 21,000 21,000 9.77 28-11-2010

2002 variable 42,000 42,000 9.77 28-11-2010

J. van den Belt 2002 fixed 17,500 17,500 9.77 28-11-2010

2002 variable 35,000 35,000 9.77 28-11-2010

J.F. Dix 1999 35,000 35,000 30.40 29-11-2004

2000 35,000 35,000 17.02 26-11-2005

2001 35,000 35,000 18.10 29-11-2006

2002 fixed 17,500 17,500 9.77 28-11-2010

2002 variable 35,000 35,000 9.77 28-11-2010

G.B. Pelizzari 1999 35,000 35,000 30.40 29-11-2004

2000 35,000 35,000 17.02 26-11-2005

2001 35,000 35,000 18.10 29-11-2006

2002 fixed 35,000 35,000 9.77 28-11-2010

The members of the Board of Executive Directors together

hold 84,000 options which were granted prior to their

appointment to the Executive Board.

2001 2000 › € 1,000

Net income and share- Net income as reported in the Consolidated Statement

holders’ equity under of Operations 10,070 151,741

US GAAP

US GAAP adjustments Business combinations –11,949 –12,317

Reorganisation costs 40,099 –29,894

Depreciation – 498

Self insurance –908 –908

Pensions 8,236 5,738

Book profit on disposal of fixed assets – –4,415

Use of tax-deductible goodwill –14,800 –9,685

Deferred income taxes on above adjustments –16,595 8,115

Net income under 14,153 108,873

Earnings per ordinary Based on average number of shares outstanding (basic) 0.12 1.25 euro

share of € 0.50 nominal Based on increase upon conversion/options (diluted) 0.13 1.23 euro

under US GAAP

Shareholders’ equity as reported in the Consolidated

Balance Sheet 908,577 989,445

US GAAP adjustments Intangible fixed assets 206,688 226,833

Reorganisation provision 83,357 25,424

Pension provision 49,338 29,211

Additional minimum pension liability – –385

Revaluation of Property, plant and equipment – –12,308

Self insurance franchise 908 1,815

Final dividend 39,719 40,326

Accrued liabilities – 4,084

Deferred income taxes on above adjustments –9,716 20,244

Shareholders’ equity under 1,278,871 1,324,689


82

United States generally accepted accounting

principles (US GAAP)

Net income and share- Océ’s consolidated financial statements are drawn up on the

holders’ equity based on basis of the accounting principles applied in the Nether-

United States accounting lands, which differ in a number of respects from United

principles States generally accepted accounting principles ( ).

The statements below give an approximate indication of the

effect that application of would have on net in-

come, earnings per share and shareholders’ equity. This in-

formation will be presented in more detail in the Form 20-

report which will be submitted to the Securities and

Exchange Commission and which will be available on

request at the end of May.

The main differences between the accounting

principles applied by Océ (Dutch ) and

are summarised below:

– Goodwill Goodwill paid has been capitalised by

Océ since December 1, 2000. Previously this

goodwill was charged directly to shareholders’

equity. Under goodwill is capitalised as

intangible fixed assets and then amortized on a

straight-line basis over a period of 10 to 40 years.

– Reorganisation provision Under the for-

mation of a provision is subject to more stringent

criteria. For this reason often a part of a provision

is not yet recognised in .

– Revaluation of Property, plant and equipmentAs described on page 62 of the financial statements,

Property, plant and equipment are valued at acqui-

sition value since the 2001 financial year. Some of

these assets were formerly valued at current cost.

Under such fixed assets are valued at

their acquisition value. As a result, the higher

depreciation costs were adjusted to allow for this.

– Self insurance franchise Under a pro-

vision for self insurance is not permitted.

– Dividends not declared The final dividend on

ordinary shares that is submitted to the share-

holders’ meeting for approval is included under

‘Current liabilities’ in the financial statements.

Under this amount should be classified

under shareholders’ equity until the moment

when the net income appropriation has been

approved by the shareholders.

– Pensions Under , pension costs are cal-

culated according to 87. As this method of

calculation differs from the local calculations, the

result is a variation in charges and balance sheet

positions.

– Book profit on disposal of fixed assets In valuing one

fixed asset item a provision had been made which

was not acceptable under . This fixed

asset was sold in the previous year, resulting in

the realisation of this difference.

– Use of tax-deductible goodwill In a previous acqui-

sition a provision was made for the capitalised

claims in respect of deferred taxation. If the claims

are realised, the amounts are released to the

Consolidated Statement of Operations under

Income taxes. Under , if the claims are

realised, they must first be deducted from Good-

will and then from other intangible fixed assets

and, after these intangibles have been amortised in

full, the gain resulting from this claim is allowed

to be released and credited to the Consolidated

Statement of Operations under Income taxes.


2001 2000 › € 1,000

Under the Consolidated Balance Sheet items

set out below would be:

Balance sheet items Intangible fixed assets (net) 250,360 226,833

under US GAAP Property, plant and equipment (net) 458,006 433,184

Long term liabilities Provision for deferred income taxes 68,198 11,131

Self insurance franchise – –

Reorganisation provision 43,157 2,352

Pension provision 152,475 158,885

Other long term liabilities (provisions) 38,156 29,669

Current liabilities Dividend – –

Other liabilities 47,644 56,612

Other accrued liabilities 109,456 113,998

83

84

Océ .. / Statement of Operations 2001 2000 › € 1,000

Income of consolidated companies 23,011 150,028

Other net income –12,941 1,713

Net income 10,070 151,741

Océ .. / Balance Sheet November 30

Assets 2001 2000 › € 1,000

Financial fixed assets Consolidated companies [27] 789,989 895,243

Amounts receivable from consolidated companies [28] 1,061,998 976,866

Unconsolidated companies [29] 3,661 4,100

Other long term assets 11 11

1,855,659 1,876,220

Current assets Amounts receivable from consolidated companies 65,326 68,591

Other amounts receivable 25,765 12,864

Cash and cash equivalents [30] 27,662 6,574

118,753 88,029

Total assets 1,974,412 1,964,249

after net income

appropriation

85

Océ .. / Balance Sheet November 30

Liabilities 2001 2000 › € 1,000

Shareholders’ equity Ordinary shares 43,630 43,337

Priority shares 2 2

Financing preference shares 10,000 10,000

Paid-in capital 511,392 505,387

Legal reserve 1,679 1,750

Other reserves 341,874 428,969

908,577 989,445

Long term liabilities Provision for deferred taxes 4,919 12,739

Long term debt Amounts payable to consolidated companies 18,844 18,844

Long term liabilities [31] 522,098 582,748

545,861 601,592

Current liabilities Amounts payable to consolidated companies 127,436 90,636

Short term debt [32] 331,863 209,810

Other liabilities [33] 39,743 40,339

Accrued liabilities 20,932 19,688

519,974 360,473

Total liabilities 1,974,412 1,964,249

86

Océ .. / Notes to the Balance Sheet and the Statement of Operations

Financial fixed assets 2001 2000 › € 1,000

Affiliated companies For a list of companies affiliated to the Group in the

Netherlands and elsewhere see pages 95 and 96.

Affiliated companies are valued pro rata to the net asset

value held.

[27] Consolidated Book value at December 1, 2000/1999 895,243 729,384

companiesChanges due toEquity in income 23,011 150,028

Capital increase 38,746 27,670

Capital decrease –16,818 –2,635

Revaluation of Property, plant and equipment – –1,992

Dividends declared –134,100 –69,229


Goodwill – –1,296


[28] Amounts receivable At December 1, 2000/1999 976,866 810,495

from consolidated Prepayments 113,165 122,774

companies Repayments –14,972 –20,348


At November 30 1,061,998 976,866

[29] Unconsolidated Book value at December 1, 2000/1999 4,100 3,638

companiesChanges due toEquity in income 122 283

Dividends declared –329 –224




The accounting principles are the same as those

used for the consolidated financial statements.

The Statement of Operations has been drawn up in

accordance with the provisions of Article 402, Book

2, of the Dutch Civil Code.

87


2001 2000 › € 1,000

Current assets

[30] Cash and cash Cash and bank balances 27,662 6,574

equivalentsShareholders’ equity

For specifications see pages 73 and 74.

Long term debt

[31] Long term liabilities Convertible euro debentures to Company personnel 9,726 8,145

Loans 512,372 574,603

Total 522,098 582,748

The average conversion price of the convertible euro

debentures to Company personnel is € 20.31

(2000: € 22.43).

Loans principal amount average interest rate redemption amounts due after › € 1,000at November 30 (%) more than five years

Euro debenture loan 113,445 6.38 2006 –

Euro debenture loan 136,134 6.25 2007 136,134

Euro 13,613 7.20 2003 –

Euro 22,867 3.80 2003 –

Euro 9,077 6.74 2004 –

Euro 22,689 6.84 2005 –

Euro 77,143 6.35 2006 –

Euro 4,538 5.84 2013 4,538



Total 512,372 6.23 140,672

The fixed interest rates of the euro (debenture) loans

have been fully swapped into variable interest rates.

The heading ‘Loans’ also includes multi-year stand-by

credit facilities. Where these relate to loans of a short term

nature, they are accounted for as ‘Short term borrowings’

under short term debt. In 2001 these amounted to

€ 189 million (2000: nil).


88

Current liabilities 2001 2000 › € 1,000

[32] Short term debt Borrowings under bank lines of credit 12,817 15,805

Current portion of long term debt 117,890 95,294

Short term borrowings 201,156 92,400

Convertible subordinated debentures – 6,311

Total 331,863 209,810

Under ‘Short term borrowings’ loans payable on call

amounting to € 84 million are included after deduction of

a deposit in respect of such loans which was settled on the

first working day after balance sheet date.

[33] Other liabilities Dividend 39,719 40,326

Other 24 13

Total 39,743 40,339

Commitments and contingent liabilities 2001 2000 › € million

not stated in the balance sheet

Contingent liabilities Government development credits 47.8 50.1

Other commitments Bank guarantees to group companies 171.5 148.6

Guarantees to group companies 49.9 32.8

For an explanation of the financial instruments

see page 78.

89

Upon adoption of this proposed net income appropriation,

the dividend for the 2001 financial year will be: € 2 per prio-

rity share of € 50, € 0.18 (rounded) per financing preference

share of € 0.50 and € 0.58 per ordinary share of € 0.50.

The final dividend per ordinary share for the 2001 financial

year will be € 0.43, as a payment of € 0.15 per ordinary share

was made on October 19, 2001 on account of the expected

dividend. It is proposed to make the final dividend available

fully in cash. This proposed net income appropriation is in

conformity with Article 36 of the Company’s Articles of

Association.

Extract from the Articles The rules for net income appropriation as laid down in the

of Association relating to Articles of Association can – where of relevance at the

net income appropriation present time – be summarised as follows (for literal text see

Article 36 of the Articles of Association):

Where possible, the following dividends shall be distributed

in turn from the net income: first, on the protective prefer-

ence shares: a percentage of the paid-up amount equal to the

average three-month percentage, weighted ac-

cording to the number of days during which it was applicable,

increased or reduced where necessary by at most two per-

centage points; then on the financing preference shares:

6.26% of the paid-up amount including share premium,

which percentage shall be adapted on December 1, 2004 and

subsequently each time eight years thereafter; then on the

priority shares: 4% and then on the ordinary shares: 5% of

the nominal value. Subsequently, of the net income then

remaining, as much shall be reserved as may be deemed

necessary by the Executive Board, subject to approval of the

Supervisory Board. In so far as the net income has not been

set aside in the form of reserves, it shall be at the disposal of

the holders of ordinary shares.

Other information

Net income appropriation 2001 2000 › € 1,000

Preference dividend 3,551 3,551

Cash dividend:Dividend 48,785 49,529

Optional stock dividend – –8,841

48,785 40,688

Added to Retained earnings:From net income – 98,661

From Retained earnings –42,266 –

Optional stock dividend – 8,841

–42,266 107,502

Total net income 10,070 151,741

Other information

90

Authorised capital

Priority shares All priority shares are issued.

They are held by Foundation Fort Ginkel, Venlo,

the directors of which are: H.B. van Liemt

(Chairman), R.L. van Iperen and M. Ververs.

The Articles of Association grant certain rights to

the holders of priority shares, including the

following:

– they determine the number of members of the

Supervisory and Executive Boards;

– they draw up a binding nomination list for

shareholders for the appointment of Supervisory

and Executive Directors;

– alteration of the Articles of Association is possible

only if proposed by them;

– their approval is required for the issue of shares as

yet not issued.

In any one year not more than € 60 may be

distributed on all the priority shares together.

The Board of Executive Directors of Océ ..

and the directors of Foundation Fort Ginkel are

jointly of the opinion that, as regards the exercise

of the voting rights attaching to the priority

shares, Foundation Fort Ginkel has complied

with the requirements set in respect hereof in

Appendix X to the Securities Regulations of the

stock exchange Euronext Amsterdam.

Preference shares Since 1979 the Company has

been under the irrevocable obligation to issue

protective preference shares to the Lodewijk

Foundation, Venlo, on the latter’s first request.

As to the nominal value of the said issue, the

Company’s obligation has since February 1997

related to at most an amount equal to the total

nominal value of the ordinary and financing

preference shares of the Company issued at the

time of the request. The directors of the Lodewijk

Foundation are: J.J.C. Alberdingk Thijm (Chair-

man), J.M.M. Maeijer,Th. Quené, N.J. Westdijk,

H.B. van Liemt and R.L. van Iperen.

The Board of Executive Directors of Océ .. and

the directors of the Lodewijk Foundation are

jointly of the opinion that, as regards the inde-

pendence of the directors of the Lodewijk Foun-

dation, the requirements set in respect hereof in

Appendix X to the Securities Regulations of the

stock exchange Euronext Amsterdam have been

complied with. In 1996 5,000,000 financing

preference shares were placed with the Foun-

dation ‘Stichting Administratiekantoor Prefe-

rente Aandelen Océ’ in return for the issue to a

number of institutional investors of registered

depositary receipts with limited cancellability.

As a result of the share split the number of

financing preference shares currently placed

amounts to 20,000,000. The directors of the

Foundation ‘Stichting Administratiekantoor

Preferente Aandelen Océ’ are: H. de Ruiter

(Chairman), S. Bergsma, J.M. Boll, L. Traas and

D.M.N. van Wensveen.

Subsequent events

In the beginning of December 2001 the

Professional Imaging Division of Gretag Imaging

Group Inc. was acquired.

It is the intention that the lease activities will be

outsourced to third parties. To this effect, an

agreement was signed with Telia Finans for

the Scandinavian market in December 2001.

In January 2002, a letter of intent has been effect-

uated with De Lage Landen International ..

relating to cooperation in the form of a joint

venture in a number of important European

countries.

Signatures to the financial statements and other

information set out on pages 57 to 90:

January 29, 2002

The Supervisory Directors:H.B. van Liemt

L.J.M. Berndsen

P. Bouw

J.L. Brentjens

J.V.H. Pennings

M. Ververs

F.J. de Wit

The Executive Directors:R.L. van Iperen

J. van den Belt

J.F. Dix

G.B. Pelizzari

Auditors’ report

Introduction We have audited the financial state-

ments as included in the annual report for the year

ended November 30, 2001 of Océ .., Venlo.

These financial statements are the responsibility of

the company’s management. Our responsibility is

to express an opinion on these financial statements

based on our audit.

Scope We conducted our audit in accordance with

auditing standards generally accepted in the

Netherlands. Those standards require that we plan

and perform the audit to obtain reasonable assur-

ance about whether the financial statements are

free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements.

An audit also includes assessing the accounting

principles used and significant estimates made by

management, as well as evaluating the overall

financial statement presentation. We believe that

our audit provides a reasonable basis for our

opinion.

Opinion In our opinion, the financial statements

give a true and fair view of the financial position of

the company as of November 30, 2001 and of the

result for the year then ended in accordance with

accounting principles generally accepted in the

Netherlands and comply with the financial report-

ing requirements included in Part 9, Book 2 of the

Dutch Civil Code.

Eindhoven, January 29, 2002

PricewaterhouseCoopers ..

91

Other information

Board of Supervisory Directors as at January 29, 2002

H.B. van Liemt (1933), Voerendaal

Post(s) held: former Chairman of the Board of Direc-

tors of .. Nationality: Dutch. Appointed in

1993. Current term of office until 2004, but he re-

tires as per the closing of the Annual General

Meeting of Shareholders in 2002. Maximum periodof office until 2004 (age limit). Supervisory Director-ships: Chairman of the Supervisory Board of Gamma

Holding .. and Sara Lee/ .., vice-chairman

of the Supervisory Board of Bank ..

and Stienstra Holding .. Other posts: member of

the Board of Directors of Sara Lee Corp., Chicago,

Chairman of Mijnraad (Mines Council) and board

member of several foundations.

M. Ververs (1933), Hattem


tors of Wolters-Kluwer .. Nationality: Dutch.

Appointed in 1995. Current term of office until 2003.

Maximum period of office until 2003 (age limit).

Supervisory Directorships: Chairman of the Super-

visory Board of Getronics .., vice-chairman of

the Supervisory Board of Groep .. and

member of the Supervisory Board of .. and

Laurus .. Other posts: Chairman of the Board of

Trustees of Isala Clinics Zwolle and member of the

Board of External Advisers, Ernst & Young.

L.J.M. Berndsen (1942), Antwerp ()


tors of Koninklijke Nedlloyd .. and co-Chairman

of P&O Nedlloyd Container Line Ltd. Nationality:Dutch. Appointed in 1996. Current term of officeuntil 2004. Maximum period of office until 2008

(12-year period). Supervisory Directorships: member

of the Supervisory Board of Holdings ..,

Martinair Holland .., Corus Nederland .. and

Delta Lloyd .. Other posts: member of the Advi-

sory Board of Bank Holding ..

P. Bouw (1941), Amsterdam

Post(s) held: former Chairman of Koninklijke Lucht-

vaart Maatschappij .. (). Nationality: Dutch.


Maximum period of office until 2010 (12-year

period). Supervisory Directorships: Chairman of the

Supervisory Board of .. and member of the

Supervisory Board of Koninklijke Vopak ..,

Getronics .., .., Crossair (Switzerland)

and De Nederlandse Bank .. Other posts: part-

time professor in Business Administration Twente

University, member of the Board of Trustees,

Amsterdam Free Reformed University, Chairman

of the Banking Council and Chairman of the

Board of Trustees of Sectie Betaald Voetbal .

J.L. Brentjens (1940), Bloemendaal


tors of .. Nationality: Dutch. Appointed in

2001. Current term of office until 2005. Maximumperiod of office until 2011 (age limit). SupervisoryDirectorships: Chairman of the Supervisory Board

of Heijmans .. and ArboNed .., vice-chairman

of the Supervisory Board of Roto Smeets De Boer

.., and also member of the Supervisory Board of

.., Fortis .. and Holdingmaat-

schappij P. Bakker Hillegom .. Other posts: vice-

chairman of Van Leer Group Foundation, Chairman

of the Board of Foundation Katholieke Universiteit

Nijmegen and board member of several foun-

dations.

J.V.H. Pennings (1934), Maaseik ()

Post(s) held: former Chairman of the Board of

Executive Directors of Océ .. Nationality: Dutch.


Maximum period of office until 2005 (age limit).

Supervisory Directorships: Chairman of the Super-

visory Board of Koninklijke Grolsch .., Konink-

lijke Ahrend .., Essent .. and .. Industrie-

bank Liof, vice-chairman of the Supervisory Board

of Wolters Kluwer .. and member of the Super-

visory Board of Heijmans .. and Berenschot

Beheer. Other posts: board member of several

foundations.

F.J. de Wit (1939), Amsterdam


tors of .. .. Nationality: Dutch. Appointedin 1997. Current term of office until 2005. Maximumperiod of office until 2009 (age limit and 12-year

period). Supervisory Directorships: Chairman of the

Supervisory Board of PontEecen .. and member

of the Supervisory Board of .. Otherposts: member of the Advisory Board of Deloitte &

Touche and Keyser & Mackay (International) ..,

honorary consul general of Finland and board

member of several foundations.

92

Board of Executive Directors as at January 29, 2002

R.L. van Iperen (1953), Venlo

Post: Chairman Board of Executive Directors.

Nationality: Dutch. Appointed as member of the

Board of Executive Directors in May 1995 and as

Chairman of the Board of Executive Directors in

September 1999. Functional responsibilities:Strategy, Corporate Personnel and Organisation,

Research & Development, Secretariat of the

Company and Legal Affairs, Corporate Commu-

nications. Geographical: The Netherlands, United

States (Chairman), Germany, Belgium and Japan.

J. van den Belt (1946), Venlo

Post: member Board of Executive Directors.

Nationality: Dutch. Appointed March 2001.

Functional responsibilities: Finance and Admini-

stration, Tax, Internal Audit, Corporate Infor-

mation Management, Investor Relations and lease

activities. Geographical: France, Spain and

Portugal.

J.F. Dix (1946), Schoten ()


Nationality: Dutch. Appointed May 1998.

Functional responsibilities: Direct Export,

Emerging Markets, Imaging Supplies, Facility

Services, Marketing Communications.

Geographical: United Kingdom, Scandinavia,

Switzerland, Italy, Austria, Australia, Eastern

Europe, Far East and Brazil.

G.B. Pelizzari (1942), Chicago ()


Nationality: Italian. Appointed May 1998.

Functional responsibilities: United States (),

Canada and Mexico.

The Strategic Business Unit Directors report to

the Board of Executive Directors as a whole.

93

Directors Central Services

94

Strategic Business Units

Wide Format Printing Systems M.J.A. Frequin

Document Printing Systems J.F. Dix

Production Printing Systems J.F. Dix

Business Groups

Imaging Supplies A.P. Langendoen*

Facility Services M.C. Kingmans*

Corporate Staff

Secretariat of the Company,Legal Affairs H.J. Huiberts

Corporate Personnel and Organisation P.H.G.M. Creemers

Finance and Administration C.F. Lindenhovius

Central Operating Company Venlo

Venlo Executive Committee P.H.G.M. Creemers

N.J. Koole

W.H.M. Orbons

Manufacturing and Logistics N.J. Koole

Research & Development W.H.M. Orbons

Personnel, Organisation and Services P.H.G.M. Creemers

Central Operating Company Poing (Germany)

Chief Executive P. Feldweg

Research & Development P. Feldweg

January 2002

* Assistant Director.

Europe

Belgium Océ-Belgium ../.. J. van Boerdonk Brussels (2)7294811

Océ-Interservices ../.. J. van Boerdonk Brussels (2)7294992

Océ Software Laboratories Namur .. M. Mühe Namur (81)559611

Denmark Océ-Danmark a/s H. Risør Copenhagen (43)297000

Germany Océ Holding Deutschland G.m.b.H. A.A.J. van Driel and Mülheim/Ruhr (208)48450

P. Feldweg

Océ-Deutschland G.m.b.H. A.A.J. van Driel and Mülheim/Ruhr (208)48450

S. Landesberger

Océ Printing Systems G.m.b.H. P. Feldweg Poing (8121)724031

Océ Document Technologies G.m.b.H. M. Mertgen Konstanz (75)31874010

Finland Océ-Finland Oy J.P. Koskenmies Helsinki (9)6859110

France Océ-France .. M. Gianfermi Noisy-le-Grand (1)45925000

Océ Print Logic Technologies .. R. Balmès Créteil (1)48988000

Espace Graphic .. J.G. Higel Saint-Ouen (1)49212345

Hungary Océ-Hungária Kft. G. Németh Budapest (1)2361040

Ireland Océ-Ireland Ltd. C. O’Boyle Dublin (1)4039100

Italy Océ-Italia S.p.A. G. Seno Milan (02)927261

Netherlands Océ-Technologies .. P.H.G.M. Creemers Venlo (77)3592222

Océ-Nederland .. J.J. Kwaak ’s-Hertogenbosch (73)6815815

Arkwright Europe .. J.R. Marciano Venlo (77)3209020

Océ Real Business Solutions .. (50%) J.A.M. Hageman Venlo (77)3592222

Norway Océ-Norge .. F.O. Nilsen Oslo (2)2027000

Austria Océ-Österreich Ges.m.b.H. G. Schennet Vienna (1)86336

Poland Océ-Poland Limited, Sp. Z o.o. M. Kozlowski Warsaw (2)28683079

Portugal Océ-Lima Mayer .. F. Calvache Lisbon (21)4125700

Spain Océ-España .. I. Esteve Barcelona (93)4844800

Czech Republic Océ-Czech republic s.r.o. I. Konecny Prague (2)44010111

United Kingdom Océ () Limited M.J. Cornish Loughton (870)6005544

Practical Print Solutions Ltd. S. Neal Reigate (1737)237000

Sweden Océ Svenska M. Kullerstrand Stockholm (8)7034000

Switzerland Océ (Schweiz) .. J.Th.M. van der Mars Glattbrugg (1)8291111

North America

United States Océ- Holding Inc. G.B. Pelizzari Chicago, (773)4443762

Océ- Inc. G.B. Pelizzari Chicago, (773)7148500

Océ Printing Systems , Inc. T. Long Boca Raton, (561)9973100

Arkwright Inc. J.R. Marciano Fiskeville, (401)8211000

Archer Management Services, Inc. M.D. Weiner New York, (212)5022100

Océ Groupware Technology, Inc. R. Kozel Cleveland, (216)6879970

Océ Display Graphics Systems, Inc. R. Kumar San Jose, (408)2324000

Canada Océ-Canada Inc. S. Goodall Toronto (416)2245600

Mexico Océ-Mexico .. de .. J. Colin Mexico City (52)5550898710

Principal companies and their chief executives*

95

January 2002

* Where holdings are less than 95% of total equity, the percentage of capital held is stated.

A list of affiliated companies is available for public inspection at the Commercial Registry, Venlo,

in conformity with the provisions of Article 379, Book 2 of the Dutch Civil Code.

´

Principal companies and their chief executives

Asia / Pacific

Australia Océ-Australia Ltd. P.W.M. Thomassen Scoresby (3)97303333

China Océ Office Equipment (Beijing) Co.,Ltd. N.W. Kooij Beijing (10)65281200

Océ Office Equipment (Shanghai) Co.,Ltd. N.W. Kooij Shanghai (21)62729698

Hong Kong Océ (Hong Kong China) Ltd. N.W. Kooij Hong Kong 25776064

Japan Océ-Japan Corporation (85%) K. Mukozaka Tokyo (3)54026112

Malaysia Océ Malaysia Sdn. Bhd. M. Sak Petaling Jaya (603)79668000

Singapore Océ (Singapore) Pte. Ltd. C. Wilson Singapore (8)462381

Taiwan Océ (Taiwan) Ltd. N.W. Kooij Taipei (2)27469497

Thailand Océ (Thailand) Ltd. M.A.M.E. van Mierlo Bangkok (2)2607133

Other countries

Brazil Océ-Brasil Comércio e Indústria Ltda. S. Notermans São Paulo (11)30535300

South Africa Océ Printing Systems M. Broude Johannesburg (11)2586000

(South Africa) (Pty.) Ltd.

Direct Export

Netherlands Océ Direct Export J.W. Verschaeren Venlo (77)3592222

Lease companies

Australia Océ-Australia Finance Pty. Ltd. P.W.M. Thomassen Scoresby (3)97303333

Germany Océ-Deutschland Leasing G.m.b.H. A.A.J. van Driel Mülheim/Ruhr (208)48450

France Océ-France Financement .. M. Gianfermi Saint-Cloud (1)45925055

Spain Océ-Renting .. E. de Sus Barcelona (93)4844800

United Kingdom Océ () Finance Ltd. N. Anderson Loughton (870)6005544

United States Océ-Credit Corporation S. Schulein Boca Raton, (1)5619973100

Minority holdings

Cyprus Heliozid Océ-Reprographic (Cyprus) Ltd. 25%

Germany Interface .. 11%

Singapore Datapost Pte. Ltd. 30%

96

Supplementary information for shareholders

Investor Relations () policy The aim of Océ’s

policy is to keep financial stakeholders informed as

effectively as possible about developments within

the company and thus provide them with a clear

picture on which to base their investment decisions

with regard to Océ. Not only information about

the financial results and prospects is of key impor-

tance, but also the provision of information in the

broadest sense about strategic choices and corpo-

rate objectives and about social aspects such as

sustainable business practices.

The principal document in which information is

provided to shareholders is the annual report.

In addition, Océ regularly organises roadshows

and other informative meetings for institutional

investors, banks and analysts.

When the annual figures are published Océ holds

a press conference. The publication of the annual

and half-yearly figures are followed by a number of

meetings for analysts. The presentations given on

those occasions are then immediately published

on our website (http://www.oce.com). After the

announcement of the results for the first and the

third quarter Océ holds a conference call for

analysts.

Efforts are being made to find further possibilities

of reaching private investors even more effectively

by expanding and improving the clarity and acces-

sibility of the information published via our Océ

website.Via the Investor Information link on that

site you can click through to other relevant items

of information, such as quarterly and annual

figures, press releases and background information

and references to other sources. The agenda for

the Annual General Meeting of Shareholders can

also be found there.

That agenda is also issued in the form of an insert

in the printed version of this annual report.

In agenda item 5 in which authorisation is re-

quested, inter alia, for the issue of shares and the

restriction or preclusion of the pre-emptive right

an explanation is given of the objectives and

restrictions that the Board of Executive Directors

and the Supervisory Board will comply with, if

they make use of such authorisation.

Investors and/or their advisers are welcome to

submit any questions direct to our Investor

Relations department by telephone (+31) (0)77

3592240 or via e-mail ([email protected]), if desired by

mentioning a telephone number and the times

when they can be called back.

Dividend policy Océ seeks to distribute around

one-third of the income attributable to holders of

ordinary shares to this category of shareholders.

This policy is based on the conviction that Océ

will continue to grow.

The resultant retention of two-thirds of income

then ensures that this growth can be achieved whilst

simultaneously maintaining the desired balance

sheet ratios.

Until 2001 it was possible to elect to receive divi-

dend in the form of new shares charged to the tax-

free share premium reserve. In order to prevent

dilution of outstanding shares and in view of the

fact that – with effect from 2001 – the tax benefit

has been discontinued for a great many Dutch

shareholders, it has been decided that dividend

will henceforth be paid out only in cash.

97

http://www.oce.com

http://www.oce.com/investor

mailto:[email protected]

Distribution of ordinary shares as % 2001 2000

at end of financial year (indication basedon information provided by banks) private institutional total private institutional total

Netherlands 33 18 51 37 22 59

United Kingdom – 18 18 1 11 12

Belgium / Luxemburg 1 10 11 2 11 13

United States 1 12 13 1 7 8

Other 1 6 7 1 7 8

Total 36 64 100 42 58 100


Quarterly results (net income*) 2001 2000

› € million % increase on › € million % increase on

previous year previous year

First quarter 28.1 –13 32.2 14

Second quarter 25.1 –37 40.1 14

Third quarter 21.2 –29 29.9 23

Fourth quarter 30.7 -38 49.5 12

Year 105.1 -31 151.7 15

Quarterly results (basic earnings* per 2001 2000

ordinary share, calculated on the basis ofthe weighted average number of shares in euro % increase on in euro % increase on

outstanding) previous year previous year

First quarter 0.32 –16 0.38 14

Second quarter 0.28 –40 0.47 13

Third quarter 0.24 –29 0.34 22

Fourth quarter 0.35 –38 0.57 10

Year 1.19 –32 1.76 14

98

* Before exceptional items.


Substantial Shareholdings Notification Act

On the basis of the Substantial Shareholdings

Notification Act () which was introduced in

the Netherlands in 1992 and which requires,

inter alia, that shareholders must notify any

holdings of more than 5% of the ordinary out-

standing shares, the following shareholder is

known: Internationale Nederlanden Groep

(6.33%), notification February 28, 1992.

Depositary receipts with limited cancellability

for financing preference shares are held by: Rabo-

bank Nederland (6.25%), notification May 31,

1996; Fortis .. (5.68%), notification May 10,

1999 and - Capital Holdings ..

(5.81%), notification June 14, 1999.

Important (publication) dates

(subject to modification)

March 6, 2002 meeting of shareholders

April 4, 2002 1st quarter results 2002

July 3, 2002 2nd quarter / 1st half year results 2002 (after close

of trading on Euronext Amsterdam)

October 4, 2002 3rd quarter / nine months results 2002

January 13, 2003 provisional results for 2002

February 2003 publication of 2002 annual report

Stock exchange listings Ordinary shares in Océ

are listed on the stock exchanges in Amsterdam,

Düsseldorf, Frankfurt/Main and on the electronic

stock exchange () in Switzerland.

They are traded in the United States as American

Depositary Receipts (s) via .

Options to Océ shares are traded on the

Options Exchange Amsterdam.

99

250

200

150

100

50

0 97

30.11

20.42

98

40.93

18.47

99

35.00

14.00

00

18.90

11.55

01

18.90

6.15

Share price development

index December 1, 1996 = 100

Océ

Euronext Amsterdam

year’s highest

year’s lowest

Océ 1992-2001

Consolidated Statement of Operations 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992

Total revenues 3,234 3,224 2,838 2,753 2,469 1,894 1,330 1,257 1,192 1,242

Operating income 225 282 248 245 200 145 101 84 75 90

Net income 10 152 77 129 108 77 49 41 28 39

Key figuresTotal revenues

Increase/decrease in (%) – 14 3 12 30 42 6 6 –4 4

Expenditure on research and development 203 199 167 155 139 111 84 84 84 86

As % of total revenues 6.3 6.2 5.9 5.6 5.6 5.9 6.3 6.7 7.1 6.9

Operating income


As % of average balance sheet total 7.1 9.1 8.8 9.5 8.6 7.9 6.9 6.2 5.7 7.0

Net income

As % of total revenues *3.2 4.7 *4.6 4.7 4.4 4.1 3.7 3.3 2.4 3.2

As % of average shareholders’ equity *11.1 16.8 *17.1 18.1 16.5 14.2 10.3 8.9 6.3 9.1

Net income retained *53 99 *87 84 70 48 30 25 12 24

As % of net income *51.9 66.6 *67.6 67.2 67.3 64.1 62.3 59.3 42.1 59.0

Payroll expenses 1,310 1,242 1,122 1,034 869 689 481 458 455 463


Number of employees 22,472 22,253 21,757 20,978 17,754 16,495 12,633 11,718 11,666 12,262

Per € 0.50 ordinary share (in euro) Basic earnings** *1.19 1.76 *1.54 1.53 1.30 1.03 0.75 0.64 0.44 0.63

Diluted earnings *1.18 1.74 *1.53 1.50 1.26 0.96 0.70 0.62 0.44 0.63

Cash flow** *3.47 4.06 *3.80 3.62 3.26 2.81 2.45 2.35 2.24 2.75

Shareholders’ equity 10.13 10.91 9.14 8.09 7.96 6.92 7.34 7.22 7.07 6.91

Dividend 0.58 0.58 0.50 0.50 0.42 0.34 0.29 0.25 0.25 0.25

Average number of ordinary shares outstanding

(› thousand) 85,241 84,401 83,191 81,955 79,913 73,136 65,224 64,680 63,696 62,720

Increase from dilution (› thousand) 714 1,131 1,282 2,129 2,997 6,452 7,740 3,292 1,840 420

Share price (in euro)

Year’s highest 18.90 18.90 35.00 40.93 30.11 22.44 11.23 10.16 6.85 9.08

Year’s lowest 6.15 11.55 14.00 18.47 20.42 10.85 8.45 6.78 4.38 4.11

Year end 10.20 17.75 17.30 30.49 25.70 21.33 11.23 8.73 6.85 4.40

100

amounts › € million

* Before exceptional items.

** Basic earnings after exceptional items amount to € 0.08 (2000: € 1.76)

and cash flow after exceptional items amounts to € 2.35 (2000: € 4.06).

Océ 1992-2001

Consolidated Balance Sheet 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992

AssetsIntangible fixed assets 44 – – – – – – – – –

Tangible fixed assets 637 679 707 687 672 599 420 408 413 430

Financial fixed assets 751 799 686 587 568 402 343 299 264 221

Fixed assets 1,432 1,478 1,393 1,274 1,240 1,001 763 707 677 651

Current assets 1,696 1,738 1,575 1,361 1,275 1,125 778 684 647 653

Total 3,128 3,216 2,968 2,635 2,515 2,126 1,541 1,391 1,324 1,304

LiabilitiesGroup equity 949 1,031 860 766 740 646 480 471 453 440

Long term liabilities (provisions) 428 320 316 220 251 210 134 129 132 131

Long term debts 754 853 884 860 749 546 471 284 309 312

Current liabilities 997 1,012 908 789 775 724 456 507 430 421

Total 3,128 3,216 2,968 2,635 2,515 2,126 1,541 1,391 1,324 1,304

Key figuresProperty, plant and equipment 458 445 450 446 453 396 255 253 254 264

Net expenditure 106 65 81 87 87 74 53 50 38 41

Depreciation 91 86 90 83 72 59 45 48 50 49

Rental equipment 179 233 257 241 219 203 165 159 166 176

Net expenditure 50 80 107 113 79 97 76 57 55 66

Depreciation 103 108 98 88 85 72 65 63 64 84

Financial lease receivables (including short term

financial leases) 1,153 1,175 1,026 908 806 565 453 416 360 291

As % of balance sheet total 37 37 35 34 32 26 29 30 27 22

Inventories 365 442 395 366 363 359 257 202 196 207

As % of total revenues 11 14 14 13 15 18 19 16 16 17

Trade accounts receivable 649 696 635 527 530 447 299 256 241 255

As % of total revenues 20 22 22 19 21 22 22 20 20 21

Ratio of current assets to current liabilities 1.7 1.7 1.7 1.7 1.6 1.6 1.7 1.3 1.5 1.6

Group equity as % of balance sheet total 30 32 29 29 29 30 31 34 34 34

101

List of terms and abbreviations

Analogue In relation to copiers: producing a copy with the aid of a photo-

lens; the opposite of digital (see below).

Asset management Organisation and management of the assets within a

company.

Asset recovery activities The removal of machine parts and complete com-

ponents from machines that have been returned from the market following

their first life cycle and then making such parts and components suitable

for re-use.

Best practices Used within Océ to mean: the best results that have been

achieved as the result of a specific strategy and that are suitable for more

widespread application within the organisation.

Computer Aided Design: designing with the aid of the computer.

Captive lease companies Lease companies which are owned by or are linked

via fixed contracts with a bigger company, often a financial institution.

Circuit board Board (usually made of plastic) which carries conductive

paths for the switching of electronic components.

Consumables Used within Océ to mean: supplies and components that are

disposed of after one-time use.

Cost of ownership The ongoing fixed and variable costs relating to a

product after it has passed into customer ownership.

Customer intimacy Maintaining such a close and constant relationship with

the customer that it is possible, without detailed consultation, to respond

immediately to that customer’s changing requirements and new needs.

Cutsheet printing Printing operation in which separate sheets of paper are

fed into the machine (as opposed to fanfold and roll feed).

Diazo Abbreviation of the word diazonium, a chemical compound which is

coated onto paper so that images can then be developed on the paper after

exposure to light; a process also known as dyeline printing.

Digital In relation to printers and copiers: producing a print or copy by

means of laser or exposure, in a machine which can communicate via a

computer network; used here as the opposite to analogue (see above).

Digitisation The conversion of information into digital, computer-

readable codes.

Direct mail businesses Businesses which produce printed matter (e.g.

advertising folders) in various print-runs and then mail these to selected

customers.

Display Graphics Large format colour prints such as posters, banners and

billboards.

Document management All activities involved in the preparation,

printing/copying and finishing of documents.

Document Printing Systems Used by Océ to refer to the market for

printing and copying in office environments.

Document Production Printing Used within Océ to mean: the market for

printing and copying in high volumes.

dpi resolution Dots per inch resolution: number of dots per inch; indicates

the degree of detail shown on a print.

Earnings Before Interest, Tax, Depreciation and Amortisation.

Electronic banking The processing of banking transactions via the

internet.

Electronic Data Processing The large-scale computerised processing of

data and information ().

Electronic Production Printing Production (printing) and processing of

documents in high volumes.

Facility Services Where the supplier of certain products handles the work

involved in the use of those products; specifically in those cases where Océ

performs printing and activities on a customer’s premises at that cus-

tomer’s request. In the the term ‘outsourcing’ is used to describe

Facility Services.

Finisher Hardware that handles finishing work for printers and copiers,

such as binding, folding, stapling.

Floor graphics Self-adhesive wide format Display Graphics material in

colour that is applied to floors.

Flow production Used within Océ to mean: production of machines on

assembly lines.

Full colour Image reproduced entirely in colour.

Human Resources Policy Policy developed for the recruitment and further

training of personnel to fulfil posts within a business.

Information and communication technology.

Imaging Supplies Materials which are used (mainly as information

carriers) in printing, copying and plotting, e.g. paper, films, labels etc.

Inkjet technology Specific type of printing technology in which fine

droplets of ink are used to build up the printed image.

Input management All activities involved in preparing for high volume

printing.

Job printer A business that specialises in making prints and copies for

third parties.

Network Printing Solutions Using printers and servers to provide

solutions for the reproduction of documents in networks (chiefly in office

environments).

Optical Character Recognition: technology that enables computers to

recognise character images on paper and then process them digitally.

One-stop solution Used within Océ to mean: The supplier provides the

customer a complete range of hardware, software and services.

Organic Photoconductor: light-sensitive and durable photoconductor

(drum) for transferring the image onto the carrier material.

Output management All activities involved in the finishing of prints

produced in high volumes.

Outsourcing Contracting out the total package of copying, printing and

finishing activities to the supplier (in this case Océ). In Europe these

activities are known as Facility Services.

102

List of terms and abrevaiations

Pay-out/pay-out ratio The proportion of net income that is distributed in

the form of dividend.

Plain paper Ordinary (untreated) paper.

Plotter supplies Materials that are used in the application of Computer

Aided Design technology.

Prints per minute: used to denote the speed of a machine's output.

Printing The (repeated) production by a printer of a document using data

stored in a digital memory.

Print procurement The performance of print assignments on behalf of

third parties, both on electronic printers and on conventional printing

presses.

Printing & Publishing Printing and handling the finishing work involved

in complete publications in relatively small print-runs, with the aid of

electronic equipment.

Print resolution Indicates the quality of a print. Resolution is expressed in

dots per inch (dpi).

Process drum Cylinder on which the image is temporarily formed before

it is transferred to the copying material.

Production Printing Systems Used by Océ to refer to the market for high

speed printing systems.

Proxy solicitation The granting of proxy to the company by the share-

holder, enabling the company to make applications on behalf of that

shareholder.

Proxy voting The granting of proxy by the shareholder to the company,

enabling the company to vote on behalf of that shareholder.

Remanufacturing Replacing certain machine components and making the

required adjustments to settings so that the machine will operate as new

when placed in the market again.

Retrieval Finding and accessing information that has been stored in a

database.

Strategic Business Unit: the Océ business structure for each

application area.

Scanning functionality The digital reading of an image, followed by its

storage in digital form in a memory device.

Self-assessment Critical evaluation by the employee of his/her own

performances.

Server System that organises and controls the 'traffic' between computers

and the printer(s) connected to them.

Stand-alone A printer or copier which is not coupled up to a network.

State-of-the-art document management Document management based

on the very latest ideas and developments.

Swap Interest rate hedging instrument used to change the type of interest

rate (fixed or variable) attached to a loan. Also used as a verb: to swap.

Tabloid format Small format newspaper (about 30 cm by 40 cm) usually

characterised by its concise style and frequent use of photographs.

Technical Document Systems Used within Océ to mean: the printing and

copying of wide format drawings in technical environments, such as

design engineering offices, factories and architectural firms.

Telecom provider A company which provides the computer user with

possibilities for communicating with others electronically (via networks).

Time-to-market Bringing a product to market at the right moment, at

exactly the time when the market needs it.

Trading desk Used within Océ to mean: central point which decides on a

new destination for surplus components and machines.

Upgrading Overhauling the machine so that it incorporates the latest

developments.

American accounting principles (United States Generally

Accepted Accounting Principles).

Volume segment Internationally accepted industrial standard for

classifying the printing and copying markets into segments based on the

number of prints or copies produced per machine per month.

Wide Format Printing Systems Used by Océ to refer to the market for

machines and supplies for printing, copying and plotting of large format

documents.

Workflow The number of current projects and the related activities within

an organisation.

103

Design Baer Cornet / Marcel Beemer, Venlo

Illustrations Geert Setola, Oirsbeek

Photography Egon Notermans (Zebra Fotostudio’s), Venlo

Text consultants Jonkergouw & Van den Akker

Financial Communication Consultants, Amsterdam

Translation Alan Hemingway, Rijsoord

Printing Drukkerij Lecturis .., Eindhoven

© 2002 Océ ..

This is an English translation of the official

Annual Report which was published in the

Dutch language.

In the event of textual inconsistencies between

the English and the Dutch version the latter shall

prevail.

Océ, Océ Doc Works, Océ Com Works, Océ

Find Logic, Océ Intra Logic, Océ Scan Logic,

Océ Engineering Exec, Océ Office Exec,

CustomTone, Pagestream, Demandstream and

Océ Audit are registered trade marks of

Océ-Technologies ..

RecoStar is a registered trade mark of Océ

Document Technologies G.m.b.H.

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