Innovators in image processing

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Innovators in image processing
BARCO General Presentation February 20, 2003

JP Tanghe VP Corp Comm Inv Rel
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BARCO

• Founded as the Belgian American Radio Corporation
  in Poperinge, Belgium, in 1934
• International company, headquartered in Kortrijk,
  Belgium, with a global presence
• Listed on Euronext Brussels, part of BEL 20, Next
  150 and component of Dow Jones Sustainability
  Indexes

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Worldwide Presence
Asia Japan Tokyo, Osaka, Nagoya India Delhi,
Noida Singapore China Beijing, Shanghai,
Chengdu, Guangzhou Hong Kong Thailand Bangkok Ma
laysia Kuala Lumpur Australia Melbourne,
Sydney Taiwan Shinzu, Taipei South-Korea Seoul
Europe Germany United Kingdom France The
Netherlands Italy Spain Switzerland Czech
Republic Denmark Poland Russia Israel
North America Charlotte (North
Carolina) Kennesaw (Georgia) Duluth
(Georgia) Xenia (Ohio) Beaverton
(Oregon) South America Sao Paulo
(Brazil) Buenos Aires (Argentina)
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World Leader in Image Processing

• Large screen visualization (BarcoProjection)
• Visualization for life critical decision-making
  (BarcoView)
• Visual inspection and quality control
  (BarcoVision)

Projection
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1H02
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Leading Edge Technology in Vertical Markets
Markets

ATC
Defense
Medical
Utilities
Telecom
Broadcast
Surveillance
Media
Events
Cinema
Flight
Oil Gas
Automotive
Leisure
Textile
Food
Avionics
View
Vision
Control Rooms
Media Events
Simulation
Projection
Networking/Software/Systems
Image Processing
CRT
LED
DLP
Sensors
LCD
Technologies
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BarcoProjection
BarcoView
BarcoVision
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Market Overview

• - Control Rooms
• - Simulation Products
• - Virtual Augmented Reality
• - Edutainment
• - Intelligent Displays
• - Media
• - Events
• - High End Home Theater
• - Digital Cinema

Barco Control Rooms
Barco Projector Innovators
Barco Creative Imaging
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Control Rooms

• Expansion of application markets from Telecom and
  Utilities towards Broadcast, Traffic,
  Surveillance
• Worldwide leader with 43 of market

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Simulation and Virtual Augmented Reality

• Simulation
• Flight, ATC, Ship Bridge, Drive, Gunnery
• VAR
• Virtual Prototyping Automotive, AEC
• Oil Gas
• Molecular Modeling, Medical
• Scientific Research and Education
• Edutainment
• Museums, Science Centers, Aquariums
• Theme Parks and Leisure Centers
• Planetariums

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Intelligent Displays

• Presentations can be sent to projectors via
  standard network or Internet, even wireless
• Projector functions can be controlled via network
  or Internet
• User can view information on status of all
  projectors connected to the network
• Intelligent Displays to replace standard
  projectors in market for corporations and other
  organizations

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Events

• Combines LED, projection and control equipment to
  provide customized events control solutions to
  the events and rental staging industries
• A recognized market leader whose products grace
  the shows of Madonna, U2, Jennifer Lopez and many
  more

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Media

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

LED Wall Reliant Stadium, Houston, Texas
LED Wall for Coca Cola on Piccadilly Circus in
London
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Digital Cinema

• Market with a huge potential of 118.000 theaters
  worldwide, but still waiting for a business model
  acceptable by all stakeholders in this market
• Increasing number of agreements signed with
  Cinema theater equipment dealers
• Regular individual sales of Digital Cinema
  projectors
• First quantity buy by Boeing Digital Cinema
• Promising Chinese market

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High End Home Theater

• Sales in High End Home Theater market going
  strong with new product introductions
• April 2002 launch of revolutionary home theater
  concept Cine VERSUM, bringing unparalleled
  digital video quality and flexibility to the home
  theater of the future

Cine VERSUM
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BarcoProjection
BarcoView
BarcoVision
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Market Overview

• Air Traffic Control
• Defense
• Airborne
• Naval
• Landbased
• Medical Imaging
• PACS
• Modalities
• - Avionics

Command Control
Medical Imaging Systems
Avionics
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Air Traffic Control

• ISIS LCD flat panel turning into commercial
  success as anticipated at introduction in Europe
  early 2001
• Now also breaking through in Asia and US
• Replacement market of some 12,000 workstations
  worldwide

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Defense

• High quality ruggedized flat panels, graphic
  boards, consoles and visualization (sub)systems
  that can be used in a variety of defense
  applications, reconnaissance, surveillance and
  intelligence gathering

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Medical Imaging

• Significant market share in PACS (Picture
  Archiving and Communication Systems)
• To be continued and strengthened by introduction
  of Coronis family of flat panels and ImageTile

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Avionics

• Clear acceptance of system concept as adopted
  over recent years, made possible thanks to
  important RD investment
• Production series based on this concept are part
  of long term projects

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BarcoProjection
BarcoView
BarcoVision
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Market Overview

• Textiles sensors systems
• Spinning
• Weaving
• Finishing (dyeing)
• Plastics
• Production monitoring
• Optical sorting
• Food (French fries, nuts, seafood, vegetables)
• Non food (tobacco, plastic flakes and pellets)

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Strategy of Barco (1)

• Consolidate our nr. 1 or nr. 2 position in our
  key growing markets
• Medical (20 to 25 CAGR)
• Events (14 on the longer term)
• Defense
• Simulation and VAR (6 to 8 CAGR)
• through internal growth by investing in RD to
  improve in
• System approach
• functionalities
• Cost containment
• through external growth acquisitions by means of
  strong net cash position of gt 60 M
• TAN in August 2002
• ORTHOGON in October 2002

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Strategy of Barco (2)

• Expand in new markets
• Air Traffic Control build on change from CRT to
  LCD (increased market share in 2002 from 5 to
  80 of new installations)
• Digital Cinema build on change from analog to
  digital with a potential of 118.000 theatres
  (CAGR 100, but in its infancy)
• Media use and adapt technology leadership from
  Events market (14 CAGR)

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Innovators in image processing
Results third quarter 2002
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Operational results Q302
in million Q302 YTD02 Q301 YTD01
Orders 163.6 521.8 146.8 525.3
Sales 145.8 474.2 153.7 492.5
EBIT 11.2 39.9 2.2 42.9

EBIT 7.7 8.4 1.4 8.7
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Orders higher than Sales for 3rd consecutive
quarter
(in million)
Results 2001 pro forma i.e. incl. dotrix
n.v., Barco Graphics not consolidated
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Results Barco

• Orders order book has further increased in Q302
  by 18 million
• Sales sales Q302 traditionally weak because of
  reduction in shipments to European customers due
  to holiday season
• Additional impact from
• Delayed internal deliveries due to transfer of
  mechanical manufacturing from Belgium to Czech
  Republic
• Yield problems with external suppliers
• EBIT
• Slight increase of gross margin from 55 for 1H02
  to 56 in Q302 by
• Ongoing introduction of new features,
  compensating price pressure
• Ongoing cost improvement
• Further reduction of manpower from 4132 end 2001,
  to 4000 employees worldwide

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BarcoProjection (1)
(in million )
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BarcoProjection (2)

• Sales
• Control Rooms
• Growth in new markets compensates low investments
  from Telecom
• Orders Telecom picking up again in Q4
• New stand-alone projector iQ
• Has won several awards
• Not taking off fast enough yet
• Higher market share in VAR thanks to growth in
  US market and TAN acquisition
• Events
• Q3 weaker investments by Events customers,
  picking up again in Q4
• Media
• Media projects delayed
• New product for Media applications available as
  of begin 03
• Hopeful signs from Digital Cinema, particularly
  in China
• EBIT margin well maintained at 10.1 vs
  comparable quarters, Q301 (2.1) and Q102 (9.3),
  despite lower sales

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BarcoView (1)
(in million)
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BarcoView (2)

• Orders
• Orders in Security and Defense picking up again
  for existing and new programs
• Ongoing strong orders for ATC and Medical
• Sales ongoing successes in
• Air Traffic Control (ATC)
• Further market penetration of flat LCD panel,
  also in USA
• Strengthening of market position by acquisition
  of Orthogon
• Medical
• Introduction of high-end flat screens for Medical
  of 1, 2 and 5 megapixel besides 3 megapixel
• EBIT much better than Q301

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Orthogon joined Barco (Oct 1, 2002)

• Strategy
• ATC is extending its portfolio with software and
  integration services, also towards end users
• Market Share Orthogon
• Mainly ATC (80) and expanding into Security
  Defense to offer software and integration
  services
• System integrators and end users
• Mainly Europe (80) with market leadership
• Short term growth potential in USA in ATC
• Long term growth potential in Security Defense

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BarcoVision
(in million)

• Textile machine market in China and Turkey
  continues to go strong
• Sales weaker in Q3 due to seasonal effect

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Barco Subcontracting
(in million)

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

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Geographical breakdown of Turnover per Activity
()

• EU Nafta Asia ROW
• BarcoProjection 37 35 24 4
• BarcoView 28 57 13 3
• BarcoVision 60 11 17 12
• Total Q302 42 35 19 5
• Total 1H02 46 32 16 6
• Total 2001 48 30 16 6

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OWC Inventory

• Inventory on same level as end Q202 due to slack
  in deliveries and in preparation of higher sales
  in Q402

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OWC Accounts Receivable
Days outstanding
(incl. BG)
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Net cash position
in million
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Results Q3 YTD
in million Q302 YTD02 Q301 YTD01
EBIT 11.2 39.9 2.2 42.9
Current Result 11.6 40.7 1.4 42.3
Taxes (3.2) (9.6) (0.3) (12.9)
Curr. Res. after Taxes 8.4 31.1 1.1 29.4
Extra-Ordinaries 0 (28.1) 0 (0.4)
Amort. Of goodwill 1.4 3.6 1.7 5.1
Net result 7.0 (0.5) (0.6) 23.9
Current EPS 0.68 2.51 0.09 2.37
Current cash Flow 23.7 77.5 15.8 74

pro forma, i.e. incl. dotrix n.v., Barco
Graphics not consolidated in euro
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Preview Q402

• Sales Q402 193.9 mio euro vs 175/185
  expected 7 vs Q401
• Better supply of certain components
• More deliveries from backlog
• More orders to be delivered still in 2002
• EBIT Q402 gt 31 mio euro vs 21/25
  expected

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Preview Full Year 2002

• Sales FY2002 668 mio euro vs 673 in 2001
  -0.8 despite low USD
• Orders FY2002 vs FY2001 -0.8
• EBIT FY 2002 gt 30 vs 2001
• gt 10 vs sales

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• Innovators in Image Processing

www.barco.com