19 February 04, page 1Company Confidential

Results Q4 and full year 2003

Analyst meeting19 February 2004

Martin De Prycker

19 February 04, page 2Company Confidential

Operational results Q4 2003 and full year 2003

in € mio Q4 2002 2002 Q4 2003 2003 Growth Q4 03 / Q4 02

Growth 03 / 02

Ordersnominal

158.9 680.7 188.5 662.6 19% (3%)

Orderscomparable **

158.9 680.7 200.4 715.4 26% 5%

Sales nominal

194.9 669.0 174.7 628.9 (10%) (6%)

Sales comparable **

194.9 669.0 188.3 681.8 (3%) 2%

EBITA 28.0 71.2 26.2* 69.1* (6%) (3%)

EBITA comparable **

28.0 71.2 33.2 90.0 19% 26%

EBITA % 14.3 10.6 15.0 11.0 5% 4%

Book-to-bill 0.80 1.02 1.08 1.05 35% 3%

* Before restructuring of € 2.5 mio** $/€ 19 % lower in Q4** $/€ 19 % lower in full year

19 February 04, page 3Company Confidential

Results per quarter

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19 February 04, page 4Company Confidential

Results Q4 2003

19 February 04, page 5Company Confidential

Overall comments Q4 2003

• Very good order intake at € 188.5 mio, i.e. 19 % growth at nominal €/$ rate and 26 % growth at comparable rate

• High book-to-bill ratio of 1.08 has increased our orderbook for 2004, especially in M&E and Simulation

• Gross profit margin improved again to 45 %, despite strong price pressure especially in Media and negative dollar evolution

• Comparable sales 3 % below Q4 2002, as last year had an extremely large delivery of ATC panels

• EBITA at 15 %, remains strong despite lower sales than Q4 2002

• Dollar decline caused a lower EBITA of € 7 mio in Q4, versus an unchanged dollar

19 February 04, page 6Company Confidential

Evolution of results per division

in € mioQ4 02 Q4 03 Q4 02 Q4 03

BarcoProjection 88.4 94.1 10.6 14.8BarcoView 70.4 59.1 14.2 11.2BarcoVision 25.0 13.6 4.1 1.0Barco Manuf. Serv. 21.0 13.5 0.9 -0.4Other -10.0 -5.6 -1.8 -0.5Total 194.9 174.7 28.0 26.2

Sales EBI TA

19 February 04, page 7Company Confidential

BarcoProjection (1)

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19 February 04, page 8Company Confidential

BarcoProjection (2)

• Orders– Strong book-to-bill ratio at 1.15

• Sales– 6 % growth in nominal sales vs Q4 2002

• Margins– Gross profit margin improved to 44 % despite high price

pressure, as a result of higher volume– EBITA margin high at 15.7 %, driven by higher volume

and continued cost control

4Q 03

19 February 04, page 9Company Confidential

BarcoProjection (3)

• On January 1, 2004 BarcoProjection was split into 3 separate divisions, reporting on same the level as other divisions

• These 3 divisions are– Media & Entertainment

• Events• Media• Cinema (digital cinema and high end home cinema)

– Control Rooms– Presentation & Simulation

• Presentation• Simulation

4Q 03

19 February 04, page 10Company Confidential

BarcoProjection (4) Media & Entertainment

• Orders– High book-to-bill ratio at 1.2– Successes in Digital Cinema, Media and Events– Strong price pressure in US/China due to low dollar

• Sales– High Media sales in the US and Europe and Events

worldwide

• Margins– EBITA margin at 9 % below our long term target, due

to heavy investments in• Extending capacity in China• Sales growth in US and Asia• R&D to further reduce product cost, as well as to launch new

products for Media, Events and Digital Cinema

• New products introduced– 3 mm high resolution LED wall

4Q 03

19 February 04, page 11Company Confidential

Acquisition “Folsom Research”, January 2004

• Based in Sacramento, USA with 75 employees

• Worldleader in “Beyond Display” products– Image Processing– Image Communication– Image Functionality & Interactivity

• Application Markets– Events (Media & Entertainment) -> above 50%– Radar (BarcoView) -> around 20%– Presentation & Simulation -> below 30%

• Figures– Orders 2003 $ 18.5 mio – Sales 2003 $ 16.5 mio– EBITA 2003 $ +1.5 mio

• Synergies with Barco– Strong market position in US, potential synergies with Barco sales

organization in Europe and Asia– Extension of “Beyond Display” products of Barco

19 February 04, page 12Company Confidential

BarcoProjection (5) Control Rooms

• Orders– Continued strong growth in orders– Book-to-bill at 1.06

• Sales– Good sales in all segments, particularly strong in

Traffic & Surveillance– High growth in China, India and Korea; and recovery

in Europe

• Margins– EBITA margin high at 22 %

• New products introduced– Streaming video functionality in display controllers

4Q 03

19 February 04, page 13Company Confidential

BarcoProjection (6) Presentation & Simulation

• Orders– Strong order intake with book-to-bill at 1.2– Good orders in Simulation and Edutainment– Good orders for car design

• Sales– Presentation

• Good level of sales, especially in large projects with focus on operational cost of our customer

• Shift towards higher end products and solutions– Simulation

• Slow civil aviation sales with partial recovery• Good orders for systems while product sales weakens• Increased market share in V&AR

• Margins– High EBITA margin at 19 %

• New products introduced– Cost effective system solutions in V&R– Home Land Defense/Security solutions in USA– Tracking device for enhanced immersion in virtual reality

4Q 03

19 February 04, page 14Company Confidential

BarcoView (1)

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19 February 04, page 15Company Confidential

BarcoView (2)

• Orders – Book-to-bill ratio at 1.0– Orders in Defense & Security strong– Orders in Medical remain at high level– Large order volume for Avionics

• Sales– Robust sales volume in Avionics– Strong sales volume in medical confirms our market

leadership– ATC and Defense deliveries remain high, although below last

year– Delivery of LCD panels requires constant attention, although

risk has been mitigated by using several suppliers

• Margins– Extremely good EBITA margin of 19 %, driven by the increase

in gross profit margin to 49 %

• New products introduced– RGB recorder for Defense & Security applications

4Q 03

19 February 04, page 16Company Confidential

BarcoVision (1)

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19 February 04, page 17Company Confidential

BarcoVision (2)

• Sales & Orders– Machine Vision no longer included since July 2003

onwards– Weaker sales volume in textile business as we are in

the middle of the down-cycle, although commercial activity is picking up since ITMA in November 2003

• First volume order received for Cyclops (visual inspection of woven material)

• Margins– Gross profit margin remains stable at 43 %– EBITA margin lower than usual at 8 % due to

extremely low volumes

4Q 03

19 February 04, page 18Company Confidential

Barco Manufacturing Services (1)

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19 February 04, page 19Company Confidential

Barco Manufacturing Services (2)

• Sales & Orders– Weaker sales/orders than Q4 2002

• Margins– Gross profit margin declined from 34 % in Q1 to

31 %– Indirect manufacturing cost not yet fully adjusted to

current manufacturing volumes, resulting in a 3 % negative EBITA margin

– No impact yet of restructuring on results 4Q 2003

• Reorganization– Restructuring cost will be taken as a special charge

in Q4 (€ 2.5 mio). This is comparable to the € 2.5 mio annual savings, which are expected to take full effect in 2005

4Q 03

19 February 04, page 20Company Confidential

Geographical breakdown of sales

51.5%

18.3%

30.2%

54.4%31.1%

14.5%

EMEAAMERI CASASI APAC.

Q4 2003

Q3 2003

19 February 04, page 21Company Confidential

Results Full Year 2003

19 February 04, page 22Company Confidential

Operational results full year 2003in € mio 2002 2003 Growth

03 / 02

Ordersnominal

680.7 662.6 (3%)

Orderscomparable **

680.7 715.4 5%

Sales nominal

669.0 628.9 (6%)

Sales comparable **

669.0 681.8 2%

EBITA 71.2 69.1* (3%)

EBITA comparable **

71.2 90.0 26%

EBITA % 10.6 11.0 4%

Book-to-bill 1.02 1.05 3%

* Before restructuring of € 2.5 mio** $/€ 19 % lower in full year

19 February 04, page 23Company Confidential

Comments full year 2003

• Further focus our organization on image processing for B2B with worldwide leadership

– Full exit Esko-Graphics– Sale of dotrix– Sale of Machine Vision– Acquisitions in Media (Trans-Lux West, Leyard) – Acquisition in Events (Folsom in 2004)

• Order growth of 5 % at equal currencies• Sales growth of 2 % at equal currencies• Dollar decline had a negative impact on EBITA of more than

€ 20 million• Focus on reducing inventory has resulted in a further

improvement. Actions to further reduce the number of different components will continue to have a positive influence on inventory in 2004

• A/R did not improve further in 2003 but actions for improved pre- and post- sales service will show first results in 2004

19 February 04, page 24Company Confidential

Key figures Income Statement 2003

in € mio FY 02 % FY 03 %

SalesCost of goods sold

669.0-372.5

100.0-55.7

628.9-351.0

100.0-55.8

Gross ProfitResearch & DevelopmentSales & MarketingGeneral & AdministrationOther operating result

296.5-70.8-98.0-49.1-7.4

44.3-10.6-14.6-7.3-1.1

277.9-68.4

-100.3-45.6

5.4

44.2-10.9-15.9-7.20.9

EBITAGoodwill amortization

71.2-7.7

10.6-1.2

69.1-6.4

11.0-1.0

Operating Result 63.5 9.5 62.7 10.0

Non-operating result -27.8 -9.4

Income Taxes -18.1 -6.7

Net Income 17.7 2.6 46.6 7.4

Current Cash Flow 114.4 17.1 109.8 17.5

Current Earnings per Share (in €) 4.39 - 4.42 -

Net Earnings per Share (in €) 1.43 - 3.77 -

19 February 04, page 25Company Confidential

Key figures Balance Sheet

in € mio 31/12/02 30/06/03 31/12/03

Accounts Receivable

158.5 148.3 149.5

Inventory 118.0 130.4 103.3

Cash 122.5 101.9 133.4

Financial debt

34.4 25.2 29.2

19 February 04, page 26Company Confidential

Overview of R&D

in € mio 2002 2003

R&D expense 71.5 69.7

Capitalized -35.5 -36.1

Amortized 34.8 34.7

Total 70.8 68.4

19 February 04, page 27Company Confidential

Expectations 2004

19 February 04, page 28Company Confidential

Growth strategy 2004 (1)

Displays Image processing

Content &applications

EU

NA

APAC

Vertical markets

Products Solutions

Geographies

19 February 04, page 29Company Confidential

Growth strategy 2004 (2)

• Main segments where large absolute growth is expected in 2004 through internal and external investments

– Medical– Events (incl. Folsom acquisition)– Media (incl. Trans-Lux West & Leyard acquisition)– Surveillance & security

• Increase sales and marketing efforts in regions with strong growing economies such as North America and Asia (e.g. opening office in Canada)

• Further evolve towards more systems business

19 February 04, page 30Company Confidential

Expectations 2004: main operational guidelines

• Keep R&D budget around € 70 million, equal to 2003, but with full focus on products within our strategy (exit dotrix, Machine Vision, …)

• Further improve pre-sales and post-sales processes to improve customer service and A/R

• Implement manufacturing restructuring announced last year to reduce operational cost

• Increase manufacturing in China to further reduce product cost, also resulting in higher natural hedging

• Gradual roll out of CRM software and new ERP software. CRM should result in better planning already in 2004. ERP cost savings to be expected in 2005

19 February 04, page 31Company Confidential

Expectations Q1 2004

• Sales target: between € 147 – 155 million, i.e. more than 6 % year on year growth at constant dollar exchange rate

• EBITA of between € 13 and 17 million• Every % decline in the value of the dollar impacts

EBITA by around € 1 million on a yearly basis

19 February 04, page 32Company Confidential

Dividend

Proposal of the Board of Directors to the annual shareholders’ meeting on May 12, 2004

Dividend will be increased to € 2.00 from € 1.92 last year