Annual report 2004 You’ll see

Life's more than what you see.

Revealing the unseen, showing the unsaid, anticipating the unexpected and understanding the unknown takes courage and dedication.

Whether you're a scientist, a pilot, a teacher, an advertiser, an operator, a radiologist or an entertainer, professionals share a passion for insight.

Company profile 4 Mission statement 6 02- 03 Company values 8 Worldwide presence 10 Employees 10 Organizational structure 11 Company milestones 12 Letter to the shareholder 14 Financial highlights of the year 16 Financial highlights per quarter 18 Key figures for shareholders 20 Sales per division 22 Geographical breakdown of sales 23

Market overview

Report of the board of directors

Corporate governance 56 Strategy for growth 66 Technology growth and engineering excellence 70 ICT 72 Corporate marketing 74 Human resources 76 Corporate sustainability 78 Sales and services 80 Table of contents Comments on the results 82 Information for the shareholder

Information about the share 102 Ownership of the company’s shares 103 Evolution of the share price 103 Daily average shares traded 104 Comments on the evolution of the share price 105 Dividend 106 Analysts covering Barco 107 Financial calendar 108 Investor relations 109

Barco consolidated

Income statement 112 Balance sheet 113 Cash-flow statement 114 Changes in shareholders' equity 115 Notes to the consolidated financial statements 116 Auditor’s report 155

Barco n.v.

Balance sheet after appropriation 158 Income statement 160 Appropriation account 161 Company profile

Barco is a world leader in professional markets, in which it offers display and visualization solutions. Based upon in-depth market know- ledge, the company designs and develops solutions for large-screen visualization, display solutions for life-critical applications, and systems for visual inspection.

Currently Barco is active in the markets of medical imaging, defense & security, traffic management, avionics, media, events, digital cinema, presentation, simulation & virtual reality, edutainment, traffic & surveil- lance, utilities & process control, broadcasting and textiles.

Barco is headquartered in Belgium, and has its own facilities for Sales & Marketing, Customer Support, R&D and Manufacturing in Europe, America and Asia-Pacific. Worldwide, Barco employs about 4,400 people and realized sales of more than euro 670 million in 2004. 04- 05

There’s more to consider You’ll see There’s more to read You’ll see 06- 07

Mission statement

As imaging is revolutionizing the world, accurate processing and display of visual information is business-critical for many professionals worldwide. The inherent complexity therefore requires user-friendly solutions.

In line with this vision, Barco's mission is to excel in creating stake- holder value, by offering user-friendly imaging solutions to selected professional markets worldwide.

Barco designs and manufactures innovative hard- and software visua- lization solutions, integrating all aspects of the imaging chain, from image acquisition and processing to image display and management.

Global presence, technological leadership and wide experience in B2B markets guarantee customers pioneering visualization that will opti- mize their productivity and business efficiency. Integrating the latest technologies, these “visual value” solutions answer specific customer needs in diverse markets.

Barco enters a partnership with professionals requiring visualization for intensive use, looking for pixel-perfect visual information, searching for the lowest total cost of ownership, … professionals who know more. Company values

It is Barco’s firm belief that profitability and respect for society go Customer focus hand in hand. As a corporate citizen, Barco has laid down five Barco wants to be a close business partner that speaks the customer’s universal values that are the cornerstone of its relationship with language, that is alert and responsive, that understands and anticipates society. These values offer employees an ethical framework, a guid- his needs. ing principle for their daily operations and business relations. Customer focus, integrity, creativity, passion for achievement and Integrity team spirit are key to realizing the company’s mission in harmonious Relationships with customers, suppliers, colleagues and society in operation with society and mankind. general are marked by integrity. Barco wants to be a long-term partner earning respect, credibility and trust through quality, service, openness and responsiveness.

Creativity Barco is continuously looking for fresh horizons, new technologies and creative ideas. Originality is an invitation for people to participate in an ambitious project, to express Barco’s authenticity through their own personalities.

Passion for achievement Employees share the same work spirit and passion to meet goals and deadlines. They are driven by the kicks of exploring new technologies, the pleasure of designing award-winning solutions and the satisfaction of creating added value.

Team spirit Barco staff are driven by a healthy team spirit. They share the same vision and join hands to achieve their goals. 08- 09

There’s more to enjoy You’ll see Worldwide presence

Sites R&D and manufacturing facilities

Europe & Middle East Asia - Pacific Americas

Belgium Australia Brazil Belgium Czech Republic Canada China Denmark India United States Czech Republic France Germany Korea Germany Israel Malaysia India Italy Japan Poland Switzerland Russian Federation United States Switzerland The Netherlands United Arab Emirates United Kingdom

Employees MKT SAL MAN 200 472 1,661 • MKT: Marketing & Sales • R&D: Research & Development ADM • MAN: Manufacturing 390 • CS: Customer Service CS • ADM: Administration 495 • LOG: Logistics LOG R&D 315 856 Total number: 4,389 10- 11 Organizational structure

BarcoView Barco Media Barco Presentation Barco Control Rooms BarcoVision & Entertainment & Simulation

32.3% 23.6% 15.4% 16.0% 8.9%

Medical Imaging Media Presentation Traffic & Surveillance Textiles Defense & Security Events Simulation & Utilities & Plastics Traffic Management Digital Cinema Virtual Reality Process Control Avionics Edutainment Broadcasting

Barco 3.8% Manufacturing Services Company milestones 2004

January March May • Barco acquires US-based Folsom Research • Barco installs six LED display walls and a • Barco wins multi-million dollar contract for Inc., thus strengthening its leadership in the control room solution at the new Formula 1 development and series production of events market and its position in the US. racetrack in , China. The giant Onboard Information Terminals for the • The Queen Mary 2 is the first passenger screens will show streaming video and Airbus A380, the largest commercial airliner liner ever to feature a planetarium. Barco’s advertizing to give grandstand spectators a in the world. projector system presents stunning space truly memorable experience. visualizations across the hemispherical screen three times a day.

February April June • Barco awarded multi-million euro contract • For continuous business process automiza- • Second quarter confirms breakthrough of by Kongsberg Defense and Aerospace tion, Barco starts with the implementation Barco LED technology in Chinese market (Norway) for the delivery of rugged flat dis- of the 6-sigma methodology in its division with contract wins for Kunming Intermediary plays for tactical information display in NATO BarcoView. People’s Court, New Airport, air defense systems. • Barco receives 30 million dollar contract Suzhou Exhibition Center, the Worker’s • Newly opened Canadian subsidiary from Lockheed Martin to supply LCD screens, Stadium, Tianya Building, Chaoyang announces contract wins for digital LED graphics cards and recording solution for the Exhibition Booth and the Shanghai Power signage with Outdoor Broadcast Network upgrade of 20 Federal Aviation Administration Company. and Cadillac Fairview Corporation Limited. air traffic control centers. 12- 13

July September November •Madonna, Van Halen, the Eagles, • United States Coast Guard awards multi- •Barco completes installation of 2,400 Metallica, Red Hot Chili Peppers, Eros million dollar contract for the delivery of square feet of LED displays in Ramazotti, the Corrs and Paul McCartney are large display wall solutions for use in tactical AmericanAirlines Arena, home to four-time but a few of the top performers relying on command and control centers. NBA Atlantic Division champions Miami Barco techno-logy for their summer tours. •Barco acquires leading 3D medical imaging Heat. company. The acquisition of Voxar • Belgian economic delegation, headed by (Edinburgh, UK) is a breakthrough in advanced HRH Prince Filip, visits Barco’s virtual reality 3D radiology imaging, the fastest growing center at the Forbidden City, Beijing, China. segment of the medical imaging market. •Barco launches dedicated approach of Asian market and appoints regional president.

August October December •Lockheed Martin awards 10 million dollar •Barco signs worldwide contract with •Barco’s financial communication ranked follow-on contract for the delivery of flat Cinemeccanica (Italy) to develop and second by Belgian Association of Financial panel displays. The displays replace aging commercialize OEM digital cinema solution Analysts in yearly awards for best financial CRT technology in en-route centers across incorporating Barco’s 2K technology. information. the US. Letter to the shareholder

Dear shareholders, Extending Barco's value proposition

2004 was a challenging year but Barco performed solidly and was able To better serve professional customers in worldwide markets, Barco to meet its strategic and business objectives. In its worldwide markets continues to move from products to systems and solutions. In this challenges came from price pressure and further depreciations of the respect, two strategic acquisitions were made in the course of 2004. dollar. Despite these difficulties Barco recorded a sales growth of Sacramento-based Folsom expands the company's offering in the almost 7% and strengthened its worldwide position in many key mar- events market and further improves market position in the US, besides kets. This is a good indication of the strength of the product portfolio becoming very successful in Europe and Asia. The acquisition of Voxar of the Barco group. Sales over the year amount to euro 672 million, (Scotland) on the other hand, extends Barco's hardware-based with a total EBITA of euro 71.8 million, a 5% growth in comparison offering in the medical imaging market with 3D software solutions, the with 2003. Excluding currency fluctuations, sales would have risen by fastest growing segment in radiological imaging. 12% and EBITA by 11%. With these results we can confidently look to the future and propose to pay shareholders a gross dividend of 2.10 Innovation and technology also remain critical for the success of Barco. euro per share, a 5% increase in comparison with the year before. We will therefore maintain a high level of R&D investments to make sure Barco's value added solutions keep on meeting customer require- A few years ago Barco decided on a sharp strategic focus for its busi- ments and outperform competition. ness portfolio and set out to strengthen its market presence in key geographic markets such as North America and Asia. In 2004 Barco’s Improving business position in Asia and North America board, together with the CEO, took actions to further implement this strategy and focused on three strategic initiatives. North America and Asia are key geographical markets for Barco. Not only do these regions have strongly growing economies, but also, and more importantly, they still hold a lot of untapped market potential for Barco. In 2004 Barco's offensive strategy, with considerable invest- ments in sales and marketing in these regions, was rewarded with a 32% increase in sales in Asia-Pacific and a 14% sales growth in the US in local currencies. Sales in China went up almost 70%. 14- 15

Further testifying to the ongoing globalization of Barco, is the success- Enhancing business efficiency ful transfer of part of its manufacturing to a newly set up facility near Beijing (the Barco Leyard joint venture) and its premises in Noida, Maintaining Barco's competitiveness is crucial towards future success. India. These two facilities already account for a substantial part of In this respect, the reorganization of the Barco Manufacturing Services Barco's worldwide production of LED and control room solutions and division, started at the end of 2003, was successfully completed. All show the way to safeguarding the company’s margins. electronic manufacturing and surface mounting activities have been consolidated into two locations, Kladno in the Czech Republic for large volume production and Poperinge, Belgium for smaller volumes.

In 2005, the attention of board and management will be on sustain- ing and strengthening margins and on reducing the level of working capital. The relocation and reorganization of manufacturing will certainly contribute to greater efficiency and lower inventory levels.

Just like in the past Barco will keep on developing market-driven inno- vations and exploring new technologies that help our professional customers become more successful in their business. Barco is determined to maintain its profitable growth and has a unique asset to realize this ambition: management and employees who understand like no one else the importance of a personal relationship and customer attention in the high-tech environment Barco is active in.

On behalf of the board of directors, I would like to thank all staff for their commitment and dedication. They all make me feel confident about the future. Furthermore, I would like to stress that the board highly values the constructive relationship with shareholders and that we will continue to create value for shareholders.

Herman Daems Chairman of the board of directors Financial highlights of the year

Key figures

[ in thousands of euro* ] 2004 2003

Net sales* 671,923 628,944 Gross profit* 290,134 277,862

EBITA* 71,780 69,091

Current result before taxes and before goodwill amortization* 72,546 70,631 Current result after taxes and before goodwill amortization* 57,505 54,581 Current result after taxes per share and before goodwill amortization 4.69 4.42

Net income* 47,692 46,564 Earnings per share 3.89 3.77 Diluted earnings per share 3.65 3.54

Current cash-flow* 116,077 109,813 Current cash-flow per share 9.47 8.88 16- 17

2004 2003

[ in thousands of euro ] [ in thousands of euro ]

671,923 653,192 628,944 662,638 700,000 700,000

600,000 600,000

500,000 500,000

400,000 400,000

300,000 300,000

200,000 200,000 71,780 69,091 100,000 100,000

0 0 Sales EBITA Orders Sales EBITA Orders Financial highlights per quarter

Key figures per quarter 2004

[ in thousands of euro* ] 4th quarter 3rd quarter 2nd quarter 1st quarter 2004 2004 2004 2004

Net sales* 193,048 158,118 171,520 149,237 Gross profit* 82,727 65,847 75,685 65,875

EBITA* 24,337 13,342 18,711 15,391

Current result before taxes and before goodwill amortization* 24,210 13,391 19,135 15,809 Current result after taxes and before goodwill amortization* 20,291 10,724 14,558 11,932 Current result after taxes per share and before goodwill amortization 1.66 0.88 1.19 0.97

Net income* 16,131 8,713 12,696 10,035 Earnings per share 1.32 0.71 1.03 0.81 Diluted earnings per share 1.24 0.67 0.97 0.76

Current cash-flow* 38,562 24,183 29,171 24,161 Current cash-flow per share 3.15 1.98 2.38 1.96

Number of employees

Total 4,389 4,384 4,217 4,121 18- 19

Key figures per quarter 2003

[ in thousands of euro *] 4th quarter 3rd quarter 2nd quarter 1st quarter 2003 2003 2003 2003

Net sales* 174,676 145,201 157,990 151,077 Gross profit* 78,646 61,607 70,903 66,705

EBITA* 26,164 10,076 17,443 15,408

Current result before taxes and before goodwill amortization* 26,543 10,370 17,928 15,788 Current result after taxes and before goodwill amortization* 22,495 7,546 13,044 11,497 Current result after taxes per share and before goodwill amortization 1.83 0.61 1.05 0.93

Net income* 18,728 6,684 11,373 9,779 Earnings per share 1.52 0.54 0.92 0.79 Diluted earnings per share 1.42 0.51 0.86 0.74

Current cash-flow* 35,314 21,955 28,049 24,496 Current cash-flow per share 2.87 1.78 2.26 1.97

Number of employees

Total 4,022 4,110 4,166 4,131 Key figures for shareholders

[ in euro ] 2004 2003

Number of shares on 31 Dec (in thousands) 12,464 12,414

Per share

Current result (1) after taxes 4.69 4.42 Current cash-flow (2) 9.47 9.03 Net result 3.89 3.77

Gross dividend 2.10 2.00 Net dividend (3) 1.575 1.50 Net dividend (4) 1.785 1.70 Gross dividend yield (%) (5) 3.09 2.88 Yearly return (%) (6) 143 Pay-out ratio (%) (7) 54 53 Price/earnings ratio (8) 14.51 15.74

Net equity 32.62 31.34

(1) earnings before provision for restructuring, non-operating income, goodwill amortization and tax impact related to afore-mentioned (2) current result after taxes + amortization, depreciation and changes in deferred taxes (3) without VVPR-strip (4) with VVPR-strip (5) gross dividend / closing rate on 31 Dec (6) increase / decrease share price + gross dividend, divided by closing share price (7) gross dividend / net result (8) share price 31 Dec / current result after taxes per share 20- 21

[ in euro ] 2004 2003

Share price

Average price 69.98 55.54 Highest price 75.05 70.1 Lowest price 65.15 42.75 Price on 31 Dec 68.05 69.5

Average number of shares traded daily 30,166 22,893

Stock market capitalization on 31 Dec (in millions) 848.15 862.77 Sales per division

2004 2003

Barco Media & Barco Media & Entertainment Entertainment 23.6% BarcoView 19% BarcoView 32.3% 34% Barco Presentation & Barco Presentation & Simulation Simulation 15.4% 16%

BarcoVision BarcoVision Barco Control Rooms Barco Control Rooms Barco Manufacturing 8.9% 12% 16% 13% dotrix Barco Manufacturing Services Services 3.8% 1% 5% 22- 23

Geographical breakdown of sales

2004 2003

AMERICAS AMERICAS EMEA EMEA 31.4% 51.8% 31.9% 49.9%

ASIA - PACIFIC ASIA - PACIFIC 18.7% 16.3%

EMEA = Europe, Middle East and There’s more to observe You’ll see Market overview Medical Imaging

“In terms of image quality, ease-of-use, speed and working with our PACS environment, Barco’s 3D software wins hands down.”

Mark A. Nigogosyan, M.D., Gundersen Lutheran Medical Center; WI, US

In today's filmless radiology department, diagnostic workstations and projection systems are used to read and review images. Medical pro- fessionals rely on digital technology to zoom in on images and patient information for efficient diagnostic reading.

Barco is a worldwide leader in 3D software and softcopy display tech- nology for digital imaging modalities and PACS (Picture Archiving and Communication System). The company provides 3D software solutions, FDA-approved LCD displays, radiology display and projection systems, and high-speed imaging boards. To ensure that the information on screen is 100% dependable, Barco has designed dedicated solutions for fast and efficient 3D image rendering, automatic calibration, image uniformity and defect pixel compensation. 26- 27

Imelda hospital Bonheiden, Belgium UZ Edegem, Belgium

Customers include leading medical integrators worldwide like Philips, GE, Fuji, Agfa and Kodak.

Imelda hospital Bonheiden, Belgium E2-C Hawkeye (© US Navy) USS San Jacinto (© US Navy)

Barco is a trusted visualization partner of major defense integrators like Lockheed Martin, EADS, Raytheon, Thales, Boeing, Northrop Grumman, BAE Systems, Kongsberg, Atlas Elektronik, Krauss-Maffei Wegmann, Embraer, General Dynamics and Alenia Marconi Systems.

CASA F.I.T.S. (courtesy EADS) 28- 29

Defense & Security

“Our relationship with Barco goes beyond outstanding day to day performance to aligning company strategies that ensure our customers get the products they need.”

Lockheed Martin

Information superiority and speed of command are critical in opera- tional decision-making. Intelligent sensors, fast and powerful networks and real-time display technology allow the military to create a better overall picture and improve tactical Command and Control. By com- bining and sharing information on-screen, commanders have a deeper understanding and a clearer view of battlefield movements.

Barco designs, manufactures and markets display solutions for operational decision-making in airborne, shipboard and ground-based applications. Its range of sensor processing hardware and software, rugged computers, Human Machine Interface software, graphics genera- tors, flat panel displays and integrated consoles has been especially designed and tested for use in extreme environmental conditions. Traffic Management

“Safety remains at the core of all activities in an Air Navigation Services Center. The products that support this prime strategy must therefore be of high quality, reliable and supported by proper services. The Barco ISIS display was selected by the Maastricht UAC because it met these essential concerns.”

Peter Naets, Head Engineering Division, Maastricht UAC, Eurocontrol

The ever increasing number of traffic movements often makes it hard for traffic controllers to detect conflicts, anticipate movements and calculate positions, while at the same time ensuring rapid and efficient handling. To keep a close eye on traffic, they rely on content-rich flat screens and supporting HMI software, displaying information in real- time.

Barco is a recognized leader in the design, development and manufac- turing of real-time graphics display systems and software components for air traffic management, vessel traffic control and coastal surveillance. When the company marketed the first 2Kx2K LCD, this high-contrast, high-resolution display revolutionized air traffic control, with more than 1500 units delivered to the US Federal Aviation Administration alone. Barco's range of components and services goes from sensor interfacing and information visualization to recording, archiving, playback and system management. 30- 31

DFS Bremen, Germany FAA Jacksonville, Florida, US

Barco solutions, integrated by leading system inte- grators in control towers and area control centers, are the reference for more than 50 Air Navigation Service Providers worldwide, including the US Federal Aviation Administration and Eurocontrol.

DFS Bremen, Germany Avionics

“Barco is a dynamic part of the success of Boeing's supplier program. They work as a team, raising issues early and their good planning will keep us successful.”

Charles DiPietro, Boeing

Real-time imaging is becoming more and more important in aerospace applications. Pilots in the cockpit need to have a real-time overview of the outside world, enhanced with computer-generated data, to have the clearest vision possible. Life-critical information is displayed on flat screens, making sure that the pilot keeps a perfect overview from take-off to landing.

Barco offers an extensive range of color cockpit displays, based upon a modular, open system architecture. Developed for crucial flight appli- cations, its product range includes video display units, smart display units, multi-purpose control display units, electronic flight instrument systems and electronic flight bags. Barco is one of a limited number of companies to have received Gold supplier certification from Boeing for its high-quality products and processes and is also a trusted partner of Airbus. 32- 33

Boeing V-22 Osprey Pilatus PC-21 (courtesy Pilatus Aircraft) Cougar EC725 (courtesy Eurocopter)

Recent airborne references include the Airbus A-380, the Boeing V-22 tiltrotor aircraft, the RC-135 Rivet Joint reconnaissance aircraft, the Tiger helicopter, the Merlin MK3 helicopters, the SARAS passenger aircraft, the PC-21 turboprop trainer and the Antonov-124 freighter.

Airbus A-380 (© Airbus - Image Graphique I3M) Shanghai F1 track, China SI Luxury World, Azerbaijan AmericanAirlines Arena, Miami, US

Leading brands like Merrill Lynch, Fuji TV, Quiksilver, BMW and Deutsche Telekom have already discovered the glamour and impact of Barco's LED displays. Barco's solutions have also been selected for high profile sports venues like the Hala Sazka Arena (Czech Republic); the Shanghai F1 track (China); the AmericanAirlines Arena, home to the Miami Heat NBA team (US) and the Karaiskaki and Kaftanzoglio stadiums, which hosted the 2004 Olympic games (Greece).

Crown Fountain, Chicago, US (Shen Milsom & Wilke) 34- 35

Media

“Visitors to Millennium Park will be absolutely stunned by the originality, beauty and feeling behind this one-of-a-kind fountain that blends water, imagery and state-of-the-art technology.”

Roark Frankel, Project Manager for the Crown Fountain

In the world of branding, visibility matters. Digital, interactive and tar- geted communications bring your message into focus and strengthen its impact. Programmable and networked messages allow reaching customers at places and times when they have an eye for you.

Barco's networked LED and LCD solutions are used by the world's lead- ing brands to maximize their visibility. From large-screen displays in sports arenas and giant branding media in corporate headquarters, to digital advertizing and targeted communications in shopping centers and on high-impact locations, Barco solutions bring your content to life and do justice to your brand's reputation. Events

“We have used Barco LED tiles and projectors for concerts of Kylie Minogue and Britney Spears, and we will be using Barco again for U2's world tour. Creatives are thrilled when there are no technical limits to their imagination.“

Detroit car show, US Versace fashion show, Italy Rene De Keyzer, Managing Director XL Video Paris car show, France

Barco's solutions are used for high profile and large-scale events, including car shows, corporate Fans sitting on each other's back, fashion lovers reaching out to the cat- exhibitions, concerts and fashion shows. High walk, car addicts standing shoulder to shoulder, they are all anxious to profile brands like Versace, Armani, Ralph Lauren, catch a glimpse of what's on stage. Artists, designers and corporations Corvette, Audi, BMW, Subaru, Mercedes, Nokia and turning to digital signage are sure to add a creative touch to the Playstation, leading artists like Bon Jovi, Van Halen, crowds’ excitement. The Corrs, Britney Spears, Robbie Williams, Kylie Minogue, Paul McCartney and U2 rely on Barco equipment to render their message with unprece- Barco offers premier, large-format visualization equipment to rental dented impact. and staging companies all over the world. The Barco product range includes the award-winning MiPIX modular LED blocks. It further fea- tures LED displays, projectors and image processing systems that form a complete rental range of display solutions for indoor and outdoor events.

Britney Spears world tour, Seattle, US

Digital Cinema

“Thanks to our innovative digital platform, Kinepolis visitors are sure of a completely new digital cinema experience. Our visitors not only enjoy stunning visual comfort but can now choose from a much wider programming, including feature films, prestigious events, television series, live concerts and sports games.”

Gilbert Deley, General Manager Kinepolis Group

Crowds going loud, spectators saying "hmm" or "ooh" when a scene plays, eyes filling with tears or mouths bursting with laughter, movies are all about emotions. For people to get caught up in the emotions of the movie, image quality and detail are of prime importance.

Barco's digital cinema solutions open up a new world of theatrical, advertizing and business opportunities. From digital mastering to premier quality feature film screenings, from business and sports presentations in the auditorium to advertizing and information displays, Barco has the solution. 38- 39

Dong Feng Cinema City, Changsha, China Hongxing Cinema, Nanning, China

Barco, a market leader with over 200 digital installations worldwide, enjoys strong relation- ships with industry leaders like DreamWorks SKG (digital movie premiere of Shrek 2) and Eastman Kodak. Digital cinema projectors have been installed worldwide for Eng Wah in Singapore, Kinepolis in Belgium, Sathyam in India, the China Film Group, Nordisk Film in Denmark, Soho Images in , T-Joy in Japan, TekoFilms in Russia and Dolby Screening Room in the US.

Kinepolis, Belgium Presentation

“Our philosophy to invest in top quality products from an industry leader in computer graphics projection has always proven to be a sound decision.”

Infosys boardroom, UK Michael Kubit, Manager of MediaVision and Classroom Technology, ACTIS, UK Ingleside Baptist Church, Georgia, US Case Western Reserve University

Corporations like Microsoft and Vodafone use Barco projectors for conferencing, while Oxford New technologies enabling virtual collaboration and remote exchanging University and Case Western are but a few refe- rences trusting on Barco technology for educational of ideas, offer a new realm of educational opportunities. Information purposes. technology does not only bring a fresh and appealing approach by showing students and conference participants video, photography and animations on screen but more importantly, opens the way for e-learning and just-in-time learning.

Barco projectors, networked or stand-alone, facilitate video conferencing and real-time data exchange between people at multiple sites and turn meeting rooms of corporations, universities and conference centers into virtual meeting rooms, with participants from all over the world conferencing as if they were in the same room. Barco recently launched the first 16:9 projector, winning the Pick Hit award at NAB 2004 for this innovative product introduced.

World Economic Forum, Davos, Switzerland

Simulation & Virtual Reality

“Saab and Barco have been able to work closely together, in an open and flexible way, to develop a solution that meets and exceeds customer requirements.”

Stefan Sandberg, Training Systems Manager for Saab Aerosystems

Simulating reality to come to a deeper understanding, creating a virtual world to gain a deeper insight, that is what Simulation and Virtual Reality are all about. Computer-generated worlds allow to practice real-life situations without any risk or danger involved or make it easier to assimilate volumes of complex data.

Barco is a trusted partner for simulation and virtual reality. Its projec- tion equipment is used to recreate reality through computer-generated images in training applications and research environments. Barco visual display solutions are typically used for flight, ship, ATC and driving simulators, digital prototyping and scientific research. Recently the company received the Edison Emerging Technology Award from the state of Ohio for its outstanding technology. 42- 43

Shell Rijswijk, the Netherlands (courtesy of Shell International Exploration and Production B.V.) SEER mini-dome display system Lockheed Martin FATS (courtesy Lockheed Martin)

Barco solutions are used by researchers at the 3D VR Lab of the University of Calgary; for oil exploration in the Oasis iCenter in Abu Dhabi, and Westerngeco Gatwick, UK; for car design at the PSA group in France; computer-aided surgery at CAESAR in Bonn; and the F-35 Joint Strike Fighter simulator.

PSA France (courtesy PSA France) Edutainment

“Many industry colleagues stated they had never seen such good geometry alignment in any other dome system. A really impressive result.”

Thomas W. Kraupe, Director of the Hamburg Planetarium

Historians presenting detailed views of how our ancestors lived, scientists looking further than ever before into our constellation, and technologists sketching what the future has in store, they all want to create a truly immersive, interactive and unforgettable experience to share their vision with their audience.

Barco's Edutainment offering helps leisure centers, museums and plane- tariums in creating a new interactive world for their visitors. Tailor-made projection solutions introduce a dazzling new world of opportunities and immerse visitors in a 3D world full of sensory experiences of past, present or future wonders of the world. 44- 45

Hamburg planetarium, Germany Technisches Museum Wien, Austria (courtesy TMW Wien) Forbidden City, Beijing, China

Barco systems give visitors the ultimate experience in leisure centers all over the world, including Papalote Museo del Niño (Mexico), the planetarium aboard Queen Mary 2, the Virtual Reality Theater in the Forbidden City (China), the Athens Eugenides planetarium (Greece), the Hamburg planetarium (Germany) and L'Astronef (France).

Queen Mary II (courtesy American Museum of National History, NYC) NCP Manchester Ltd. (NML), UK VCNON, the Netherlands

The Florida Department of Transportation (US), The City of Boca Raton (US), The Coast Guard and Department of Homeland Security (US), NCP Manchester Ltd. (UK), VCNON (The Netherlands), BRISA (Portugal) and Ministries of Defense and Joint Forces are but a few of the customers that have chosen Barco to optimize their traffic control, surveillance and command & control systems.

Welsh Assembly, UK 46- 47 Traffic & Surveillance

“We wanted our investment to be state-of-the-art and as open and flexible as possible. What's more, the Barco system allowed us to reduce our equipment costs.”

Robert J. DiChristopher, Municipal Services Director, City of Boca Raton

Traffic controllers and surveillance operators rely on enhanced display solutions to keep a real-time view of traffic flow and respond to potential emergency situations. Their video display walls, allowing real-time monitoring and on-screen interaction with data sources and sensors, highlight potential congestion points and help coordinate emergency responses.

Barco is regarded the leading expert in control rooms for traffic, surveillance and command & control. Its networked solutions display critical information to operators in command & control centers of police, fire brigades and other organizations. Maps with positions and alternative routes, as well as video feeds of events, are displayed on screen and communicated to the entire operations command staff. Barco’s solutions are also optimized for Homeland Security and Defense applications. They enable shared situational awareness in real-time from the field up to the (central) command in Joint Operations Centers. Utilities & Process Control

“Barco's large screen display wall, comprising thirty-two 50" projection modules, displays the entire high voltage network at a glance.”

Katarzyna Klingenfuss, Barco

Providing operators with all key information at a glance, is business- critical in utilities and process control. Real-time signals and informa- tion sources (data, schematics and video) are visually presented, and help operators identify problems and properly respond to events.

In electricity, water, oil and gas plants, Barco visualizes all dynamic data, from detailed network distribution information to topological overviews. In process control, Barco equipment collects and processes all data from the production site, resulting in total control of the manu- facturing process and improved quality at reduced cost. Barco's control room solutions even feature direct network connectivity, allowing to share and exchange contents between control centers. 48- 49

Neckarwerke Stuttgart, Germany Nuon, the Netherlands

Neckarwerke Stuttgart (Germany), Österreichische Bundesbahnen (Austria), Sichuan Power (China), Nuon (The Netherlands), Petronas (Malaysia), Aramco (Saudi Arabia) and Reliance (India) are some of Barco's references.

Elia, Belgium Broadcasting

“Barco's solution installed in the newsroom is a new, sophisticated one. The minute a lamp goes out, another lights up in and within two to three seconds, the internal software automatically calibrates the brightness level to match the rest of the wall.”

Mark Karlen, Broadcast Design International, US

The number of images that need to be simultaneously viewed and controlled in studios, master control centers, playout centers, uplink centers and downlink monitoring is increasing drastically. Barco helps operators in today's broadcasting and distribution business identify potential problems and initiate responsive actions.

Barco's rear-screen projection walls offer a total solution for managed monitoring of a wide range of incoming signals from various sources, and are also optimized as a backdrop solution for interactive use in content-rich productions. This backdrop solution won the Broadcast Engineering's Pick Hit award at NAB 2004, an award handed out for the most innovative and exciting products. 50- 51

Astra, Luxembourg TVN24, Poland Channel4, UK

Monitoring rooms for broadcasting and distribution relying on Barco technology include Turner Broadcasting (US), EMC Digital Head End (Taiwan), SES Astra (Luxembourg) and Danish Broadcast Corporation. Backdrop solutions have been installed for Dubai TV (UAE), VTM (Belgium) and the London Stock Exchange (UK).

Dubai TV, United Arab Emirates Textilgruppe Hof, Germany Concordia Textiles, Belgium

Barco's client portfolio includes leading manufac- turers on all continents, including J&J Industries (US), Beaulieu of America (US), Orion Rugs (US), Fruit of the Loom (US), Shaw Industries (US), Brintons Ltd. (UK), Anton Cramer (Germany), Textilgruppe Hof (Germany), the Fabricato Group (Colombia), Mc Three Carpets (BE), Ideal Floorcoverings (Belgium) and Concordia Textiles (Belgium).

Ideal Floorcoverings, Belgium 52- 53

Textiles

“Investments in textile production can only be justified if we guarantee top quality fabrics at the lowest possible cost. Automatic inspection is the way to achieve this target.”

Mr. Runge, Plant Manager of Anton Cramer, Germany

Industry leaders in textiles need real-time manufacturing information to remain successful in a highly competitive market. Automated track- ing, processing and visualization of manufacturing data across plants and locations, offers strategic insight and allows optimizing the production process.

Barco is one of the international leaders in sensor- and camera-based quality management from raw material to final product. The company offers a complete range of computerized production and quality mana- gement solutions for spinning, weaving, knitting, tufting, dyeing and finishing. These products and systems greatly improve the efficiency of the production process, as well as the quality of the final products. Dedicated versions of Barco's manufacturing solutions are also avail- able for the plastics industry. There’s more to manage You’ll see Report of the board of directors Corporate governance

On 9 December 2004 “The Belgian Code on Corporate Governance” Barco will present its charter to the annual general shareholders’ meet- was issued. Although the Corporate Governance chapter in the annual ing on 4 May 2005 and will publish it on the Barco website by 15 May report only needs to be fully compliant with the requirements set forth 2005. in the code from January 2006 onwards, Barco chose to bring the chap- The chapter on Corporate Governance in this annual report is therefore ter as much as possible in line with the code already in this year’s best read together with the “Corporate Governance Charter” of the annual report. company. In the final section of this chapter, all principles of “The “The Belgian Code on Corporate Governance” also requires Belgian Belgian Code on Corporate Governance” that are not complied with, stock listed companies to draft a “Corporate Governance Charter”. are listed with an explanation of the reasons for non-compliance.

Executive committee

Martin De Prycker Chief Executive Officer Antoon Van Petegem Chief Financial Officer Donald Defoort President Human Resources & Corporate Affairs Miel Schamp President Information Technologies JP Tanghe President Corporate Communication & Investor Relations Luc Kindt President Global Sales & Services Bernard Dursin President Europe, Middle East, Africa and Latin America Jacques Bertrand President Asia-Pacific Dave Scott President North America

Luc Vandenbroucke President BarcoView Stephan Paridaen President Barco Media & Entertainment Michel Vandeplas President Barco Presentation & Simulation Carl Peeters President Barco Control Rooms Bernard Cruycke President BarcoVision Patrick Luyssen President Barco Manufacturing Services & General Operations 56- 57

Date on which the term Main position of office expires: end of Board of directors outside the company the annual general meeting

Chairman Herman Daems (1) Chairman of the board of directors Gimv 2006 CEO Martin De Prycker (3) 2008 Vice-Chairman Baron Hugo Vandamme (1) Chairman of the board of directors Roularta Media Group and Kinepolis Group 2008 Directors Jozef Cornu (2) Advisor to the Chairman of Alcatel 2010 Marc Ooms (1) Managing Director Petercam n.v. 2010 Philippe Naert (2) Dean TIAS Business School, Tilburg University (NL) 2008 Eric Van Zele (2) Managing Director Omniform s.a. Chairman Pauwels International and Reynaers Aluminium 2010 Marc Vercruysse (1) Chief Financial Officer Gimv 2006 Robert J. Verhoeven (2) Managing Director BMT n.v. 2007 Jan P. Oosterveld (2) Member of various boards, Professor at IESE Business School Barcelona, Spain 2007

Secretary Antoon Van Petegem

(1) non-executive directors (2) non-executive independent directors (3) executive director Herman Daems is Chairman of the board of Barco and Gimv, a publicly listed Private Equity and Venture Capital firm. He is also a member of the board of CoWare Inc. (San Jose, CA, USA) and EVCA (European Venture Capital Association). Before, he held board positions with Belgacom and Glaverbel and was Professor in International Management and Strategy at Herman Daems the Department of Applied Economics of the Catholic University of Leuven (Belgium). He also taught Competition & Strategy at Harvard Business School and was at the faculty of the University of California, Los Angeles. Herman Daems holds degrees in Mathematical Physics and Economics and has a doctorate in Economics. He received grants and prizes from sev- eral international organizations.

Martin De Prycker held several positions with Alcatel between 1982 and 1996. He was President of the division for ADSL broadband products from 1996 until 2000. From 2000 until 2002 he was Chief Martin De Prycker Technology Officer and a member of the Executive Committee. In February 2002 he became President and CEO of Barco. He is also on the board of directors of FLV Fund and Agoria (Belgian multisector federa- tion for the technology industry). Martin De Prycker holds a PhD in Computer Science. 58- 59

Baron Hugo Vandamme was President and CEO of Barco from 1983 until 2002. Today he is Vice-Chairman of the board of directors and Honorary Hugo Vandamme President. He is Chairman of the boards of Roularta Media Group and Kinepolis Group, a member of the board of supervisors of Sara Lee/DE and a director on the board of the Port Authority of Zeebrugge. Baron Hugo Vandamme is also Chairman of the Association of Belgian Listed Companies and of the Belgo-Indian Chamber of Commerce & Industry.

After three years of research at the Brown Boveri research laboratories in Baden, Switzerland, Jozef Cornu started his career within Bell Telephone (ITT) in 1973. During his career he occupied general mana- gement positions with Mietec and Bell Telephone (ITT) and was COO of Jozef Cornu Alcatel Telecom from 1995 till 1999. Since 2000 he has been on the board of directors of Alcatel. Next to this he is a member of the Supervisory board of Alcatel SEL (Germany) and a member of the board of Alcatel CIT (France). Jozef Cornu is also Chairman of the Board of Directors of Alcatel Bell n.v. and Tijd n.v.; and he is a director of KBC and Agfa-Gevaert.

Marc Ooms joined Petercam as Managing Director in 1988, became Managing Partner of the Petercam Group in 1992 and Chairman of Petercam Nederland in 1999. He is in charge of corporate finance in Marc Ooms Belgium and the Netherlands. He is a member of the board of direc- tors of several companies, including Gimv. Philippe Naert is dean of TIAS Business School at Tilburg University (NL) and Technische Universiteit Eindhoven; and he is a director of Almanij, Concordia Textiles, Nuon Belgium and De Koninck. He was also dean of INSEAD (FR), director of the EIASM (Brussels) and academic director of Philippe Naert the Instituto Universitario Euroforum Escorial (ES). He graduated in Electrical Engineering from the Catholic University of Leuven. He further holds a postgraduate degree in Management Science (University of Manchester, UK) and a PhD (Cornell University, USA). He is Doctor honoris causa of the Helsinki School of economics.

Eric Van Zele is President and CEO of Pauwels International, President Eric Van Zele of Omniform s.a. and chairman of Reynaers Aluminium. Prior to his current positions, he served as President & CEO of Telindus and as Vice- President of Raychem Corporation.

Marc Vercruysse has been CFO and member of the Executive Committee of Gimv since 1998. Before becoming CFO, he was internal Marc Vercruysse auditor with Gimv, senior investment manager and head of Structured Finance. He is also on the board of directors of several unlisted com- panies. 60- 61

For almost twenty years Robert J. Verhoeven held several senior man- agement positions in the connector industry. Since 1991 he has been Robert. J. Verhoeven CEO of the BMT Group. This company is active in 12 countries with 17 manufacturing plants. He is also on the board of LVD company.

Jan P. Oosterveld joined Philips in 1972. He held various international management positions and became a member of the group manage- ment team in 1998. Until his retirement in 2004 he was in charge of Philips' corporate strategy, corporate alliances and was responsible for the joint ventures for LCD and CRT with LGE Korea. He was also CEO of Philips Asia Pacific. Jan P. Oosterveld holds degrees in Mechanical Engineering from the Technical University Eindhoven, the Netherlands Jan P. Oosterveld and Business Administration from the IESE Business School, Barcelona, Spain. He is a lecturer in Strategy, Entrepreneurship and International Management at leading business schools around the world and was appointed professor at IESE in 2002. Since May 2003 he is a member of the supervisory board of Continental AG, Hannover, Germany. In 2004 he was appointed as a member of the Supervisory Board of Atos Origin s.a. in Paris, France, Crucell n.v. in Leiden, the Netherlands and of Cookson Electronics Plc, London, UK. Appointment of directors Activity report on board and board committees meetings The board consists of 10 directors: Reference is made to the Corporate Governance Charter on One executive director www.barco.com for an overview of the responsibilities of the board of Martin De Prycker, Chief Executive Officer directors and its committees, and for a survey of topics discussed at Four non-executive directors board meetings. Herman Daems, Chairman, Baron Hugo Vandamme, Marc Ooms, Board of directors Marc Vercruysse Five independent, non-executive directors who hold senior positions in In 2004 the board of directors met 9 times. All members participated in leading international companies or organizations 5 of these meetings. At 2 of the 9 meetings 2 directors were excused Jozef Cornu, and at another 2 meetings 1 member was excused. Philippe Naert, Jan P. Oosterveld, Eric Van Zele, Audit committee Robert J. Verhoeven The audit committee consists of Robert J. Verhoeven (chairman), Marc The directors are appointed by the general meeting for a term of maxi- Vercruysse and Philippe Naert, who all are non-executive directors. In mum six years. Terms of office end at the closing of the annual meeting. 2004 the audit committee met 5 times. One member was not present Directors may be dismissed at any time by the general meeting. The at one meeting. age limit is set at 65 and directors can be re-appointed upon the end of their mandate. New directors are nominated by the remuneration & nomination committee; international business experience and/or expe- Remuneration & nomination committee rience in professional electronics are the main selection criteria. The remuneration & nomination committee consists of 3 non-executive directors: Herman Daems (chairman), Jozef Cornu and Marc Ooms. The committee met 3 times. At one occasion one member was not present. 62- 63

Strategic committee committee, in line with the rules described in the company’s “Corporate Governance Charter”, to become available on www.barco.com. The strategic committee met on 3 occasions in 2004. At 2 of these meetings 1 member was absent. The members of this committee are The total remuneration paid in 2004 to members of the executive com- Herman Daems (chairman), Martin de Prycker, Hugo Vandamme, Jozef mittee, including the CEO, amounted to euro 4,517,465. Included are the Cornu, Eric Van Zele and Jan P. Oosterveld. employer’s contributions to personal risk insurances and retirement benefits. Euro 3,319,709 of the total remuneration was fixed, while euro 1,197,756 was variable remuneration. The total number of stock options Remuneration for directors and members of the executive committee granted to the members of the executive committee was 25,500.

The general meeting grants a fixed remuneration to directors and an additional amount for being present at meetings of committee(s) a director is member of. These remunerations are charged to the general Compliance with “The Belgian Code on costs. The board of directors is authorized to grant remuneration to direc- Corporate Governance” tors entrusted with special functions or tasks. This remuneration is also charged as general costs. Barco complies to a large extent to all corporate governance rules, as can be found in “The Belgian Code on Corporate Governance”, which In 2004 the remuneration paid to directors totalled euro 1,358,830 con- can be consulted on www.corporategovernancecommittee.be. sisting of: euro 352,500 fixed remuneration Following is a survey of the principles and guidelines of the code that euro 252,000 variable remuneration Barco does not comply with, along with an explanation of the reasons euro 753,830 paid to HRV n.v. for strategic advice to the company, in for non-compliance. execution of the board’s 2002 decision, as reported in the annual report of 2002. Principle 2, Appendix A, Criteria of independence, 2.3/1 No stock options were granted to directors in 2004. The assessment of independence shoud be made taking into account several For the executive director and the members of the executive committee criteria, including "not having served on the board as a non-executive director for the remuneration is determined by the remuneration & nomination more than three terms". One member of the board of directors, who is also chairman of the audit Without prejudice to applicable legal provisions, proposals for appointment should committee, does not comply with these criteria of independence, as he be communicated at least 24 days before the general meeting, together with the has been a member of the board for more than three terms. Throughout other points on the agenda of the general meeting. This provision also applies to the period (more than 12 years) that the board member in question has proposals for appointment originating from shareholders. been serving as a director, he has always maintained and demonstrated an independent attitude. His departure would result in the loss of a As required by law (article 533, paragraph 4), proposals for appointment wealth of historical background knowledge of the company's complex are included in the concerning notice of the general meeting. business.

Principle 5, Appendix C, Audit Committee, 5.2/1 Principle 4.6, Nomination and appointment The board should set up an audit committee composed exclusively of non- Any proposal for the appointment of a director by the shareholders' meeting executive directors. At least a majority of its members should be independent. The should be accompanied by a recommendation from the board, based on the chairman of the board should not chair the audit committee. The board should advice of the nomination committee. satisfy itself that the committee has sufficient relevant expertise to fulfill its role effectively, notably in financial matters. The proposal should specify the proposed term of the mandate, which should not exceed four years. It should be accompanied by relevant information on the can- One of the members of the audit committee can not be considered as didate's professional qualifications together with a list of the positions the candi- independent for historical reasons. This member of the board represents date already holds. The board will indicate whether the candidate satisfies the Gimv, which owned more than 10% of the shares in the past, and which independence criteria. has no conflicting interests with Barco. The member’s competences and wide financial experience guarantee important expertise in his position as a member of the audit committee. Concerning the chairman of the Until now, directors were appointed by the general meeting for a term audit committee, reference is made to the explanation made under of maximum 6 years. The board of directors will propose at the annual principle 2, Appendix A, Criteria of independence, 2.3/1. shareholders’ meeting to limit terms of office to 4 years. Terms of office of current directors will remain unchanged. 64- 65

Principle, Appendix D, Nomination Committee, 5.3/1 Statutory auditor

The board should set up a nomination committee composed of a majority of inde- Ernst & Young Bedrijfsrevisoren S.C.C. pendent non-executive directors. Marcel Thirylaan 204 1200 Brussel The nomination committee is currently composed of three members, all of whom are non-executive directors. Only one is independent; the represented by Ludo Swolfs and Marc Van Hoecke other two are non-independent. One of these non-independent directors was appointed to represent a shareholder who was not independent at that time as this shareholder held more than 10% of the shares. But Remuneration paid to the statutory auditor for special assignments and today this shareholder holds less than 10% of the shares. Moreover, this to the person with whom the statutory auditor collaborates in his pro- shareholder, nor the director, have conflicting interests with Barco. fessional capacity amounted to 141,423 euro over the past financial year. Payments to the statutory auditor for special assignments were granted mainly for additional audit services relating to the application of Principle 8.9, Shareholders’ meetings International Financial Reporting Standards and with respect to the warrant plan. The persons with whom the statutory auditor collaborates The level of shareholding for the submission of proposals by a shareholder to the professionally were paid with funds designated for fiscal and social general shareholders' meeting should not exceed 5% of the share capital. consulting services.

According to the articles of the association (article 30) and the code on companies (article 532), shareholders owning more than 20% of the company’s shares can request that a general shareholders’ meeting be convened. A 5% limit is not appropriate given the size of the company. Profitable growth

Barco designs and develops solutions for large-screen visualization, and mechanical manufacturing in two locations. This consolidation was life-critical applications, and visual inspection in a diverse range of finalized end of 2004 and internal processes will be further optimized professional markets. In this high-tech environment, a forward-thinking in 2005. In addition, other products like LED tiles and control room company roadmap is essential to align the efforts of many divisions, solutions are manufactured in China and India respectively. business units and regional centers of excellence. Therefore Barco has laid down a long-term growth plan along three axes, as well as a Also in 2004, the Barco Silex center of competence for micro-electronic short-term operational improvement plan. design, was integrated into the medical imaging organization, and adds extra resources to Barco's dedicated engineering department for Operational excellence modality imaging solutions.

In 2004 Barco further streamlined its internal processes with an oper- In 2005 Barco will continue to improve operational efficiency in all ational improvement plan. Increased customer focus, higher quality functional domains (operations, R&D, sales and marketing, finance and levels through the 6-sigma project, a global marketing image and an administration) to yield improved profitability. improved customer service organization have been continued as planned and yielded the expected results. Long-term growth

In order to stay ahead of competition, larger volume products are more Barco strives to grow along three axes: trust upon its wide technology and more manufactured in countries with lower labor cost and coun- expertise and dedicated solutions to expand its offering into new ver- tries with dollar-related currencies, strengthening Barco's natural tical markets, build upon its global presence to expand sales in North hedging position. The consolidation of all subcontracting services in America and Asia-Pacific, and go from (sub)systems to solutions and Poperinge (Belgium) and Kladno (Czech Republic) bundles electronic present customers with a wider range of services. 66- 67

Martin De Prycker Chief Executive Officer Vertical market expansion Regional growth in North America and Asia-Pacific

Intense R&D efforts and strong market knowledge have enabled Barco As an international company, Barco targets markets on a worldwide to become a leader in many professional markets worldwide. It is the scale. Consequently, the company wants to increase its presence and company's strategy to further consolidate its position in stable markets sales in North America and the Asia-Pacific area. In 2004, Barco by increasing market share and streamlining operations, and to build aligned its internal organization with this regional focus, by appointing upon its momentum in fast-growing markets both through internal regional presidents for North America and Asia-Pacific. growth and acquisitions. Markets like medical imaging, media, events and traffic & surveillance have a lot of untapped market potential and The acquisition of Folsom Research Inc. further strengthened the consequently Barco continues to invest heavily in these markets. company's position in North America, where Folsom had a 30% mar- ket share for display control products in the events market. Next to Acquisitions of Voxar (UK), Folsom Research Inc. (USA) and System this, sales offices were opened in Canada; the existing facilities in Technologies (BE), further expand Barco's product portfolio and exper- Duluth near Atlanta (GA), were expanded; and sales and marketing tise in key markets like medical imaging and events. Barco's unique efforts were increased. In the US security market, Barco was awarded technology expertise and cross-divisional collaboration have also numerous contracts, with the US Coast Guard project as a major break- opened new opportunities for LED technology in the market of archi- through. tecture and urban design, whereas rear-projection technology was successfully optimized to be used as a backdrop solution in TV studios. In Asia-Pacific, Barco also heavily invested in expanding the sales and marketing force and set up an R&D center for LED technology in China. 68- 69

In addition, manufacturing of LED tiles was successfully started at the Voxar expands Barco's product portfolio and expertise in the medical Barco Leyard facility near Beijing. The number of employees in China market with 3D image analysis software. Folsom Research Inc. adds rose from 50 to 200, and thousands of LED tiles were manufactured in image processing to Barco's offering for rental and staging companies, the first year of production, a considerable part of Barco's worldwide whereas the integration of System Technologies brings a creative production. Testifying to Barco's success, spectators in the grandstand dimension to Barco's consultancy for rental and staging. of the Formula One grand prix in China last September, followed the race on giant Barco LED screens. An annual R&D investment level of 11% of sales, customer proximity and user involvement in product design, are of prime importance for Also in India, Barco invested considerably over the last years and set Barco to keep on offering pioneering solutions. With a strategic up an R&D and manufacturing facility for its Control Rooms division. In product portfolio rotation of about 60% every two years, Barco keeps 2004, the number of units produced went up from 1,000 to over 3,000 on setting the pace of innovation in many professional markets. units.

From systems to solutions

Over the years, Barco has gradually evolved from a product manufac- turer into a solution provider. Acquisitions of Folsom, Voxar and System Technologies bring the company valuable expertise in offering com- plete systems, as they add image processing, image analysis and creative design to its portfolio. Technology growth and engineering excellence

In today’s fast changing business environment, clear understanding of In line with the company’s strategic vision, Barco also focuses on emerging and future technologies is key to maintaining Barco’s com- image analysis tools that do not only visualize information but also petitive position. Close interaction between product management, help interpreting and understanding the data available. In this shift R&D and manufacturing, coupled with intimate customer and market from Human Machine Interface to data analysis solutions, the knowledge, allows Barco to focus on technology differentiators and Orthogon product range in traffic management and the Voxar product shorten time-to-market. range in medical imaging offer advanced software tools for image interpretation. In its constant quest for innovation, Barco keeps a close eye on emerg- ing technologies like Micro-Electro-Mechanical Systems (MEMS), flexi- For a technology leader to provide clients and partners with the high- ble displays, reflective displays and nanotechnology. Engineering high- est added value possible, engineering excellence is another foundation lights for 2004 include the first 16:9 High Definition projector for the stone of its activities. Therefore Barco will keep on focusing on opera- Presentation market, circular LED building blocks and the Encore video tional and engineering excellence in the course of 2005, with customer processing and control system for Events, a dedicated backdrop solu- satisfaction as the main standard for evaluation. Key to realizing this tion for Broadcasting, and unique solutions for pixel compensation and ambition and meeting customer expectations are user-friendly design, uniformity in medical LCD technology. In 2004 Barco filed for 31 usability, extensive testing, quality control and serviceability (easy patents and now has a portfolio of over 200 patents. Through an active access to and replacement of consumables). licensing strategy, this intellectual property may well become a valu- able asset for the company in the near future. 70- 71

In support of engineering excellence, Barco set up a company-wide resource planning and management tool in 2004. This will optimize the use of available resources through consistent planning and will allow to fully focus on technology differentiation. In addition, technology forums and collaborative user groups allow for knowledge exchange between divisions and business units, and offer the chance to reuse technology and components in new vertical markets.

Johan Remmerie Vice President Technology ICT

Alertness and responsiveness are key for Barco to remain competitive Processes will gradually get streamlined and management tools will in today’s global economy. Throughout the extended value chain, be implemented to offer integrated views of suppliers and customers, speed of decision making and execution are crucial for success. ICT is and facilitate reporting and data analysis. the basic enabler for the integration and zero-latency of business processes, and offers managers and business analysts a real-time In 2005 a program will be started to optimize Barco’s global supply status overview of the company. network. Related business processes will be rethought to gain transparency and flexibility, and will allow Barco to operate as close as In 2004, the foundations were laid for worldwide resource and port- possible to the customer, with improved service, responsiveness and folio management. This will bring improved focus to resource planning efficiency. The international roll-out of the unified ERP system will on a global scale and drive efficiency within engineering and enable and support the defined operating models in this respect. development. The roll-out of the company-wide ERP system was also continued throughout the year, with particular attention for the basic Barco will also continue the worldwide roll-out of customer-centric processes in customer service. data warehousing and business intelligence tools. Flexible solutions will ensure that information can be disseminated quickly and cost- Next to this, a performance measurement program was started. For a effectively within the organization, and will enable to have a single selected set of business processes, key performance indicators were point of control for enterprise management. defined and brought together in a management dashboard. Furthermore, the technology platform of Barco’s IT infrastructure will be refreshed and upgraded. The new environment will be the corner- stone for real-time collaboration and enhanced knowledge sharing. In this perspective, the info@home project, whereby associates get access to information sources from home, will ensure that all employees are connected and have vital information sources at hand anytime, anywhere.

Risk management also remains prominently on the agenda for 2005. To ensure smooth business operations, continuity and disaster recovery, measures and procedures for ICT services will be further implemented, with particular attention for system redundancy and data recovery in case of failures.

Miel Schamp President Information Technologies Corporate marketing

In today’s competitive business environment, the role of marketing is browse at least two pages. In 2004, a new search functionality was crucial to the entire decision-making process of a company. Marketing implemented to make the website even more user-friendly. Next to offers an organizational framework, with the customer at heart, which this, an e-mail alert system was set up and allows visitors to subscribe enables the whole organization to work as one and achieve its objec- to press release announcements and website updates. tives. As such, marketing goes beyond its traditional support role and identifies long-term strategies for harmonious interaction with To further increase brand recognition, the “You’ll see” cross-divisional customers in a constantly changing environment. communication theme was launched. This theme offers all divisions, business units and regional organizations a guiding principle to reflect With the company’s strategic orientation towards solutions and vertical Barco’s premium brand strategy in their 2005 communications. market expansion, the brand becomes a prime asset in marketing Barco’s unique competences and entering new market segments. Because products are an important interface with the customer, as far Therefore Barco’s premium brand strategy was completed with company as brand experience is concerned, product branding was a major point vision, mission and values, which offer employees a guiding principle of attention in 2004. A brand charter was established to lay down the to live the brand in their daily contacts with customers, prospects, consistent and uniform reflection of the Barco brand in product design. investors and colleagues. In order to avoid brand dilution through a multitude of product names, and to further strengthen the brand in an optimum way, Barco opted In addition, the corporate identity, which has been very consistently for a master brand approach. This approach, with full focus on the implemented worldwide, is paying off and proves to be a prerequisite Barco name, not only enhances brand recognition but also facilitates to position Barco in a professional way in all B2B markets it is active in. the strategic shift from products to solutions, with more emphasis on the added value of the solution than on the individual components. As The globally integrated barco.com website, with its dedicated cus- far as product identification is concerned, the use of non-brandable tomer-oriented market portals, is a driving force in a unified brand alphanumerical codes to identify products will lead to a substantial image and consistent brand experience across all communication. reduction of the number of trademarks and will facilitate cross-market Traffic on the Barco homepage increased by 33% in 2004. More than use of solution components. half of the visitors spend more than 2.5 minutes on the website and Finally, in a global company, with dedicated teams in various locations Ann Galland all over the world, knowledge sharing and strategic planning are cru- Director Corporate Marketing cial to success. To coordinate and streamline all efforts worldwide, a marketing board has been set up, where senior executives share strategic insight and weigh new branding initiatives. In addition, forums were organized for Barco communications and marketing pro- fessionals worldwide in order to exchange views on their respective challenges and achievements. Human resources

Working in a multicultural and global organization has to be an enrich- ing experience. Therefore Barco's three-dimensional human resources approach aims to create a working atmosphere, which stimulates employees to explore new horizons and discover new potential. Multi- national task forces align market position, employee profiles and regional cultural differences with the company's vision.

As people make the difference in today's competitive business envi- ronment, competence management is not an empty phrase with Barco. Dedicated programs have been set up to identify employees' potential and aspirations, and link their personal career paths with the overall company roadmap.

In 2004 the number of staff worldwide rose from 4,022 to 4,389. The number of personnel in Belgium remained stable but increased by 171 in the rest of Europe, by 134 in North America and by 89 in Asia- Pacific. Acquisitions of Voxar in the medical imaging market and Folsom Research Inc. in the events market account for an increase of the number of staff with 152.

Donald Defoort President Human Resources & Corporate Affairs 76- 77

In line with the company's strategy to be the worldwide number one 2004 also was the year of Barco's seventieth birthday, with festivities in selected professional markets, the R&D force was expanded with all over the world. As employees are at the heart of Barco's success 10%, the number of sales and marketing staff with 12% and the cus- story, they were all invited to join the celebrations and organize com- tomer service base with 16%. The strong company focus on regions pany outings and events. Celebrations culminated in the publication of resulted in an increase of the number of personnel of about 20% in the book "An eye for niche markets, the strategic growth of Barco". Asia-Pacific and North America, which lays the foundations for future This historical book not only describes Barco's expansion over the last success in both regions. 70 years but also keeps a close eye on the strong involvement, tech- nological boldness and feel for international expansion of the company's Last year Barco not only invested in people but also had an eye for the staff. workplace and working atmosphere. A new building was constructed for the operations of the BarcoView division in Kortrijk, Belgium, Internationalization will also mark the coming year. Active in global whereas Barco's US facilities in Duluth, Atlanta, were expanded. The markets, Barco interfaces with international customers and offers new and refurbished offices and production floor not only offer products and solutions on all continents. This opens up new perspec- employees enhanced working comfort but also promote cooperation tives and career opportunities for associates, both in product bases and and knowledge exchange by regrouping business units from several regional offices and presents Barco with the ongoing challenge of locations into a central location. Next to this, Human Resources set up optimizing business efficiency in a multicultural environment. the info@home project, which gives staff the chance to connect to the Therefore new initiatives are being set up, including an international Barco intranet and have information at hand where and when they HR exchange program, remuneration benchmarking and employee need it. evaluation. Corporate sustainability

Barco wants to be successful in the long term wherever it operates, successful if it enjoys the trust and support of its neighbors. That is why and as a stock-listed company, making profit is an integral part of this Barco strives to be recognized as a dependable partner and an attrac- approach. Therefore the corporate roadmap focuses on both internal tive employer that takes its social responsibilities seriously. Therefore and external growth, through improved business efficiency and strate- Barco actively sponsors humanitarian, cultural and social causes, gic acquisitions in key markets. With this aggressive approach, Barco is including city projects, concerts, festivals and charities like Unicef, confident to further strengthen its leading position in worldwide visu- Belgian Burns Foundation and the victims of the seaquake in South East alization markets and maximize profit for all stakeholders. Asia.

But profitability is not the only cornerstone of Barco's long-term strategy, Investing in education and science is also very important for Barco's as the company wants to make profit in harmonious operation with future, both from a competitive as well as a social point of view. That society. As a good corporate citizen, Barco wants to balance the three is why Barco financially supports the Vlerick (Belgium) and CEIBS P's in its sustainability approach. Barco works actively to balance financial (China) management schools and hands out yearly awards for promis- success (profit), human progress (people) and a clean environment ing engineering research. What is more, Barco wants to bring high tech (planet). Therefore the company enters into a dialogue with all stake- closer to the people and stimulate interest in sciences through open- holders: employees, customers, neighbors, suppliers, shareholders and ing its doors for the general public on special occasions, welcoming society in general. interns or giving guided tours to students.

With its global presence, Barco has an impact on and actively partici- Employees are also key in Barco's sustainability approach. Barco is not pates in local communities all over the world. These communities play only committed to internationally recognized labor and social standards an important role in the corporation's success, as Barco can only be at all its sites worldwide, but takes many more initiatives to create a 78- 79

truly international, multicultural working environment. Next to this, the As for the environment, Barco strictly respects legislation and tries to company is continuously internationalizing its management teams. do better than regulations prescribe, by using easily recyclable raw materials and components, by cleaning historic ground pollution or by Barco also wants to cooperate in a constructive manner with employee developing energy-friendly products. Barco's projectors for instance, representatives. In this respect, regular meetings are held with the feature long-life lamps and its LCD displays are equipped with replace- works councils and trade unions, and a European works council was set able backlights, increasing product lifetime and reducing waste. When up several years ago. Protecting and promoting good health is also an polluting manufacturing processes cannot be avoided, Barco operates obligation for a corporation like Barco and therefore many sports teams in strict accordance with local legislation. As an example, its and leisure initiatives have been set up within Barco, including jogging, Manufacturing Services division has had an environmental charter from soccer, teambuilding events, ... an independent government agency since 1993.

When developing new products and manufacturing processes, Barco Another integral part of Barco's corporate sustainability approach is its adheres to the ISO9001 standard and uses the 6sigma methodology to striving for openness. A new corporate governance charter has been create more efficient processes. Next to this, the company also active- drafted and will be submitted to the annual shareholders' meeting in ly involves its suppliers in performance improvement programs as they May 2005. But corporate governance and transparency have always play a crucial role in ensuring the competitiveness of Barco's products been key for Barco, as is illustrated by the fact that its financial com- and services. In this respect, the first ever supplier day was held in munication was awarded for the second time in a row by the Belgian 2004 and the first Barco partnership awards were handed out. Association of Financial Analysts. Sales and services

Customer intimacy is deeply rooted in the values and operating prin- ciples of Barco. With forward-thinking vision, passion and ambition, Barco has strengthened its regional presence and customer-centric focus in sales and post-sales support.

Following the global commitment to anticipating and responding to market demands, Barco has centralized regional sales and post-sales support in North America, Asia-Pacific, and Europe/Middle East/Africa (EMEA). Regional presidents were appointed to each of these three regions to emphasize a dedicated approach, while these presidents were also appointed to Barco’s Executive Committee to ensure conti- nuity across all the business divisions. In just one year, Barco's regional approach has already proven to be a successful strategy, with a notable increase in sales for 2004. While growth in EMEA has steadily continued to climb, US sales experienced a healthy increase of 14% (8% organic) in local currency, while Asia-Pacific realized a 32% gain over the year in local currency.

Luc Kindt President Global Sales & Services In all regional markets, it is of prime importance to have a direct feel for customer needs. With local sales offices in all continents, Barco is Bernard Dursin in a unique position to understand its customers, convince them of the President Europe, Middle East, unique value added solutions and offerings, and show them full com- Africa and Latin America mitment.

For Barco, the optimal performance of its products during the complete life cycle is the best guarantee for the company’s success. To ensure maximum support and availability of products, Barco has expanded its worldwide support network with both regional competence centers and local service centers. Cross-divisional synergies in technology, product development, channel marketing and account management have aided Barco in the successful management of diverse customer groups and multiple products, services and channels, while playing the role of manufacturer, distributor and service provider.

Streamlining Barco’s worldwide service processes has become vital to Dave Scott the success of the company. True to its firm commitment to customer President North America support for sales and post-sales, Barco established a Service Core Team to lead and streamline worldwide service processes for closer commu- nication with the customer in all phases of product life cycles.

Together with local partners in 100 countries worldwide, the Barco service centers and major regional competence centers provide cus- tomers with faster turnarounds, continuous availability of spare parts, and long-term technical support, training, consultancy and engineering services.

Jacques Bertrand President Asia-Pacific Comments on the results

In comparison with the previous year, sales increased by 6.8% in 2004. Two divisions are playing a leading part in the sales increase in Asia- All divisions recorded a growth in sales, except for the division Pacific: Barco Control Rooms and Barco Media & Entertainment. Both BarcoVision, where sales dropped 11% (after exclusion of Machine divisions recorded a strong growth in China. This country already makes Vision, divested July 2003). The divisions Control Rooms and Media & up 9% of Media & Entertainment sales. This proves that the investments Entertainment saw their sales grow by 32% and 31% respectively. in research & development and manufacturing in Barco Leyard (Barco's Growth at the BarcoView and Presentation & Simulation divisions was joint venture in China set up in 2003) render the expected results in the rather modest, with a sales increase of 4% and 3% respectively. Chinese market. Excluding currency fluctuations, sales would have increased by 12% year-on-year. The acquisitions made in 2004, Folsom in January and Orders declined by 1.4% compared with the year before. Excluding Voxar in September, account for a total sales increase of 3.4%. currency fluctuations, however, orders would have grown by 3%. The substantial growth in orders of 18% for the Media & Entertainment divi- The Asia-Pacific region accounts for a considerable part in the growth in sion and the modest growth of 2% for the BarcoView and Barco Control sales with a 22% increase compared with 2003. Sales in the Americas Rooms divisions, could not fully offset the decline by 20% at increased by 5%, whereas sales grew by 3% in EMEA (Europe, Middle BarcoVision and 5% at Presentation & Simulation. For the first three East and Africa). When evaluating sales in local currencies, Asia-Pacific quarters of 2004 orders were higher than sales. But the low book-to-bill grew by 32%, the Americas by 14% and EMEA by 3%. This confirms ratio for 4Q04 of 0.84 brought the book-to-bill for the full year down to once again that Barco's increased investments in sales & marketing in 0.97. regions with strongly growing economies, are paying off. General and administration expenses remained relatively stable in 2004 (7.1% of sales). In absolute value this was also the case for investments in research & development. Sales and marketing investments however, saw a substantial increase of 9% in absolute figures. 82- 83

Sales in ‘000 euro & current EBITA in %

2004 % EBITA 2003 % EBITA

BarcoView 220,449 16.9 211,894 15.6 Barco Media & Entertainment 160,903 1.6 122,486 1.8 Barco Control Rooms 109,552 12.1 82,976 12.6 Barco Presentation & Simulation 105,233 10.0 102,100 13.9 BarcoVision* 59,556 12.4 75,522 15.1 Barco Manufacturing Services 112,083 0.7 64,473 3.8 Eliminations -95,853 -30,507

Total 671,923 10.7 628,944 11.0

* Sales for 2003 include the business unit Machine Vision, divested in July 2003

Evolution of sales per quarter, 2003 - 2004 Evolution of orders per quarter, 2003 - 2004

(‘000 euro) (‘000 euro)

250,000 250,000

200,000 200,000 2003 2003 150,000 150,000 2004 2004 100,000 100,000

50,000 50,000

0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % 2003 -1.2 8.6 8.9 10.5 % 2003 -2.6 5.6 8.1 -14.2 Traffic Management Medical Imaging 28.4% Systems 35% BarcoView

Orders and sales

Orders at BarcoView increased by 2.4% in 2004. Sales grew by 4%.

With an increase of 24%, sales in the medical market were the most important driver of the division's growth. The medical market grew each quarter year on year, confirming Barco's leadership in the PACS Defense & Security Avionics (Picture Archiving and Communication Systems) market. 3D medical 30.8% 5.8% software company Voxar, which was acquired in September 2004, rea- lized euro 2 million in 4Q04. This acquisition is expected to become an important contributor to Barco's growth in the medical market in the years to come. The defense & security market declined by 15% in 2004, a decline year-on-year to be noted in each of the four quarters. An improved performance in this market is expected in 2005. Traffic BarcoView sales & EBITA, 2003 - 2004 management increased sales by 8% driven by an excellent fourth quarter. Avionics realized a sales increase of 6%.

(In million euro)

In the first half of 2004, BarcoView had a book-to-bill ratio above 1. 250 This was no longer the case in the second half of the year due to a 200 lower order performance in the defense & security and avionics mar- Sales kets. 2004 book-to-bill was 0.94. The medical and traffic management 150 EBITA markets saw good order levels over 2004, with an increase of 24% 100 212 221 and 9% respectively. 50

0 15.6% 16.9% 2003 2004 Evolution of Defense & Security sales per quarter, 2003 - 2004

(‘000 euro)

30,000 25,000 20,000 2003 15,000 2004 10,000 5,000 0 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 % 2003 -14.1 -2.4 -14.9 -25.6

Luc Vandenbroucke President BarcoView EBITA

Evolution of Traffic Management EBITA margin increased from 15.6% in 2003 to 16.9% in 2004. sales per quarter, 2003 - 2004

The increase in gross profit margin from 46.6% in 2003 to 47.4% in 2004 had a positive impact on the EBITA margin for the whole year. (‘000 euro) This effect was of particular importance in 4Q04 with the gross profit 25,000 margin increasing to 51.1%, resulting in a 23% EBITA margin. 20,000 2003 R&D investments 15,000 2004 10,000 Total expenditures for research & development amounted to 12.2% of sales. 5,000 0 Q1 Q2 Q3 Q4 Number of employees

At the end of 2004, the division BarcoView had 1,215 employees worldwide. Q1 Q2 Q3 Q4 % 2003 -24.5 6.7 -8 71.6 86- 87

Evolution of Medical Imaging Systems Evolution of Avionics sales per quarter, 2003 - 2004 sales per quarter, 2003 - 2004

(‘000 euro) (‘000 euro) 22,000 20,000 6,000 18,000 5,000 16,000 14,000 2003 4,000 2003 12,000 10,000 2004 3,000 2004 8,000 6,000 2,000 4,000 1,000 2,000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % 2003 10.9 12.8 33 38.6 % 2003 24.9 18.7 -3.8 -3.7 Barco Media & Entertainment

Orders and sales

In 2004 orders at Media & Entertainment grew by 18.3% and sales by play an important role in this success. While more than doubling its sales 31.4%. compared with 2003, Digital Cinema saw a shift in importance from the US to the Asia-Pacific market, which makes up for almost 50% of the With the divestment of the home theater activity, only three business total digital cinema market for Barco (with China taking up 23%). The units remain in the Media & Entertainment division: Events, Media and European market almost accounts for almost 40% of sales. This Digital Cinema, which all realized substantial growth in 2004 (29.2%, illustrates the very slow digitization of cinema theaters in the US. 33% and 163.9% respectively). After the acquisition of California-based Folsom in January 2004, its product-line was successfully integrated Orders grew by more than 20% in the events and media markets. It is worldwide. In this way the Folsom products could play a major part in clear that these markets, in particular the media market, will remain the events market in Europe and Asia-Pacific as well, and contributed important growth drivers for Barco in 2005. In digital cinema, orders substantially to the strong increase in sales seen in the events market increased by almost 50%, again with better performance of the worldwide. The Media business unit realized an important part of its European and Asia-Pacific markets than the North-American market. The growth in China, with sales increasing from 3.5% of total sales in 2003 book-to-bill ratio for the division was 1.03. to 17% in 2004. The investments made in the Chinese media market through the joint venture of Barco Leyard at Chang Ping near Beijing,

Digital Cinema

Media 7.5% 30.8%

Events 61.7% 88- 89

Barco Media & Entertainment sales & EBITA, 2003 - 2004

(In million euro)

180 160 140 Sales 120 100 EBITA 80 123 159 60 40 20 0 1.8% 1.6% 2003 2004

Stephan Paridaen President Barco Media & Entertainment EBITA

Evolution of Media EBITA margin decreased from 1.8% in 2003 to 1.6% in 2004. Over the sales per quarter, 2003 - 2004 first three quarters EBITA margins improved compared with a year before. In 4Q04 however, EBITA margin was minus 7.1%, negatively impacted by a lower gross profit margin and higher inventories. This (‘000 euro) was due to the fact that LED walls were (only temporarily) simultane- 18,000 ously manufactured in China and Belgium and to longer lead times of 16,000 suppliers. The EBITA margin was further negatively influenced by pro- 14,000 12,000 2003 visions for bad debt in the events market. 10,000 2004 8,000 R&D investments 6,000 4,000 2,000 Total expenditures for research & development amounted to 8.6% of 0 Q1 Q2 Q3 Q4 sales in 2004.

Number of employees Q1 Q2 Q3 Q4 At the end of 2004, the division Media & Entertainment counted 564 % 2003 365.3 62.2 27.2 -14 employees worldwide. 90- 91

Evolution of Events Evolution of Digital Cinema sales per quarter, 2003 - 2004 sales per quarter, 2003 - 2004

(‘000 euro) (‘000 euro) 35,000 6,000 30,000 5,000 25,000 2003 4,000 2003 20,000 2004 3,000 2004 15,000 2,000 10,000 5,000 1,000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % 2003 49.5 34.3 11.4 23.2 % 2003 58.7 209.1 245.5 196.5 Barco Control Rooms

Orders and sales

Orders at Barco Control Rooms increased by 2% and sales by 32% in 2004.

Sales in China increased by 34% in 2004, a growth that is even stronger than the 32% of the division as a whole. Also South Korea proved to be a growing market for the division. Traffic & surveillance applications did very well worldwide throughout the year, while in the second half of the year the process control market showed a growing interest in Barco Barco Control Rooms sales & EBITA, 2003 - 2004 control room solutions.

All quarters in 2003 recorded very strong order levels, thus preparing for (In million euro) the strong sales of 2004. At the end of 2004 Barco saw some orders for 110 control rooms shift to 2005. Book-to-bill ratio was 0.94. 100 90 80 EBITA 70 Sales 60 50 83 109 EBITA EBITA margin was 12.1% of sales versus 12.6% the year before. There 40 30 was a dip to 8.3% in 3Q04, due to temporary supplier issues, which 20 weakened the gross profit margin. 10 0 12.1% 12.6% 2003 2004 R&D investments

Total expenditures for research & development amounted to 6.6% of sales.

Number of employees

At the end of 2004, the Control Rooms division had 569 employees worldwide. 92- 93

Evolution of Control Rooms sales per quarter, 2003 - 2004

(‘000 euro) 40,000 35,000 30,000 25,000 2003 20,000 2004 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 % 2003 37.2 33.7 39.6 22.5

Carl Peeters President Barco Control Rooms Barco Presentation & Simulation

Orders and sales

Orders at Barco Presentation & Simulation decreased by 5% while sales grew by 3.1%. Barco Presentation & Simulation Except for 1Q04, the division Presentation & Simulation realized a sales & EBITA, 2003 - 2004 growth year-on-year in all quarters of 2004. Simulation business grew by 10% with good performance in the virtual reality segment and the (In million euro) museum and planetarium markets. The market for simulation solutions 110 for civil aviation on the other hand, remained weak. The Presentation 100 business unit saw its sales decrease by 6.3%. In 2004 the award- 90 80 winning ICON projector, the world's first with 16:9 native resolution, was 70 Sales successfully introduced. 60 102 104 50 EBITA 40 Compared with 2003, order intake in the simulation market remained 30 flat. The presentation market saw its orders decrease but with the new 20 10 ICON solution it should be able to re-strengthen its market position. 0 13.9% 10.0% Book-to-bill ratio for the division was 0.99. 2003 2004

EBITA

EBITA decreased from 13.9% in 2003 to 10% in 2004. Compared with the previous year, the EBITA margin was particularly low in 1Q04 due to lower sales volumes. 3Q04 margin suffered from price pressure in the Presentation presentation market and the delivery of some lower margin projects in 38.1% the simulation market. Although the EBITA margin grew to 13.2% again in 4Q04, there was also the negative influence of the lower US dollar.

R&D investments

Total expenditure for research & development amounted to 9.1% of sales. Simulation 61.9% Number of employees

At the end of 2004, the division Presentation & Simulation counted 502 employees worldwide. Michel Vandeplas President Barco Presentation & Simulation

Evolution of Simulation Evolution of Presentation per quarter, 2003 - 2004 sales per quarter, 2003 - 2004

(‘000 euro) (‘000 euro) 20,000 14,000 18,000 16,000 12,000 14,000 10,000 2003 2003 12,000 8,000 10,000 2004 2004 8,000 6,000 6,000 4,000 4,000 2,000 2,000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % 2003 -11.3 27.8 9.7 14.1 % 2003 -24.7 -4.8 14.7 -4.2 BarcoVision

Orders and sales

Orders at BarcoVision decreased by 8% and sales by 11%.

BarcoVision sales for 2004, compared with those for 2003, exclude Machine Vision, the company's former food sorting business, which was divested as of 31 July 2003. The decrease in sales year-on-year illustrates the hitherto ongoing low of the textile market cycle. But in the second half of 2004, the decline of sales has stabilized.

Book-to-bill ratio was 1 for 2004.

EBITA

BarcoVision's EBITA margin over 2004 was 12.4%, boosted by a margin of no less than 18.2% in 4Q04, which was realized despite the continuing negative climate in the textile market.

R&D investments

Total expenditure for research and development amounted to 13.5% of sales.

Number of employees

At the end of 2004 the division BarcoVision counted 403 employees Bernard Cruycke worldwide. President BarcoVision 96- 97

Evolution of BarcoVision BarcoVision sales & EBITA, 2003 - 2004* sales per quarter, 2003 - 2004*

(In million euro) (‘000 euro)

80 25,000 70 60 20,000 2003 50 Sales 15,000 40 EBITA 2004 76 60 30 10,000 20 5,000 10 15.1% 12.4% 0 0 Q1 Q2 Q3 Q4 2003 2004

Q1 Q2 Q3 Q4 % 2003 -26.7 -16 -11.2 19.4

* Sales for 2003 include the business unit Machine Vision, divested in July 2003 Barco Manufacturing Services

Orders and sales

Orders at Barco Manufacturing Services grew by 95.2% and sales by 73.8%.

At the end of 2003 the decision was taken to consolidate all electronic manufacturing of the Belgian divisions into Barco Manufacturing Services to get the company's manufacturing operations further Barco Manufacturing Services streamlined. Smaller series are now manufactured in the division's sales & EBITA, 2003 - 2004 Belgian plant, whereas larger series are produced in its Czech plant. The transfer of all subcontracting work from the other Barco divisions into the Barco Manufacturing Services division explains to a large (In million euro) extent the growth in orders and sales of the division. 110 100 90 The division's book-to-bill ratio was 1.05. 80 70 Sales 60 EBITA EBITA 50 64 112 40 30 EBITA margin for 2004 was 0.7%. The margin was temporarily nega- 20 tively impacted by the consolidation of the activities into two factories. 10 0 3.8% 0.7% Moving machines to other production sites and training new people 2003 2004 decreased the efficiency of the manufacturing processes and led to a lower EBITA margin.

Number of employees*

At the end of 2004 the division Manufacturing Services counted 805 employees worldwide.

* Next to staff dedicated to one particular division, Barco also has a global number of 331 employees who hold sales, commercial and administrative positions. Patrick Luyssen President Barco Manufacturing Services & General Operations There’s more to explore You’ll see Information for the shareholder JP Tanghe President Corporate Communication Information about the share & Investor Relations

Euronext Brussels Market capitalization 31 Dec 04 848,150,702 euro Highest capitalization 935,396,182 euro Barco share BAR ISIN BE0003790079 Lowest capitalization 808,765,715 euro Barco VVPR-strip BARS ISIN BE0005583548 Share price 31 Dec 03 69.50 euro Share price 31 Dec 04 68.05 euro Reuters BARBt.BR Average number of shares traded Bloomberg BAR BB on daily basis (2004) 30,166

Yearly volume 2004 544,676,028 euro Velocity 2004 58.36% 102- 103

Ownership of the company’s shares

On 31 December 2004, ownership of the company’s shares was as follows:

Gimv: 9.43% (1,174,921 shares) fully diluted: Gimv: 8.84% (1,174,921 shares) Fidelity:5.33% (664,357 shares) Fidelity:5.00% (664,357 shares) Public: 83.27% (10,379,176 shares) Public: 84.31% (11,202,675 shares) Barco: 1.97% (245,186 shares) Barco: 1.85% (245,186 shares) Total: 100% (12,463,640 shares) Total: 100% (13,287,139 shares)

Evolution of the share price

Barco/BEL 20/Next 150 Barco/Eurostoxx 50/Eurostoxx Technology

180 180

160 160

140 140

120 120

100 100

80 80

60 60

40 40

20 20 ------0 ------0 04 04 04 04 04 04 04 04 04 04 04 04 04 04 01 03 05 07 09 11 12 01 03 05 07 09 11 12 02 02 02 02 02 02 31 02 02 02 02 02 02 31

Barco BEL 20 Next 150 Barco Eurostoxx 50 Eurostoxx Technology Daily average shares traded

2004 2003

50,000 50,000 45,000 45,000 40,000 40,000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 0 0 July July May May June June April April March March August August January January October October February February December December November November September September 104- 105

Comments on the evolution of the share price

Unlike previous years, Barco's share performed below the BEL 20 and Next 150 indices in 2004. After outperforming the indices in 2002 (+27%) and 2003 (+40%), the Barco share did not keep up with the strong performance of the Brussels/Euronext stock exchange. However, the company's share was in sync with the Eurostoxx 50 and outperformed the Eurostoxx Technology indices. (euro) 76 The impressive increase in share value over the last years is only one 75 of the explanations for the rather modest performance over 2004. The 74 ongoing depreciation of the US dollar versus the euro also had a con- siderable influence on Barco's share price as it had a negative impact 73 on the top line growth of the company and on its profit margins. 72 71 But 2004 also confirms that Barco, year after year, draws more attention 70 of international investors. This increased attention from the interna- tional scene can be explained to a certain extent by the decision of 69 Barco's largest shareholder Gimv to sell more than 20% of the 68 company's stock, which greatly increased the free float of the share to 67 over 90%. The demand for stock was much larger than the offer, which 66 resulted in an increase of the share price.

65 ------

The larger free float also helped to increase the liquidity of the Barco 04 04 04 04 04 04 04 01 03 05 07 09 11 12 02 02 02 02 02 31 share, and as a result the average daily volume over 12 months grew 02 from 22,893 per day at the end of 2003 to 30,166 at the end of 2004. Average velocity over the year grew from 38.34% in 2003 to 58.36% in 2004. Another factor playing a role in the increased interest from investors, is Barco's ongoing effort to optimize transparency. And for the second year in a row, the Belgian Association of Financial Analysts has nominated Barco for the quality of its financial communication. Dividend

The board of directors will propose to the general meeting that the Evolution dividend dividend will be raised to 2.10 euro gross, this is 1.575 euro net, on withholding tax of 25%, and 1.785 euro net on withholding tax of 15% (with VVPR strip). Dividends will be payable from 25 May 2005. At 2.10 euro, the pay-out ratio is 54%. 1.88 1.88 1.88 1.92 2.00 2.10 2

1.5

1

0.5

0 1999 2000 2001 2002 2003 2004 106- 107

Analysts covering Barco

Cazenove Gorm Thomassen Corluy Patrick Millecam Degroof Rachid Chikhi Delta Lloyd Securities Dinant Wansink Dewaay n.v. Danny Wittenberg Marc Ernaelsteen Dexia Securities Peter Van Assche Flemish Federation of Investors and Investor Clubs Xavier Vandoorne Gert De Mesure Fortis Bank Wim Lewi ING Jean-Marc Mayeur KBC Securities Dirk Saelens Merrill Lynch Christer Beckard Petercam s.a. Stefaan Genoe SG Bank De Maertelaere Danny Van Quaethem Financial calendar Annual report 2004 available on www.barco.com (preliminary) 17 February 2005

Announcement of results 4Q04 and FY04 17 February 2005

Announcement of results 1Q05 27 April 2005

Annual General Meeting of Shareholders 4 May 2005

Payment of dividend (coupon number 5) 25 May 2005

Announcement of results 2Q05 26 July 2005

Announcement of results 3Q05 26 October 2005

Announcement of preliminary results 4Q05 and FY05 26 January 2006

Announcement of results 1Q06 26 April 2006

Annual General Meeting of Shareholders 3 May 2006 108- 109

Investor relations

In 2004 Barco continued its efforts to create higher visibility in world- In 2004, the Investor Relations department also continued its efforts to wide financial markets. A firm step towards this target had already have face-to-face meetings with analysts and shareholders, institu- been made in 2003, with a strong increase in daily traded volumes of tional and private. Close to 200 meetings were set up throughout the the Barco share. With a further growth of almost 50% in daily traded year at Barco premises or on roadshows worldwide. volumes in 2004, Barco’s visibility was even more accentuated. In March 2004 financial analysts and members of the press were invited This growth in traded volumes goes hand in hand with the ongoing to join a guided “Barco” tour in China, where they visited numerous globalization of Barco’s shareholdership. Today more than 25% of customer sites from various Barco markets and participated in Barco’s institutional shareholders are UK-based while almost 10% is seminars on Barco’s strategy. Highlight of the trip certainly was the US-based. The rest of the institutional shareholders are spread over newly-constructed Formula 1 track in Shanghai, showcasing 6 large continental Europe, Canada and some countries in the Asia-Pacific LED screens above the pitlane. region. In April 2004 the second edition of the Analyst & Investor Day was Barco’s IR website is one of the premium tools to achieve enhanced held, with a growing number of international participants present, who visibility. Investors and shareholders have 24 hours a day access to cor- greatly appreciated Barco’s efforts for transparency in financial com- porate information and more particular, vital information about Barco’s munications. Investor relations activities. This website was completely restyled into a dedicated IR portal in 2003, including press releases, quarterly All published materials can be downloaded from www.barco.com or reports and audiocasts, company presentations, IR calendar and obtained from the Investor Relations department. Information about numerous downloads. The 43% increase in visitor sessions last year in investor conference calls that have been scheduled, is also to be found comparison with 2003, clearly confirms that this dedicated portal on the website. E-mail addresses and telephone or fax numbers can answers investors and shareholders’ needs for accurate and up-to-date be consulted on the final page of this annual report. company information. There’s more to spot You’ll see Barco consolidated Income statement

Note 2004 2003 [ in thousands of euro ]

Net sales 4 671,923 628,944 Cost of goods sold 5 -381,789 -351,082

Gross profit 290,134 277,862

Research and development expenses 6 -66,758 -68,350 Sales and marketing expenses 7 -109,709 -100,307 General and administration expenses 8 -48,091 -45,550 Other operating income (expense) - net 9 6,204 5,436

Operating result before goodwill amortization and restructuring provision (EBITA) 71,780 69,091

Goodwill amortization 16 -9,963 -6,397 Restructuring provision 11 -2,535

Operating result 61,817 60,159

Interest income (expense) - net 12 765 1,540 Other non-operating income (expense) - net 13 -181 -8,399

Income before taxes 62,401 53,299

Income taxes 14 -14,704 -6,666

Net income of consolidated companies 47,697 46,634

Minority interest 26 -5 -70

Net income 47,692 46,564

Earnings per share 15 3.89 3.77 Diluted earnings per share 15 3.65 3.54 Balance sheet [ in thousands of euro ] Note 31 Dec 2004 31 Dec 2003

ASSETS Goodwill 16 64,403 32,123 Capitalized development cost 17 58,289 53,458 Other intangible assets 17 2,152 1,564 Land and buildings 18 65,554 57,908 Assets under construction 18 1,954 10,234 Other tangible assets 18 40,958 35,778 Investments 19 2,096 1,723 Deferred tax assets 20 12,061 11,338 Other non-current assets 19 3,871 3,645 Non-current assets 251,340 207,772 Inventory 21 144,049 103,351 Trade debtors 22 166,212 149,486 Other amounts receivable 22 19,399 25,851 Deposits and cash at bank and in hand 23 90,610 133,416 Prepaid expenses and accrued income 24 9,410 3,131 Current assets 429,680 415,235 Total assets 681,019 623,008

EQUITY AND LIABILITIES Equity 25 398,845 386,088 Minority interest 26 1,030 1,122 Long-term debts 27 26,014 17,235 Deferred tax liabilities 20 3,469 3,054 Other long-term liabilities 27 2,129 1,329 Non-current liabilities 31,612 21,618 Current portion of long-term debts 27 8,646 2,412 Short-term debts 28 23,294 9,536 Trade payables 83,326 57,104 Advances received on contracts in progress 11,152 19,460 Tax payables 18,600 24,080 Employee benefits 41,962 35,674 Other current liabilities 29 8,528 9,296 Accrued charges and deferred income 30 15,871 16,025 Provisions 31 38,154 40,593 Current liabilities 249,533 214,180 Total equity and liabilities 681,019 623,008 Cash-flow statement (note 36) 2004 2003 [ in thousands of euro ]

Cash-flow from operating activities Operating result before goodwill amortization and restructuring provision (EBITA) 71,780 69,091 Amortization capitalized development cost 36,107 34,733 Depreciation of tangible and intangible fixed assets 18,210 19,616 Gains and losses on tangible fixed assets 214 276 Gross operating cash-flow 126,311 123,716 Decrease in trade receivables -15,772 -1,363 Decrease in inventory -40,552 2,684 Increase in trade payables 24,781 1,024 Other changes in net working capital -10,823 -8,620 Change in net working capital -42,366 -6,275 Net operating cash-flow 83,945 117,441 Interest income/expense 765 1,540 Income taxes -13,560 -10,014 Cash-flow from operating activities 71,151 108,967 Cash-flow from investing activities Expenditure on product development -38,354 -36,106 Purchases of tangible and intangible fixed assets -23,904 -19,222 Proceeds on disposals of tangible and intangible fixed assets 651 567 Acquisition of Group companies, net of acquired cash -48,633 -11,492 Disposal of Group companies, net of disposed cash 395 5,894 Other investing activities 34 Cash-flow from investing activities -109,846 -60,326 Cash-flow from financing activities Dividends paid -24,828 -23,831 Share issue 2,357 89 Acquisition of own shares -10,272 -4,978 Proceeds from (+), payments of (-) long-term liabilities 8,779 146 Proceeds from (+), payments of (-) short-term liabilities 19,852 -9,180 Cash-flow from financing activities -4,111 -37,754 Net decrease/increase in cash and cash equivalents -42,806 10,887 Cash and cash equivalents at beginning of period 133,416 122,529 Cash and cash equivalents at end of period 90,610 133,416 114 - 115

Consolidated statement of changes in shareholders’ equity (note 25)

Share Share Retained Cumulative Derivatives Convertible Acquired Total capital premium earnings translation bond own shares equity [ in thousands of euro ] adjustment

Balance on 1 January 2003 53,065 120,471 217,198 -7,471 -693 188 382,759

Net income 46,564 46,564 Dividend -23,831 -23,831 Translation adjustment -14,764 -14,764 Cash-flow hedge 250 250 Capital increase 8 81 89 Acquisition of own shares -4,978 -4,978

Balance on 31 December 2003 53,073 120,552 239,931 -22,234 -443 188 -4,978 386,088

Balance on 1 January 2004 53,073 120,552 239,931 -22,234 -443 188 -4,978 386,088

Net income 47,692 47,692 Dividend -24,828 -24,828 Translation adjustment -3,513 -3,513 Cash-flow hedge 1,320 1,320 Capital increase 213 2,144 2,357 Acquisition of own shares -10,272 -10,272

Balance on 31 December 2004 53,286 122,695 262,795 -25,747 877 188 -15,250 398,845 Notes to the consolidated financial statements

1. Accounting principles 14. Income taxes 2. Consolidated companies 15. Earnings per share 2.1 List of consolidated companies 16. Goodwill 2.2 Changes in group structure 17. Intangible assets 3. Segment reporting 18. Property, plant and equipment 3.1 Basis of segment reporting 19. Investments - other non-current assets 3.2 BarcoView 20. Deferred tax assets - deferred tax liabilities 3.3 Barco Media & Entertainment 21. Inventory 3.4 Barco Control Rooms 22. Trade debtors and other amounts receivable 3.5 Barco Presentation & Simulation 23. Deposits and cash at bank and in hand 3.6 BarcoVision 24. Prepaid expenses and accrued income 3.7 Barco Manufacturing Services 25. Equity 3.8 Reconciliation of segment information with group information 26. Minority interest 3.9 Key data by region 27. Long-term debts 4. Net sales 28. Short-term debts 5. Cost of goods sold 29. Other current liabilities 6. Research and development expenses 30. Accrued charges and deferred income 7. Sales and marketing expenses 31. Provisions 8. General and administration expenses 32. Derivative financial instruments 9. Other operating income (expense) - net 33. Operating leases 10. Current revenues and expenses by nature 34. Rights and commitments not reflected in the balance sheet 11. Restructuring provision 35. Related party transactions 12. Interest income (expense) - net 36. Cash-flow statements: effect of acquisitions and disposals 13. Other non-operating income (expense) - net 37. Events subsequent to the balance sheet date 38. Recent IFRS accounting pronouncements 1. Accounting principles

Antoon Van Petegem 1. Statement of compliance and basis of presentation Chief Financial Officer

The consolidated financial statements of the Barco group have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the IASB, and International Accounting Standards and SIC- Interpretations approved by the IASC that remain in effect. The financial statements are presented in thousands of euro and are prepared under the historical cost convention, except for the measure- ment at fair value of investments and derivative financial instruments. The financial statements were authorized for issue by the board of directors on 14 March 2005. The chairman has the power to amend the financial statements until the shareholders' meeting of 4 May 2005.

2. Principles of consolidation

General

The consolidated financial statements comprise the accounts of the parent company, Barco n.v., and its controlled subsidiaries, after the elimination of all intercompany transactions.

Subsidiaries

Subsidiaries are consolidated from the date the parent obtains control until the date control ceases. Acquisitions of subsidiaries are account- ed for using the purchase method of accounting. Control exists when Barco has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial state- ments of subsidiaries are prepared according to the parent’s company reporting schedule, using consistent accounting policies.

Investments in associated companies

Investments in associated companies over which the Company has sig- nificant influence (typically those that are 20-50% owned) are accounted for under the equity method of accounting and are carried in the balance sheet at the lower of the equity method amount and the recoverable a longer or shorter period can be justified. This period does not exceed amount, and the pro rata share of income (loss) of associated companies 4 years. is included in income. 5. Other intangible assets Joint ventures Intangible assets acquired separately are capitalized at cost. The Company’s interest in the jointly controlled entity is accounted for Intangible assets acquired as part of a business combination are capi- by proportionate consolidation, which involves recognizing a propor- talized at fair value separately from goodwill if the fair value can be tionate share of the joint venture’s assets, liabilities, income and measured reliably on initial recognition. expenses with similar items in the consolidated financial statements Other intangible assets are amortized on a straight-line basis not on a line-by-line basis. exceeding 5 years.

3. Goodwill 6. Property, plant and equipment

Goodwill represents the excess of the cost of the acquisition over Property, plant and equipment are stated at cost less accumulated the fair value of identifiable net assets and contingent liabilities of a depreciation. Generally, depreciation is computed on a straight-line subsidiary or associated company at the date of acquisition. basis over the estimated useful life of the asset. The carrying amounts For business combinations for which the agreement date is before 31 are reviewed at each balance sheet date to assess whether they are March 2004, goodwill is amortized using the straight-line method over recorded in excess of their recoverable amounts, and where carrying its expected useful life. General estimate of useful life is 10 years, values exceed this estimated recoverable amount, assets are written unless a longer or shorter period can be justified. This period does not down to their recoverable amount. exceed 20 years. For business combinations for which the agreement date is on or after Estimated useful life is: 31 March 2004, goodwill is carried at cost less any accumulated - buildings 20 years impairment losses. The change in accounting policy is the consequence - installations 10 years of IFRS 3, which was issued in March 2004. - production machinery 5 years - measurement equipment 4 years 4. Research and development costs - tools and models 3 years - furniture 10 years Research and development costs are expensed as incurred, except for - office equipment 5 years development costs, which relate to the design and testing of new or - computer equipment 3 years improved materials, products or technologies, which are capitalized to - vehicles 5 years the extent that it is expected that such assets will generate future eco- - leasehold improvements nomic benefits and the recognition criteria of IFRS are met. Capitalized cfr underlying asset, limited to development costs are amortized on a systematic basis over their outstanding period of lease contract expected useful lives. General estimate of useful life is 2 years, unless - demo material 1 to 3 years 7. Leases 10. Inventories

Finance leases, which effectively transfer to the group substantially all Inventories are stated at the lower of cost or net realizable value. Cost risks and benefits incidental to ownership of the leased item, are is determined on a first in first out (FIFO) basis. Net realizable value is capitalized as property, plant and equipment at net present value of the estimated selling price in the ordinary course of business less esti- the minimum lease payments. The corresponding liabilities are recorded mated costs of completion and the estimated costs of completion and as long-term or current liabilities depending on the period in which the estimated costs of completing the sale. they are due. Lease interest is charged to the income statement as a In addition to the cost of materials and direct labor, the relevant pro- financial cost. Capitalized leased assets are depreciated over the useful portion of production overhead is included in the inventory values. life as mentioned under “property, plant and equipment”. 11. Revenue recognition Operating leases, where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term, are classified Revenue is recognized when it is probable that the economic benefits as operating leases. Operating lease payments are expressed in the will flow to the group and the revenue can be reliably measured. income statement in the income statement on a straight line basis over For product sales, revenue is recognized when the significant risks and the lease term. rewards of ownership of the goods have passed to the buyer. Sales are recognized when persuasive evidence of an arrangement exists, deli- 8. Investments very has occurred, the fee is fixed and determinable, and collectibility is probable. Investments are treated as financial assets available for sale and are For contract revenue, the percentage of completion method is used, initially recognized at cost, being the fair value of the consideration provided that the outcome of the contract can be assessed with given and including acquisition costs associated with the investment. reasonable certainty. For sales of services, revenue is recognized by For investments quoted in an active market, the quoted market price reference to the stage of completion. is the best measure of fair value. For investments not quoted in an active market, the carrying amount is the historical cost, if a reliable 12. Government grants estimate of the fair value cannot be made. An impairment loss is recorded when the carrying amount exceeds the estimated recover- Government grants are recognized as income in proportion to the able amount. depreciation of the underlying fixed assets. Other forms of government assistance are recognized as income upon irreversible achievement 9. Other non-current assets and by reference to the relevant expenses incurred.

Other non-current assets include long-term interest-bearing receivables 13. Trade debtors and other amounts receivable and cash guarantees. Such long-term receivables are accounted for as loans and receivables originated by the company and are carried at Trade debtors and other amounts receivable are shown on the balance amortized cost. An impairment loss is recorded when the carrying sheet at nominal value (in general, the original amount invoiced) less amount exceeds the estimated recoverable amount. an allowance for doubtful debts. Such an allowance is recorded in oper- ating income when it is probable that the company will not be able to interest rate method. Amortized cost is calculated by taking into collect all amounts due. Allowances are calculated on an individual account any issue costs and any discount or premium on settlement. basis, and on a portfolio basis for groups of receivables that are not individually identified as impaired. 18. Trade and other payables

14. Cash and cash equivalents Trade and other payables are stated at cost.

Cash and cash equivalents consist of cash on hand and balances with 19. Employee benefits banks and short-term investments. It is the group’s policy to hold investments to maturity. All investments are initially recognized at cost. Employee benefits are recognized as an expense when the group con- Gains and losses are recognized in income when the investments are sumes the economic benefit arising from service provided by an redeemed or impaired, as well as through the amortization process. employee in exchange for employee benefits, and as a liability when an employee has provided service in exchange for employee benefits 15. Provisions to be paid in the future. General pension plans are defined contribution plans. Obligations for Provisions are recorded when the group has a present legal or con- these plans are recognized as an expense in the income statement as structive obligation as a result of a past event and when it is probable incurred. that an outflow of resources embodying economic benefits will be Pension obligations caused by legal requirements and some excep- required to settle the obligation and a reliable estimate can be made tional cases where the additional pension plan includes defined bene- to the amount of the obligation. fit obligations, are treated as post employment benefits of a defined The group recognizes the estimated liability to repair or replace pro- benefit type. ducts still under warranty at the balance sheet date. The provision is calculated based on historical experience of the level of repairs and 20. Transactions in foreign currencies replacements. Transactions in foreign currencies are recorded at the rates of exchange 16. Equity – costs of an equity transaction prevailing at the date of transaction or at the end of the month before the date of the transaction. At the end of the accounting period the unsettled The transaction costs of an equity transaction are accounted for as a balances on foreign currency receivables and liabilities are valued at the deduction from equity, net of any related income tax benefit. rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses are recognized in the income statement in the 17. Interest-bearing loans and borrowings period in which they arise.

All loans and borrowings are initially recognized at cost, being the fair 21. Foreign group companies value of the consideration received net of issue costs associated with the loan/borrowing. Subsequent to initial recognition, interest-bearing In the consolidated accounts all items in the profit and loss accounts of loans and borrowings are stated at amortized cost using the effective foreign subsidiaries are translated into euro at the average exchange rates for the accounting period. The balance sheets of foreign group companies poses. Tax rates are used that are expected to apply to the period when are translated into euro at the rates of exchange ruling at the year end. the asset is realized or the liability is settled, based on tax rates and tax The resulting exchange differences are classified as equity until disposal laws that have been enacted or subsequently enacted at the balance of the investment. sheet date. Deferred tax assets are recognized for all deductible temporary diffe- 22. Derivative financial instruments rences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which Derivative financial instruments are recognized initially at cost. the deductible temporary differences, carry-forward of unused tax credits Subsequent to initial recognition, derivative financial instruments are and tax losses can be utilized. stated at fair value. The fair values of derivative interest contracts are estimated by discounting expected future cash-flows using current 24. Impairment of assets market interest rates and yield curve over the remaining term of the instrument. The fair value of forward exchange contracts is their mar- At each balance sheet date, an assessment is made as to whether any ket price at the balance sheet date. indication exists that assets may be impaired. If any such indication exists, an impairment test is carried out in order to determine if and to Derivative financial instruments that are either hedging instruments what extent a valuation allowance is necessary to reduce the asset to not designated or not qualified as hedges are carried at fair value with its value in use (the present value of estimated future cash-flows) or, changes in value included in the income statement. if higher, to its net selling price. Then, and only then, is an impairment loss recorded and completely charged against income. Where a derivative financial instrument is designated as a hedge of the An impairment loss is recognized whenever the carrying amount of an variability in cash-flows of a recognized asset or liability, a firm com- asset or its cash-generating unit exceeds its recoverable amount. mitment or a highly probable forecasted transaction, the effective part Impairment losses are recognized in the income statement. of any gain or loss on the derivative financial instrument is recognized directly in equity. 25. Earnings per share

23. Income taxes The group calculates both basic and diluted earnings per share in accor- dance with IAS 33, Earnings per share. Under IAS 33, a basic earnings Current taxes are based on the results of the group companies and are per share is computed using the weighted average number of shares calculated according to local tax rules. outstanding during the period. Diluted earnings per share are computed Deferred tax assets and liabilities are determined, using the liability using the weighted average number of shares outstanding during the method, for all temporary differences arising between the tax basis of period plus the dilutive effect of warrants and stock options outstanding assets and liabilities and their carrying values for financial reporting pur- during the period. 2. Consolidated companies 2.1. List of consolidated companies on 31 December 2004

Europe, Middle-East and Africa

Belgium Aesthedes n.v. President Kennedypark 35, 8500 Kortrijk 100% Belgium Barco Coordination Center n.v. President Kennedypark 35, 8500 Kortrijk 100% Belgium Barco Creative Systems n.v. President Kennedypark 35, 8500 Kortrijk 100% Belgium Barco Silex s.a. Scientific Parc, rue du Bosquet 7, 1348 Ottignies-Louvain-la-Neuve 100% Czech republic Barco Manufacturing s.r.o. Billundska 2756, 272 01 Kladno-Krocehlavy 100% Denmark Barco A/S Tobaksvejen 23A, 2860 Soeborg 100% France Barco s.a. Z.A. Urbaparc 1, Boulevard de la Libération 6, 93200 Saint-Denis 99.99% France Barco Silex s.a. ZI Rousset-Peynier, Route de Trets, 13790 Peynier 99.95% France BarcoView Texen s.a. 7 rue Roger Camboulives, 31000 Toulouse 99.98% Germany Barco Control Rooms GmbH An der Rossweid 5, 76229 Karlsruhe 100% Germany Barco GmbH An der Rossweid 5, 76229 Karlsruhe 100% Germany Barco Orthogon AG Hastedter Osterdeich 222, 28207 Bremen 100% Germany Barco Sedo GmbH Neuwies 1, 35794 Mengerskirchen 100% Germany BarcoView GmbH Wilhelm-Franz-Strasse 1, 77971 Kippenheim 100% Italy Barco Loepfe s.r.l. Via El Alamein 11/c, 22100 Como 100% Italy Barco s.r.l. Via Montferrato 7, CAP 20094 Corsico, Milano 100% Netherlands Barco b.v. Marinus van Meelweg 20, 5657 EN Eindhoven 100% Netherlands Barco Holding b.v. Marinus van Meelweg 20, 5657 EN Eindhoven 100% Netherlands Folsom Research b.v. Het Eenspan 16, 8332 JG Steenwijk 100% Poland Barco Sp. z o.o. Ul. Marywilska 16, 03-228 Warsaw 100% Russia Barco Services LLC Novorogozhkaya Ul 32, Stroyeniye 1, 109544 Moscow 100% Spain Barco Electronic Systems s.a. Travesera de Las Corts, 371, 08029 Barcelona 100% Sweden Barco AB Kungsgatan 15, Box 2230, 403 14 Göteborg 100% Switzerland Barco AG Kastellstrasse 10, 8623 Wetzikon 99.93% Switzerland Gebr. Loepfe AG Kastellstrasse 10, 8623 Wetzikon 99.99% Switzerland Dyeing Technologies AG Kastellstrasse 10, 8623 Wetzikon 100% United Kingdom Barco Ltd 50 Suttons Business Park, Reading, Berkshire RG6 1AZ 100% United Kingdom BarcoVision Ltd Philips Rd., Blackburn, Lancashire, BB1 5SN 100% United Kingdom Voxar Ltd Bonnington Bond, 2 Anderson Place, Edinburgh, EH6 5NP 100% 122- 123

Americas

Brazil Barco Ltda Av. Dr. Cardoso de Melo, Nr. 1855- 8° Andar - Cj. 81- 04548-005 Vila Olympia, Sao Paulo 100% Canada Barco Visual Solutions LLC 5925 Airport Road, Suite 200, Mississauga, Ontario, L4V 1W1 100% Canada Voxar Canada Inc. 40 King Street West, Toronto, Ontario 100% USA Barco Visual Solutions LLC 1209 Orange Street, Wilmington, Delaware 19801 100% USA Barco Simulation Inc. 600 Bellbrook Avenue, Xenia, OH 45385 USA Barco Inc. 1209 Orange Street, Wilmington, Delaware 19801 100% USA Barco Media LLC 1651 North 1000 West, Logan UT 84321 100% USA Barco Orthogon LLC 29 South New York Rd, Suite 400 Smithville NJ 08205 100% USA Barco Projection Systems LLC 3240 Town Point Drive, Kennesaw, GA 30144 100% USA BarcoView LLC 1209 Orange Street, Wilmington, Delaware 19801 100% USA BarcoVision LLC 4420 Taggart Creek Rd. Ste 101, Charlotte NC 28208 100% USA Barco Folsom LLC 11101-A Trade Center Drive, 95670 Rancho Cardova 100% USA Voxar Inc. 945 Concord Street, Framingham 01701 100%

Asia-Pacific

Australia Barco Systems Pty Ltd 2 Rocklea Drive, Port Melbourne, Vic 3207 100% China Barco Leyard Electronic Technology Co Ltd 18 Harbour Road, Wanchai, 80% China Barco Ltd 18 Harbour Road, Wanchai, Hong Kong 100% China Barco Trading (Shanghai) Co Ltd 66 Lujiazui Road, Pudong, Shangai 200120 100% China Beijing Barco Leyard Electronic Technology Co Ltd Changping Park, No. 16 Changsheng Road, 102 200 Changping District, Bejing 80% India Barco Electronic Systems Pvt., Ltd 14, LSC, Community Centre, Pushp Vihar, Madangir, New Delhi 11-0062 100% India Barco Hotline Pvt. Ltd B-26, Qutab Institutional Area, New Delhi-110016 100% Israel Barco Electronic Systems Ltd 6 Kriminitzky Street, Tel Aviv 67899 100% Israel BarcoView Ltd 6 Kriminitzky Street, Tel Aviv 67899 100% Japan Barco Co Ltd Yamato International Bldg 8F, 5-1-1 Heiwajima, Ohta-ku, Tokyo 143-0006 100% Japan Barco Toyo Medical Systems Japan Co Ltd Chuo-ku, Tokyo 50% Korea Barco Ltd 3F, Dansan-Nonhyun Bld. 216-8 Nonhyun-dong, Kangnam-ku, Seoul 135-010 100% Korea BarcoView Ltd 3F, Dansan-Nonhyun Bld. 216-8 Nonhyun-dong, Kangnam-ku, Seoul 135-010 100% Malaysia Barco Sdn. Bhd. Level 17, Menara Milenium, 50490, Kuala Lumpur 100% Singapore Barco Pte Ltd Block 750 E Chai Chee Road, # 05-03 Technopark@Chai Chee, 469005 100% Taiwan Barco Ltd 17F, n° 868-6 Chungcheng Road, Chungho City, Tapei County 235 100% Thailand Barco Ltd Sukhumvit 42 Road, Prakanong, Klongtoey, 10110 49% 2.2. Changes in group structure during 2004 3. Segment reporting 3.1. Basis of segment reporting The acquisition of Folsom Research Inc. California, US took place begin- ning of January 2004. The company’s balance sheet was included in the Segment reporting is based on two segment reporting formats. Barco consolidation on 1 January 2004. Results are incorporated into the income statement for the whole year 2004. Folsom Research Inc. was Primary reporting format presents the organizational structure with fol- renamed in Barco Folsom LLC, and is the parent company of Folsom lowing divisions: Research b.v. in the Netherlands. - BarcoView (3.2) The acquisition of Voxar Ltd. Edinburgh, Scotland, UK, took place on - Barco Media & Entertainment (3.3) 15 September 2004. The balance sheet of Voxar was included in the - Barco Control Rooms (3.4) Barco consolidation on 15 September 2004. Results of Voxar are - Barco Presentation & Simulation (3.5) consolidated from that date onwards. Voxar Ltd. is the parent company - BarcoVision (3.6) of Voxar Inc. in the United States, and of Voxar Canada Inc. - Barco Manufacturing Services (3.7)

During 2004 Barco set up new sales organizations in Canada, Barco From 2004 onwards, BarcoProjection is split into Barco Media & Visual Solutions LLC, and in Sweden, Barco AB. In Japan, Barco created a Entertainment, Barco Presentation & Simulation and Barco Control new joint-venture with Toyo, Barco Toyo Medical Systems Japan Co Ltd. Rooms. Until 2003 BarcoProjection was one division including the acti- vities of the 3 new divisions. Dotrix n.v. and dotrix Inc. were liquidated during 2004. Net assets of these companies were sold to Agfa-Gevaert on 30 December 2003. The activities in each of the divisions are described in “Organizational structure 2004” on page 11. Results by division are commented on Following companies were renamed: pages 82 to 99. - in Switzerland, Treepoint AG was renamed in Dyeing Technologies AG Reconciliation of division reporting with group reporting is made in 3.8. - in the United States, Electronic Image Systems Inc. was renamed in Barco Simulation Inc. Secondary reporting (3.9.) presents the geographical markets: - in the United States, Barco Projection Systems LLC was renamed in - Europe, Middle-East and Africa Barco Visual Solutions LLC - Americas - Asia-Pacific 124- 125

3.2. BarcoView 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 220,449 100.0% 211,894 100.0% 8,555 - external sales 217,027 98.4% 211,820 100.0% 5,207 - interdivision sales 3,422 1.6% 75 0.0% 3,347 Cost of goods sold -115,918 -52.6% -112,911 -53.3% -3,007

Gross profit 104,531 47.4% 98,984 46.7% 5,548

Operating result before goodwill amortization and restructuring provision (EBITA) 37,199 16.9% 33,067 15.6% 4,132

Goodwill amortization -4,657 -2.1% -2,042 -1.0% -2,614 Restructuring provision

Operating result 32,543 14.8% 31,025 14.6% 1,518

Amortization capitalized development 14,010 6.4% 14,414 6.8% -404 Depreciation TFA and software 4,437 2.0% 4,173 2.0% 264

Earnings before interest, taxes, depreciation and amortization (EBITDA) 55,646 25.2% 51,654 24.4% 3,992

Capitalized development 17,276 7.8% 14,548 6.9% 2,728 Capital expenditures TFA and software 11,490 5.2% 12,456 5.9% -965

Segment assets 196,881 142,535 Segment liabilities 49,899 58,360

Number of employees at year end 1,215 1,087 3.3. Barco Media & Entertainment 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 159,226 100.0% 122,605 100.0% 36,621 - external sales 158,519 99.6% 122,512 99.9% 36,008 - interdivision sales 707 0.4% 93 0.1% 613 Cost of goods sold -104,474 -65.6% -81,699 -66.6% -22,775

Gross profit 54,752 34.4% 40,906 33.4% 13,846

Operating result before goodwill amortization and restructuring provision (EBITA) 2,573 1.6% 2,262 1.8% 311

Goodwill amortization -2,002 -1.3% -425 -0.3% -1,577 Restructuring provision

Operating result 571 0.4% 1,837 1.5% -1,266

Amortization capitalized development 8,980 5.6% 6,233 5.1% 2,748 Depreciation TFA and software 2,934 1.8% 3,407 2.8% -473

Earnings before interest, taxes, depreciation and amortization (EBITDA) 14,487 9.1% 11,902 9.7% 2,585

Capitalized development 8,009 5.0% 8,832 7.2% -823 Capital expenditures TFA and software 2,580 1.6% 1,491 1.2% 1,090

Segment assets 141,587 114,090 Segment liabilities 43,839 34,839

Number of employees at year end 564 392 126- 127

3.4. Barco Control Rooms 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 108,626 100.0% 83,056 100.0% 25,570 - external sales 107,339 98.8% 83,032 100.0% 24,307 - interdivision sales 1,286 1.2% 24 0.0% 1,262 Cost of goods sold -59,287 -54.6% -41,166 -49.6% -18,121

Gross profit 49,338 45.4% 41,890 50.4% 7,449

Operating result before goodwill amortization and restructuring provision (EBITA) 13,287 12.2% 10,428 12.6% 2,859

Goodwill amortization -1,544 -1.4% -1,544 -1.9% Restructuring provision

Operating result 11,743 10.8% 8,884 10.7% 2,859

Amortization capitalized development 4,059 3.7% 3,860 4.6% 199 Depreciation TFA and software 1,513 1.4% 2,091 2.5% -579

Earnings before interest, taxes, depreciation and amortization (EBITDA) 18,859 17.4% 16,380 19.7% 2,480

Capitalized development 4,340 4.0% 4,634 5.6% -294 Capital expenditures TFA and software 1,533 1.4% 1,380 1.7% 152

Segment assets 80,112 69,263 Segment liabilities 37,798 26,765

Number of employees at year end 569 350 3.5. Barco Presentation & Simulation 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 104,101 100.0% 102,199 100.0% 1,902 - external sales 103,866 99.8% 101,823 99.6% 2,043 - interdivision sales 235 0.2% 376 0.4% -141 Cost of goods sold -55,581 -53.4% -49,499 -48.4% -6,081

Gross profit 48,521 46.6% 52,700 51.6% -4,179

Operating result before goodwill amortization and restructuring provision (EBITA) 10,526 10.1% 14,143 13.8% -3,618

Goodwill amortization -921 -0.9% -1,473 -1.4% 552 Restructuring provision

Operating result 9,605 9.2% 12,671 12.4% -3,066

Amortization capitalized development 4,469 4.3% 5,197 5.1% -729 Depreciation TFA and software 2,490 2.4% 3,454 3.4% -964

Earnings before interest, taxes, depreciation and amortization (EBITDA) 17,484 16.8% 22,795 22.3% -5,311

Capitalized development 3,892 3.7% 3,253 3.2% 639 Capital expenditures TFA and software 1,614 1.6% 1,054 1.0% 560

Segment assets 63,355 59,070 Segment liabilities 33,494 27,967

Number of employees at year end 502 471 128- 129

3.6. BarcoVision 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 59,556 100.0% 75,522 100.0% -15,966 - external sales 59,481 99.9% 75,508 100.0% -16,027 - interdivision sales 75 0.1% 14 0.0% 61 Cost of goods sold -32,351 -54.3% -42,348 -56.1% 9,998

Gross profit 27,205 45.7% 33,174 43.9% -5,969

Operating result before goodwill amortization and restructuring provision (EBITA) 7,365 12.4% 11,383 15.1% -4,018

Goodwill amortization -840 -1.4% -913 -1.2% 73 Restructuring provision

Operating result 6,525 11.0% 10,469 13.9% -3,945

Amortization capitalized development 4,588 7.7% 5,029 6.7% -440 Depreciation TFA and software 1,495 2.5% 1,759 2.3% -265

Earnings before interest, taxes, depreciation and amortization (EBITDA) 13,447 22.6% 18,170 24.1% -4,723

Capitalized development 4,837 8.1% 4,840 6.4% -3 Capital expenditures TFA and software 932 1.6% 600 0.8% 332

Segment assets 42,390 45,066 Segment liabilities 13,305 18,504

Number of employees at year end 403 449 3.7. Barco Manufacturing Services 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales 112,083 100.0% 64,473 100.0% 47,610 - external sales 25,691 22.9% 29,484 45.7% -3,793 - interdivision sales 86,392 77.1% 34,988 54.3% 51,404 Cost of goods sold -106,296 -94.8% -56,437 -87.5% -49,859

Gross profit 5,787 5.2% 8,036 12.5% -2,249

Operating result before goodwill amortization and restructuring provision (EBITA) 830 0.7% 2,431 3.8% -1,601

Goodwill amortization Restructuring provision -2,535

Operating result 830 0.7% -104 -0.2% 934

Amortization capitalized development Depreciation TFA and software 4,785 4.3% 4,389 6.8% 396

Earnings before interest, taxes, depreciation and amortization (EBITDA) 5,615 5.0% 6,820 10.6% -1,204

Capitalized development Capital expenditures TFA and software 5,070 4.5% 1,596 2.5% 3,474

Segment assets 40,474 30,619 Segment liabilities 21,349 13,224

Number of employees at year end 805 765 3.8. Reconciliation of segment information with group information 130- 131

[ in thousands of euro ] 2004 2003

External sales Total external sales segments 671,923 624,179 External sales dotrix 4,765 Net sales Group 671,923 628,944

Net Income Total operating results segments 61,816 64,782 Operating result dotrix -4,624 Interest income (expense) - net 765 1,540 Other non-operating income (expense) - net -181 -8,399 Income taxes -14,703 -6,666 Minority interest -5 -70 Net Income Group 47,692 46,564

Assets Total segment assets 564,798 460,643 Assets dotrix 354 Investments 2,096 1,723 Deferred tax assets 12,061 11,338 Deposits and cash at bank and in hand 90,610 133,416 Other non-allocated assets 11,454 15,533 Total assets 681,019 623,008

Liabilities Total segment liabilities 199,684 179,658 Liabilities dotrix 261 Equity 398,845 386,088 Minority interest 1,030 1,122 Long-term debts 26,014 17,235 Deferred tax liabilities 3,469 3,054 Current portion of long-term debts 8,646 2,412 Short-term debts 23,294 9,536 Other non-allocated liabilities 20,037 23,641 Total equity and liabilities 681,019 623,008

Number of employees at year end Barco Control Rooms 569 350 Barco Presentation & Simulation 502 471 Barco Media & Entertainment 564 392 BarcoView 1,215 1,087 BarcoVision 403 449 Barco Manufacturing Services 805 765 Global commercial and administrative staff 222 412 General Services 109 96 Total 4,389 4,022 3.9. Key data by region 2004 2003 Variance [ in thousands of euro ] 2004-2003

Net sales

Europe - Middle East - Africa 335,412 49.9% 325,727 51.8% 9,685 Americas 211,065 31.4% 200,684 31.9% 10,381 Asia-Pacific 125,446 18.7% 102,533 16.3% 22,913

Total 671,923 100.0% 628,944 100.0% 42,979

Total assets

Europe - Middle East - Africa 466,027 68.4% 459,069 73.7% 6,958 Americas 95,247 14.0% 94,043 15.1% 1,204 Asia-Pacific 64,878 9.5% 50,433 8.1% 14,444 Group corrections 54,868 8.1% 19,462 3.1% 35,406

Total 681,019 100.0% 623,008 100.0% 58,011

Capitalized development

Europe - Middle East - Africa 31,844 83.0% 31,340 86.8% 503 Americas 6,510 17.0% 4,766 13.2% 1,744 Asia-Pacific

Total 38,354 100.0% 36,106 100.0% 2,248

Capital expenditure software and tangible fixed assets

Europe - Middle East - Africa 19,857 83.1% 14,523 75.6% 5,334 Americas 2,601 10.9% 3,076 16.0% -475 Asia-Pacific 1,447 6.1% 1,624 8.4% -177

Total 23,904 100.0% 19,222 100.0% 4,682

The split of net sales shows the revenue from external customers based on the geographical location of the customers to whom the invoice is issued. Total assets and capital expenditure are detailed by geographical location of the assets. Group corrections on assets mainly relate to goodwill and elimination of intercompany margin on inventory. 4. Net sales 132- 133

2004 2003 % 671,923 628,944 6.8% [ in thousands of euro ]

Sales were favourably affected by organic growth (9.6%) and new acquisitions (3.8%), mainly Folsom, Voxar and Leyard. There was a negative currency impact (-4.5%) and a negative influence of the divestment of the business units Machine Vision and dotrix (-2.1%).

Sales per division and per geographic region are disclosed in the section “Segment reporting” (note 3), and in “Comments on the results” on pages 82 to 99.

5. Cost of goods sold

2004 2003 %

381,789 351,082 8.7% [ in thousands of euro ]

Cost of goods sold includes direct selling cost, direct and indirect production cost, warranty cost and cost of inventory obsolescence.

Cost of goods sold increased as a percentage of sales from 55.8% in 2003 to 56.8% in 2004. Direct selling costs were comparable as a percentage of sales. Direct production costs increased year-on-year, as a result of a change in product mix, and lower margins in the divisions Control Rooms and Presentation & Simulation. In the Media & Entertainment division, price pressure was compensated by partly transfer of manufacturing to China, but less than anticipated. Indirect production costs decreased as a percentage of sales because of a higher sales volume in 2004. Warranty costs were euro 1.2 million lower in 2004 versus 2003, while cost of inventory obsolescence was euro 1.0 million higher.

6. Research and development expenses

[ in thousands of euro ] 2004 2003 %

Research & development 69,005 69,724 -1.0% Capitalized development -38,354 -36,106 6.2% Amortization capitalized development 36,107 34,732 4.0%

Research and development expenses 66,758 68,350 -2.3%

Evolution in R&D-expenses is mainly due to acquisitions and disposals of group companies. Dotrix, which was disposed at the end of 2003, had R&D- expenses for an amount of euro 3,464 K, which were not capitalized. For the new acquisitions of 2004, Folsom and Voxar, criteria for capitalization are fulfilled, and capitalization procedures are comparable to those used for other Barco entities.

R&D-expenses decreased as a percentage of sales, mainly due to the sales increase. 7. Sales and marketing expenses

2004 2003 % 109,709 100,307 9.4% [ in thousands of euro ]

Sales and marketing costs include customer service, sales, marketing and strategic marketing. Sales and marketing costs increased as a percentage of sales, from 15.9% in 2003 to 16.3% in 2004. There were increased efforts in customer service, sales, marketing and strategic marketing.

8. General and administration expenses

2004 2003 % 48,091 45,550 5.6% [ in thousands of euro ]

General and administration expenses include human resources management, finance and accounting, information technology and general administration. General and administration expenses remained stable as a percentage of sales: 7.2% both in 2003 and 2004.

9. Other operating income (expense) - net [ in thousands of euro ] 2004 2003

Addition to (-)/ reversals of (+) provisions for liabilities and charges (1) 755 2,482 Addition to (-)/ reversals of (+) year-end bonus provisions (2) 150 1,288 Losses on bad debts (including write-offs and reversals of write-offs) (3) -2,645 -1,604 Exchange gains and losses (4) -1,383 -2,733 Bank charges -946 -1,037 Other financial results 272 355 Investment grants (5) 3,572 2,180 Operating subsidies (5) 4,285 365 Gains on disposals of tangible fixed assets 301 211 Other operating income (6) 3,193 4,480 Losses on disposal of tangible fixed assets -515 -487 Other operating income (expense) - net -835 -64

Total 6,204 5,436

(1) Provisions for liabilities and charges are disclosed in note 31. (2) In 2003 lower bonus provisions were accrued than paid out. In 2004 there was no significant difference between accrued bonus provisions, and the bonuses which were paid out. Provisions for liabilities and charges are disclosed in note 31. (3) Losses on bad debts were higher in 2004 than in 2003 because of losses in the division Media and Entertainment. (4) Exchange gains and losses were negative both in 2003 and 2004, because of the negative evolution of the USD. (5) Investment grants and operating subsidies were higher in 2004 versus 2003, because of grants received for capital expenditure and additional employment in BarcoView and Barco Manufacturing Services. (6) Other operating income mainly includes cost recuperations and additional risk premiums which can be invoiced on clients appealing on the vendor lease program as disclosed in note 31. 10. Current revenues and expenses by nature

[ in thousands of euro ] 2004 2003

Sales 671,923 628,944 Material cost -265,490 -238,149 Services and other costs -108,687 -93,502 Personnel cost -219,216 -214,217 Amortization capitalized development cost -36,107 -34,733 Capitalized development cost 38,354 36,106 Depreciation tangible fixed assets and software -18,294 -19,616 Write-offs/(reversals) on inventories 3,753 -1,388 Write-offs/(reversals) on trade receivables -2,765 -1,564 Provisions 755 2,401 Other operating charges -3,454 -4,547 Other financial charges/income 1,072 -1,630 Other operating income 9,935 10,986

Operating result before goodwill amortization 71,780 69,091 and restructuring provision (EBITA)

Interest income (expense) - net 765 1,540

Current income before taxes 72,545 70,631

11. Restructuring provision

[ in thousands of euro ] 2004 2003

Addition to provision -2,535 Restructuring cost -749 Reversal of provision 749

Restructuring provision -2,535

A provision was set up in 2003 for the reorganization of the electronic module surface mounting activities during 2004 and 2005. During 2004, part of the reorganization was carried out, which resulted in a cost of euro 749 K. The same amount was reversed from the provision which was set up in 2003. 12. Interest income (expense) - net 2004 2003 [ in thousands of euro ]

Interest income 2,252 2,439 Interest expenses -1,487 -899 non-operating income (expense) - net 765 1,540

13. Non-operating income (expense) - net

Non-operating results include the results on the sale of the Graphics division, the Machine Vision business unit, and the Home Theater activitiy.

[ in thousands of euro ] 2004 2003 non-operating income (expense) - net -181 -8,399

Negative result in 2003 was related to the exit by Barco from Esko-Graphics (euro -13.8 million), dotrix (euro +4.8 million) and Machine Vision (euro +0.6 million). In 2004 non-operating results include the sale of the Home Cinema activity to French TEC, and further results on the settlement of the exits in 2003. 14. Income taxes 136- 137

[ in thousands of euro ] 2004 2003

Current versus deferred income taxes

Current income taxes -10,738 -14,856 Deferred income taxes -3,966 8,190 Income taxes -14,704 -6,666

Income taxes versus income before taxes

Current income before taxes (note 10) 72,546 70,631 Taxes related to current income before taxes (1) -15,040 -16,049 20.7% 22.7% Goodwill amortization -9,963 -6,397 Taxes related to goodwill amortization 0.0% 0.0%

Provision restructuring -2,535 Taxes related to provision restructuring 861 34.0% Other non-operating income and expenses -181 -8,399 Taxes related to other non-operating income and expenses (2) 336 8,522 185.6% 101.5% Income before taxes 62,402 53,300 Income taxes -14,704 -6,666 23.6% 12.5%

1) Taxes related to current income before taxes

Current income before taxes 72,546 70,631 Theoretical tax rate 34.0% 34.0% Theoretical taxes related to current income before taxes -24,668 -24,000 Non-deductible items -1,018 -1,104 Special tax status 8,278 6,030 Investment allowances 1,932 1,868 Use of deferred tax assets, not recognized in prior years 25 1,721 Deferred tax assets, not recognized in current year -302 -261 Tax adjustments related to prior periods 712 -303 Reported taxes related to current income before taxes -15,040 -16,049

2) Taxes related to other non-operating income and expenses

In 2003, the positive tax-effect of 8,522 K euro is the result of the taxes on the liquidation of Afviklingsselskabet A/S (formerly Esko-Graphics A/S). In 2004, taxes are related to the non-operating results on Home Theater and dotrix. 15. Earnings per share

[ in thousands of euro ] 2004 2003

Basic earnings per share

Net income attributable to shareholders 47,692 46,564 Weighted average of shares 12,261,848 12,365,002 Basic earnings per share 3.89 3.77

Diluted earnings per share

Net income attributable to shareholders 47,692 46,564 Weighted average of shares (diluted) 13,082,577 13,160,628 Basic earnings per share 3.65 3.54

The difference between the weighted average of shares and weighted average of shares (diluted) is due to exercisable options and debt linked derivatives. The company has issued share options to its employees and non-executive directors. These option plans are not recognized in the balance sheet and income statement. For more detailed information about the exercisable options and debt linked derivatives, please refer to note 25.

16. Goodwill 2004 2003 [ in thousands of euro ]

At cost

On 1 January 96,072 113,042 Expenditure 42,244 7,982 Sales and disposals -24,951 On 31 December 138,316 96,072

Amortization

On 1 January 63,949 82,503 Amortization 7,319 6,397 Impairment losses 2,644 Sales and disposals -24,951 On 31 December 73,913 63,949

Net book value

On 1 January 32,123 30,538 On 31 December 64,403 32,123

Main expenditure on goodwill in 2004 relates to the acquisition of Folsom and Voxar. For business combinations for which the agreement date is before 31 March 2004, goodwill is amortized using the straight-line method over its expected useful life. General estimate of expected useful life is 10 years. As a result, goodwill on the acquisition of Folsom dated January 2004, is amortized in 2004 just as goodwill on acquisitions dated before 2004. For business combinations for which the agreement date is on or after 31 March 2004, goodwill is carried at cost less any accumu- lated impairment losses. This change in accounting policy is the result of IFRS 3, which was issued in March 2004. As a consequence, the acquisi- tion of Voxar dated 15 September 2004 is not amortized. If Voxar was amortized in 2004, amortization cost would have amounted to euro 934 K. The impairment losses for an amount of euro 2,644 K relate to the goodwill on the acquisition of Orthogon. Although positive results are expected from Orthogon from 2005 onwards, a higher risk factor was used in the impairment test because of the negative results in 2003 and 2004. 138- 139

17. Intangible assets 2004 2003 Capitalized Other intangible Total Total [ in thousands of euro ] development assets

At cost

On 1 January 136,783 9,109 145,892 120,608 Expenditure 38,354 556 38,910 36,766 Sales and disposals -18,942 -71 -19,014 -4,877 Acquisition of subsidiary 5,316 962 6,278 145 Disposal of subsidiary -3,495 Translation (losses)/gains -1,421 -108 -1,529 -3,255 On 31 December 160,090 10,447 170,537 145,892

Amortization

On 1 January 83,326 7,544 90,871 63,764 Expenditure 36,107 899 37,006 35,818 Sales and disposals -18,620 -71 -18,692 -4,877 Acquisition of subsidiary 1,694 1,694 Disposal of subsidiary -2,239 Translation (losses)/gains -705 -78 -783 -1,595 On 31 December 101,802 8,295 110,096 90,871

Net book value

On 1 January 53,457 1,564 55,021 56,844 On 31 December 58,289 2,152 60,441 55,021 18. Property, plant and equipment

2004 2003 Land and Plant, Furniture, Leasing and Other Assets under Total Total buildings machinery office other similar property, construction and equipment rights plant and equipment and vehicles equipment [ in thousands of euro ]

At cost

On 1 January 86,235 116,818 42,612 219 4,407 10,234 260,525 278,545 Expenditure 3,982 13,506 4,790 86 984 23,349 18,561 Sales and disposals -4,218 -2,686 -48 -78 -7,029 -32,019 Acquisition of subsidiary 45 1,048 9 1,102 8,660 Disposal of subsidiary -6,232 Transfers 7,672 846 -370 -8,147 Translation (losses)/gains -527 -189 -434 -6 -35 -133 -1,325 -6,990 On 31 December 97,362 126,808 45,329 251 4,918 1,954 276,622 260,525

Depreciation

On 1 January 28,327 91,131 33,993 105 3,049 156,605 177,423 Depreciation 3,619 9,376 3,520 44 835 17,395 18,531 Sales and disposals -3,925 -1,747 -36 -73 -5,781 -30,978 Acquisition of subsidiary 42 666 9 717 Disposal of subsidiary -5,471 Transfers 109 261 -370 Translation (losses)/gains -246 -173 -331 -3 -26 -779 -2,900 On 31 December 31,808 96,712 36,101 111 3,424 168,156 156,605

Carrying amount

On 1 January 57,908 25,687 8,619 114 1,358 10,234 103,920 101,122 On 31 December 65,554 30,096 9,228 140 1,493 1,954 108,467 103,920

Main capital expenditures in 2004 relate to the new buildings and plant for BarcoView in Belgium (Kortrijk). 140- 141

19. Investments - Other non-current assets

[ in thousands of euro ] 2004 2003

Investments

Mania-Technologie AG, Germany 925 925 ManiaBarco GmbH, Germany 455 455 Innovatie- en Incubatiecentrum Kortrijk n.v., Belgium 124 124 Barco Graphics France s.a. 430 Topgraph s.a., France 77 Flabel s.a., Belgium 74 74 N.v. Bedrijvencentrum Regio Kortrijk, Belgium 45 45 IGEBA, Baugenossenschaft, Switzerland 33 13 Expo Kortrijk, Belgium 10 10

Investments 2,096 1,723

Other non-current assets

Amounts receivable on Mania-Barco GmbH 417 417 Cash guarantees / deposits 3,116 3,203 Other amounts receivable on more than one year 338 25

Other non-current assets 3,871 3,645

Barco has a put/call agreement to sell the participation in Barco Graphics France s.a. in 2005 for euro 430 K. Net book value was zero at the end of 2003. . 20. Deferred tax assets - deferred tax liabilities

Assets Liabilities Net - asset Income statement

[ in thousands of euro ] 2004 2003 2004 2003 2004 2003 2004 2003

Capitalized development cost 7,801 8,519 -7,801 -8,519 1,406 303 Patents, licenses, ... 878 1,291 18 878 1,273 -395 -267 Tangible fixed assets and software 498 955 7,198 7,499 -6,700 -6,544 -156 416 Other investments 82 8,600 82 8,600 -8,518 8,600 Inventory 7,877 7,653 2,340 1,901 5,538 5,752 -52 -620 Trade debtors 530 943 217 308 313 635 -322 -74 Provisions 2,428 2,713 799 866 1,629 1,847 -201 142 Employee benefits 2,347 2,682 2,347 2,682 -335 -220 Deferred revenue 697 857 697 857 -399 4 Other items 1,368 158 309 241 1,059 -83 311 204 Tax value of loss carry forwards 7,643 850 7,643 850 2,723 240 Tax value of tax credits 2,907 934 2,907 934 1,973 -538

Gross tax assets/(liabilities) 27,256 27,636 18,664 19,352 8,592 8,284 -3,966 8,190

Set off of tax 15,195 16,298 15,195 16,298

Net tax assets/(liabilities) 12,061 11,338 3,469 3,054 8,592 8,284

Temporary differences for which no deferred tax asset is recognized: Tax losses carried forward and other temporary differences on which no deferred tax asset is recognized amount to euro 7,418 K (2003: 6,539 K). Deferred tax assets have not been recognized on these items because it is not probable that future profit will be available against which the bene- fits can be utilized. 21. Inventory 142- 143

[ in thousands of euro ] 2004 2003

Raw materials and consumables 98,322 76,447 Work in progress 43,625 34,351 Finished goods 55,564 52,746 Advance payments Contracts in progress 6,274 5,999 Amounts written-off inventory -59,737 -66,192

Inventory 144,049 103,351

Inventory was euro 41 million higher end 2004 compared with end 2003, due to internal reshuffling of processes and longer lead times of suppliers. Contracts in progress on 31 December 2004, include a recognized profit of euro 129 K (31 Dec 2003: euro 257 K), based on the percen- tage of completion method, where contract revenue and stage of completion are determined on specified milestones in the contract, and actual versus projected labour hours.

22. Trade debtors and other amounts receivable

[ in thousands of euro ] 2004 2003

Trade debtors (accounts receivable) - gross 174,131 153,392 Trade debtors (accounts receivable) - amounts written down -7,919 -6,906

Trade debtors (accounts receivable) - net 166,212 149,486

V.A.T. receivable 3,668 4,595 Taxes receivable 9,356 8,425 Interest rate swap (note 32) 82 213 Currency rate swap (note 32) 2,712 693 Other 3,581 11,925

Other amounts receivable 19,399 25,851

Other amounts receivable on 31 December 2003, included a receivable on Agfa-Gevaert, as a result of the sale of the dotrix division. 23. Deposits and cash at bank and in hand

[ in thousands of euro ] 2004 2003

Deposits (1) 51,404 78,235 Cash at bank (2) 39,075 55,073 Cash in hand 131 108

Deposits and cash at bank and in hand 90,610 133,416

(1) Deposits have an original term of less than one year. On 31 December 2004, deposits include: - deposits in EUR, with an average interest rate of 2.42% 42,345 - deposits in CHF with an average interest rate of 0.92% 9,059 51,404

Deposits are held to maturity. Due to the nature of the products, differences between cost and fair value are minimal.

(2) Cash at bank is immediately available. It is denominated in the following currencies: - EUR 35% - USD 21% - CHF 8% - GBP 8% - other 28%

24. Prepaid expenses and accrued income

[ in thousands of euro ] 2004 2003

Prepaid expenses 9,127 3,012 Accrued income 284 119

Prepaid expenses and accrued income 9,410 3,131 144- 145

25. Equity

[ in thousands of euro ] 2004 2003

Share capital 53,286 53,073 Share premium 122,695 120,552 Retained earnings 262,795 239,931 Cumulative translation adjustment -25,747 -22,234 Derivatives 877 -443 Convertible bond 188 188 Acquired own shares -15,250 -4,978

Equity 398,845 386,088

1. Share capital

In 2004, 49,738 warrants under the existing warrant plans were exercised. As a result the capital increased on 21 June 2004 with euro 212,878.64 from euro 53,073,264.76 to euro 53,286,143.40 and the total number of shares outstanding increased from 12,413,902 to 12,463,640. On 31 December 2004 the capital amounted to euro 53,286,143.40 represented by 12,463,640 shares. All shares are fully paid.

Event subsequent to 31 December 2004: following the exercising of 78,374 warrants of the 1995-2005 bond loan with warrants the capital was increased on 9 February 2005 with euro 335,440.72 from euro 53,286,143.40 to euro 53,621,584.12 and the total number of shares outstanding increased from 12,463,640 to 12,542,014 shares.

On 9 November 2000 the extraordinary shareholders' meeting decided that the board of directors could create 400,000 warrants for staff and non- executive directors as well as for individuals who play an important role for the company. In 2004, 69,261 warrants were granted. On 31 December 2004 the remaining number of warrants available for distribution was 8,601.

In 2004 the extraordinary shareholders' meeting approved a new warrant scheme effective for a period of five (5) years and decided that the board of directors could create for the benefit of the staff and executive officers up to 400,000 warrants, each one entitling subscription to one (1) share. Warrants exercisable under the warrant plans

The total number of outstanding warrants on 31 December 2004 amounted to 823,499 which can lead to the creation of the same number of sha- res. These warrants may be exercised under the following conditions:

Allocation date Last exercise date Exercise price Balance on 31 Dec 2004

09/16/99 (personnel) Sep/09* 93.58 euro 127,961 09/06/99 (non-personnel) Sep/04 96.93 euro 05/16/00 (personnel) Dec/06 95.64 euro 8,510 07/13/00 (personnel) Jun/10* 91.92 euro 147,064 07/13/00 (non-personnel) Jun/05 93.27 euro 2,000 10/16/00 (personnel) Sep/10 107.77 euro 06/18/02 (personnel) Jun/12* 42.01 euro 184,558 06/18/02 (non-personnel) Jun/07 46.36 euro 5,400 06/24/02 (personnel UK) Jun/12 40.55 euro 4,752 06/24/02 (personnel) Jun/12* 42.70 euro 10,000 11/04/02 (personnel) Sep/12* 42.40 euro 25,900 06/23/03 (personnel) Jun/13 50.75 euro 71,075 06/23/03 (non-personnel) Jun/08 52.17 euro 2,400 06/23/03 (personnel UK) Jun/13 50.50 euro 1,605 09/15/03 (personnel) Sep/13 57.52 euro 5,350 03/29/04 (personnel) Dec/13 67.00 euro 67,165 03/29/04 (personnel UK) Dec/13 66.50 euro 1,385

665,125 * For a large number of warrants this latest exercise date was extended with three (3) years according to article 407 of the law of 24 December 2002.

2. Share premium

On 21 June 2004 49,738 warrants were converted into shares. As a result thereof the share premium increased from euro 120,551,512 to euro 122,695,365. For 48,238 warrants the exercise price was euro 47.55 per warrant including a share premium of euro 43.27 and for 1,500 warrants the exercise price was euro 42.01 per warrant including a share premium of euro 37.73. 146- 147 3. Acquired own shares

During the year 2004, Barco acquired 181,400 own shares for a total amount of euro 12,487,474. A part of the price to acquire Voxar was paid with 32,142 shares representing a total amount of euro 2,216,237. As a result the number of own shares owned by the Company increased from 95,928 on 31 December 2003 to 245,186 on 31 December 2004.

4. 1995-2005 bond loan with warrants

Issue date Last exercise date Exercise price Balance on 31 Dec 2004

03/08/95 Feb/05 47.55 euro 78,374*

* In February 2005 all 78,374 warrants were exercised.

5. Convertible bond loan

Issue date Last exercise date Exercise price Balance on 31 Dec 2004

11/29/95 Nov/05 67.46 euro 80,000

6. Retained earnings

Change in retained earnings is caused by net income of 2004 and the dividend declaration by the annual general meeting in 2004. According to IFRS-rules, the proposed dividend with respect to the year 2004 for payment in 2005, is still included in the retained earnings on 31 December 2004. The board of directors will propose to the annual general meeting of 2005 to distribute a dividend of euro 2.10 per share.

7. Cumulative translation adjustment

Negative evolution in translation adjustment is the result of the strong euro, in comparison with the currencies of some foreign group companies, mainly US companies.

8. Derivatives

Derivative financial instruments are disclosed in note 32 below. 26. Minority interest

[ in thousands of euro ] 2004 2003

Balance on 1 January 1,122 11

Share of minority shareholders in net profit -5 70 First consolidation 1,200 Decrease/(increase) in ownership Translation gains/(losses) -87 -159

Balance on 31 December 1,030 1,122

Most important part is the 20% minority interest in Barco Leyard Beijing and Barco Leyard Hongkong.

27. Long-term debts

31 December 2004 Payable Payable Payable Payable Payable Payable Total [ in thousands of euro ] in 2005 in 2006 in 2007 in 2008 in 2009 later

Financial debts 7,602 5,573 1,701 1,694 1,684 15,362 33,616 Other debts 1,044 655 105 105 105 1,158 3,173 Total 8,646 6,228 1,807 1,799 1,789 16,520 36,789

Analysis of long-term financial debts as to currencies: Analysis of long-term financial debts as to interest rate:

- EUR 20,157 - fixed (average 6.41%) 9,814 - GBP 3,727 - variable swapped into fixed (average 4.38%) 4,181 - USD 9,551 - variable, limited by cap-floor agreements as described in note 32 19,620 - AUD 126 - BRL 55 - Total 33,616

- Total 33,616

Long-term debts are valued at amortized cost, which approximates fair value. The other debts relate to governmental loans and amounts payable to former shareholders of acquired companies. 148- 149 28. Short-term debts 2004 2003 [ in thousands of euro ]

Short-term debts 23,294 9,536

Analysis of short-term financial debts on 31 December 2004: - American dollar, fixed interest rate 10,278 - Japanese Yen, fixed interest rate 4,798 - Hong-Kong dollar, variable interest rate 7,125 - other 1,093

Total 23,294

For short-term debts, the carrying amount reported in the balance sheet approximates fair value, considering their short maturity.

29. Other current liabilities 2004 2003 [ in thousands of euro ]

Dividends payable 2,332 1,773 Interest rate swap 361 491 Other liabilities 5,835 7,032

Other current liabilities 8,528 9,296

30. Accrued charges and deferred income

[ in thousands of euro ] 2004 2003

Investment grants 5,313 4,212 Accrued charges 4,188 4,516 Deferred income 6,369 7,298

Accrued charges and deferred income 15,871 16,025 31. Provisions

Balance sheet Balance sheet Additional Amounts Unused 31 Dec 2004 31 Dec 2003 provisions used amounts [ in thousands of euro ] made reversed

Pension obligations (1) 3,923 4,206 360 -643 Technical warranty (2) 17,003 16,594 14,674 -14,130 Restructuring provision (3) 1,786 2,535 -749 Risk on buy-back agreements (4) 3,436 3,154 2,075 -1,793 Risk on contracts in progress 644 709 644 -709 Risk on disposed activities 650 1,450 300 -457 -643 Environmental risk 2,717 3,174 78 -535 Social claims and severance payments 1,154 1,527 514 -887 Other claims and risks 6,841 7,244 3,463 -3,713 -288

Provisions 38,154 40,593 22,108 -23,616 -931

(1) In general, pension plans at Barco are defined contribution plans. Obligations for these plans are recognized as an expense in the income statement as incurred. Expenses for these plans amount to euro 8,062 K in 2004 (euro 8,377 K in 2003). In some specific cases a pension plan includes a defined benefit obligation. According to IAS 19, provisions are set up in these situations: - early retirement plans in Belgium 1,743 - local legal requirements (mainly France, Japan, Korea and Italy) 1,342 - a small number of individual plans which existed before the employee joined Barco 838 Early retirement plans are treated as termination benefits. Termination benefits are recognized as liability and an expense when the company is committed to termi- nate the employment of the employees affected before the normal retirement date. (2) Provisions for technical warranty are based on: - historical experience of the level of repairs and replacements - and additional provisions are set up when a technical problem is detected. (3) Restructuring provision includes the provision for Barco Manufacturing Services as disclosed in note 11. (4) Barco appeals on a vendor-lease program with the obligation to take back sold goods, in case of insolvency of the client. A provision is set up for this risk. Total possible value of the obligation to take back sold goods is 33.4 mln euro. Average remaining duration of these contracts is 19 months.

For the main classes of provision the timing of the resulting outflow of economic benefits is expected on a short term basis. 32. Derivative financial instruments 150- 151

Derivative financial instruments are used to reduce the exposure to fluctuations in foreign exchange rates and interest rates. These instruments are subject to the risk of market rates changing subsequent to acquisition. These changes are generally offset by opposite effects on the item being hedged.

Foreign currency risk

Recognized assets and liabilities

Barco incurs foreign currency risk on recognized assets and liabilities when they are denominated in a currency other than the company’s local currency. Such risks may be naturally covered when a receivable in a given currency is matched with a payable in the same currency.

Forward exchange contracts and option contracts are used to manage the currency risk arising from recognized receivables and payables, which are not naturally hedged. This is particularly the case for the US dollar, for which receivables are systematically higher than payables and for the Japanese Yen, for which payables are systematically higher than receivables. No hedge accounting is applied to these contracts.

The balances on foreign currency receivables and payables are valued at the rates of exchange prevailing at the end of the accounting period. Derivative financial instruments that are used to reduce the exposure of these balances are rated in the balance sheet at fair value. Both changes in foreign currency balances and in fair value of derivative financial instruments are recognized in the income statement.

Forecasted transactions

In January 2004, Barco started to designate forward contracts to forecasted sales and costs. Hedge accounting is applied to these contracts. The portion of the gain or loss on the hedging instrument that will be determined as an effective hedge is recognized directly in equity.

Interest rate risk

Barco uses following hedging instruments to manage its interest rate risk:

Swap on outstanding loan An outstanding loan of USD 5,695 K (euro 4,181 K) with variable interest swapped into fixed 4.38%. This hedging instrument is treated as cash-flow hedge, and gains or losses are recognized directly into equity.

Cap/Floor on loan agreements Barco entered into following loan agreements with variable interest rates, for which the variability is limited by a cap/floor: - An outstanding loan of euro 14,250 K, with variable interest rate which is limited between 2% and 5%; - An outstanding loan of USD 3,680 K (euro 2,702 K) with variable interest rate which is limited between 2.74% and 7%; - An outstanding loan of USD 3,635 K (euro 2,669 K) with variable interest rate which is limited between 2.49% and 4.89% The cap/floor loan agreements do not meet the hedging requirements of IAS 39 and are therefore treated as financial instruments held for trad- ing. They are valued at fair value and changes in fair value are recognized in the income statement.

Credit risk

Credit risk on accounts receivable Credit evaluations are performed on all customers requiring credit over a certain amount. The credit risk is monitored on a continuous basis. In a number of cases collateral is being requested before a credit risk is accepted. Specific trade finance instruments such as letters of credit and bills of exchange are regularly used in order to minimize the credit risk.

Credit risk on liquid securities and short-term investments A policy defining acceptable counter parties and the maximum risk per counter party is in place. Short-term investments are done in marketable securities or in fixed term deposits with reputable banks. 33. Operating leases

[ in thousands of euro ] 2004 2003

Non-cancellable operating leases are payable as follows:

Less than one year 5,118 4,952 Between one and five years 8,405 8,853 More than five years 476 74

Total 13,999 13,879

Non-cancellable operating leases mainly relate to leases of factory facilities, warehouses and sales offices. During the current year, euro 4,970 K was recognized as an expense in the income statement in respect of operating leases of factory facilities, warehouses and sales offices (2003: euro 5,365 K).

34. Rights and commitments not reflected in the balance sheet

[ in thousands of euro ] 2004 2003

Guarantees given to third parties (1) 7,633 14,142 Mortgage obligations given as security (2) - book value of the relevant assets 19,386 12,993 - total of the mortgage 15,981 15,981

The above amounts represent the maximum exposure. (1) Guarantees given to third parties mainly relate to guarantees given to customers for ongoing projects, and to authorities for commitments related to VAT, duties, etc. (2) There are outstanding debts guaranteed by the mortgage obligations for an amount of 15 thousand euro.

35. Related party transactions

In 2004 753,830 euro was paid to HRV n.v. for strategic advice to the company, in execution of the board’s 2002 decision. For more information, please refer to the “Corporate governance” section on page 56 of this annual report. 36. Cash-flow statements: effect of acquisitions and disposals 152- 153

Acquisitions Disposals

[ in thousands of euro ] 2004 2003 2004 2003

Non-current assets 9,261 8,660 -2,074 Capitalized development cost 3,622 -1,203 Tangible assets and other intangible assets 1,422 8,660 -866 Deferred tax assets 4,217 Other investments -5

Current assets 5,112 1,058 -7,342 Inventory 2,290 552 -7,309 Trade debtors 2,370 490 -5,220 Other receivables 452 16 5,187

Foreign exchange adjustments -36

Minority interest 1,200

Non-current liabilities 3,814 Long-term debts, interest-bearing liabilities 3,814

Current liabilities 8,796 1,194 -8,923 Trade payables 1,441 1,194 -5,503 Other payables 7,355 -3,420

Net-identifiable assets and liabilities 5,577 3,510 -493

Non-operating profit (losses) on disposals 395 5,436 Goodwill on acquisitions 43,056 7,982

Received consideration 395 5,893 Acquired cash 3,486 Purchase price -48,633 -14,978

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are carried in terms of historical cost using the exchange rate at the date of the acquisition. Acquisitions and disposals of group companies have a positive influence on the EBITA in 2004 versus 2003 of euro 6,613 K. This is mainly caused by the disposal of the loss-making dotrix activity at the end of 2003, and the acquisition of Folsom in the beginning of 2004. 37. Events subsequent to the balance sheet date

On 17 January 2005, Barco acquired the business of System Technologies, based in Torhout, Belgium. The company has annual sales of approximately euro 5 million, and specializes in innovative design for special projects in the Rental & Staging market.

38. Recent IFRS accounting pronouncements

Barco’s accounting principles applied in 2004 are based on the IFRSs effective on 31 December 2004.

The IASB revised the International Accounting Standards as part of their project on improvements to International Accounting Standards. This so called ‘Improvements project’ amended several standards. The revised standards apply to the annual periods beginning on or after 1 January 2005. The company did not apply the revised standards as per 31 December 2004. It is anticipated that the revised standards will have no relevant impact on the company’s consolidated financial statements.

IFRS 2 ‘Share-based Payment’ was issued in February 2004 and applies to annual periods beginning on or after 1 January 2005. As disclosed in note 25, Barco created warrants for staff and non-executive directors, as well as for individuals who play an important role for the company. According to IFRS 2, Barco will reflect the effects of share-based payment transactions in its profit and loss and financial position in 2005, with restatement of the 2004 figures.

On 31 March 2004 the IASB issued IFRS 3 ‘Business combinations’ together with a revised version of IAS 38 ‘Intangible Assets’. The main change introduced is that amortization of goodwill and intangible assets with indefinite lives is prohibited and these are tested annually for impairment. In accordance with the requirements of IFRS 3, the company applied this new standard for all business combinations with an agreement date on or after 31 March 2004. The company will discontinue amortization of goodwill effective from 1 January 2005.

IFRS 5 ‘Non-current Assets Held for Sale and Discontinued operations’ has been issued in the course of 2004 and is effective for annual periods commencing on or after 1 January 2005, early adoption is encouraged. This standard has not been applied by the company on 31 December 2004. 154- 155

Auditor’s report

Report of the auditor on the consolidated financial and significant accounting estimates made by the company, as well as statements of Barco n.v. as of and for the year ended the overall presentation of the consolidated financial statements. We 31 December 2004 to the shareholders’ meeting believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the reports of other auditors, the In accordance with legal requirements, we are pleased to report to you consolidated financial statements present fairly the Company’s conso- on the performance of the audit mandate, which you have entrusted lidated assets, liabilities and financial position as of 31 December 2004 to us. and the results of its operations for the year then ended, in accordance We have audited the consolidated financial statements of Barco n.v. with International Financial Reporting Standards. (hereafter “the Company”) as of and for the year ended 31 December 2004, which have been prepared in accordance with International Other certification and information Financial Reporting Standards under the responsibility of the Board of Directors and which show a balance sheet total of euro 681,019 K We supplement our report with the following certification and informa- and a consolidated net income for the year of euro 47,692 K. tion that do not modify our audit opinion on the consolidated financial We have also examined the Directors’ report. In respect of certain statements: affiliates of the company for which we are not the auditors, we have - The Company obtained on 29 April 2003 the authorization of the relied upon the work of other auditors. Banking, Finance and Insurance Commission to issue consolidated financial statements in accordance with International Financial Unqualified audit opinion on the consolidated financial statements Reporting Standards. The Company applies all international finan- cial reporting standards effective as at 31 December 2004; We conducted our audit in accordance with the standards of the - The consolidated Directors’ report contains the information required Belgian Institute of Registered Auditors (“Institut des Reviseurs by law and is consistent with the consolidated financial state- d’Entreprises/Instituut der Bedrijfsrevisoren”). Those standards require ments. that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, taking into account the legal and regulatory require- Brussels, 31 March 2005 ments applicable to consolidated financial statements. In accordance with those standards, we considered the group’s admi- Ernst & Young Reviseurs d'Entreprises S.C.C. (B 160) nistrative and accounting organization, as well as its internal control represented by procedures. We have obtained the explanations and information required for our audit. We examined, on a test basis, evidence supporting the Ludo Swolfs Marc Van Hoecke amounts in the consolidated financial statements. We have assessed Partner Partner the validity of the accounting principles used, the basis of consolidation There’s more to master You’ll see 156- 157

Barco n.v.

Summary version of statutory accounts Barco n.v. The management report of the Board of Directors to the Annual General Meeting of Shareholders and the annual accounts of Barco n.v., The following pages are extracts of the statutory annual accounts of as well as the Auditor’s Report, will be filed with the National Bank of Barco n.v. Belgium within the statutory periods. These documents are available on request from Barco’s Investor Relations department, and at The accounting principles used for the statutory annual accounts of www.barco.com. Barco n.v. differ significantly from the accounting principles used for the consolidated annual accounts: the statutory annual accounts follow The statutory auditor’s report is unqualified and certifies that the non- the Belgian legal requirements, while the consolidated annual consolidated financial statements of Barco n.v. for the year ended accounts follow the International Financial Reporting Standards. 31 December 2004 give a true and fair view of the financial position Only the consolidated annual financial statements as set forth in the and results of the company in accordance with all legal and regulatory preceding pages present a true and fair view of the financial position dispositions. and performance of the Barco Group. Balance sheet after appropriation 2004 2003 ASSETS

FIXED ASSETS 627,007 428,529 II. Intangible fixed assets 32,398 29,229 III.Tangible fixed assets 41,611 35,291 A. Land and buildings 23,046 16,580 B. Plant, machinery and equipment 13,798 8,869 C. Furniture and vehicles 2,773 1,487 E. Other tangible fixed assets 108 101 F. Assets under construction and advance payments 1,886 8,254

IV.Financial fixed assets 552,998 364,009 A. Affiliated enterprises 549,978 360,408 1. Investments 549,978 360,408 2. Amounts receivable B. Other enterprises linked by participating interests 1,891 2,496 1. Investments 1,454 1,454 2. Amounts receivable 437 1,042 C. Other financial fixed assets 1,129 1,105 1. Shares 179 179 2. Amounts receivable and cash guarantees 950 926

CURRENT ASSETS 236,334 186,355

VI. Stocks and contracts in progress 82,860 59,847 A. Stocks 82,262 59,540 1. Raw materials and consumables 45,203 30,174 2. Work in process 21,711 16,230 3. Finished goods 15,348 13,136 B. Contracts in progress 598 307

VII. Amounts receivable within one year 127,985 120,336 A. Trade debtors 102,741 102,150 B. Other amounts receivable 25,244 18,186

VIII. Investments 15,456 4,979 A. Own shares 15,456 4,979

IX. Cash at bank and in hand 4,428 76 X. Deferred charges and accrued income 5,605 1,117

TOTAL ASSETS 863,341 614,884 2004 2003 LIABILITIES [ in thousands of euro ]

CAPITAL AND RESERVES 378,647 197,915 I. Capital 53,286 53,073 A. Issued capital 53,286 53,073

II. Share premium account 122,695 120,552 III. Revaluation surplus 63 IV. Reserves 21,715 11,261 A. Legal reserve 6,182 6,182 B. Reserves not available for distribution 15,456 4,979 1. In respect of own shares held 15,456 4,979 C. Untaxed reserves 77 100

V. Accumulated profits 177,086 10,538 VI. Investment grants 3,865 2,428

PROVISIONS AND DEFERRED TAXES 20,574 27,339 VII. A. Provisions for liabilities and charges 20,026 26,053 1. Pensions and similar obligations 1,602 1,390 3. Major repairs and maintenance 2,215 2,215 4. Other liabilities and charges 16,209 22,448 B. Deferred taxes 548 1,286

CREDITORS 464,120 389,630 VIII. Amounts payable after more than one year 92,422 104,937 A. Financial debts 90,843 104,412 2. Bonds 3,774 5,892 4. Credit institutions 87,069 98,520 D. Other amounts payable 1,579 525

IX. Amounts payable within one year 369,678 281,427 A. Current portion of amounts payable after one year 32,857 34,531 B. Financial debts 182,785 132,390 1. Credit institutions 182,785 132,390 C. Trade debts 78,488 53,778 1. Suppliers 78,488 53,752 2. Bills of exchange payable 26 D. Advances received on contracts in progress 3,939 10,952 E. Taxes, remuneration and social security 24,396 22,136 1. Taxes 6,611 5,969 2. Remuneration and social security 17,785 16,167 F. Other amounts payable 47,213 27,640

X. Accrued charges and deferred income 2,020 3,266

TOTAL LIABILITIES 863,341 614,884 Income statement

[ in thousands of euro ] 2004 2003

I. Operating income 456,167 449,373

A. Sales 408,449 423,804 B. Increase (+), decrease (-) in stocks of finished goods, work in process and contracts in progress 5,011 -9,520 C. Fixed assets - own construction 22,289 24,876 D. Other operating income 20,418 10,213

II. Operating charges (-) -435,944 -411,212

A. Raw materials, consumables and goods for resale 244,728 226,289 1. Purchases 253,898 226,945 2. Increase (-), decrease (+) in stocks -9,170 -656 B. Services and other goods 73,320 60,686 C. Remuneration, social security costs and pensions 98,298 94,635 D. Depreciation of and other amounts written off on formation expenses, intangible and tangible fixed assets 27,875 30,755 E. Increase (+), decrease (-) in amounts written off on stocks, contracts in progress and trade debtors -7,457 -514 F. Increase (+), decrease (-) in provisions for liabilities and charges -2,111 -1,056 G. Other operating charges 1,291 417

III. Operating profit (+) 20,223 38,161

IV. Financial income 8,314 14,803

A. Income from financial fixed assets 1 4,925 B. Income from current assets 22 C. Other financial income 8,311 9,876

V. Financial charges (-) -18,411 -22,473

A. Interest and other debt charges 10,848 10,533 C. Other financial charges 7,563 11,940

VI. Profit on ordinary activities before income taxes (+) 10,126 30,491 [ in thousands of euro ] 2004 2003

VII. Extraordinary income 199,724 6,957

B. Write-back of amounts written off financial fixed assets 4,154 C. Write-back of provisions for extraordinary liabilities and charges 3,915 500 D. Gain on disposal of fixed assets 191,655 6,457

VIII. Extraordinary charges -6,993 -22,566

B. Amounts written off on financial fixed assets 16,865 C. Provisions for extraordinary risks and charges 5,701 D. Losses on disposal of fixed assets 6,993

IX. Profit for the year before income taxes (+) 202,857 14,882 Loss for the year before income taxes (-)

IX bis. A. Transfer from deferred taxes (+) 34 34

X. Income taxes -589 -2,416

A. Income taxes -589 -2,417 B. Adjustment of income taxes and write-back of tax provisions 1

XI. Profit for the year 202,302 12,500 Loss for the year

XIII. Profit for the year for appropriation 202,302 12,500 Loss for the year available for appropriation

Appropriation account

[ in thousands of euro ] 2004 2003

A. Profit to be appropriated 212,840 40,345 1. Profit for the year for appropriation 202,302 12,500 Loss for the year available for appropriation (-) 2. Profit brought forward 10,538 27,845 C. Transfers to capital and reserves -10,476 -4,979 3. to other reserves 10,476 4,979 D. Result to be carried forward 1. Profit to be carried forward (-) -177,086 -10,538 F. Distribution of profit (-) -25,278 -24,828 1. Dividend 25,278 24,828 Registered office Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62

Group management Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62

Stock exchange Euronext Brussels

Financial information More information can be obtained at the Investor Relations Department of the group Copyright© 2005 Barco n.v. management: All rights reserved

Mr JP Tanghe, Realization President Corp. Comm. and Investor Relations Barco Corporate Marketing Tel.: +32 (0)56 26 23 22 Fax: +32 (0)56 26 22 62 Publisher E-mail: [email protected] JP Tanghe President Corporate Communication Ms Sigrid Desanghere, & Investor Relations Assistant Corp. Comm. and Investor Relations Tel.: +32 (0)56 26 23 21 Barco Fax: +32 (0)56 26 22 62 President Kennedypark 35 E-mail: [email protected] 8500 Kortrijk - Belgium www.barco.com