Report for the financial year December 1, 1997 to...
Transcript of Report for the financial year December 1, 1997 to...
Report for the financial year
December 1, 1997
to November 30, 1998
Océ ..
.. Box 101, 5900 Venlo, the Netherlands
Océ enables people to share information by offering products
and services for the reproduction, presentation, distribution and
management of documents.
This is a complete English translation of the official annual report published in Dutch. Certain financial/technical
terms have been translated in line with American usage.
We trust it will give a clear presentation of the Company’s operations and results, although some of the terminology
is that required by Dutch law or usage rather than that used in other countries.
Only the Dutch text is legally binding.
The letters represent the Dutch guilder.
De Nederlandse uitgave van dit jaarverslag wordt u op aanvraag gaarne toegezonden.
4 Océ Profile
6 Report of the Board of Supervisory Directors
9 Key figures
Report of the Board of Executive Directors
10 Main outlines
13 Dividend
13 Prospects
15 Strategic outlook
17 Risks and risk management
21 Financial review
24 Industrial and financial activities
26 Use of funds and finance
31 Océ Engineering Systems
33 Océ Office Systems
35 Océ Printing Systems
37 Océ Imaging Supplies
39 Financial leases
40 Research & Development ()
41 Safety, Health and the Environment
42 Manufacturing and Logistics
44 Personnel & Organisation
Financial Statements
49 Consolidated Statements of Operations
50 Consolidated Balance Sheets
52 Consolidated Statements of Cash Flow
54 Summary of Significant Accounting Principles
58 Notes to the Consolidated Statements of Operations
60 Notes to the Consolidated Balance Sheets
70 Company Balance Sheets
70 Company Statements of Operations
72 Notes to the Company Balance Sheets and the Company Statements of Operations
Other information
75 Net income appropriation
76 Authorised capital
78 United States generally accepted accounting principles ( )
81 Auditors’ report
Miscellaneous
82 Directors Central Services
83 Principal companies and their chief executives
85 Supplementary information for shareholders
88 Océ 1989 - 1998
90 List of terms and abbreviations
Contents
Océ Profile
Océ offers people and organisations the resources they need to share information.
Those resources comprise a broad range of products and services for the repro-
duction, presentation, distribution and management of documents. This range
consists of high-quality printing and copying systems, application software,
consumables and imaging supplies. Océ largely develops, produces and markets
these products itself. In addition, some of the products are selectively supplied via
third parties. Océ also offers a total package of services comprising the related
maintenance and financing. Another Océ activity involves the provision of com-
plete services for the management of document flows (Facility Services).
In 1998 the Océ Group achieved total revenues of over 6 billion. World-
wide the Company employs almost 21,000 people in Océ operating companies in
about 30 countries.
Océ seeks to occupy a leading position on its markets world-wide by supplying
state-of-the-art products characterised by their high quality, reliability, productivity,
durability, ease of use and environmental friendliness.
Right from the design stage allowance is made for the maximum possible re-use
of components and materials. This not only yields substantial cost savings but also
minimises the environmental impact.
Each year the Company invests some 6% of its total revenues in Research &
Development. Océ’s technology base is also strengthened via systematic cooperation
– even in the development phase – with suppliers, co-developers and, to an in-
creasing extent, with strategic partners.
Since most of the sales and service activities are handled by the Group’s own
operating companies, Océ can provide the customer with professional support in a
one-on-one relationship. This also gives Océ access to the most up-to-date market
information. The Company is therefore always able to respond effectively to market
needs by supplying a well-balanced range of products and services.
The head office of the Océ Group is located in Venlo, the Netherlands.
The greater part of the research, production and international marketing activities
are also concentrated in Venlo, within the central operating company Océ-
Technologies .. The Océ Group also has its own research centres and manufac-
turing facilities in Germany, France and the United States. The – publicly listed –
holding company of the Group is Océ ..
Further details about share listings and the Océ share can be found on
pages 85 to 87.
4
Océ Profile
Board of Supervisory Directors H.B. van Liemt, chairmanM. Ververs, vice-chairman L.J.M. Berndsen
P. Bouw
J.V.H. Pennings
F.J. de Wit
Board of Executive Directors J.C.M. Hovers, chairmanJ.F. Dix
R.L. van Iperen
H.J.A.F. Meertens
G.B. Pelizzari
Staff Director/Company J.M.M. van der Velden
Secretary
Financial year The Company’s financial year runs from December 1 to November 30.
Articles of Association The present Articles of Association were confirmed by a notarial deed dated
April 27, 1998. Océ .. is an international holding company within the meaning
of Article 153, para. 3b, Book 2 of the Dutch Civil Code.
Registered office and The Company has its registered office in Venlo, the Netherlands, and is registered
Commercial Registry in the Commercial Registry in Venlo under No. 12002283.
Head office The head office is at St. Urbanusweg 43, Venlo, the Netherlands.
Postal address: .. Box 101, 5900 Venlo, the Netherlands.
Telephone (+31) 77-359 2222, fax (+31) 77-354 4700.
Océ on Internet: http://www.oce.com.
For general information about Océ: tel. (+31) 77-359 3029.
5
Report of the Board of Supervisory Directors
To the Annual General Meeting of Shareholders of Océ N.V., Venlo
Annual accounts We present to you the Financial Statements for 1998 as drawn up by the Board of
Executive Directors. These Financial Statements have been examined by and
discussed with the auditors PricewaterhouseCoopers .. in close cooperation with
Océ’s Internal Audit Department. In respect of these Financial Statements the
auditors have issued an unqualified opinion which is set out on page 81. We propose
to you that these Financial Statements, as adopted by us, together with the dividend
proposal contained therein, be approved.
Supervision In 1998 our Board met five times. Besides discussing the general development of
the business, we reviewed a number of other important aspects, including the
Company’s strategy, its product development programmes and its financing policy.
We also talked about the consequences of a proposal by the Board of Executive
Directors to realign the Company’s organisation structure, with the specific aim of
giving Océ a stronger customer focus. The intention is to structure Océ’s activities
in such a way that, by linking up precisely with the various customer categories, the
organisation can continue to respond alertly to the trends and needs that exist in
the market. Recommendations were also made for boosting the effectiveness of the
Company’s research and development efforts.
Our Board also held regular discussions about the acquisitions policy and the
risks the Company faces in its operations. We also reviewed the Executive Board’s
evaluation of the findings relating to the structure of the internal management and
control systems designed to provide reliable information about the conduct of the
business.
Corporate Governance During the past year we again exchanged ideas on the subject of Corporate
Governance. This was prompted in part by the publication at the end of November
of the report by the Monitoring Committee. Last year several other reports were
published on the same subject. A detailed exchange of views took place with
shareholders at the Annual General Meeting in April 1998.
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Report of the Board of Supervisory Directors
Following on from these events, further attention was paid to effective Corporate
Governance. We subscribe to the view of the Peters Committee and the Monitoring
Committee that transparency and accountability are the most important elements
for effective governance, also in an international context. Transparency and
accountability are also the basic principles underpinning our active investor
relations policy whose aim is to keep our shareholders as fully informed as possible.
Though greater attention is advocated for the international aspects in the
relationship between Corporate Governance and Performance, we would note that
this has long been the practice in our Company.
We are confident that, overall, we act in conformity with the recommendations
and that any departures from them are justified in our situation.
We were pleased to see the favourable developments experienced by Océ in 1998
and we are satisfied with the results the Company has booked. Océ, as a European
business, has built a world-class position and a momentum that will provide further
support for future growth. However, a close watch needs to be kept on develop-
ments in the main competitor businesses, where changes were recently initiated
which may have an impact on Océ’s markets.
We look forward with confidence to developments in the new financial year.
Our thanks go the Board of Executive Directors and to all Océ em-ployees for the
contribution they made to Océ’s success during the year under review.
February 17, 1999
H.B. van Liemt, chairman
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The profile and the information about Supervisory Directors as recommended by the Peters Committee is available
on request from the Company’s head office.
9
Océ, the digital problem
solver. Software is the
golden key for leading-
edge added value.
Key figures
1998 1997 1998 1997
Total revenues 6,065.8 5,439.6 2,752.5 2,468.4
Increase on previous year (%) 11.5 30.3
Gross margin 2,578.6 2,278.3 1,170.1 1,033.9
As % of total revenues 42.5 41.9
Operating income 540.4 441.3 245.2 200.2
Increase on previous year (%) 22.5 38.3
As % of total revenues 8.9 8.1
As % of average balance sheet total 9.6 8.8
Net income 284.4 236.7 129.0 107.4
Increase on previous year (%) 20.1 39.7
As % of total revenues 4.7 4.4
As % of average shareholders’ equity 18.1 16.5
Cash flow 661.9 582.7 300.3 264.4
Dividend (including preference dividend) 98.6 82.8 44.8 37.6
Depreciation 377.5 346.0 171.3 157.0
Net capital expenditure 440.2 366.1 199.8 166.1
in guilders in euro
Per N LG 1 ordinary share Basic earnings 3.37 2.86 1.52 1.30
Cash flow 7.98 7.19 3.62 3.26
Shareholders’ equity 17.83 17.55 8.09 7.96
Dividend 1.10 0.93 0.50 0.42
Diluted earnings per N LG 1 ordinary share 3.30 2.78 1.50 1.26
Share pricesYear’s highest 90.20 66.35 40.93 30.11
Year’s lowest 40.70 45.00 18.47 20.42
Year end 67.20 56.63 30.49 25.70
Number of N LG 1 ordinary sharesAverage number outstanding 81,954,636 79,913,360 shares
Increase upon conversion/options 2,128,605 2,996,952
Number of employees at November 30 20,978 17,754 employees
› million pro forma
› € million
Report of the Board of Executive Directors
Main outlines
Océ’s net income for the 1998 financial year was excellent, showing an increase of
20%. The strategic policy decisions combined with the acquisitions of recent years
have clearly given the company’s operations a broader and stronger basis. During
the year under review autonomous growth was comparable to that achieved in
1997. The further spread in income sources, notably income from service, software
and system consultancy, the broader customer base and the supply of new product/
market combinations have boosted the stability of revenue and income. Revenues
growth was further reinforced somewhat by slightly positive net exchange rate
effects in 1998.
Total revenues increased by 12% to 6,066 million. Of this increase, auto-
nomous growth accounted for 7%; the effect of exchange rates was 1%.
Acquisitions contributed 4% to the growth in revenues.
Operating income went up by 22% to 540 million. The increase was
attributable to effective cost control and, in particular, to strongly increased sales of
higher-margin digital products.
Net income worked out at 284 million, which was 20% higher than in
1997. Cash flow went up by 14% to 662 million.
On a per share basis, basic earnings rose by 18% to 3.37 (1997: 2.86),
cash flow by 11% to 7.98 (1997: 7.19) and shareholders’ equity by 2% to
17.83 (1997: 17.55).
Expenditure on Research & Development increased by 36 million to
342 million. This is equivalent to 5.6% of total revenues (1997: 306 million,
or 5.6%). Gross capital expenditure on ‘Property, plant and equipment’ amounted
to 249 million (1997: 248 million). Depreciation and disposals worked
out at 242 million (1997: 215 million).
The markets in which Océ operates are currently subject to major changes.
Digital products are in ever greater demand because of their versatility and high
productivity. Digital machines are also being increasingly used in networks and are
thus replacing stand-alone equipment. This latter development is partly due to the
need of customers to gain tighter control over their document flows. About one-
half of Océ’s revenues are already generated via digital products.
Printing and copying in colour, applications closely linked to digitisation, are
also developing strongly, though not at the same speed in all markets. In the office
environment and in the high volume printing market the level of interest is high.
The more widespread use of colour in documents is in itself creating further demand.
In the market for display graphics (billboards and other large format colour appli-
cations) the possibilities that digitisation offers are as yet being applied only on a
modest scale.
Océ is also benefiting from the strong technology base that it built up in the
pre-digitisation period. The quality of the present machines, the organic photo-
conductors, the unrivalled CopyPress system and the ergonomic machine layout all
date from that period. The ‘transition’ from analogue to digital therefore reflects a
logical ongoing development in Océ’s technological know-how, resulting in the
present high standard of digital quality.
10
?
Engineering Systems Océ’s revenues in the Engineering Systems market increased by 6% to 1,700
million. Autonomous growth provided 5% of this increase, whilst 1% stemmed
from exchange rate effects.
Demand for digital printers/copiers continued at a high level, with growing
numbers of placements of the Océ 9400, 9700 and 9800. Regular market shipments
of the Océ 9600 mid-volume digital printer/copier will commence in the first half of
1999. The machine will be equipped with an advanced ‘next generation’ controller.
The growth in the number of machines installed in the market is also bringing
higher income from service. Digital machines and the related software meanwhile
represent 85% of the value of new placements in the large format market.
In the analogue segment of the market the low volume ‘eco’-copier, the Océ 7050,
remains very much in demand as a stand-alone machine. Despite the declining ana-
logue market, placements of this user-friendly machine are still growing in number.
The increase in digitisation has brought strong growth in the volume of system
software. Several of these software applications do not relate directly to the
presentation of documents but offer storage and retrieval functions that are highly
appreciated by users. Cooperation with partners and the input of Groupware
Technology Inc., the American software company that was acquired in 1998, have
resulted in strong growth in the number of applications.
Office Systems In the Office Systems market Océ’s revenues increased by 19% to 2,833
million. Autonomous growth contributed 9% to this increase. The contribution
made by acquisitions likewise amounted to 9%. Exchange rates had a positive effect
of 1% on revenues. The strong autonomous growth resulted chiefly from the great
success of the Océ 3165 digital printer/copier, whose high productivity and copying
quality have fast made it very popular. This success represents a decisive milestone
on the road towards a digital office environment. In the declining analogue market,
too, Océ was able to strengthen its position with the Océ 3045 and the Océ 3100,
machines which serve the medium and very high volume segments respectively.
The number of machines leaving the manufacturing facilities in Venlo reached a
record level and production numbers of the Océ 3165 were even more than double
the previous year’s figure. Towards the end of the year a start was made on regular
market shipments of the Océ 3055 (a higher speed version of the Océ 3045) and
the Océ 3155 (an adapted version of the Océ 3165).
Océ also booked strong growth in the market for colour printing and copying.
A growing proportion of the revenues in the Office Systems market is accounted for
by an activity that was initiated only a few years ago: Facility Services. Over that brief
period Océ has built a solid market position, particularly since the acquisition at the
end of 1997 of Archer Management Services in the , which had a successful year.
Océ’s Facility Services, which initially involved Océ handling the customer’s in-
house copying activities, meanwhile comprise a great number of different func-
tions, ranging from repro services to postal department operations.
Printing Systems In the Printing Systems market Océ’s revenues went up in 1998 by 5% to 1,533
million. The share of autonomous growth amounted to 4%. Exchange rates had a
positive effect of 1% on revenues.
During the year under review Océ again confirmed its leadership in the high
volume printing market. Océ also gained share in the medium volume segment of
the network printing market. In the Print on Demand segment of the printing and
publishing market Océ achieved a major breakthrough.
11
Report of the Board of Executive Directors
Report of the Board of Executive Directors
Océ is very successful in the market for big machines for high speed processing of
continuous-feed paper. At the end of 1998 the fastest system to date was intro-
duced: the Océ 1060 , with an output of 1,060 pages per minute.
The change-over to paper without a perforated edge brings customers a substantial
saving on finishing costs.
An important new market for Océ is formed by the printing industry. In the
Print on Demand segment modern, high speed printers can perform the work of a
small offset press. The print quality (600 dpi) is high enough to make this an
acceptable alternative in the printing industry. By introducing several fast printers
Océ has created a good basic position in this market. Océ supplies a large number
of its customers in this market with complete systems which include such features
as integrated (book-)binding functions. The cooperation with Agfa in the area of
colour has also strengthened Océ’s position in the highly promising Print on
Demand market.
Imaging Supplies In the Imaging Supplies market Océ’s revenues increased in 1998 by 3% to 928
million. In the traditional engineering market Océ booked a further increase in
sales of supplies for use on its own installed population of machines. In the sharply
declining diazo market Océ succeeded in maintaining margins, partly through
ongoing cost reduction programmes. In the market Océ is gaining share, not
only in supplies for Océ systems but also in supplies for third-party equipment.
The growing, but in absolute terms still limited, sales of machines in the market
for display graphics also resulted in a limited growth in sales of the related supplies.
Océ is excellently equipped to supply business graphics materials. The range that it
markets includes numerous variants of small format paper for colour copying and
printing, coloured paper and films for office applications. For this market the
company uses the products developed and produced by its American subsidiary
Arkwright. Sales of these materials, like sales of plain paper, increased further
during the year under review. Centralisation of production and a further stream-
lining of logistics brought greater efficiency.
United States With revenues of 2.3 billion, the Océ operation in the United States has
reached a size that gives the business high visibility, also in the markets where it still
occupies a relatively modest position. Océ meanwhile can count a large number of
Fortune Top 100 businesses amongst its customers. Océ’s revenues in the United
States account for 37% of total revenues (as compared to over 32% in 1997). The
company expanded its market share further in the principal sub-markets in 1998
thanks to the success of the broad range of digital printers and copiers. Particularly
the Océ 3165 played an important role in this success. The intention is to achieve
further substantial growth in these markets so that Océ can build a position of
sufficient size and momentum in this environment, which is the world pace-setter
as regards digital solutions.
During the year under review Océ considerably strengthened its United States
organisation via a further integration of its activities, some of which had joined the
business via acquisitions. Thanks to the combined marketing approach and a
continual exchange of information about customer accounts, the Océ organisation
there has taken on an extra dimension.
12
Report of the Board of Executive Directors
Dividend
We propose to distribute over the 1998 financial year a dividend of 1.10
(50 eurocents) (1997: 0.93) per ordinary share of 1 nominal. This divi-
dend involves an amount of 90.8 million (1997: 74.9 million). If the
General Meeting of Shareholders adopts this proposal the final dividend will
amount to 0.77 (35 eurocents); the interim dividend amounted to 0.33.
It is proposed to make the final dividend available, at the option of shareholders,
either fully in cash or fully in ordinary shares to be charged to the (tax-free) paid-in
capital or, if desired, to the net income over 1998.
The dividend in shares will be determined on 28 April 1999 (after close of
trading on the Amsterdam Stock Exchange) and will be subject to a discount of at
most 5% as compared to the cash dividend. The newly issued shares will be entitled
to dividend as from 1st December 1998.
The pay-out ratio of approximately 32.8% (1997: 32.7%) is in line with our
target of a two-thirds net income retention, which is the level we consider necessary
for a healthy and balanced financing of our expansion.
Prospects
We expect continued success for our range of digital products, supported by several
new machine launches and software releases that meet clear market needs. Although
Océ can hardly be described as a business that is affected by economic cycles, the
lower growth rate of the economies in large parts of the world may also impact on
our company. We may possibly also experience some slowdown in revenues growth
as a result of a restructuring operation that has been set in motion at our partner in
the United States. In recent years, however, Océ’s own direct sales organisation in
the United States has been strongly expanded, bringing a substantial broadening of
our commercial base in that country. To ensure that the consequences of a possible
slowdown in revenue growth can be countered in good time, we have meanwhile
put a number of measures in place to achieve tighter cost control.
Employee numbers will increase slightly in 1999, mainly because of an expansion
in capacity and in sales and service staff.
Capital expenditure on fixed assets and rental copying equipment will increase
in 1999. Cash flow (net income plus depreciation) is expected to be almost
sufficient to finance this capital expenditure.
Also in 1999, barring unforeseen circumstances, we expect results to grow.
13
Report of the Board of Executive Directors
Strategic outlook
Changing role As the scope of its operations steadily becomes broader and deeper, Océ is devel-
oping more and more into a supplier of complete solutions for the management of
document flows. The company increasingly combines its own strong and broad
technology base with its partners’ products (mostly software). Océ’s role is therefore
more that of a supplier of ‘total concepts’ rather than just of machines. This means
that the quality and functionality of the machines, combined with access to and an
understanding of the customer’s document flow processes, are the key success factors.
In its customer approach Océ is moving away from a ‘transaction orientation’ and
focusing more and more on entering into long term relationships, which offer
various sales moments in the form of new releases, upgrades and replacements.
An additional aspect is that the ongoing digitisation of the equipment is in-
creasingly blurring the distinction between copying and printing. As a consequence,
two markets are converging which until a few years ago were completely separate:
the market for traditional, analogue reproduction and the market for digital Infor-
mation Technology. The reasons for adopting a separate market approach therefore
no longer apply. The customer is in fact interested more than anything in a com-
plete, and cost-effective, management of his document flows.
The customer’s changing requirements and his need for full-service document
processing has therefore been decisive for the direction in which Océ is developing.
Recently the Océ Mission Statement was reformulated to reflect this: Océ enablespeople to share information by offering products and services for the reproduction,presentation, distribution and management of documents.
New customer categories Although it is generally the customer environment that provides the impulses for
and markets product development, in some cases it is also the technologically advanced nature
of the systems themselves that triggers the development of new applications.
This is particularly true in the Print on Demand segment, where the high speed
printer can produce updated or personalised information on paper quickly and
with a high quality. Print on Demand is thus entering the domain of the printing
industry, a market segment with which Océ had no direct link. Entering this market,
which is not an easy market to serve, is especially attractive because of its size and
rapid growth.
Another growth market for Océ is that for display graphics. This relates to large
format, small run colour prints which are mainly used as displays. With a supply
that comprises inkjet printers and a range of paper and plastic carrier materials, Océ
believes it is capable of building up a position in this fast growing market.
Organisation The Océ organisation has in recent years been adapted several times to bring it into
line with the requirements of markets in which changes are occurring in ever more
rapid succession. In view of the pace and extent of the current changes an adaptation
of the organisation is needed once again. This is geared to an improved interaction
between strategic planning, product development, marketing, sales, support and
service. At the beginning of December 1998 the Board of Executive Directors
decided to introduce an organisation model in which the guiding principle will no
longer be the products that are used but a subdivision based on customer appli-
cation categories.
The new organisation will be grouped around three application areas in
Printing: wide format systems, office document systems and high volume
production systems. The existing business units (Engineering Systems, Office
15
Office Systems:
document flows in
big print-runs digitally
controlled and
distributed.
Report of the Board of Executive Directors
Systems and Printing Systems) will be replaced by Strategic Business Units ( s),
namely Wide Format Printing Systems, Document Printing Systems and Pro-
duction Printing Systems. These s each comprise two application-oriented
Business Groups (one focusing on existing applications and one on new ones).
In this way the national organisations can also be given targeted support via a more
integrated customer approach in their sales and service activities.
Geographical ambition Océ’s biggest operations by far are to be found in Europe and the United States,
with Europe generating 57% and the United States 37% of total revenues in 1998.
Partly thanks to the strengthened organisation structure and the intensive market
approach we expect to achieve considerable further growth in the United States in
the years ahead in both the printing and the copying market. The United States has
in fact become a second home market for Océ. In the countries outside Europe and
the United States Océ will concentrate principally on its existing operations and
distributorships. Given the overall market situation in the Asian countries and
South America growth there in the near future will be limited.
Market objectives In the Engineering Systems market Océ aims to maintain its position as market
leader and, where possible, to expand that position further on the basis of its strong
range of digital systems. In addition, the company wants to build a strong presence
in new growth markets, such as that for display graphics.
In the Office Systems market Océ’s objective is to further expand its good basic
position in digital printers and copiers by offering new machines for the various
volume segments, both for black-and-white and for colour. The growth in copying
volume will in future stem mainly from digital systems. However, because of the
good performances of the Océ 3045, the Océ 3055 and the Océ 3100, Océ will also
be able to strengthen its position even further in the analogue segment.
In the Printing Systems market Océ intends to reconfirm and expand its market
leadership. Océ will extend its Company Wide Printing concept further by offering
versatile printers for the medium volume. In the high and very high volume
segment the company intends to strengthen its position further in the electronic
printing market and particularly in the Print on Demand market, a growth market
in which Océ is rapidly gaining expertise. Highlight colour and full colour are
important aspects in this market.
In the Imaging Supplies market Océ will focus on expanding its sales volume by
strengthening its position in speciality, wide format materials (e.g. display graphics)
and in speciality materials for small format colour applications (e.g. business
graphics). Océ will also concentrate on raising the sales of supplies for Océ machines
installed in the market by stimulating close cooperation between the sales staff of its
local operating companies.
In the fast growing Facility Services market the company aims to expand further.
The broad range of products and services, notably for the medium, high and very
high volume segments, gives Océ an excellent launch-pad to realise this aim.
Yield objective Océ continues to devote high priority to enhancing the overall profitability of the
business, both through autonomous growth and, where opportune, through
acquisitions, as well as via improved efficiencies and by accelerating the circulation
rate of total assets. Océ seeks to improve the return on total assets from 9.6% in
1998 (8.8% in 1997) to 12%, to be achieved within a few years.
16
Risks and risk management
General Océ is confronted with the commercial and technological risks of a company which
specialises in the development, manufacture, sale and servicing of technologically
advanced products and systems on a world-wide scale.
Océ’s broad technology base, the markets on which the company operates and
its links, mostly on a long term basis, with highly diverse customer categories ensure
that the risks are evenly spread. The revenue from rentals, leases, service and sup-
plies, the diversified customer base and the wide geographical spread of operations
help to create stability in the total revenue flow.
Markets On the Engineering Systems market the demand for Océ products is generally
related to the level of economic activity and more specifically to the investment
climate. Structural growth in this market is estimated at 2% per annum. For a
number of years a shift has been taking place from coated diazo paper to plain paper
copying and, in recent years, from analogue to digital printing/copying systems.
Océ has responded to these developments with a broad series of digital machines
whose functionality is constantly adapted to meet the evolving needs of the market.
A new, and promising market for display graphics is also developing.
By contrast, the Office Systems market, which is many times bigger than that for
Engineering Systems, is much less dependent on the level of economic activity.
Generally speaking, growth in the market for printing/copying is estimated at about
3% per year. The market for (black-and-white) analogue copying is shrinking,
whilst the market for digital black-and-white and colour printing/copying is growing
strongly: Océ is outpacing that market growth. In this market the company con-
centrates mainly on the medium and high volume segments for (digital) printers/
copiers and offers a competitive range of machines for both black-and-white and
colour printing/copying.
The market for Printing Systems in the medium to high volume (30-99 ppm) is
growing by some 20% each year. The very high volume printing market (>100 ppm)
is growing annually by some 4 to 5% in the segment and by around 30% in
the Print on Demand segment. In the market for medium and high volume cut-
sheet printers and in that for (very) high volume continuous-feed printers Océ
offers a complete and highly competitive range. These printers also have excellent
prospects in the Print on Demand segment.
Position Océ has a leading market position in Engineering Systems world-wide.
In the European market for Office Systems Océ is a prominent player in the
medium and very high volume segments. In the American market the company’s
share in these segments, though provisionally still small, is growing fast.
In Europe Océ is the market leader for high volume printers. Océ is also a major
force in this market in the United States. In the medium volume segment of the
Printing Systems market Océ has meanwhile built up a good position in Europe.
Océ seeks to strengthen its position in Europe and to expand its activities in
other geographical markets, specifically in the American market.
17
Report of the Board of Executive Directors
18
Report of the Board of Executive Directors
Technology The extensive investments made by Océ in in recent years are increasingly
bearing fruit in the form of self-developed core technologies, products based on these
and a series of market-driven innovations in the areas of applications, operating
concepts, and improved environmental and safety features.
These core technologies encompass a number of unique components and
processes for a new generation of black-and-white printers/copiers as well as for full
colour printers/copiers. Océ also holds a leading position in continuous-feed
printing technology.
Product development activities are steered by the Business Units, which ensures
the closest possible contact with the market. Since service and sales staff are given
an input in product development at an early stage, the learning curve is short.
Exchange rates Océ achieves its revenues all over the world, with particular emphasis on Europe
and the United States, but a considerable proportion of its costs are incurred in
Dutch guilders, German marks and French francs. Océ also has costs denominated
in Japanese yen for the purchase of product sub-assemblies and complete machines
in Japan to supplement its range. As regards the revenues from service activities, the
foreign exchange risk is limited because most of the costs, consisting of the payroll
expenses of the service technicians, are in local currency. The introduction of the
euro as from January 1, 1999 has substantially reduced the company’s foreign ex-
change risk and that risk will now mainly be limited only to the dollar, the
pound Sterling and the Japanese yen.
The competitive market for printers and copiers makes it difficult to pass on
price increases to the market.The adverse effects of exchange rate fluctuations over the
long term are offset as much as possible by increasing the efficiency of operations, by
conducting buying activities as much as possible in those currency areas in which the
revenues are also achieved (‘matching principle’) and by raising the added value of the
products. In addition, endeavours are made to offset the short-term consequences
of foreign exchange fluctuations via an active currencies management policy.
Océ applies a central foreign exchange management system and a selective foreign
currency policy aimed at effective control over the company’s commercial and net
asset exposures in various currencies. For this purpose Océ makes use of a number
of financial instruments, particularly forward foreign exchange contracts. The
policy and the plans based on it are implemented in close consultation with the
Board of Executive Directors.
Introduction of the euro Since 1997 Océ has been making thorough preparations for the introduction of the
euro. As from January 1, 1999 the organisation has been in a position to conclude
contracts in euros. That same date also saw the completion of a conversion program
which the operating companies can use to adapt their accounting system rapidly if
the country in which they are established decides to switch over to the new
currency.
In general Océ is ready to use the euro as a currency in any form whatever.
In this report, in line with the regulations, the figures are still primarily reported in
guilders. With effect from the first quarter of the 1999 financial year Océ will
report its results in euros.
18
Interest rates Most of the interest income is provided by financial leases. Financial lease contracts
usually comprise a fixed interest which corresponds to the rates charged by external
leasing businesses. These contracts are mainly financed by interest-bearing capital
whose interest rate is generally fixed in line with the duration of the contracts
(‘matching principle’).
The interest rate policy is largely executed centrally at corporate level through
the use of financial instruments. Implementation of this policy likewise takes place
in close consultation with the Board of Executive Directors.
Millennium The millennium problem has been the subject of Océ’s attention for quite some
time. Both in the central organisation and in the national organisations all software
incorporated in the hardware and software products marketed by Océ and in the
computer applications used within the business has been tested and, where
necessary, replaced or modified. Océ has initiated various Year 2000 compliance
programmes to achieve this, all of which are expected to be finalised in mid-1999.
The four programmes differentiated by Océ are as follows:
– Océ’s own products, both hardware and software,
– corporate business applications (including invoicing, contract handling, logistics,
service and financial accounting systems) and local business applications (including
personnel systems),
– hardware and software for information supply, and
– embedded software, not involved in the information supply function.
As far as the corporate business applications and information supply software
are concerned, the process is simplified to some extent in that Océ applies a
modern, company-wide information system (Océ Common Systems).
Since the end of 1997 a Millennium Steering Group has been coordinating all
millennium compliance aspects of the products released by Océ (including bought-
in products). All products, both new ones and those already placed with customers,
are tested by a working group in accordance with a defined test procedure based on
an Océ Technical Standard. This standard imposes stricter criteria than those set by
the British Standards Institute.
To demonstrate that equipment is millennium proof Océ uses the following
definition:
– correct handling of dates prior to and after January 1, 2000,
– recognition of the year 2000 as a leap year,
– correct handling of logical dates that are used in non-date-related functions.
Reporting on the progress of the programmes takes place each quarter. Almost
all parts of the business are currently on schedule.
To provide a rapid response to questions from users, Océ has meanwhile opened
a special ‘Year 2000’ section on its Internet site: http://www.oce.com.
Report of the Board of Executive Directors
19
21
Report of the Board of Executive Directors
Financial review
Total revenues In 1998 total revenues rose by 12% to 6,066 million. Autonomous revenue
growth amounted to 7%, with the share of analogue products in revenues
(including Imaging Supplies) decreasing to 52% (1997: 57%), whilst that of digital
products climbed to 48% (1997: 43%). Acquisitions and exchange rates had a
positive effect on revenues of 4% and 1% respectively.
Earnings from net sales increased by 15% to 3,628 million. Earnings from
rentals and service went up by 6% to 2,240 million. Interest income from
financial leases rose by some 22% to 198 million.
The growth in revenues was largely attributable to the following factors:
– strongly increased sales of and service income from digital copiers and printers;
– the contribution to revenues resulting from the acquisition of Archer Management
Services;
– net positive exchange rate effects.
As a proportion of total revenues, revenues from rentals and service plus interest
income from financial leases amounted to 40% (1997: 42%).
Development of revenues In the Engineering Systems market revenues increased by 6% to 1,700
by market million. Revenues in the Office Systems market went up by 19% to 2,833
million; excluding acquisitions, the increase amounted to 10%. In Printing
Systems, revenues increased by 5% to 1,533 million.
Gross margin The gross margin generally increased more strongly than total revenues. As a per-
centage of total revenues the gross margin increased to 42.5% (1997: 41.9%). The
principal reasons for this development are:
– higher margins on digital printers/copiers which offset the continued pressure on
the margins for analogue copiers including the related supplies;
– a further productivity increase in machine manufacturing, partly as a result of the
substantially higher production volumes.
The average interest realised on the lease portfolio amounted to 10.5% (1997:
10.8%). In the financial lease contracts the interest percentage is fixed for the entire
duration of the contracts.
Printing Systems:
personalised software
creates versatile and
variable Print on
Demand publications.
Report of the Board of Executive Directors
Operating income Operating income increased by 22.5% to 540 million (1997: 441
million). This is equivalent to 8.9% of total revenues (1997: 8.1%) and
corresponds to 9.6% of the average balance sheets total (1997: 8.8%). The increase
in operating income was attributable not only to autonomous growth and
acquisitions but also to the fact that costs increased more slowly than the growth in
total revenues.
22
Development of 1998 1997
total revenues bybusiness unit total revenues as % total revenues as %
› million › million
Engineering Systems 1,700 28 1,610 29
Office Systems 2,833 47 2,376 44
Printing Systems 1,533 25 1,454 27
Total 6,066 100 5,440 100
Total revenues 1998 1997
by geographical areas › million as % › million as %
Germany 845 14 873 16
France 471 8 454 8
United Kingdom 456 7 454 8
Netherlands 441 7 419 8
Rest of Europa 1,249 21 1,128 21
United States 2,244 37 1,742 32
Rest of the world 360 6 370 7
Total 6,066 100 5,440 100
Operating income
› million
600
480
360
240
120
0
94 95 96 97 98
6500
5200
3900
2600
1300
0
Total revenues
› million
94 95 96 97 98
23
Report of the Board of Executive Directors
Research & Development (R&D) Spending on increased to 342 million, or 5.6% of total revenues (1997:
306 million, or 5.6%). As a result of the success of the new machines and the
resultant liability to repay development credits, an amount of 33 million
(1997: 29 million) was added to expenditure to cover the negative
balance of government grants in 1998. This, combined with the expansion of the
organisation, meant that on balance the expenses in the Consolidated
Statements of Operations increased by 12% to 375 million, which is equiva-
lent to 6.2% of total revenues (1997: 335 million and 6.2%).
General administrative and The general administrative and selling expenses increased by 10.7% from 1,502
selling expenses million in 1997 to 1,663 million and thus grew less than the increase in total
revenues. Expressed as a percentage of total revenues these expenses decreased to
27.4% (1997: 27.6%).
Financial expense (net) Financial expense (net) – balance of interest paid and other interest received –, went
up from 117 million in 1997 to 134 million in 1998. On the basis of an
average interest rate of 5.6% (1997: 5.6%), the average interest-bearing capital
increased by 289 million. This is mainly due to the financing of acquisitions
and the increase in the rental population and in financial lease receivables.
The interest income from financial leases amounted to 198 million in
1998 (1997: 163 million).
Income taxes The average taxation charge amounted to 29.0% (1997: 25.3%). The higher tax
charge is mainly due to the ending of the entitlement to claim fiscal loss
compensation.
Net income Net income increased by 20.1% to 284.4 million. This corresponds to 18.1%
of the average shareholders’ equity (1997: 236.7 million and 16.5%).
As a percentage of total revenues, net income amounted to 4.7% (1997: 4.4%).
The net income attributable to ordinary shareholders, i.e. after deduction of the
dividend on the financing preference shares, increased by 20.8% to 276.6
million. Basic earnings per share, calculated on the basis of the weighted average
number of ordinary shares outstanding, increased by 17.8% to 3.37 (1997:
2.86).
Research & Development
› million
expenditure
costs
400
320
240
160
80
0
94 95 96 97 98
10
8
6
4
2
0
Operating income as % of
total revenues
94 95 96 97 98
Report of the Board of Executive Directors
Industrial and financial activities
Océ is a combination of industrial and financial activities, each with their own in-
come profile and balance sheet characteristics.
In assessing the financial position of the Company as a whole, a distinction must
be made between these two types of activities. As indicated below, the assessment
criteria for both activities differ widely.
The revenue from financial activities is formed by the interest from financial
leases. The costs comprise the costs of financing the lease portfolio and the selling
and administrative expenses. Where the financial activities are financed from
interest-bearing capital, it has been assumed that this has been done fully on a fixed-
interest basis.
The costs of financing are then allocated on the basis of the average amount of
fixed interest-bearing capital. The selling and administrative expenses, including
provisions for doubtful debtors, are allocated as far as possible on the basis of origin.
The cost level that is applied corresponds to that of other ‘captive’ lease companies
with similar activities. After expiry of the lease contracts the machines, provided
they have not been written off in full, are transferred to the industrial activities at
their residual book value.
For the financing structure of the financial activities a ratio of 0.15 between the
equity and the balance sheet total is applied. This ratio is derived from ‘captive’
companies in the financial services industry which publish their own Financial
Statements. It is seen as an extremely solid ratio. Under this method the remaining
part of the equity is allocated to the industrial activities.
The table on the next page gives a breakdown of the salient financial figures for the
two company activities. As can be seen from that breakdown, both the industrial
and the financial activities have good profitability and solid balance sheet ratios.
Particularly the profitability of the industrial activities has clearly improved. In the
case of the financial activities the average interest from financial leases decreased
slightly as a result of market interest rates. The yield (net income as a percentage of
the average equity) increased.
24
25
Report of the Board of Executive Directors
1998 1997 › million
IndustrialRevenues 5,868 5,277
Gross margin 2,381 2,115
Operating income 399 323
Financial expense (net) 38 32
Result before taxation 361 291
Income taxes 105 74
Result after taxation 256 217
Net income 252 212
Shareholders’ equity 1,286 1,261
Minority interest 89 90
Group equity 1,375 1,351
Interest-bearing liabilities 601 647
Provisions and other liabilities 1,707 1,603
Balance sheet total 3,683 3,601
RatiosOperating income as % of
average balance sheet total 11.0 9.4
Net income as % of
average shareholders’ equity 19.8 17.7
Shareholders’ equity as % of
balance sheet total 34.9 35.0
FinancialInterest from financial leases 198 163
Selling and general administrative expenses 57 45
Financial expense (net) 96 85
Result before taxation 45 33
Income taxes 13 8
Result after taxation 32 25
Shareholders’ equity 314 280
Interest-bearing liabilities 1,776 1,585
Balance sheet total 2,090 1,865
RatiosInterest from financial leases
as % of average balance sheet total 10.0 10.3
Net income as % of average
shareholders’ equity 10.9 10.3
Shareholders’ equity as %
of balance sheet total 15.0 15.0
Rental copying equipment and After several years in which there was a move away from rentals and towards finan-
financial lease receivables cial leases, both rentals and financial leases have been on the increase since 1996.
The book value of rental copying equipment increased by 47 million to
530 million (an increase of 10%). The capitalised value of financial lease
receivables (including short term amounts receivable) went up from 1,776
million in 1997 to 2,000 million (an increase of 13%). The aggregate value of
rental copying equipment and financial lease receivables increased by 12% and
represented 43.8% of the balance sheet total (1997: 41.3%).
The balance sheet value of rental copying equipment is calculated on the basis
of the all-in costs, less depreciation. Financial lease receivables are valued at the net
present value of the contracted lease instalments plus the residual value. Both these
valuations give only a partial reflection of the economic significance of the
population of machines installed on rental and on lease. A better assessment can be
obtained by comparing the balance sheet value of rental copying equipment and
financial lease receivables with their economic value, which consists of the cash
inflows expected to be generated on a contract basis.
26
Report of the Board of Executive Directors
Use of funds and finance
Gross capital expenditure In 1998 Océ’s gross capital expenditure on ‘Property, plant and equipment’
amounted to 249 million (1997: 248 million). This mainly relates to
investments in machines, plant and equipment for the production of machines and
the related supplies. An amount of 242 million (1997: 215 million) was
released from depreciation and disposals.
Geographical 1998 1997
spread of assets› million as % › million as %
Germany 1,044 18 1,037 19
Netherlands 1,006 17 906 17
United Kingdom 516 9 457 8
France 449 8 438 8
Rest of Europa 942 16 1,001 18
United States 1,588 28 1,395 26
Rest of the world 228 4 232 4
Total 5,773 100 5,466 100
Rentals and leases
› million
rental copying equipment
financial lease receivables
(including short-term
financial leases)
3000
2400
1800
1200
6o0
0
94 95 96 97 98
Report of the Board of Executive Directors
As the above table shows, the population of rented and leased machines and the
related service contracts generate a gross cash flow which is about 1.9 times (1997: 2.0
times) higher than their balance sheet valuation. The average remaining duration of
the lease contracts is about three years and that of the rental contracts is about one-
and-a-half years. The contractual revenue from rentals, service and financial leases
forms a stable basis for the future. The rental copying equipment and financial lease
receivables also have a high liquidity value.
The cash flows generated by rentals, financial leases and service also contribute
to the company’s financial strength.To illustrate this, the table on page 28 shows the
relationship between the cash flows expected to arise from the rental, financial lease
and service contracts existing at balance sheet date and the total interest-bearing
capital. The contractual cash flows have been reduced for this purpose by sub-
tracting the relevant cash outflows. The latter consist of the estimated service costs
and financial expenses that have to be incurred during the subsistence of the rental
and financial lease contracts. Calculated on this basis, the net resultant cash flow
from rentals, financial leases and service exceeds the total interest-bearing capital by
29% (1997 year end: 28%).
Interest-bearing capital At the 1998 year end the interest-bearing capital amounted to 2,377 million.
Of this amount, 1,894 million (80%) had been taken out over the long term.
27
1998 1997 › million
Contractual cash inflows from:Rental contracts 996 972
Financial leases and the related
service contracts 3,844 3,475
Total 4,840 4,447
Balance sheet value of:Rental copying equipment 530 483
Financial lease receivables 2,000 1,776
Total 2,530 2,259
Contractual cash inflows
› million
rental contracts
financial leases
and related
service contracts
5000
4000
3000
2000
10o0
0
94 95 96 97 98
Report of the Board of Executive Directors
Group equity Group equity increased to 1,688 million (1997: 1,631 million). This
increase was the result of earnings retained (+ 186 million), foreign currency
translations (– 48 million), optional stock dividend (+ 45 million),
conversion of debentures (+ 32 million), goodwill paid upon acquisitions
(– 153 million), issue of ordinary shares (+ 36 million), repurchase of
shares (– 30 million) and other movements (– 11 million).
Group equity as a percentage of the balance sheet total amounted to 29.3%
(1997: 29.8%); including the convertible subordinated guilder debenture loan,
whose conversion price is lower than the share price, this ratio amounted to 29.7%
in 1998 (1997: 30.9%). The ratio between interest-bearing borrowings and Group
equity was 141:100 (137:100 in 1997).
The shareholders’ equity per ordinary share, calculated on the basis of the
number of shares outstanding, amounted to 17.83 at the end of the financial
year (1997 year end: 17.55).
Cash flow The cash flow (net income attributable to holders of ordinary shares, plus deprecia-
tion) amounted to 654 million and was therefore 79 million higher than
in 1997. Expressed as a percentage of the interest-bearing capital the cash flow
amounted to 28% (1997: 26%). Cash flow per ordinary share, calculated on the
28
1998 1997 › f miljoen
Contractual cash inflows from:Rental contracts 996 972
Financial leases and the related
service contracts 3,844 3,475
Total 4,840 4,447
Expected cash outflows from:Operational cash flows 1,573 1,428
Financial expense (net) 212 162
Total 1,785 1,590
Expected net cash flows 3,055 2,857
Interest-bearing capital 2,377 2,232
Excess as a % 29 28
Cash flow and basic
earnings per share
amounts in guilders
per ordinary share of
1
cash flow per share
basic earnings per share
10
8
6
4
2
0
94 95 96 97 98
Dividend per share
amounts in guilders
per ordinary share of
1
1.25
1.00
0.75
0.50
0.25
0
94 95 96 97 98
Report of the Board of Executive Directors
29
basis of the weighted average number of shares outstanding, rose by 11% to
7.98 (1997: 7.19).
The cash flow calculated on this basis does not take account of the financial
lease repayments; these increased in 1998 by 31% to 626 million (1997:
479 million). If these financial lease repayments had been added to the cash flow, it
would have increased in 1998 by 21% to 1,280 million (1997: 1,054
million).
As can be seen from the above table, the cash flow calculated on this basis was
sufficient in 1998 to finance about 92% (1997: about 78%) of the net investments
in property, plant and equipment, rental copying equipment and new financial
lease receivables.
When comparing the cash flow with the investments a proper assessment is again
served by making a distinction between the industrial and the financial activities.
The cash flow from industrial activities amounted to 622 million (1997:
550 million). The aggregate of the (net) investments in property, plant and
equipment and in rental copying equipment amounted to 440 million (1997:
366 million). The cash flow therefore exceeded the investments by 182
million or 41% (1997: 184 million or 50%).
In the financial activities the cash flow, which comprises net income and finan-
cial lease repayments, amounted to 658 million (1997: 504 million).
The investments in new financial lease receivables amounted to 951 million
(1997: 855 million, excluding the acquisition of the lease portfolio in the
United States). The investments in the financial activities therefore exceeded the
cash flow by 293 million (1997: 351 million).
Credit facilities At the end of the financial year a total of 1,025 million of unused credit
facilities were available to the Océ Group, part of which is available under stand-by
credit contracts.
1998 1997 › million
Investments in:Property, plant and equipment (net) 192 191
Rental copying equipment (net) 248 175
New financial lease receivables 951 986
Total 1,391 1,352
Investments
› million
1500
1200
900
600
300
0
94 95 96 97 98
Report of the Board of Executive Directors
Océ Engineering Systems
In 1998 Océ maintained its leading position in the market for Engineering Systems
(large format printing and copying). Revenues, including service and supplies, in-
creased by about 6% to 1,700 million (1997: 1,610 million), more or less
keeping pace with the growing market. Of the increase in revenues, autonomous
growth represented 5%, whilst favourable exchange rate effects contributed 1%.
Profitability increased further, especially due to the growing share of the digital
products, the Océ 9800, Océ 9700 and Océ 9400, which are also generating a stable
flow of revenues from service, supplies and software upgrades.
In 1999 the development of revenues and net income will be further boosted
by the start of regular market shipments of the Océ 9600 digital printer/copier
which is also equipped with the advanced ‘next generation’ controller. The Océ
9600 is specifically targeted at the mid-volume segment where the machine will
meet a great need.
The development of Océ’s own new inkjet equipment for the colour segment is
progressing well. The technology developed as part of this project is ground-
breaking, which also implies that the exact progress of the development is difficult
to predict.
The share of diazo in revenues has declined further to around 10%. However,
Océ’s relative position in the diazo market (now only supplies and service) is ex-
cellent, thanks in part to efficiency measures taken to reduce costs systematically in
line with decreasing volumes.
Market Both in Europe and in the United States demand for digital copiers/printers
remained at a sustained high level. Placements of the Océ 9400 and Océ 9800
increased even further. In Europe Océ accounts for 75% of all placements of digital
wide format printers/copiers. In the United States this amounts to 60%.
Given the slight share of the Asian countries in Océ’s revenues, the economic
circumstances there had hardly any effect on revenues and net income.
The cooperation with Shacoh in Japan progressed well. To meet the specific
requirements of the Japanese market, Océ will be introducing machines in a fully
Japanese version there in 1999.
Analogue Analogue copiers still have an important role to play in providing extra capacity
alongside machines in networked environments. Besides, there is a continuing need
for reliable machines in smaller offices and decentralised locations. The total popu-
lation of diazo and analogue plain paper machines in the market is meanwhile
declining. However, the low volume ‘eco’-copier, the Océ 7050, continues to be
popular, as was evidenced by the further increase in the number of placements in
1998. Its high user-friendliness and short warming-up time still form the basis for a
highly competitive market position.
31
Engineering Systems:
Large format output for
optimal visualisation
and documentation of
plans for a grand design.
Report of the Board of Executive Directors
Digital Since the introduction in 1993 of the first digital printer/copier/plotter (the Océ
9500), Océ has taken a lead in the wide format market. That lead was further
strengthened with the launch of the Océ 9800 and the Océ 9400. The share of sales
accounted for by the number of placements in the digital segment of Engineering
Systems has meanwhile climbed to 85%. These machines have a very wide range of
applications. Fitted with finishing equipment and software applications, they serve
as multi-functional production units which scan, print and copy and in many cases
also play a central role in archiving. Because of the quality and advanced features of
the Océ 9600, which is due for launch in 1999, Océ expects to strengthen its
position further in this market.
Apart from excellent quality equipment, the availability of good software appli-
cations is of essential importance in this market now that the machines are to an
increasing extent operating within networks. A growing proportion of sales there-
fore consists of software applications and upgrades. During the year under review
Océ put the Reprodesk and Repro-Exec software applications on the market.
These are programs for controlling and managing document flows. In order to offer
solutions at the same high speed as the growth in the market’s demand for new
applications, Océ works closely together with partners that have a proven track
record in various specialised fields. In mid-1998 Océ acquired Groupware
Technology Inc. in the United States, a software developer which had already been
developing applications for Océ for some time in the area of archiving systems for
the large format market. A number of other applications that allow the equipment
to operate in conjunction with systems such as Autocad and Intergraph have also
given Océ a good link-up with this increasingly versatile market.
Océ has a strong direct sales and service organisation. This provides Océ with
good access to end-users, enabling it to anticipate market needs and translate them
into customised hardware and software solutions.
The potentially interesting market for display graphics (large format colour
prints that are mostly used for advertising purposes) is developing more slowly than
expected. Despite selling in much greater numbers, the Océ 5350 inkjet plotter for
graphics applications, which was introduced in 1997, still lagged behind sales
expectations.
Océ continues to invest in developing its own inkjet technology, focused on
higher speeds and sharper resolutions. In the high volume segment Océ seeks to
achieve a leading position.
32
The traditional appli-
cations for large format
printing and copying
have been maintained
but the quality has been
strongly improved and
countless new digital
facilities, such as
archiving, have been
added.
Report of the Board of Executive Directors
Océ Office Systems
In the market for Office Systems Océ’s revenues, including service and supplies,
increased by 19% to 2,833 million (1997: 2,376 million). Autonomous
growth amounted to 9%, acquisitions contributed 9% and 1% was accounted for
by positive exchange rate effects. The relatively strong autonomous growth also
resulted in an increase in net income. This was mainly attributable to the enormous
demand for the Océ 3165 digital printer/copier and, towards the end of the year,
for the Océ 3155 as well. As demand for analogue machines continued to be high,
the manufacturing facilities in Venlo experienced a record year, producing the
biggest number of machines ever.
Océ therefore grew faster than the market, especially in the United States. The
Océ 3165 digital printer/copier (once again voted Machine of the Year) had a major
share in that growth, but Océ’s position in this market was also strengthened
further by the undiminished interest for its analogue machines, the strong growth
in colour and the successful expansion of its Facility Services activities.
The shift from analogue to digital can also be clearly seen in the Office Systems
market, as can the shift in attention away from the machine itself and towards
complete solutions in digital environments. In the declining analogue market Océ
strengthened its position. The increased durability of the machines has brought a
further reduction in service costs. That durability is reflected, for example, by the
fact that the number of service employees only increased slightly, despite the growth
in machine numbers and a 12% increase in copying volume.
Market In the European markets of most importance for Océ the upward line continued
unabated.
In the United States Océ was able to increase its market share strongly via its
own direct sales organisation and via its distributor Ikon, which operates through-
out the . The improved market position, particularly in the high and very high
volume segments, was achieved thanks to the performances of Océ machines. Their
productivity and strong technology continue to be convincing arguments in this
market. The strengthened structure and greater customer focus of the sales organi-
sation also made a substantial contribution to the market success.
The adverse economic developments in Asia and Eastern Europe are hardly
affecting Océ’s results in the market for Office Systems. The company’s activities in
Asia are relatively small. Revenue figures in Central and Eastern Europe are
satisfactory, with the exception of exports to Russia.
33
The convenience in use
of Océ equipment is
legendary. Originals of
varying shapes and
quality can be effortlessly
copied in any required
numbers on a wide
variety of carrier
materials.
Report of the Board of Executive Directors
Analogue In a shrinking analogue market Océ succeeded in booking a further increase of 7% in
copying volume. The Océ 3045 and Océ 3055, primarily intended for the medium
volume, have acquired a solid position thanks to their reliable technology. Their
market share has increased further, in Europe as well as in the United States. Both
machines received awards from authoritative American trade journals during the past
year. The Océ 3045 was even chosen as the Editor’s Choice of Better Buys for Businessfor the third successive year. The Océ 3055, which was introduced in 1998, is based
on the same technology as the Océ 3045 but is faster and quieter and has a lower
energy consumption. In view of the great interest shown nowadays for the environ-
ment and health and safety factors, these are properties that are highly appreciated.
In the very high volume segments, too, Océ steadily reinforced its market
position. The Océ 3100 (100 cpm), launched in 1998, proved a worthy successor
to the successful Océ 2600. Ikon and Océ- were able to expand their market
shares in the United States.
Digital The share of digital products in Océ’s revenue in this market is now around 21%
(1997: 10%). This has also brought changes in the composition of the sales organi-
sation. To give customers the most effective advice possible, software and colour
specialists have meanwhile been added to all sales teams and service teams.
The digital Océ 3165 (to be supplemented this year by the Océ 3155, an
adapted version of the Océ 3165) was well received by the market. The Océ 3165
uses ImageLogic, a system developed by Océ which was initially only incorporated
in large format machines and which guarantees prints of a constantly high quality.
Since some two-thirds of the population of these machines now operate in networks,
Océ has built an effective presence in professional digital environments. As one of
the few suppliers operating world-wide, Océ is in a good position to serve the needs
of multinationals. Usage data have meanwhile shown that the Océ 3165 also finds
wide application as a printer.
The Océ 3165 and the Océ 3155 are increasingly also being used in the printing
industry. In this relatively new market for Océ both machines and printers
(with their much higher capacity) are supplied. In central repro environments Océ
sells more and more complete printing and copying solutions combined with soft-
ware applications and service. These solutions give customers integrated control
over their overall printing and copying processes.
In the market for colour printing and copying Océ has made good progress,
particularly by integrating its own, well-trained colour specialists in the sales and
service teams and by offering a broad range of speciality supplies. As a result of this
overall approach Océ succeeded in growing faster than the market.
34
The boundaries between
copying and printing
have been swept away
for good in Océ’s digital
printers/copiers. Once
included in a network,
the easy-to-operate
corridor copier proves to
be a versatile multi-user
printer/copier/scanner
offering numerous
special features.
As part of a successful cooperation agreement with Canon, Océ also offers a range of
colour copiers. Work on the development of Océ’s own colour copier is going well.
Good progress was achieved on bringing its all-in quality and operational reliability
to the required standard and also on preparations for its production start-up.
Facility Services In the period of a few years Océ’s activities in the area of Facility Services have
grown enormously. In Europe substantial autonomous growth has been achieved
and, following the acquisition of Archer Management Services at the end of 1997,
these activities have also expanded further in the United States. An estimated 60%
of the revenue in Facility Services relates to income from prints and copies pro-
duced by Océ on the customer’s premises, whilst the remainder stems from related
activities such as postal department operations. The additional revenues were
chiefly booked with customers to whom Océ had previously not been supplying
printing and copying services.
Océ Printing Systems
The business unit Océ Printing Systems, which combines the production, sale and
service of printers for both the medium volume and the high volume, again had a
very successful year, recording a further increase in revenue and net income.
In Europe and the United States there was a slight gain in market shares. Printing
Systems grew by 5%, achieving revenues of 1,533 million (1997: 1,454
million). Autonomous growth amounted to 4% and exchange rate effects
contributed 1% to the increase in revenue. Measures taken to improve efficiency
helped bring a further reduction in service costs.
Market In the market for high volume printing on continuous-feed paper Océ maintained
its leading position.
In the Print on Demand market and in the medium volume Océ gained share.
The Print on Demand market, which is fast growing in importance, offers Océ
good opportunities in both the medium and the high volume segment. Since the
printing industry traditionally uses complete configurations for this application,
including binding and finishing equipment, Océ has opted to supply strongly
customer-focused, integrated solutions which also incorporate third-party
equipment and applications.
Océ is well prepared to meet the need for centralised and decentralised(distributed) printing in large companies thanks to its Company Wide Printing
concept. This concept, developed several years ago, involves the use of networks of
mainly medium volume printers whose software applications allow them to
35
Report of the Board of Executive Directors
The printer is taking
over more and more of
the tasks of a small offset
press. The benefits are
that changes are possible
until the very last
minute and that it is
never necessary to print
more than the required
numbers.
perform various tasks. To a growing extent the concept is being successfully applied
in larger business corporations, most of which already have an installed network.
Demand for the recently launched Océ 158 cut-sheet printer, with a speed
of 158 pages per minute, has been growing steadily. In 1999 this will be joined by
the Océ 110 , with a speed of 110 pages per minute. These high volume
machines have a modular construction and can be modified in line with the
customer’s specifications. Via upgrades they can be adapted to keep pace with the
fast-moving developments in the various production environments.
In 1998, in response to the growing market demand for application software,
Océ acquired participations in two businesses: InterFace Connection (Munich) and
Siemens Software .. (Namur, Belgium), active in the field of Print on Demand,
distributed printing, and archive and workflow management systems.
New products At the end of last year Océ presented the fastest system in its range, the Océ
1060 , which has a speed of 1,060 pages per minute. The machine will be
brought to market early in 1999. Also at the end of last year the Océ (-
) 8090 was introduced. This machine, with an output of 700 pages
per minute, features a print quality of 600 dpi to meet the needs of printing
industry customers for a higher resolution.
With its Océ () 200 , Océ has long been supplying a
continuous-feed printer with optional highlight colour. In 1998 Océ launched a
cut-sheet printer that combines speed with highlight colour: the Océ 158 .
Another new launch was the Océ 88, a mid-volume continuous-feed printer,
consisting of a bought-in engine and an Océ-developed controller. Its special
feature is image fixing via a flash fusing system. As the heat it generates is very
limited, the machine can also process heat-sensitive paper and plastic materials.
Deliveries of these machines were well under way in 1998.
All Océ’s continuous-feed printers are now being fitted as standard for the
transport of paper without edge perforation. This also brings savings in paper and
enables printing across the full paper width. Paper costs and the need for finishing
operations are thus substantially reduced. A further benefit is that a broader range
of paper grades can be used.
Another strength of Océ’s high volume printing equipment is that it can run
under all common printer languages, which makes it easy for customers to
incorporate Océ equipment in their specific environment. With the development
of the printer language, Océ now offers full compatibility with the most
important third-party equipment.
36
Report of the Board of Executive Directors
Fast, error-free and with
a high print quality,
Océ’s high speed printers
produce hundreds of
thousands of impeccable
prints each day anew.
Every print is a unique
document that radiates
the quality image of the
sender.
Report of the Board of Executive Directors
Print on Demand The product range for Print on Demand was strongly expanded during the year
under review, with the result that Océ meanwhile occupies a prominent position as
a supplier in this market. The new Océ printer family is speci-
fically targeted at this market. The systems supplied by Océ are principally used in
the printing industry for job production print solutions. For example, user in-
structions for mobile telephones, kitchen appliances and many other products are
produced ‘just in time’, with updated contents where required. The publishing
industry, too, is increasingly using digital print solutions to produce small to very
small print runs of, say, books, training manuals and loose-leaf publications.
Apart from the print quality (600 dpi), clear success factors in the Print on
Demand market are the individual system solutions, offering the customer complete
configurations that can also encompass finishing, binding and scanner functions
and can fit seamlessly in existing system environments. Of the revenues in this
market, less than half is generated by the machines; the greater part stems from
software applications, consultancy and service. To supplement the range for this
market, Océ has entered into a long term, world-wide partnership with Agfa to co-
market Agfa’s Chromapress, a high volume, full colour production system. The
cooperation in the areas of sales, service and development should bring a strong
improvement in the market position of both businesses.
Organisation At the beginning of 1998 the national organisation structure and reporting lines of
the business unit were brought fully into line with the existing structure within Océ.
As a consequence, the Printing Systems sales and service organisation in Germany
has been amalgamated with the sales and service organisations for Engineering
Systems and Office Systems of Océ-Deutschland in Mülheim.
Océ Imaging Supplies
In the market for Imaging Supplies Océ’s revenues, including those of Arkwright,
increased in 1998 by 3% to 928 million (1997: 904 million). These
revenues form part of the revenues of the Engineering Systems, Office Systems and
Printing Systems business units.
During the year the main focus was on improving the result via more accurately
targeted sales efforts, a rationalisation of the product range and a reduction of the
cost base. The year under review brought a hefty volume increase for large format
plain paper grades and inkjet papers but, due to continuing price decreases, this
volume growth was not reflected to the same extent in money terms. In these seg-
ments, where Océ operates with very low cost prices, a further reduction in
distribution costs should lead to an improvement in the result.
37
The quality of the
printing and copying
process is reflected in the
print itself. Océ’s broad
range of imaging
supplies guarantees
perfect interaction
between machine and
carrier material.
Report of the Board of Executive Directors
Sales of supplies for display graphics grew strongly but lagged slightly behind
expectations. This was, however, in line with what were likewise lower than ex-
pected sales of machines for that market.
Ever since the period when diazo was still the most common technology, Océ
has had a very strong presence in the market for wide format carrier materials. In
the space of ten years, however, the character of the market has changed completely.
Following the introduction of plain paper copiers in this sector, which resulted in
the disappearance of most of the diazo market, the traditionally high average
margin on supplies came under pressure. Various actions, including the creation of
the special Imaging Supplies unit and the targeted development of new materials
plus the implementation of a number of cost reduction measures, have helped to
change this situation. At the moment, therefore, Océ is one of the major suppliers
of both smaller and larger format materials for copying and printing equipment
and occupies a prominent position in speciality materials. Particularly for display
graphics, business graphics and colour copying Océ has built a broad and very high
quality range of supplies.
Market Last year Océ succeeded in further enhancing its presence in the Imaging Supplies
market. A particularly valuable contribution was made by the increased synergy
between the Imaging Supplies unit and the other Business Units which handle the
sale of machines. Apart from its direct sales, Océ also works with third-party
distributors in its bigger national organisations. The improvement in the result was
principally attributable to cost reductions brought by the further automation and
concentration of European production facilities, mainly in our supplies
manufacturing units in Venlo and Châteauroux (France).
Considerable savings on logistics costs are being achieved by contracting out the
relevant activities to specialised businesses. For 1999 a plan has meanwhile been
drawn up for a further substantial reduction of the logistics costs for Imaging
Supplies, including packaging materials. Part of the production in the United States
was also centralised last year within one organisation, Arkwright Inc.
Large format Sales of large format paper for use on the Océ machines installed in the market grew
further in1998.For example,Océnowsupplies virtually100%of thepaper require-
ments for theOcé9800. Inaddition,Océ isbooking good progress specifically in the
inkjet market with supplies of materials for third-party equipment installedon the
premisesof Océcustomers.This is partly the result of the targeted sales efforts, but it
is also attributable to the good quality of Océ’s own coated paper and films.This has
helped make Océ the biggest supplier of inkjet papers in Europe at the moment.
Small format In the smaller formats Océ is recording much success with its speciality materials
for business graphics. The greatly increased penetration of colour printers in office
environments has created a high demand for speciality paper, coated paper and
various film materials for overhead projection.
Arkwright The wealth of know-how that has been built up within Océ’s American subsidiary
Arkwright, especially in coating techniques for a wide spectrum of carrier materials,
provides Océ with an excellent entry into this high-tech market. The quality and
stability of the materials produced by Arkwright is universally acknowledged.
As a result, the business has built up a strong position as supplier for various
international brands.
38
Report of the Board of Executive Directors
Financial leases
Océ primarily uses financial leases as an important commercial instrument.
Financial leases form an integral part of Océ’s product offerings and enable Océ to
provide the customer with a package consisting of service, supplies and financing.
This ‘one-stop shopping’ concept has many advantages both for the customer
and for Océ and often results in preferred supplier status for the entire duration of
the contract. Such an arrangement provides Océ with a constant flow of profitable
revenue from interest payments, maintenance and supplies.
The financial lease contracts which Océ offers reveal a wide variety and great
flexibility and are tailored to each customer’s specific needs and cash flow.
Océ’s strength lies in the combination of leasing and possibilities for remarketing.
The company operates remanufacturing and remodelling programmes which ex-
tend the technical and economic lifetime of its machines. As a result Océ can keep
its machines on the market for longer periods, both via contract extension and via
placement with other customers.
The duration of the financial leases is virtually identical to the depreciation
period for the machines they relate to. The risk in respect of their residual value is
therefore lower than in the case of rental contracts, which have a shorter duration.
At the moment when the financial lease contract is signed, the selling price of the
machine is recorded as sales in the form of the discounted value of the financial
lease. During the subsistence of the contract the service income and the interest
received are booked to revenue. In the case of rentals the rental instalments are in-
cluded in revenue for the reporting period in which they fall due.
The debtors risk is slight thanks to the spread of customers across many
customer categories in many countries and thanks to the close relationship that
exists with customers via the provision of technical service, but also because Océ
can realise the value of the machines when they are placed back on the market.
In 1998 47% (1997: 45%) of all direct sales of machines were based on finan-
cial leases. In Office Systems this percentage was considerably higher and in
Engineering Systems and Printing Systems it was considerably lower.
Interest from financial leases went up by 22% to 198 million (1997:
163 million). The book value of financial lease receivables increased by 13% to
2,000 million, representing 35% of the total invested capital at the 1998 year
end (1997 year end: 32%).
In view of the average interest rate of 10.5% (1997: 10.8%) achieved on the
lease portfolio, financial leasing makes a good contribution to the result.
The decrease in the interest percentage is a consequence of the lower interest rates.
The return on financial leases is attractive, representing 10.9% (1997: 10.3%) of
average shareholders’ equity.
39
Océ’s is one of the
technology leaders in
Europe. In the cradle of
the current success
research efforts focus on
the building blocks for
excellence in the next
millennium.
Report of the Board of Executive Directors
Research & Development (R&D)
Mega-trends such as colour, digitisation and the environment and several specific
areas that Océ concentrates on (wide format, very high volume) mean that Océ’s
covers a broad-ranging and complex field. With its expansion into digital
technologies Océ has made major research efforts in recent years, culminating in a
number of machines that have been decisive for the market position that the
company now holds. Océ currently has over 1,600 employees (about 8% of
total workforce), spread over a number of research facilities in various countries.
Each year Océ invests around 6% of its revenue in Research & Development. This
figure does not include the development efforts focused on manufacturing
operations and on penetrating new markets.
Cooperation After digital machines have been launched, their development – unlike that of ana-
logue machines – is basically never completely finalised. Digital machines contain a
great deal of embedded software and also use a number of software applications that
are regularly updated and upgraded. For this means that it is not a matter of
developing successive models of a machine but more of working to supply a constant
succession of major and smaller software releases. In many cases those new releases
are also installed on the customer’s existing equipment to give it greater function-
ality. This is the reason why works in intensive cooperation with external
specialists, for example with software developers, to devise new products. To guar-
antee that the right products are brought to market with sufficient speed, the
organisation has been realigned with effect from 1999.
Océ is also represented in the relevant centres of expertise, including the Dutch
‘Top-Class Technology Institutes’ for polymers and telematics. This is important
for structuring projects aimed at broadening the company’s technology base and at
shortening project lead times. It also reinforces the profile of Océ’s on the
labour market.
Organisation Océ’s largely consists of young people who feel attracted by the leading-edge
nature of the research work but also by the open structure and by working together
in multidisciplinary teams. To meet the great need for trained software developers,
Océ launched its own training programme in 1997. All those who took part in that
programme are meanwhile working within the business. A new group of partici-
pants started on the programme last year. Because of this and other initiatives Océ
continues to fulfil the high standards that are required to ensure constant growth.
40
In 1998 some 250 new employees strengthened the ranks of the organisation.
In addition, Océ acquired the American software developer Groupware Technology
Inc. and took a participation in the Belgian company, Siemens Software ..,
a Siemens-Nixdorf activity which specialises in the development of application
software.
Cooperation between the various establishments within Océ (in the
Netherlands, France, Germany and the United States) is gradually becoming
smoother, despite the sometimes wide differences in culture between the various
countries. As each department also has its own specific characteristics and skills,
little overlap exists. Where possible, knowledge about new products and tech-
nologies is combined within joint projects.
Last year in Venlo moved into a new building which combines an
inspirational working environment with ultra-modern equipment. Vibration-free,
acoustic rooms in the new premises also enable highly specialised research to be
carried out in-house.
Emphasis on practicality In the development of new machines has traditionally given strong priority to
their practicality and convenience of use. Océ has developed a highly identifiable
approach to achieve this, with an emphasis on the ‘human interface’. By contrast
with an often overwhelming and therefore confusing array of possibilities offered
by many machines, especially because of the use of digital technologies, Océ has
kept faith with simplicity. This benefits the operational deployment of the machines
in the workplace. Océ aims to provide customers with maximum support on the
basis of its thorough knowledge of the process. The hardware and its use form the
basic starting point, whilst digital information technology provides an excellent
auxiliary resource. Océ seeks to achieve completely open structures and optimum
connectivity with the main suppliers of specialised software. The great success now
enjoyed by Océ products ensures that those suppliers themselves are also interested
in guaranteeing that their software will link up with Océ equipment.
Safety, Health and the Environment
Safety, health and the environment are important factors in all Océ’s activities.
The company focuses on the protection of people (employees, customers and others)
and on the protection of the environment (water, soil, air and raw materials) and
seeks to achieve constant improvements in these areas. Océ does this by reducing
structural risks in the areas of product safety and the environment to an acceptable
level.The entire chain of activities (designing products and processes, manufacturing,
marketing, maintenance, recovery, re-use) is carried out in line with the legal
regulations and the standards set by seals of approval. On top of these come the
additional requirements set by Océ itself. In this way Océ keeps ahead of develop-
ments in society in ideas about product safety and the environment.
Océ carries the internationally recognised / and safety seals of ap-
proval on all its products. It also checks the safety of all related supplies and prevents
avoidable environmental impact by using environmentally friendly materials and
by reducing waste to an absolute minimum.
41
Report of the Board of Executive Directors
Report of the Board of Executive Directors
This approach is based on a number of eco-themes formulated by Océ in the areas
of energy, noise and re-use of paper. These include promoting paper savings via full
speed duplex printing, avoiding substances that are environmentally harmful and
preventing waste by ensuring the most effective re-use of machines, components
and materials. As regards standards for office equipment Océ complies with the
requirements set by the environmental seals of approval Energy Star (United States)
and Der blaue Engel (Germany).
To ensure that the life cycle of products complies fully with the ‘cradle-to-
cradle’ principle, a product safety and environmental care system is being developed
in which all tasks, responsibilities and agreements are laid down as well as further
steps for improvement. This links up with the 14000 certified environmental
care system that has been in place in the production facilities in Venlo for the past
few years. Océ participates in various national and international safety and environ-
mental bodies and contributes in this way to the establishment of internationally
recognised standards.
An Océ brochure on the corporate safety, health and environmental policy is
available on request.
Manufacturing and Logistics
The greatly increased demand for Océ machines has made heavy demands on the
manufacturing facilities and, as a consequence, on the internal and external logistics
operations. Although production of some successful series was virtually doubled,
this did not present any insurmountable obstacles. All manufacturing facilities
delivered impressive performances. To cope with the extra workload Océ deployed
many temporary staff.
Machines The high level of activities served as a good litmus test for the new form of supply
logistics. These services are now performed by third parties who supply most of the
components to the production line on a ‘just-in-time’ basis. During the year under
review a start was also made on supplies based on the ‘pull’ principle. This means
that production decides on the call-off of components on the basis of actual, instead
of planned usage, bringing an even further reduction in intermediate stocks. In the
manufacture of the machines the specific wishes of customers are more and more
often being taken into account on the production line itself. This ‘customised’ pro-
duction sets different requirements for the manufacturing organisation and also
makes the logistics system increasingly important. Océ is now investigating whether
configurations to customer specifications can be introduced in more locations.
A pilot study will shortly be started in the United States.
42
At the end of their
economic liftetime some
90% of Océ machines
return to the factory for
recycling. Many compo-
nents still show no signs
of wear-and-tear after
many years of usage and
are re-used in new or
reconditioned machines.
In close cooperation
with specialised logistics
services providers, Océ
delivers the requested
supplies and components
to the customer promptly.
This guarantees an un-
interrupted production
process.
Report of the Board of Executive Directors
43
In view of the strong increase in production, the subject of quality control received
extra attention. As part of the efforts to achieve all-in quality assurance, quality
checks on the production lines have been stepped up and several activities have also
been initiated to give a further stimulus to employee commitment and motivation.
For some time a pilot project has been under way with the ultimate goal of giving
assembly line operatives greater independence in their work as well as greater
responsibility for achieving production targets and safeguarding a constant, high
quality.
Components and materials The increased production of machines also had its influence on the production of
the components and materials which for strategic reasons are exclusively manu-
factured by Océ itself. Production of photoconductors was strongly boosted to
meet the needs of both manufacturing and service operations. The high precision
and strictly controlled conditions needed for the production of an Organic Photo
Conductor () mean that further upscaling is not a simple matter. This led to
modifications in the processing methods and resulted in substantial investments in
equipment in the plant, which came on stream in 1996. Besides, due to the
increase in the copying volume on older machines, photoconductors based on zinc
oxide are still in full production. Output of the toner plant has more than doubled
over the past four years. Given the current level of demand, further adaptions are
urgently needed. A further expansion of the plant is also scheduled for 1999.
Recycling For quite some time Océ has been focusing on the re-use of (components from)
machines returned from the market. In Europe around 90% of all machines are re-
turned and are then stripped down, cleaned and taken apart in the special recycling
plant. Each machine contains a large quantity of usable parts and components
which are indistinguishable from new ones and can therefore be re-used in new and
reconditioned machines. Even in the design stage of new machines makes
allowance for the use of recycled parts and complete components. Partly as a result
of this, the recycling plant has become one of the biggest suppliers of the Océ
production units.
Purchasing & Logistics During 1998 a major step forward was taken towards the centralisation of the
European distribution logistics for the three flows of goods: supplies, machines and
components. Océ now delivers directly to the customer, in close cooperation with
logistics service providers who have been offering activities of this type for quite
some time. This brings a substantial improvement in inventories turn rates, leading
to further savings in storage and handling costs.
During the year under review Océ decided to change its strategy in the area of
purchasing. The company intends to reduce the number of suppliers and also aims
to buy in more sub-assembly units. Océ will be guided in these efforts by the overall
quality of the suppliers in terms of engineering capacity, core competencies, the role
that the suppliers can play in creating greater added value and their potential to
support Océ in future developments.
Personnel & Organisation
Recruitment, training and labour mobility were the principal themes in Océ’s
human resources activities in 1998. Océ has a good reputation as an employer, which
means that in most disciplines there are no problems in recruiting qualified
personnel. For the same reason staff turnover is not high: less than 4% in Venlo;
and in Poing (Germany) even less than 2%.
Just like other businesses, however, Océ is confronted with a shortage of ex-
perienced Information Technology specialists. Océ’s 1997 initiative to set up its
own training programme has provided a partial solution for this.
The number of Océ employees has grown strongly to almost 21,000, chiefly as a
result of the acquisition of Archer Management Services.
Education and Training To make optimum use of the capacity required for education and training, this
need is increasingly being met on a ‘need-to-know’ basis in which employees or
senior staff can to a large extent compile their own training programme. Much use
is made of computer-based training in which employees can put together their own
study package and learn at their own pace. Especially for employees in the national
organisations this is a time-saving solution. Employees are also encouraged in
various ways to take part in these training courses in their own time. Océ’s own
international training centre, the , is – as always – in charge of the implemen-
tation of both the classical and the computer-based training courses. The more
general training courses that are not specifically Océ-related are also contracted out
to specialised training institutes. These represent a substantial share of the total, as
increasing attention has been devoted in recent years to the training of management
skills and the skills needed for the more consultancy-focused role that many Océ
employees fulfil in their contacts with customers.
Mobility The programme started several years ago to encourage mobility within middle and
senior management is being vigorously continued. In Venlo alone the programme is
already applicable to just under 300 people.
44
Report of the Board of Executive Directors
A healthy working
climate, attention for
employees and
challenging career
prospects: the
cornerstones of a
creative and productive
Océ organisation.
Distribution of 1998 1997
employees bygeographical areas number as % number as %
Netherlands 4,155 20 4,015 23
Germany 3,110 15 3,021 17
France 1,578 8 1,549 9
United Kingdom 1,239 6 1,330 7
Rest of Europe 3,449 16 3,303 19
United States 6,369 30 3,418 19
Rest of the world 1,078 5 1,118 6
Total 20,978 100 17,754 100
Distribution of 1998 1997
employees bytypes of work number as % number as %
Research &
Development 1,614 8 1,527 9
Manufacturing and
Logistics 3,878 19 3,996 22
Facility Services 3,237 15 453 3
Sales 4,885 23 4,608 26
Service 5,415 26 5,312 30
Accounting and
other staff 1,949 9 1,858 10
Total 20,978 100 17,754 100
Report of the Board of Executive Directors
One of the most conspicuous changes in recent years has been the enormous in-
crease in the scale of Océ’s business operations. This can be seen in the big numbers
of machines produced each day, in the breadth and depth of the product range, in
the enormous number of customers served by the company and – as an end-result –
in the incredible numbers of square metres of paper that pass through Océ
machines every day. All these are a multiple of what they were ten years ago.
But during the same period the number of employees has not even doubled.
Despite this growth and despite the pressure that the bigger scale of the business
has brought for the organisation, the care and attention devoted to each and every
product has remained constant. Neither Océ’s products and services nor the way
the company interacts with its customers and suppliers contain any reflection of the
wholesale approach that the increased production volume might be expected to
bring.
45
Only a short while ago the editors of the magazine Better Buys for Business stated
in the jury report in which they gave the Océ 3045 the accolade of Editor’s Choicefor the third consecutive year: ‘The Océ 3045 is, above all, a classic Océ’. That short
sentence reflects a whole world of appreciation that is directly attributable to the
dedication of Océ people – both inside and outside the business. For that dedi-
cation we would like once more to express our appreciation and gratitude.
Venlo, February 17, 1999
The Board of Executive Directors:
J.C.M. Hovers, chairmanJ.F. Dix
R.L. van Iperen
H.J.A.F. Meertens
G.B. Pelizzari
46
Report of the Board of Executive Directors
1998 1997 1998 1997
Net sales 3,627,714 3,156,430 1,646,185 1,432,326
Rentals and service 2,240,084 2,120,401 1,016,506 962,196
Interest from financial leases 198,011 162,723 89,853 73,840
Total revenues 6,065,809 5,439,554 2,752,544 2,468,362
Cost of sales 2,015,160 1,759,876 914,440 798,597
Cost of rentals and service 1,472,093 1,401,331 668,007 635,896
3,487,253 3,161,207 1,582,447 1,434,493
Gross margin 2,578,556 2,278,347 1,170,097 1,033,869
Selling expenses 1,368,587 1,227,589 621,038 557,056
Research and development expenses 374,878 334,642 170,112 151,854
General and administrative expenses 294,739 274,837 133,747 124,715
2,038,204 1,837,068 924,897 833,625
Operating income 540,352 441,279 245,200 200,244
Financial expense (net) 134,467 117,395 61,018 53,272
Income before income taxes, equity in income of unconsolidated companies and minority interest 405,885 323,884 184,182 146,972
Income taxes 117,780 81,813 53,446 37,125
Income before equity in incomeof unconsolidated companies and minority interest 288,105 242,071 130,736 109,847
Equity in income of
unconsolidated companies 1,807 247 820 112
Income before minority interest 289,912 242,318 131,556 109,959
Minority interest in net income of
subsidiaries 5,525 5,618 2,507 2,549
Net income 284,387 236,700 129,049 107,410
Dividend preference shares 7,825 7,825 3,551 3,551
Net income attributable to holders of ordinary shares 276,562 228,875 125,498 103,859
49
Consolidated Statements of Operations
› 1,000 pro forma
› € 1,000
Assets 1998 1997 1998 1997
Tangible fixed assets Property, plant and equipment 982,350 997,535 445,771 452,662
Rental copying equipment 530,410 483,464 240,690 219,386
Investment grants –95 –212 –43 –96
1,512,665 1,480,787 686,418 671,952
Financial fixed assets Unconsolidated companies 8,066 8,187 3,660 3,715
Financial lease receivables 1,223,371 1,150,273 555,141 521,971
Other long term assets 47,377 42,482 21,499 19,277
1,278,814 1,200,942 580,300 544,963
Current assets Inventories 806,436 798,802 365,945 362,481
Accounts receivable 2,077,858 1,887,274 942,891 856,408
Prepaid expenses 57,336 36,119 26,018 16,390
Cash and cash equivalents 40,315 61,914 18,294 28,095
2,981,945 2,784,109 1,353,148 1,263,374
Total assets 5,773,424 5,465,838 2,619,866 2,480,289
50
after net income appropriation Consolidated Balance SheetsNovember 30
› 1,000 pro forma
› € 1,000
Liabilities 1998 1997 1998 1997
Group equity Ordinary shares 83,173 80,686 37,742 36,614
Priority shares 3 3 1 1
Financing preference shares 20,000 20,000 9,076 9,076
Paid-in capital 1,115,098 1,049,601 506,009 476,288
Revaluation reserve 82,105 99,100 37,258 44,969
Legal reserve 3,260 2,234 1,479 1,014
Other reserves 296,010 289,182 134,324 131,225
Total shareholders’ equity 1,599,649 1,540,806 725,889 699,187
Minority interest 88,820 90,054 40,305 40,865
1,688,469 1,630,860 766,194 740,052
Long term liabilities (provisions) 469,627 502,925 213,107 228,217
Long term debt 1,893,505 1,650,345 859,235 748,894
Current liabilities Short term debt 483,661 582,057 219,476 264,126
Other liabilities 663,715 567,353 301,181 257,454
Accrued liabilities 478,384 430,682 217,081 195,435
Deferred income 96,063 101,616 43,592 46,111
1,721,823 1,681,708 781,330 763,126
Total liabilities 5,773,424 5,465,838 2,619,866 2,480,289
51
Consolidated Balance Sheets November 30 › 1,000 pro forma
› € 1,000
1998 1997 1998 1997
Cash flow from operating Net income 284,387 236,700 129,049 107,410
activities Adjustments to reconcile net income to
cash flow generated by operating activities:
Depreciation 377,506 345,969 171,305 156,994
Net change in rental copying equipment –248,325 –175,247 –112,685 –79,524
Financial lease receivables –110,922 –168,835 –50,334 –76,614
Equity in income of
unconsolidated companies –1,150 351 –522 159
Increase in long term liabilities
(provisions) –44,579 71,333 –20,229 32,370
Net change in other working
capital accounts* –87,906 –157,122 –39,890 –71,299
Total cash flow from operating activities 169,011 153,149 76,694 69,496
Cash flow from investing Capital expenditure:
activities Additions to property, plant and
equipment –249,111 –248,078 –113,042 –112,573
Other investments –4,673 –2,634 –2,120 –1,195
Proceeds from sale of property,
plant and equipment 57,207 57,182 25,959 25,948
Investment grants received – 13 – 6
Released investment grants related
to property, plant and equipment –117 –220 –53 –100
Acquisition of unconsolidated companies –2,251 – –1,021 –
Proceeds from disposition of
unconsolidated companies 3,095 – 1,404 –
Movement from unconsolidated companies
to consolidated companies – 28,486 – 12,926
Aquisition net asset value 14,196 –228,399 6,442 –103,643
Goodwill –153,030 –69,969 –69,442 –31,750
Increase (decrease) in minority interest –1,234 3,421 –560 1,552
Total cash flow from investingactivities –335,918 –460,198 –152,433 –208,829
52
Consolidated Statements of Cash Flow
* See page 53 for the specification of Net change in other working capital accounts.
› 1,000 pro forma
› € 1,000
1998 1997 1998 1997
Cash flow from financing Long term debt:
activities Proceeds from long term debt 375,469 515,448 170,381 233,900
Repayment of long term debt –93,226 –86,640 –42,304 –39,315
Borrowings and current portion
of long term debts –98,593 –43,827 –44,740 –19,888
Conversion of convertible bonds into
share capital –31,913 –20,206 –14,482 –9,169
Converted into share capital 31,913 20,206 14,482 9,169
Issue of new shares 36,071 – 16,368 –
Repurchase of shares –30,012 –4,857 –13,619 –2,204
Dividends paid –99,627 –65,630 –45,209 –29,782
Optional dividend 52,855 27,267 23,985 12,373
Effect of exchange rate changes 530 –38,577 240 –17,505
Total cash flow from financing activities 143,467 303,184 65,102 137,579
Changes in cash and cash equivalents –23,440 –3,865 –10,637 –1,754
Specification of Net change in other working capital accounts:Inventories 4,093 24,682 1,857 11,200
Accounts receivable (excl. financial leases) –39,991 –128,123 –18,147 –58,140
Financial leases –150,389 –147,071 –68,243 –66,738
Prepaid expenses –20,684 –4,172 –9,386 –1,893
Trade accounts payable 28,137 40,787 12,768 18,508
Income taxes 36,152 25,392 16,405 11,522
Value added taxes, social
security and other taxes payable 13,883 –18,040 6,300 –8,186
Pension liabilities –2,367 2,543 –1,074 1,154
Other liabilities 12,183 –22,410 5,528 –10,169
Accrued liabilities 36,630 38,511 16,622 17,476
Deferred income –5,553 30,779 –2,520 13,967
Balance –87,906 –157,122 –39,890 –71,299
53
Consolidated Statements of Cash Flow › 1,000 pro forma
› € 1,000
Introduction
The following summary of significant accounting principles is intended as a guide
in interpreting the financial statements. There has been no change in the
accounting principles since the previous financial year.
The stated euro amounts are pro forma and are calculated using the fixed rate as
at December 31, 1998 of 1 euro = 2.20371.
The Group’s financial year commences on December 1 and closes on November 30 of thesubsequent year.
Principles of consolidation
The consolidated financial statements combine the financial data for Océ .. and its
subsidiaries. The financial data of subsidiaries are fully consolidated; the minority
interest is stated separately. A company is considered to be a subsidiary if Océ
directly or indirectly holds a majority controlling interest in it.
The financial data of a company joining the Océ Group in the course of a
financial year are consolidated from the date of the Group’s entitlement to that
company’s results.
If the value of the acquisition exceeds the net asset value based on our accounting
principles, the difference, being the goodwill paid, is charged upon acquisition to
the Shareholders’ equity.
The principal companies affiliated to the Group are listed on pages 83 and 84 of
this report. A number of affiliated companies of minor importance have been
omitted by virtue of the provisions of Article 379, para. 2c, Book 2 of the Dutch
Civil Code.
Balance sheet items of foreign subsidiaries are translated into Dutch guilders.
As the opening assets and movements in assets during the year are recalculated on
the basis of the closing exchange rate at the end of the reporting period, differences
arise as compared to the calculation based on the exchange rate used for the
previous period. Such differences are charged against or added to the Shareholders’
equity (under Accumulated translation adjustment).
Statement of operations items of foreign subsidiaries are translated into Dutch
guilders at the average exchange rate during the reporting period. The result cal-
culated on this basis differs from that calculated on the basis of the closing exchange
rate for the reporting period. This difference is debited or credited directly to the
Shareholders’ equity (under Accumulated translation adjustment).
Consolidated Statements of Operations
Revenues These are the proceeds from the sale of goods and services to third parties, excluding
turnover taxes. Receipts from sales also include the receipts from the financial
leasing contracts concluded during the financial year. Interest income arising from
these contracts is included under total revenues.
Receipts from rental and service contracts for equipment are included in
revenues as far as they relate to the reporting period. Where rental and service
contracts have been invoiced in advance, the relevant amounts are shown in the
balance sheet under ‘Deferred income’.
54
Summary of Significant Accounting Principles
Costs Consumption of raw materials and other cost items, except depreciation on buildings
and production facilities, are based on historic cost.
Depreciation on fixed production assets is charged at a fixed percentage of the
lower of the replacement value or the value to the business (current value) of the
relevant asset. Depreciation on rental copying equipment is charged at a fixed
percentage of the all-in cost. Government grants relating to property, plant, equip-
ment and rental copying equipment are deducted from the depreciation costs of the
aforementioned items.
Provisions are set aside for risks connected with business operations.
Research and development Expenditure on research and development, including purchased know-how, is
expenses charged directly to income.
Development credits and subsidies Development credits received from the government are subject to a contingent repay-
ment liability. This contingent liability, to which a contractual mark-up is applied
each year, is not included in the balance sheet. According as the relevant projects
prove successful, the liability ceases to be contingent in nature and a real liability
arises. A provision to cover these liabilities is set up in the year in which the liability
arises. The actual repayments fall due pro rata to the revenues achieved on the
relevant product. These repayments are charged to the provision for development
credits. Each year the balance of credits received and the repayment liabilities that
have arisen in respect of successful products are included in the results under
‘Research and development expenses’.
Subsidies received from the government are included in the statement of
operations as an income item in the year of the entitlement thereto.
Financial expense (net) Besides interest received and interest paid, also expenses relating to raising of loan
capital are included. The effect of interest rate instruments and interest on loans are
also included under this heading.
Income tax Income tax is calculated on the commercial results at the rates applicable in
the various countries. This method implies that provisions are made for deferred
income taxes. The entitlement to loss compensation is taken into consideration in
so far as there is a reasonable expectation that it can be realised. Allowance is made
for non-offsettable dividend withholding tax at the moment of dividend distri-
bution by an affiliated company.
55
Summary of Significant Accounting Principles
Consolidated Balance Sheets
Assets and liabilities are included at face values, unless stated otherwise.
Foreign currencies Receivables and payables denominated in a foreign currency are translated into
local currency at the exchange rate ruling at year end. In so far as the exchange
results include results on forward exchange contracts relating to the positions of
subsidiaries, they are recorded under Shareholders’ equity. The other differences are
taken to the statement of operations, with the results on forward foreign exchange
contracts being included pro rata to the cash flow income.
Property, plant and equipment Property, plant and equipment are valued at the lower of the replacement value or the
value to the business (current value). In determining the replacement value, the
nature and location of the assets involved are taken into consideration. Adjustments
to replacement value are credited or debited directly to Shareholders’ equity
(Revaluation reserve) after deducting deferred taxes. Deferred taxes are not taken
into account regarding adjustments to replacement value of land.
Rental copying equipment These are valued at the all-in cost.
Unconsolidated companies These are included at the attributable net asset value, calculated where possible on
the basis of the valuation principles applied in these Financial Statements and
taking into account the specific risks connected with the company’s nature and
location.
Financial lease receivables These comprise the long-term receivables and residual values in respect of financial
lease contracts. They are valued at the present value of the contracted receivables.
Other long term assets These comprise assets that are not immediately realisable, such as mortgage debtors,
cash advances and guarantee deposits. They are valued at expected realisable value.
Inventories Purchased inventories are valued at purchase price by the First-in-First-out method.
Inventories of finished and semi-finished products and spare parts are valued at
manufacturing cost inclusive of a surcharge for indirect costs related to the manu-
facturing, no interest being charged. The risk of obsolescence is allowed for. Results
on transactions between consolidated companies are eliminated.
Accounts receivable Accounts receivable (trade debtors, financial leases, other debtors) and amounts
receivable from unconsolidated companies are shown at face value less an allowance
for bad and doubtful accounts.
Prepaid expenses These are shown at face value.
Cash and cash equivalents This item is valued at face value and includes unrestricted cash and short term
deposits with a maturity of less than three months.
Minority interest The minority interest in subsidiary companies are included at their net asset value
determined in accordance with the valuation principles used in these financial
statements.
56
Summary of Significant Accounting Principles
Long term liabilities The provision for deferred income taxes is calculated on the differences between
(provisions) valuation of assets and liabilities for commercial and tax purposes, based on the
effective rate of income tax in the various countries and is stated at face value.
Claims in respect of loss compensation are deducted from this provision.
The self insurance franchise provision relates to uninsured potential future losses
that have not yet occured.
The provision for retirement benefits and severance payments relates to the
commitments, determined on an actuarial basis, which are not covered by separate
pension or redundancy funds, as well as to other non-activity schemes. The
provision for non-activity schemes relates to employees who have opted to make
use of such a scheme.
The reorganisation provision also includes amounts for the integration of printing
activities.
Other long term liabilities (provisions) among others relate to (legal)
proceedings and guarantee commitments.
All provisions are long term in nature.
Long term debt These include loans available for longer than one year. Loan amounts due within
one year are included under ‘Current liabilities’.
Current liabilities These commitments comprise liabilities falling due within one year.
Commitments and contingent These are commitments and contingent liabilities arising from contracts, mostly
liabilities not stated in the of more than one year (leasing contracts, rental contracts, capital expenditure
balance sheet commitments, repayable development credits, financial instruments, etc.).
Consolidated Statements of Cash Flow
The figures in this statement are derived from the movements in the Consolidated
Balance Sheets. In the event of a major acquisition, however, the acquired net asset
value is shown separately. The movement in the portions of long term debt falling
due within one year is shown under ‘Long term debt: repayment of long term debt’.
57
Summary of Significant Accounting Principles
Total revenues 1998 1997 › 1,000
Total revenues 6,065,809 5,439,554
Geographical distribution Germany 14 16 percentages
France 8 8
United Kingdom 7 8
Netherlands 7 8
Rest of Europe 21 21
United States 37 32
Rest of the world 6 7
100 100
Distribution by industry Engineering Systems 28 29 percentages
segment Office Systems 47 44
Printing Systems 25 27
100 100
Exchange rates of a average rate in guilders balance sheet rate in guilders
number of currenciesof importance to Océ 1998 1997 1998 1997
German mark (100) 112.72 112.51 112.74 112.69
French franc (100) 33.63 33.40 33.63 33.67
Pound sterling (1) 3.30 3.17 3.16 3.34
American dollar (1) 1.99 1.93 1.92 1.99
Australian dollar (1) 1.25 1.46 1.21 1.36
Japanese yen (10,000) 151.63 160.69 156.00 155.85
Costs & Expenses 1998 1997 › 1,000
Depreciation Property, plant and equipment 184,342 157,948
Rental copying equipment 193,164 188,021
377,506 345,969
Payroll expenses Wages and salaries 1,817,650 1,551,595
Social security 376,681 294,966
Pensions 83,429 67,251
2,277,760 1,913,812
The remuneration, including pension scheme contributions, of the present members of the Board of
Executive Directors for the 1998 financial year amounted to 5,332,243 (1997: 3,624,545) and
that of former Executive Board members amounted to nil (1997: nil).
Under the Océ Stock Option Plan (see page 76) 182,000 options were granted to the members of the
Board of Executive Directors (1997: 100,000 units). At the end of the financial year the members of the
Board of Executive Directors held no ordinary shares in Océ (1997: nil) and no rights to shares (1997: nil)
58
Notes to the Consolidated Statements of Operations
from the 1994 issue of convertible bonds and the 112,000 options listed on the Options Exchange.
The remuneration for the 1998 financial year of the present and former members of the Board of
Supervisory Directors amounted to 410,563 (1997: 357,880). At the end of the financial year
the members of the Board of Supervisory Directors held 2,814 ordinary shares in Océ (1997: nil) and no
rights to shares (1997: nil) from the 1994 issue of convertible bonds and from options listed on the
Options Exchange.
1998 1997 › 1,000
Research and development Total expenditure on research
and development 341,947 306,131
Subsidies received and net
development credits repayable 32,931 28,511
374,878 334,642
Financial expense (net) Interest and similar income items –10,071 –8,839
Interest charges and similar expenses 141,542 123,765
Other financial expenses 2,996 2,469
134,467 117,395
Income taxes A reconciliation of the Dutch statutory income tax rate to the effective income tax
rate is set forth below:
Dutch statutory tax rate 35.0 35.0 percentages
Non-deductible expenses 1.6 1.1
Foreign tax rate deviating from the
Dutch tax rate 3.2 3.2
Tax credits –6.7 –6.5
Utilisation of carry forward losses – –3.9
Other –4.1 –3.6
Effective income tax rate 29.0 25.3
Employees by category 1998 1997 employees
Research and development 1,614 1,527
Manufacturing and logistics 3,878 3,996
Facility Services 3,237 453
Sales 4,885 4,608
Service 5,415 5,312
Accounting and other staff 1,949 1,858
Number of employees at November 30 20,978 17,754
Average number of employees 19,366 17,124
59
Notes to the Consolidated Statements of Operations
Tangible fixed assets
Property, plant and equipment property production other fixed under fixed assets not total ›
and plant machines assets construction in production 1,000
and prepayments process
At November 30, 1997
Replacement value 791,824 729,589 594,143 46,813 8,809 2,171,178
Accumulated depreciation 282,920 504,792 382,366 – 3,565 1,173,643
Book value 508,904 224,797 211,777 46,813 5,244 997,535
Movements in book valueExpenditure 25,463 66,060 148,417 7,661 1,510 249,111
Divestments 20,891 337 29,485 6,402 92 57,207
Net expenditure 4,572 65,723 118,932 1,259 1,418 191,904
Acquisition of companies – 2,475 991 – – 3,466
Depreciation –18,951 –67,826 –96,045 – –1,520 –184,342
Revaluation –14,974 –1,487 – – – –16,461
Foreign currency translations –4,992 –2,165 –2,375 –221 1 –9,752
At November 30, 1998 474,559 221,517 233,280 47,851 5,143 982,350
Replacement value 776,011 774,009 668,825 47,851 10,090 2,276,786
Accumulated depreciation 301,452 552,492 435,545 – 4,947 1,294,436
Book value 474,559 221,517 233,280 47,851 5,143 982,350
Revaluation included in book value amounts to 27.8 million.
The estimated useful lives of the various classes of fixed assets are as follows:
– property and plant: 20 to 50 years;
– production machines: 8 or 10 years;
– equipment: 3 to 10 years;
– vehicles: 4 or 5 years.
Property, plant and equipment contains an amount of 28.9 million for
financial leases (1997: 29.3 million).
Depreciation on property, plant and equipment on the basis of historic cost
amounts to 183 million (1997: 155 million).
60
Notes to the Consolidated Balance Sheets
1998 1997 › 1,000
Rental copying equipment At November 30, 1997/1996
Cost 1,102,697 943,934
Accumulated depreciation 619,233 496,670
Book value 483,464 447,264
Movements in book valueInstalled on rental 370,508 347,687
Divestments –122,183 –172,439
Acquisition of companies – 29,355
Depreciation –193,164 –188,021
Foreign currency translations –8,215 19,618
At November 30 530,410 483,464
Cost 1,176,487 1,102,697
Accumulated depreciation 646,077 619,233
Book value 530,410 483,464
The estimated useful life of the various types of machines ranges from 3 to 5 years.
61
Notes to the Consolidated Balance Sheets
Financial fixed assets 1998 1997 › 1,000
Unconsolidated companies Book value at November 30, 1997/1996 8,187 36,584
Changes due toEquity in income 1,807 247
Increase in/acquisition of companies 2,251 –
Divestments –3,095 –
Decrease resulting from addition to
consolidated companies – –28,486
Distributions received –657 –613
Foreign currency translations –427 455
Book value at November 30 8,066 8,187
Financial lease receivables Lease amounts receivable at November 30,
1997/1996 1,414,894 969,817
New lease amounts receivable 950,828 854,579
Acquisition of unconsolidated companies
and acquisition of lease portfolio – 131,008
To current lease amounts receivable –776,460 –626,071
Foreign currency translations –37,824 85,561
Lease amounts receivable at November 30 1,551,438 1,414,894
Residual values 91,607 104,902
Unearned income –419,674 –369,523
At November 30 1,223,371 1,150,273
Other long term assets Book value at November 30,
1997/1996 42,482 38,963
New amounts receivable 6,210 7,550
Repayments –1,263 –4,256
Foreign currency translations –52 225
Book value at November 30 47,377 42,482
62
Notes to the Consolidated Balance Sheets
Current assets 1998 1997 › 1,000
Inventories Raw and other materials 70,011 70,940
Semi-finished products and spare parts 332,700 357,199
Finished products and trade stock 403,725 370,663
Total 806,436 798,802
Accounts receivable Trade accounts receivable 1,162,139 1,167,148
Discounted trade bills –1,522 –2,052
Lease receivables 776,460 626,071
Other 140,781 96,107
Total 2,077,858 1,887,274
Cash and cash equivalents Cash and bank balances 36,283 60,392
Time deposits 4,032 1,522
Total 40,315 61,914
63
Notes to the Consolidated Balance Sheets
Group equity 1998 1997 › 1,000
Authorised capital* Ordinary shares 145,000 145,000
Priority shares 3 3
Financing preference shares 30,000 30,000
Protective preference shares 175,000 175,000
Total 350,003 350,003
Paid up share capital Ordinary sharesAmount at November 30, 1997/1996 80,686 79,364
Conversion of convertible loans 1,323 837
Share issue 622 –
Stock dividend 542 485
Amount at November 30 83,173 80,686
Number at November 30, 1997/1996 80,686,176 79,363,780 shares
Conversion of convertible loans 1,322,959 837,276
Share issue 621,916 –
Stock dividend 542,199 485,120
Number at November 30 83,173,250 80,686,176
Priority sharesAmount at November 30, 1998/1997 3 3
Number at November 30 30 30 shares
Financing preference sharesAmount at November 30, 1998/1997 20,000 20,000
Number at November 30 20,000,000 20,000,000 shares
Paid-in capital Amount at November 30, 1997/1996 1,049,601 1,030,717
Conversion of convertible loans 30,590 19,369
Issue of ordinary shares 35,449 –
Stock dividend –542 –485
Amount at November 30** 1,115,098 1,049,601
64
Notes to the Consolidated Balance Sheets
* For further information about the authorised capital see page 76.
** If distributed in the form of shares, this amount is available to shareholders without attracting Dutch income tax.
1998 1997 › 1,000
Revaluation reserve At November 30, 1997/1996 99,100 100,918
Revaluation of property, plant and
equipment less deferred tax liability –16,461 –1,818
Tax rate change –534 –
At November 30 82,105 99,100
Legal reserve Reserve for non-distributed income of unconsolidated companiesAt November 30, 1997/1996 2,234 6,995
From/To Retained earnings 1,026 –4,761
At November 30 3,260 2,234
Other reserves Accumulated translation adjustmentAt November 30, 1997/1996 –174,489 –255,101
Foreign currency translations –47,723 80,612
At November 30 –222,212 –174,489
Retained earningsAt November 30, 1997/1996 463,671 352,559
To/From legal reserve –1,026 4,761
Added from net income 185,764 153,910
Goodwill –153,030 –69,969
Repurchase of shares –5,957 –4,857
Settlement of optional stock dividend
previous year 7,623 –4,458
Optional stock dividend (estimated) 45,232 31,725
At November 30 542,277 463,671
Repurchased shares relating to the Stock Option PlanAt November 30, 1997/1996 – –
Repurchased –24,055 –
At November 30 –24,055 –
Number at November 30 449,840 – shares
Total Other reserves 296,010 289,182
Minority interest At November 30, 1997/1996 90,054 86,633
Capital distribution / contribution –6,796 –2,595
Share in income 5,525 5,618
Foreign currency translations 37 398
At November 30 88,820 90,054
65
Notes to the Consolidated Balance Sheets
Long term liabilities (provisions) 1998 1997 › 1,000
Provision for deferred At November 30, 1997/1996 38,427 11,217
income taxesMovements due toAcquisition of companies –12,387 –3,358
Differences between income for
commercial and tax purposes –6,659 37,025
Revaluation of property, plant and equipment – –2,832
Foreign currency translations 2,699 –3,625
At November 30 22,080 38,427
The composition of the provision for deferred income taxes is as follows
Leasing 270,701 269,905
expenses –91,252 –84,545
Other fixed assets –34,875 –46,681
Current assets –100,985 –107,672
Long term liabilities (provisions) 515 2,741
Current liabilities –22,024 4,679
Total 22,080 38,427
Other provisions Self insurance franchise 8,000 8,000
Retirement benefits and severance payments 311,839 288,635
Development credits 12,749 59,288
Reorganisation provision 70,213 69,890
Other provisions 44,746 38,685
At November 30 447,547 464,498
Total long term liabilities (provisions) 469,627 502,925
Long term debt 1998 1997 › 1,000
Convertible subordinated guilder
debenture bonds 26,292 56,672
Convertible guilder debenture
bond to Company personnel 11,871 8,136
Loans 1,841,580 1,570,119
Capitalised lease obligations 13,762 15,418
Total 1,893,505 1,650,345
66
Notes to the Consolidated Balance Sheets
Convertible subordinated Principal conditions of these 7-year bonds are:
guilder debenture bonds – final maturing date June 15, 2001;
– annual interest 4.75%, payable June 15;
– earlier redemption in whole or part is permitted under certain conditions as from
June 15, 1998;
– the bonds are convertible into ordinary shares until June 15, 2001 at the
stipulated conversion price of 23.70 per 1 ordinary share;
– the conversion price will be adjusted (inter alia) in case of a rights issue below market
price with pre-emptive rights for existing shareholders and if a share distribution is
made out of reserves or in the form of a dividend.
The Trustee: Amsterdamsch Trustee’s Kantoor ..,
Fred. Roeskestraat 123, 1076 Amsterdam.
Convertible guilder debenture The average conversion price is 54.09 (1997: 40.44).
bond to Company personnel
Loans principal amount average interest rate redemption amounts due after
amounts › 1,000 at November 30 (%) more than five years
Guilder
debenture loan 300,000 6.25 2007 300,000
Guilder
debenture loan 250,000 6.38 2006 250,000
Guilder
debenture loan 200,000 6.50 2001 –
Guilders 128,000 8.32 2002 –
Guilders 30,000 7.20 2003 –
Guilders 50,000 6.84 2005 50,000
Guilders 170,000 5.88 2006 170,000
Guilders 50,000 4.70 2004 10,000
Guilders 10,000 5.84 2013 10,000
American dollars 96,000 6.00 2000 –
American dollars 53,086 5.88 2001/2003 –
German marks 62,571 3.71 2002/2004 11,274
French francs 79,031 4.31 2002/2004 33,630
French francs 50,445 3.75 2003 –
British pounds 72,611 7.49 2003/2004 24,625
Spanish pesetas 11,510 4.97 2004 11,510
Swiss francs 53,372 1.42 2002 –
Swiss francs 102,364 1.47 2001/2004 54,740
Norwegian crowns 24,252 5.86 2001/2004 16,408
Swedish crowns 26,180 4.72 2001/2004 14,941
Other 22,158 4.63 2001/2004 2,965
Total 1,841,580 5.72 960,093
The fixed interest rates of the guilder (debenture) loans have been fully swapped
into variable interest rates.
67
Notes to the Consolidated Balance Sheets
Current liabilities 1998 1997 › 1,000
Short term debt Borrowings under bank lines of credit 97,004 127,655
Current portion of long term debt 48,031 83,058
Short term borrowings 338,626 371,344
Total 483,661 582,057
Other liabilities Trade accounts payable 317,668 291,370
Notes payable 26,156 14,940
Income taxes 45,790 9,638
Value added taxes, social security
and other taxes payable 100,857 86,974
Pension liabilities 2,984 5,351
Dividend 39,722 40,726
Other 130,538 118,354
Total 663,715 567,353
Accrued liabilities Salary expenses and payroll taxes 266,996 224,404
Other 211,388 206,278
Total 478,384 430,682
Financial instruments
Financial instruments are used to hedge against the financial risks that are inherent
to the Group’s underlying commercial activities. For an explanation of the foreign
exchange and interest management policy, see pages 18 and 19 of the Report of the
Board of Executive Directors.
Foreign exchange risks The policy for the management of foreign exchange risks is aimed at protecting the
operating income and participations held in foreign currencies. Forward foreign
exchange contracts have been entered into to control these foreign exchange risks.
The contract value and the result of forward foreign exchange contracts at balance
sheet date were as follows (in millions):
– in respect of cash flows: 680 and 13 (1997: 962 and –25);
– in respect of participations: 760 and 11 (1997: 1,054 and –14).
Interest risks Interest rate instruments are used to achieve the desired risk profile in terms of fixed
and variable interest exposures. A central objective of the policy is to prevent a mis-
match between the portfolio of rentals and leases and financing of the Group.
Efforts are made to achieve a ratio of about 80% between the above fixed-interest
assets and liabilities. At balance sheet date the contract value/notional principal
amount and the market value of interest rate instruments were as follows (in millions):
– interest rate swap contracts: 2,548 and 126 (1997: 2,314 and 117);
– interest rate cap contract: 57.6 and 0.1 (1997: 59.6 and 0.4);
– interest/foreignexchange swap: 4.6 and –0.1(1997: 15.0 and –0.6).
Credit risks Credit risks are reduced by doing business solely with financial institutions which
have a high credit rating, with fixed limits being applicable to each institution.
68
Notes to the Consolidated Balance Sheets
Commitments and contingent liabilities 1998 1997 › million
not stated in the balance sheets
Collateral security Collateral security for liabilities 1.0 1.2
Contingent liabilities Guarantee commitments 8.4 9.1
Government development credits 127.5 167.5
Guarantee commitments include guarantees given in respect of import duties and
loans from third parties.
Other commitments Repurchase commitments of 18.2 million (1997: 15.4 million) exist on
the lease contracts with third parties. As a result of these commitments the
machines can be sold again upon their return. The estimated market value upon
return is higher than the repurchase commitment.
Total contracted lease commitments amount to 388 million
(1997: 309 million). The instalments which become due in 1999 amount to
115 million (1998: 90 million). Other commitments, such as buying
contracts etc., have been entered into solely as part of normal business operations.
Recourse liabilities in respect of bills discounted amount to 1.5 million
(1997: 2.1 million).
Litigation Since November 1996 Océ and Siemens have been involved in a lawsuit brought
before a court in Florida relating to alleged infringement of antitrust regulations.
Océ is contesting this complaint vigorously. Together with its advisers Océ takes
the view that a strong defence exists against all claims. Océ feels there is no reason to
assume that the claims will entail any risk to the financial position of the Océ Group.
69
Notes to the Consolidated Balance Sheets
70
Assets 1998 1997 › 1,000
Financial fixed assets Consolidated companies 1,399,961 1,170,725
Amounts receivable from consolidated
companies 1,655,342 1,963,568
Unconsolidated companies 6,954 8,128
Other long term assets 25 25
3,062,282 3,142,446
Current assets Amounts receivable from consolidated
companies 487,891 365,196
Other amounts receivable 7,898 2,472
Cash and cash equivalents 70 22,334
495,859 390,002
Total assets 3,558,141 3,532,448
after net income appropriation Océ .. / Balance Sheets November 30
1998 1997 › 1,000
Income of consolidated companies 280,257 227,940
Other net income 4,130 8,760
Net income 284,387 236,700
Océ .. / Statements of Operations
71
Liabilities 1998 1997 › 1,000
Shareholders’ equity Ordinary shares 83,173 80,686
Priority shares 3 3
Financing preference shares 20,000 20,000
Paid-in capital 1,115,098 1,049,601
Revaluation reserve 82,105 99,100
Legal reserve 3,260 2,234
Other reserves 296,010 289,182
1,599,649 1,540,806
Long term debt Amounts payable to consolidated
companies 41,527 41,527
Long term liabilities 1,425,980 1,342,183
1,467,507 1,383,710
Current liabilities Amounts payable to consolidated
companies 168,190 224,768
Short term debt 194,180 295,295
Other liabilities 90,482 39,245
Accrued liabilities 38,133 48,624
490,985 607,932
Total liabilities 3,558,141 3,532,448
Océ .. / Balance Sheets November 30
72
Océ .. / Notes to the Balance Sheets and the Statements of Operations
Summary of Significant Accounting Principles
The accounting principles are the same as those used for the consolidated financial
statements. The Statements of Operations have been drawn up in accordance with
the provisions of Article 402, Book 2, of the Dutch Civil Code.
Financial fixed assets 1998 1997 › 1,000
Affiliated companies For a list of companies affiliated to the Group in the Netherlands and elsewhere see
pages 83 and 84. Affiliated companies are valued pro rata to the net asset value held.
Consolidated companies Book value at November 30, 1997/1996 1,170,725 847,719
Changes due toEquity in income 280,257 227,940
Capital increase 275,344 152,130
Capital decrease –34,088 –
Revaluation of property, plant and
equipment –16,995 –1,818
Dividends received –90,607 –84,661
Foreign currency translations –31,645 99,682
Goodwill –153,030 –70,267
Book value at November 30 1,399,961 1,170,725
Amounts receivable from At November 30, 1997/1996 1,963,568 1,741,239
consolidated companies Prepayments 259,720 461,688
Repayments –523,321 –316,093
Foreign currency translations –44,625 76,734
At November 30 1,655,342 1,963,568
Unconsolidated companies Book value at November 30, 1997/1996 8,128 36,077
Changes due toEquity in income 1,807 670
Acquisition of companies 1,183 –
Divestments –3,080 –
Decrease resulting from transfer to
consolidated companies – –28,486
Distributions received –657 –613
Foreign currency translations –427 480
Book value at November 30 6,954 8,128
Current assets 1998 1997 › 1,000
Cash and cash equivalents Cash and bank balances 70 22,334
Shareholders’ equity
For specifications, see pages 64 and 65.
Long term debt 1998 1997 › 1,000
Long term liabilities Convertible subordinated guilder
debenture bonds 26,292 56,672
Convertible guilder debenture bond to
Company personnel 11,871 8,136
Loans 1,387,817 1,277,375
Total 1,425,980 1,342,183
The principal details of the convertible subordinated guilder debenture bonds are
stated on page 67. The average conversion price of the convertible guilder
debenture bond to Company personnel is 54.09 (1997: 40.44).
Loans principal amount average interest rate redemption amounts due after
amounts › 1,000 at November 30 (%) more than five years
Guilder
debenture loan 300,000 6.25 2007 300,000
Guilder
debenture loan 250,000 6.38 2006 250,000
Guilder
debenture loan 200,000 6.50 2001 –
Guilders 128,000 8.32 2002 –
Guilders 30,000 7.20 2003 –
Guilders 50,000 6.84 2005 50,000
Guilders 170,000 5.88 2006 170,000
Guilders 50,000 4.70 2004 10,000
Guilders 10,000 5.84 2013 10,000
American dollars 96,000 6.00 2000 –
French francs 50,445 3.75 2003 –
Swiss francs 53,372 1.42 2002 –
Total 1,387,817 6.14 790,000
The fixed interest rates of the guilder (debenture) loans have been fully swapped
into variable interest rates.
73
Océ .. / Notes to the Balance Sheets and the Statements of Operations
Current liabilities 1998 1997 › 1,000
Short term debt Borrowings under bank lines of credit 129,516 165,641
Current portion of long term debt 13 77,352
Short term borrowings 64,651 52,302
Total 194,180 295,295
Other liabilities Income taxes 43,245 –5,650
Dividend 39,722 40,726
Other 7,515 4,169
Total 90,482 39,245
Commitments and contingent liabilities 1998 1997 › million
not stated in the balance sheets
Contingent liabilities Government development credits 127.5 167.5
Other commitments Bank guarantees to group companies 338.0 276.1
Guarantees to group companies 87.9 105.5
For an explanation of the financial instruments see page 68.
74
Océ .. / Notes to the Balance Sheets and the Statements of Operations
75
Other information
Net income appropriation 1998 1997 › 1,000
Preference dividend 7,825 7,825
Cash dividend:Dividend 90,798 74,965
Optional stock dividend (estimated) –45,232 –31,725
45,566 43,240
Added to Retained earnings:From net income 185,764 153,910
Optional stock dividend (estimated) 45,232 31,725
230,996 185,635
Total net income 284,387 236,700
Upon adoption of this proposed net income appropriation, the dividend for the
1998 financial year will be: 4.00 per priority share of 100, 0.39
(rounded) per financing preference share of 1 and 1.10 per ordinary share
of 1.
The final dividend per ordinary share for the 1998 financial year will be 0.77,
as a payment of 0.33 per ordinary share was made on November 6, 1998 on
account of the expected dividend.
It is proposed to make the final dividend available optionally either fully in cash,
or fully in shares, charged to the tax-free paid-in capital reserve or, if desired,
charged to the net income of 1998. This proposed net income appropriation is in
conformity with Article 36 of the Company’s Articles of Association.
Extract from the Articles of The rules for net income appropriation as laid down in the Articles of Association can –
Association relating to net where of relevance at the present time – be summarised as follows (for literal text see
income appropriation Article 36 of the Articles of Association):
Where possible, the following dividends shall be distributed in turn from the
net income: first, on the protective preference shares: a percentage of the paid-up
amount equal to the renewal rate of interest plus 1.5%; then on the financing
preference shares: 6.26% of the paid-up amount including share premium, which
percentage shall be adapted on December 1, 2004 and subsequently each time eight
years thereafter; then on the priority shares: 4% and then on the ordinary shares:
5%, of the nominal value.
Subsequently, of the net income then remaining, as much shall be reserved as
may be deemed necessary by the Executive Board, subject to approval of the
Supervisory Board.
In so far as the net income has not been set aside in the form of reserves, it shall
be at the disposal of the holders of ordinary shares.
76
Other information
Authorised capital
Priority shares All priority shares are issued. They are held by Foundation Fort Ginkel, Venlo, the
directors of which are: H.B. van Liemt (chairman), J.C.M. Hovers and M. Ververs.
The Articles of Association grant certain rights to the holders of priority shares,
including the following:
– they determine the number of members of the Supervisory and Executive Boards;
– they draw up a binding nomination list for shareholders for the appointment of
Supervisory and Executive Directors;
– alteration of the Articles of Association is possible only if proposed by them;
– their approval is required for the issue of shares as yet not issued.
In any one year not more than 120 may be distributed on all the priority
shares together. The Board of Executive Directors of Océ .. and the directors of
Foundation Fort Ginkel are jointly of the opinion that, as regards the exercise of the
voting rights attaching to the priority shares, Foundation Fort Ginkel has complied
with the requirements set in respect hereof in Appendix X to the Securities
Regulations of the Amsterdam Exchanges ..
Ordinary shares To encourage the long term achievement of the Company’s objectives, Océ
operates a Océ Stock Option Plan under which option rights to ordinary shares in
Océ are granted to directors and certain senior company executives.
During the financial year an aggregate of 872,500 option rights were granted to
a total of 180 participants for the Océ Stock Option Plan 1999. For participants in
the Netherlands the options have a duration of six years, whilst the duration for
participants in other countries amounts to five years.
Participants in the Océ Stock Option Plan are expected to abide by a code of
conduct. This code stipulates that, where the duration of the options amounts to
five years, they will not exercise option rights within two years after grant and,
where the duration of the options amounts to six years, they will not exercise within
three years after grant.
The exercise price is equal to the opening price quoted for the Océ share on the
Amsterdam Exchanges () on the day of grant and amounts to 67 for
participants outside the Netherlands. Participants domiciled in the Netherlands
may choose, at the moment of grant, between an exercise price of 67,
73.70, 80.40 or 90.65. To cover the income tax payable by Dutch
participants upon grant of the options, loans have been provided which are repaid
upon exercise.
Participation in the Océ Stock Option Plan is subject to regulations aimed at
preventing the misuse of inside information. Participants are prohibited from
trading in Océ options on the Options Exchange and from disposing of or
pledging the options that have been granted.
At November 30, 1998 an aggregate of 1,813,500 option rights to ordinary
shares were outstanding at an average exercise price of 64.69.
The remaining duration of these options is 4.6 years on average.
The Company’s policy is to buy in the shares required for implementation of
the Océ Stock Option Plan.
The following table contains information about the share options outstanding
at November 30, 1998.
Preference shares Since 1979 the Company has been under the irrevocable obligation to issue
protective preference shares to the Lodewijk Foundation, Venlo, on the latter’s first
request. As to the nominal value of the said issue, the Company’s obligation has
since February 1997 related to at most an amount equal to the total nominal value
of the ordinary and financing preference shares of the Company issued at the time
of the request. The directors of the Lodewijk Foundation are: O. Hattink
(chairman), J.J.C. Alberdingk Thijm, J.M.M. Maeijer, Th. Quené, H.B. van Liemt
and J.C.M. Hovers.
The Board of Executive Directors of Océ .. and the directors of the Lodewijk
Foundation are jointly of the opinion that, as regards the independence of the
directors of the Lodewijk Foundation, the relevant requirements set in respect hereof
in Appendix X to the Securities Regulations of the Amsterdam Exchanges .. have
been complied with.
During 1996 20,000,000 financing preference shares were placed with the
Foundation ‘Stichting Administratiekantoor Preferente Aandelen Océ’ in return for
the issue to a number of institutional investors of registered depositary receipts with
limited cancellability. The directors of this Foundation are H. de Ruiter
(chairman), S. Bergsma, J.M. Boll, L. Traas and D.M.N. van Wensveen.
77
Other information
issued issued number of options exercise price exercised number option forfeited outstanding at expiration date
in guilders of options November 30, 1998
1994 624,000 18.30 606,800 2,000 15,200 Nov. 29, 1999
1995 676,000 23.00 655,000 – 21,000 Nov. 30, 2000
1996 806,400 46.40 682,600 – 123,800 Nov. 25, 2001
1997 807,000 54.80 26,000 – 781,000 Nov. 28, 2002
1998 872,500 67.00-90.65 – – 872,500 Nov. 29, 2003/04
3,785,900 1,970,400 2,000 1,813,500
United States generally accepted accounting principles (US GAAP)
Net income and shareholders’ Océ’s consolidated financial statements are drawn up on the basis of the accounting
equity based on United States principles applied in the Netherlands, which differ in a number of respects from
accounting principles United States generally accepted accounting principles ( ). The statements
below give an approximate indication of the effect that application of
would have on net income, earnings per share and shareholders’ equity. This
information will be presented in more detail in the Form 20- report which will be
submitted to the Securities and Exchange Commission and which will be available
on request at the end of May.
Net income and shareholders’ equity 1998 1997 › 1,000
under U S G A A P
Net income as reported in the
Consolidated Statements of Operations 284,387 236,700
U S G A A P adjustmentsBusiness combinations –44,520 –41,813
Reorganisation costs –16,000 –12,000
Depreciation 1,842 2,948
Deferred income taxes 15,901 14,426
Use of tax-deductible goodwill –17,300 –
Net income under 224,310 200,261
Earnings per ordinary share of N LG 1 nominal under U S G A A P
Based on average number of shares
outstanding (basic) 2.64 2.41 guilders
Based on increase upon
conversion/options (diluted) 2.59 2.34 guilders
Shareholders’ equity as reported in the
Consolidated Balance Sheets 1,599,649 1,540,806
U S G A A P adjustmentsBusiness combinations 766,738 823,325
Reorganisation provision 67,619 47,243
Revaluation of property, plant and equipment –18,119 –48,700
Self insurance franchise 8,000 8,000
Final dividend 39,722 40,726
Accrued liabilities 9,000 25,000
Deferred income taxes on above adjustments –256,899 –240,525
Shareholders’ equity under 2,215,710 2,195,875
78
Other information
Under the Consolidated Balance Sheets items set out below would be:
Balance sheets items under U S G A A P 1998 1997 › 1,000
Intangible assets (net) 766,738 823,325
Property, plant and equipment (net) 964,231 948,835
Long term liabilitiesProvision for deferred income taxes 278,978 278,952
Self insurance franchise – –
Reorganisation provision 21,794 22,647
Other long term liabilities (provisions) 29,386 38,685
Current liabilitiesDividend – –
Accrued liabilities 465,543 405,682
The main differences between the accounting principles applied by Océ
(Dutch ) and are summarised below:
Business combinationsGoodwill paid is charged by Océ directly to shareholders’ equity in the year of
acquisition. Under goodwill is capitalized as intangible fixed assets and
then amortized on a straight-line basis over a period of 20 to 40 years.
Reorganisation provision In the case of an acquisition, a provision is made for future integration costs.
Under the formation of this provision is subject to more stringent criteria.
For this reason the provision is not recognised in . Consequently, the
integration costs incurred during the financial year are charged directly to the
Statements of Operations.
Revaluation of property, plant and equipmentAs described on page 56 of the financial statements property, plant and equipment
are valued at the lower of replacement value or the value to the business. Under
such fixed assets are valued at their original cost. As a result, the higher
depreciation costs are adjusted to allow for this.
Self insurance franchise Under a provision for self insurance is not permitted.
Dividends not declaredThe final dividend on ordinary shares that is submitted to the shareholders’
meeting for approval is included under ‘Current liabilities’ in the financial state-
ments. Under this amount should be classified under shareholders’ equity
until the moment when the net income appropriation has been approved by the
shareholders.
79
Other information
Use of tax-deductible goodwillIn a previous acquisition a provision was made for the capitalised claims in respect
of deferred taxation.
Under these claims have to be netted against the goodwill included,
upon realisation.
Signatures to the financial statements and other information set out on pages 49 to 80:
February 17, 1999
The Supervisory Directors: The Executive Directors:H.B. van Liemt J.C.M. Hovers
L.J.M. Berndsen J.F. Dix
P. Bouw R.L. van Iperen
J.V.H. Pennings H.J.A.F. Meertens
M. Ververs G.B. Pelizzari
F.J. de Wit
80
Other information
Auditors’ report
Introduction We have audited the financial statements as included in the annual report for the
year ended November 30, 1998 of Océ .., Venlo.These financial statements are
the responsibility of the company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
Scope We conducted our audit in accordance with auditing standards generally accepted in
the Netherlands. Those standards require that we plan and perform the audit to ob-
tain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
Opinion In our opinion, the financial statements give a true and fair view of the financial
position of the company as of November 30, 1998 and of the result for the year then
ended in accordance with accounting principles generally accepted in the Netherlands
and comply with the financial reporting requirements included in Part 9, Book 2 of
the Dutch Civil Code.
Eindhoven, February 12, 1999
PricewaterhouseCoopers ..
81
Other information
82
Business Units
Engineering Systems G. Kraaijeveld
Office Systems A.A.J. van Driel
Printing Systems E. Spaett
Imaging Supplies H.J.A.F. Meertens
Corporate Staff
Secretariat of the Company, J.M.M. van der Velden
Legal Affairs
Corporate Personnel and P.H.G.M. Creemers
Organisation
Finance and Administration C.F. Lindenhovius
Central Operating Company Venlo
Venlo Executive Committee J.C.A. Vercoulen, chairmanN.J. Koole
Manufacturing and Logistics N.J. Koole
Research and Development J.C.A. Vercoulen
R. Teer
February 1999 Directors Central Services
See also page 5.
83
Europe
Belgium Océ-Belgium ../.. P.J.J.G. Nabuurs Brussels (2)729.4811
Océ-Interservices ../.. P.J.J.G. Nabuurs Brussels (2)729.4116
Denmark Océ-Danmark .. F.O. Nilsen Copenhagen (43)29.7000
Germany Océ-Holding Deutschland J.F. Dix, E. Spaett Mülheim/Ruhr (208)48450
G.m.b.H.
Océ-Deutschland G.m.b.H. J.F. Dix Mülheim/Ruhr (208)48450
Océ Printing Systems G.m.b.H. E. Spaett, P. Feldweg Poing (8121)72.4031
and L. Bockholts
France Océ-France .. A. Gimenez Noisy-le-Grand (1)4592.5000
Océ-Industries .. J.L. Desriac Créteil (1)4980.6500
Hungary Océ-Hungária Kft. J.P. Pelé Budapest (1)1236.1040
Ireland Océ-Ireland Limited R. Thompson Dublin (1)403.9100
Italy Océ-Italia S.p.A. L. Iannuzzi Milan (02)927.261
Netherlands Océ-Technologies .. J.C.A. Vercoulen Venlo (77)359.2222
Océ-Nederland .. J.J. Kwaak ’s-Hertogenbosch (73)6815.815
Arkwright Europe .. J.R. Marciano Venlo (77)382.5315
Norway Océ-Norge .. O. Fondevik Oslo 2202.7000
Austria Océ-Österreich Ges.m.b.H. G. Schennet Vienna (1)865.3610
Poland Océ-Poland Limited, Sp. z z.o. M. Kozlowski Warsaw (2)2846.7429
Portugal Océ-Lima Mayer .. Th. de Lima Mayer Lisbon (1)412.5700
Spain Océ-España .. A. Aznar de Argumosa Barcelona (3)484.4800
Czech Republic Océ-Czech republic s.r.o. J. de Vries Prague (2)440.10111
United Kingdom Océ () Limited M.J. Cornish Loughton (181)508.5544
Sweden Océ Svenska .. N.R. Gabriel Stockholm (8)703.4000
Switzerland Océ (Schweiz) .. H. Würges Glattbrugg (1)829.1111
North America
United States Océ- Holding Inc. G.B. Pelizzari Chicago, (773)714.8500
Océ- Inc. G.B. Pelizzari Chicago, (773)714.8500
Océ Printing Systems , Inc. H.W. Krause Boca Raton, (561)997.3100
Arkwright Inc. J.R. Marciano Fiskeville, (401)821.1000
Archer Management S. Katz New York, (212)502.2100
Services Inc.
Océ Groupware D. Bower Cleveland, (216)687.9970
Technology, Inc.
Canada Océ-Canada Inc. S. Goodall Toronto (416)224.5600
February 1999 Principal companies and their chief executives*
* Where holdings are less than 95% of the equity, capital percentages are stated. A list of affiliated companies is
available for public inspection at the Commercial Registry, Venlo, in conformity with the provisions of Article 379,
Book 2, of the Dutch Civil Code.
Far East
Hong Kong Océ (Hong Kong China) Ltd. N.W. Kooij Hong Kong 2577.6064
China Océ Office Equipment N.W. Kooij Beijing (10)6422.1622
(Beijing) Co., Ltd.
Singapore Océ (Far East) Pte. Ltd. N. Klitsie Singapore (8)46.2381
Malaysia Océ Systems R. Goh Petaling Jaya (3)758.4088
(Malaysia) Sdn. Bhd.
Singapore Océ (Singapore) Pte. Ltd. N. Klitsie Singapore (8)46.2381
Taiwan Océ (Taiwan) Ltd. Ch. Yeh Taipei (2)2651.6516
Thailand Océ (Thailand) Ltd. S. Santhidej Bangkok (2)260.7133
Other countries
Australia Océ-Australia Limited P.A. Duijser Scoresby (3)9730.3333
Brazil Océ-Brasil Comércio e S. Notermans São Paulo (11)835.8444
Indústria Ltda.
South Africa Océ Printing Systems T. Venediger Johannesburg (11)488.9118
(South Africa) (Pty.) Ltd.
Direct Export
Netherlands Océ Direct Export W.J. Verheijen Venlo (77)359.2222
Lease companies
Australia Océ-Australia Finance Pty. Ltd. P.A. Duijser Scoresby (3)9730.3333
Germany Océ-Deutschland A. Hütter Mülheim/Ruhr (208)48450
Leasing G.m.b.H.
France Océ-France Financement .. M. Haranger Saint-Cloud (1)4592.5055
Spain Océ-Renting .. E. de Sus Barcelona (3)484.4800
United Kingdom Océ () Finance Limited I. Paskins Loughton (181)508.5544
United States Océ-Credit Corporation S. Schulein Purchase, (914)694.1116
Minority holdings
Belgium Siemens Software .. 40%
Cyprus Heliozid Océ-Reprographics 25%
(Cyprus) Ltd.
Germany InterFace Connection G.m.b.H. 11%
Hungary Szenzor Számítóközpont Kft. 34%
Singapore Datapost Pte. Ltd. 30%
84
Principal companies and their chief executives
85
Quarterly results (net income) 1998 1997
› million › € million % increase on › million › € million % increase on
previous year previous year
First quarter 55.5 25.2 25 44.3 20.1 62
Second quarter 73.0 33.1 24 58.8 26.7 43
Third quarter 59.4 26.9 18 50.5 22.9 30
Fourth quarter 96.5 43.8 16 83.1 37.7 34
Year 284.4 129.0 20 236.7 107.4 40
Quarterly results (basic earnings 1998 1997
per ordinary share, calculated on the basis of the weighted average in guilders in euro % increase on in guilders in euro % increase on
number of shares outstanding) previous year previous year
First quarter 0.66 0.30 24 0.53 0.24 27
Second quarter 0.86 0.39 20 0.71 0.32 23
Third quarter 0.69 0.31 14 0.61 0.28 28
Fourth quarter 1.15 0.52 14 1.01 0.46 33
Year 3.37 1.52 18 2.86 1.30 26
Distribution of ordinary shares 1998 1997
as % at end of financial year (approximate indication based private institutional total private institutional total
on information provided by banks) Netherlands 26 32 58 22 33 55
United Kingdom – 11 11 – 16 16
Belgium / Luxemburg 1 10 11 1 9 10
United States 1 8 9 1 9 10
Other 1 10 11 1 8 9
Total 29 71 100 25 75 100
Supplementary information for shareholders
Investor Relations Océ has been actively engaged in Investor Relations since the early 1980s.
At first this chiefly involved seeking active contact with investors in the relevant
main financial centres in the world. As had already been the custom for years,
meetings were again organised in 1998 for (institutional) investors in Amsterdam,
London, New York, Edinburgh, Frankfurt/Main, Zürich and Geneva. In recent
years growing numbers of analysts and managers of major institutional investors
visit companies to see what is going on for themselves. Dozens of visits of this type
to Océ take place each year.
Océ also receives regular requests from brokers and banks to give a presentation
about Océ at meetings and seminars they have organised for investors. Wherever
possible, Océ complies with these requests, which often offer an excellent
opportunity to meet new and different categories of investors. Last year, for
example, two presentations were given at a seminar in New York organised by one
Dutch and one American broker.
Last year Océ also began giving extensive explanatory comments following
publication of its half-yearly results. For this purpose meetings were held with
analysts in Amsterdam and London, both of which were well attended. This
initiative will be continued.
Stock exchange listings Océ ordinary shares are listed on the stock exchanges in Amsterdam, Düsseldorf
and Frankfurt/Main and on the electronic stock exchange (). in Switzerland.
They are traded in the United States as American Depositary Receipts ( s): via
(over the counter). Options to Océ shares are traded on Amsterdam
Exchanges .. The Océ share is included in the main Index in Amsterdam.
Capital and shares The authorised capital amounts to 350,003,000. At 30th November 1998 the
issued and fully paid capital amounted to 103,176,250 nominal, divided into
83,173,250 (ordinary shares), ,000,000 (financing preference shares)
and 3,000 (priority shares). The ordinary and financing preference shares have
a nominal value of 1.
86
Supplementary information for shareholders
Share price development
index Dec. 1,1993 = 100
Océ
700
550
400
250
100
year’s highest
year’s lowest
22.38
14.95
94
24.75
18.63
95
49.45
23.90
96
66.35
45.00
97
90.20
40.70
98
Number of shares The number of ordinary shares outstanding at the end of the 1998 financial year was
83,173,250. Compared to the 1997 year end this is an increase of 2,487,074 share
units as a result of conversion of convertible (personnel) bonds, issue of ordinary
shares and distribution of stock dividends.The weighted average number of shares
outstanding in 1998 is: 81,954,636. The increase in the number of outstanding
ordinary shares on a diluted basis is 2,128,605 share units. This latter calculation is
based on the method that is (inter)nationally prescribed.
At the 1998 year end 20,000,000 depositary receipts with limited cancellability
for financing preference shares were outstanding at, inter alia, Rabobank
Nederland, Preferent Fonds .. and the Nationale Investeringsbank .. These
carry a dividend of 6.26% up to December 1, 2004.
Calculation basic earnings The calculation of the basic earnings and cash flow per ordinary share of 1
per share nominal is based on the net income available for holders of ordinary shares and on
the weighted average number of shares outstanding. Equity per ordinary share of
1 nominal is calculated on the basis of the number of shares outstanding at the
end of the financial year. For this purpose the equity has been reduced by the
amount of 125 million that was brought in by the holders of preference shares.
Substantial Shareholdings On the basis of the Substantial Shareholdings Notification Act () which was
Notification Act introduced in the Netherlands in 1992 and which requires, inter alia, that share-
holders must publish holdings of more than 5% of the ordinary outstanding shares,
the following shareholder is known: Internationale Nederlanden Groep: 6.33%
(notification February 28, 1992).
Important publication dates April 8, 1999 meeting of shareholders and 1st quarter results 1999;
(subject to modification) July 8, 1999 2nd quarter results / 1st half year 1999;
October 7, 1999 3rd quarter results / nine months 1999;
January 7, 2000 provisional results for 1999;
February 2, 2000 4th quarter and 1999 full year results;
February 2000 publication of 1999 annual report.
87
Supplementary information for shareholders
Market trading Océ share
1998 on the Amsterdam
Stock Exchange
numbers (› thousand)
1600
1280
960
640
320
0
12/97 2/98 4/98 6/98 8/98 10/98
Consolidated Statements 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
of Operations
Total revenues 6,066 5,440 4,174 2,932 2,770 2,626 2,737 2,623 2,358 2,156
Operating income 540 441 319 222 186 165 199 220 187 168
Net income 284 237 169 108 90 62 87 101 86 85
Key figuresTotal revenues
Increase/decrease (%) 12 30 42 6 6 –4 4 11 9 14
Expenditure on research and
development 342 306 245 186 186 186 189 182 173 146
As % of total revenues 5.6 5.6 5.9 6.3 6.7 7.1 6.9 7.0 7.3 6.8
Operating income
As % of total revenues 8.9 8.1 7.6 7.6 6.7 6.3 7.3 8.4 7.9 7.8
As % of average balance
sheet total 9.6 8.8 8.0 7.0 6.3 5.8 7.1 8.5 7.9 7.7
Net income
As % of total revenues 4.7 4.4 4.1 3.7 3.3 2.4 3.2 3.8 3.6 3.9
As % of average
shareholders’ equity 18.1 16.5 14.2 10.3 8.9 6.3 9.1 10.7 9.2 9.6
Net income retained 186 154 106 67 54 26 52 66 55 55
As % of net income 67.2 67.3 64.1 62.3 59.3 42.1 59.0 65.9 64.6 64.5
Payroll expenses 2,278 1,914 1,519 1,060 1,010 1,003 1,021 970 894 811
As % of total revenues 37.6 35.2 36.4 36.2 36.5 38.2 37.3 37.0 37.9 37.6
Number of employees 20,978 17,754 16,495 12,633 11,718 11,666 12,262 12,354 11,416 11,117
Per N L G 1 ordinary share (amounts in guilders)*
Basic earnings 3.37 2.86 2.27 1.66 1.40 0.98 1.39 1.66 1.42 1.45
Diluted earnings 3.30 2.78 2.11 1.55 1.37 0.96 1.39 1.60 1.36 1.35
Cash flow 7.98 7.19 6.19 5.40 5.18 4.93 6.06 6.53 5.87 5.55
Shareholders’ equity 17.83 17.55 15.25 16.17 15.92 15.58 15.23 15.47 15.62 15.14
Dividend 1.10 0.93 0.75 0.63 0.56 0.56 0.56 0.56 0.50 0.50
Average number of
ordinary shares outstanding
(› thousand)* 81,955 79,913 73,136 65,224 64,680 63,696 62,720 60,744 60,332 58,628
Increase upon conversion/
options (› thousand)* 2,129 2,997 6,452 7,740 3,292 1,840 420 3,392 3,780 5,456
Share price (in guilders)*
Year’s highest 90.20 66.35 49.45 24.75 22.38 15.10 20.00 16.25 15.93 16.88
Year’s lowest 40.70 45.00 23.90 18.63 14.95 9.65 9.05 8.38 8.93 12.80
Year end 67.20 56.63 47.00 24.75 19.23 15.10 9.70 15.50 9.00 14.90
88
year ended November 30 Océ 1989-1998amounts › million
* Figures restated because of a ‘four-for-one’ split of the ordinary and financing preference shares of 4 nominal
into shares of 1 nominal.
Consolidated 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Balance Sheets
AssetsTangible fixed assets 1,512 1,481 1,319 926 899 909 947 1,016 1,003 975
Financial fixed assets 1,279 1,201 841 724 631 555 461 329 270 212
Fixed assets 2,791 2,682 2,160 1,650 1,530 1,465 1,408 1,345 1,273 1,187
Current assets 2,982 2,784 2,458 1,699 1,492 1,412 1,427 1,410 1,141 1,148
Total 5,773 5,466 4,618 3,349 3,022 2,877 2,835 2,754 2,414 2,334
LiabilitiesGroup equity 1,688 1,631 1,422 1,056 1,038 998 969 953 949 915
Long term liabilities (provisions) 470 503 419 264 257 263 263 258 239 194
Long term debt 1,894 1,650 1,203 1,039 625 680 689 364 353 391
Current liabilities 1,721 1,682 1,574 990 1,102 935 914 1,181 872 835
Total 5,773 5,466 4,618 3,349 3,022 2,877 2,835 2,754 2,414 2,334
Key figuresProperty, plant and equipment 982 998 872 563 558 559 582 612 585 558
Net expenditure 192 191 164 117 111 84 90 111 119 98
Depreciation 184 158 129 100 105 110 108 101 91 81
Rental copying equipment 530 483 447 364 350 366 387 437 465 482
Net expenditure 248 175 213 168 126 122 146 167 160 175
Depreciation 193 188 158 143 139 141 185 195 178 160
Financial lease receivables
(incl. short term financial leases) 2,000 1,776 1,244 998 917 794 641 475 299 228
As % of balance sheet total 35 32 27 30 30 28 23 17 12 10
Inventories 806 799 792 566 445 433 457 469 388 360
As % of total revenue 13 15 18 19 16 16 17 18 16 17
Trade accounts receivable 1,162 1,167 986 658 565 530 563 582 533 534
As % of total revenue 19 21 22 22 20 20 21 22 23 25
Ratio of current assets to
current liabilities 1.7 1.7 1.6 1.7 1.4 1.5 1.6 1.2 1.3 1.4
Group equity as % of
balance sheet total 29 30 31 32 34 35 34 35 39 39
89
Océ 1989-1998
90
Analogue In relation to copiers: producing a copy with the aid of
a photo-lens in a stand-alone machine; here it means
the opposite of digital (see below).
Business Graphics Materials (supplies) for making high quality colour
prints, especially on transparent film for presentations
(see also Display Graphics).
Business Unit A part of the business organisation which serves a
specifically defined market and has responsibility for
managing the development and marketing (sales and
service) of the products destined for that market.
Computer Aided Design.
‘Captive’ lease Lease company with which fixed contracts have been
company concluded.
Coating Applying a special (mostly chemical) layer to paper or
polyester.
Company Wide Connecting up the various specific printing environ-
Printing concept ments which exist within a company via a network
with different configurations.
Computer-based training Training and education in which the computer plays a
central role as a teaching aid.
Consumables Materials which are used (consumed) during copying
or printing.
Contiuous-feed paper Technology in which fanfold paper is fed from a roll
into the printer.
Controller In relation to printer systems: an electronic device
which converts input data into a format which can be
understood by the printer.
CopyPress system System used to produce copies with offset quality by
‘pressing’ the toner into the paper.
Core competences The key areas of know-how and skills of the supplier
with whom a contract is concluded.
cpm Denotes the speed in copies per minute.
Customised manufacture Manufacture of machines in which the customer’s
specific wishes are taken into account on the
production line itself.
Cut sheet Loose sheets of paper which are fed into a printer (as
opposite to fanfold or roll feeding).
Diazo Abbreviation of the word diazonium; a chemical
compound which is coated onto paper so that images
can then be developed on the paper after exposure to
light; a process formerly known as dyeline printing.
Digital In relation to copiers and printers: producing a copy or
print by means of laser or exposure, in a machine
which can be linked up to a network; used here as the
opposite to analogue (see above).
Digitisation The conversion of information into digital codes.
Display Graphics Application area for large format prints, e.g. on
posters, banners and billboards (see also Wide Format
Short Run).
dpi Dots per inch, also known as resolution or print
quality: describes the amount of detail that is visibly
reproduced on a print or copy.
Eco-copier Copying machine designed on the basis of durability
and environmental friendliness.
Electronic printing Market for high to very high volume print-runs.
market
Embedded software Sofware required to control the basic function of a
machine.
Engine Complete driver and controller unit for a (copying)
machine.
Engineering Systems (Previously known as Design Engineering systems.)
Used by Océ to describe machines and supplies for
copying, printing and plotting of large format docu-
ments (up to 0 format).
Facility Services Where the supplier of certain products handles the
work involved in the use of those products; specifically
in those cases where Océ produces copies and prints on
a customer’s premises at that customer’s request.
Fanfold printer High volume printer for processing fanfold
(continuous) forms.
Full colour Also abbreviated as: fc. Image reproduced with the
same colours as the original.
Human interface The development of machines specifically focused on
practicality, simplicity and ease of use.
ImageLogic Specific imaging software/hardware that allows a digital
Océ printer/copier to make optimum-quality prints or
copies of documents containing any combination of
text, graphics and photos, without loss of speed.
Imaging supplies Materials which are used (mainly as information
carriers) in copying, printing and plotting, such as
paper, films, labels, etc.
Inkjet Specific printing technology in which fine droplets of
ink are used to build up the printed image.
Inkjet papers Paper qualities suitable for use in printers based on
inkjet technology.
Inkjet plotters Plotting machines in which the final drawing is trans-
ferred to paper by fine droplets of ink.
Inkjet printer Printer which transfers the final image to paper by
means of very fine droplets of ink.
Interfaces Systems which allow various digital sources and
functions, especially computers, to communicate with
each other.
training Training which mainly concentrates on teaching the
latest developments in information technology.
Job Printing The work done by a business which specialises in
making copies and prints for third parties.
printer language Laser Conditioned Data Stream: printer language used
in specific environments.
List of terms and abbreviations
91
List of terms and abbreviations
Matching principles Buying in goods as much as possible in the same areas
in which the sales are also achieved.
Materials management The management and control of flows of machines,
spare parts and supplies for specific product groups or
products.
Need-to-know basis The level of knowledge required by employees to
perform their own specific job effectively.
supplier Original Equipment Manufacturer: producer who
supplies goods to customers who then market these
under their own brand.
Office Systems Used by Océ to mean: the market for copying and
printing in offices, s, environments, etc.
(includes both machines and supplies).
One-stop-shopping Buying in as many products and services as possible
from one single supplier, such as copiers, printers,
system software, service support as well as their
financing.
Organic Photo Conductor.
Pay-out / pay-out ratio The proportion of the net income that is distributed in
the form of dividend.
Plain paper Ordinary (untreated) paper.
Plotting Analogue or digital printing of a design (usually a
technical drawing) which has been generated using
systems.
ppc Plain paper copying.
ppm Prints per minute: used to denote the speed of a
machine’s output.
Printing The (repeated) production by a printer of an original
document based on data stored in a digital memory.
Printing Systems Used by Océ to describe the market for printer
systems.
Print on Demand Specific printer application: producing small print-
runs as and when required; this eliminates the need to
carry high stocks of documents on paper.
Pull principle Principle applied in managing the stocks of production
components so that components are called off on the
basis of actual usage.
Remanufacturing Replacing the required parts and making the required
adjustments to settings so that the machine will operate
as new when placed in the market again.
Remodelling Adding a different functionality to an existing
machine.
Research and Development.
Resolution (See dpi.)
Scanning Digital reading of an image which is then stored in
digital form in a memory.
Server System which organises and controls the ‘traffic’
between computers and their printer(s).
Stand-alone A copier or printer which is not coupled up to a
network.
Swap(s) Interest rate hedging instrument used to change the
type of interest rate (fixed or variable) attached to a
loan. Also used as a verb: to swap.
Toner (Ink) powder used in copiers and printers to transfer
the image to paper by means of high pressure and heat.
American accounting principles (United States
Generally Accepted Accounting Principles).
Volume segments Internationally accepted industrial standard for
classifying the copying and printing markets into
segments on the basis of the number of copies or prints
produced per machine per month.
Workflow management Systems developed to organise and manage projects.
systems
©1999 Océ ..
Colophon Design/dtp
Baer Cornet , Venlo
Illustrations
Geert Setola, Oirsbeek
Photography
Egon Notermans (Zebra Fotostudio’s), Venlo
Text consultants
Jonkergouw & Van den Akker
Financial Communication Consultants, Amsterdam
Translation
Alan Hemingway, Rijsoord
Lithography and printing
Drukkerij Lecturis .., Eindhoven