Results first quarter confirm expectations for further growth in 2008
First Quarter 2008 financial highlights1 on the basis of continuing operations2 :
- The order book at the end of March 2008 amounted to euro 324.5 million compared to euro 336.7 million the previous year. Order intake totaled euro 198.4 million, down 10.3% compared to the same period in 2007 but up 6.4% versus 4Q07.
- Sales amounted to euro 165.7 million, an increase of 5.9%. At constant currencies growth was 14%.
- Gross profit rose by 3.1% to euro 63.4 million from euro 61.5 million the previous year.
- EBIT remained flat at euro 6.5 million. The EBIT margin was 3.9% compared to 4.2% in 1Q07. Currency evolution cost Barco euro 3.7 million in EBIT. At constant currencies EBIT would have grown 57%.
- EBITDA was euro 20.8 million, a margin of 12.6%. In 1Q07 EBITDA was euro 18.9 million, a margin of 12.1%.
- Net income was euro 6.6 million, down 12.8% from euro 7.5 million in 1Q07.
- Net earnings per share were euro 0.55 compared to euro 0.62 for the same period the previous year.
2 Following IFRS rules comparison must be made on the basis of “continuing operations”. This means that the results of the division BarcoVision is shown as a separate line (“results from discontinued operations”) and added to the net results of the continuing operations. All financial data appearing further in this announcement will be based on “continuing operations” for 1Q08 as well as for 1Q07, unless otherwise indicated.
First Quarter 2007 financial highlights on the basis of reported results*: 
* Including BarcoVision
Kortrijk, Belgium, 23 April 2008 – Barco n.v. (NYSE Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the three-month period ended March 31, 2008.
Referring to the 1Q08 results Barco CEO, Martin De Prycker, commented: “We started the year with an increase of sales of 6% in 1Q08 compared to the same quarter of 2007 or 14% at constant currencies. Growth was outstanding in the divisions Security & Monitoring and Medical Imaging, with respectively 15% and 9%. At constant exchange rates sales grew for all divisions. Against the background of the euro, further gaining strength against the USD, it is remarkable that sales growth in North America was 12% quarter-on-quarter. In the Asia Pacific region it was even 20%.”
“Order intake over the first quarter was high, with an increase of 6.4% compared to 4Q07, signaling a further general rise in orders. Compared to 1Q07 the order level was lower, but 1Q07 orders included a very large Chinese contract in the digital cinema market. The Medical Imaging division in particular contributed to the order intake with a growth of 25% compared to the same quarter the previous year. ”
“Gross profit increased by 3% to euro 63.4 million, despite a significant negative impact of the declining USD versus the euro. EBIT remained flat at euro 6.5 million. At constant currencies EBIT would have been euro 10.2 million, which would have meant an increase of 57% compared to the same quarter the previous year. At euro 6.5 million the EBIT margin was 3.9% versus 4.2% the previous year.”
“The ongoing positive development in sales and the growing order intake in 1Q08 confirm our confidence in sustained sales growth for 2008 on the basis of which we expect profit growth for the full year."
Mr De Prycker also stated that management aims to reduce working capital by euro 40 million in 2008.
Concerning the closing of the sale of BarcoVision to Itema, Mr De Prycker added: “On 14 April the European antitrust authority postponed the deal’s final approval, pending further clarification from Itema on a number of issues. However, this does not change the intention of both Barco and Itema to go ahead with the agreement and finalize the acquisition in the nearest possible future. In this respect Barco and Itema have extended the deadline for the closing of the transaction until 30 September 2008. As Barco has communicated before, after closing the deal the Board of Directors will call an extraordinary general shareholders meeting to recommend a capital reduction in the amount of euro 70 million.”
CONSOLIDATED RESULTS FOR THE QUARTER
Sales & Orders
Sales for the quarter increased by 5.9% year-on-year to euro 165.7 million, despite the decline of the USD versus the euro of 14% year-on-year. With a growth in sales of 15% and 9% respectively the Security & Monitoring and the Medical Imaging divisions were the largest contributors to Barco’s total sales growth of Barco in 1Q08. At constant currencies sales grew in all divisions and would have increased by 14%.
Overall order intake was solid with an increase of 6.4% compared to 4Q07, again signaling a general increase in order intake. In particular the Medical Imaging and the Security & Monitoring markets did very well. Compared to 1Q07 order intake decreased. However, 1Q07 orders included a very large Chinese contract in digital cinema.
Sales to Europe, Middle East and Africa represented 45% of consolidated sales, while 37% of sales was achieved in the Americas and 18% in Asia Pacific. Compared to 1Q07 sales growth in the USA was 12% and in APAC 20%.
The book-to-bill ratio was 1.2 compared with 1.42 for 1Q07.
Order book progress 
Gross Profit & Margin
Gross profit increased 3.1% to euro 63.4 million from euro 61.5 million in 1Q07, despite the negative impact of the decline of the USD versus the euro. Gross profit margin was 38.3% versus 39.3% in 1Q07.
Operating Result (EBIT)
EBIT remained flat at euro 6.5 million, or 3.9% of sales. EBIT margin in 1Q07 was 4.2%.
At constant currencies EBIT would have been up euro 3.7 million to euro 10.2 million. This would have been an increase of 57% compared to the same period the year before.
As a percentage of sales, research & development expenses increased year-on-year from 9.9% to 10.6% of sales. Sales & marketing costs increased from 17.7% to 18.0% of sales. General & administration costs decreased from 7.6% of sales to 7.5%.
Other operating results were euro 2.7 million compared to nil in 1Q07. The euro 2.7 million relates to positive currency exchange results realized on short term financial debts held in USD.
Income Taxes
Income taxes increased from euro 1.0 million to euro 1.2 million year-on-year.
Net Income
Net income for the quarter decreased by 12.8% from euro 7.5 million in 1Q07 to euro 6.6 million in 1Q08. The net margin in 1Q08 was 4.0% versus 4.8% the year before.
Net earnings per share (EPS) for the quarter were euro 0.55, down from euro 0.62 in 1Q07. Fully diluted net earnings per share were euro 0.52, compared to euro 0.59 in the same period the year before.
Balance Sheet
At the end of 1Q08 Barco had a net debt position of euro 48.3 million, compared to a net cash position of euro 11.3 million at 31 March 2007. At 31 December 2007 the net debt position was 53.4 million. In 1Q08 Barco did not buy back any of its own shares3. On 31 March 2008 accounts receivable were at euro 169.4 million, compared to euro 188.5 million at the end of March 2007 and euro 202.4 million at 31 December 2007. Inventory was at euro 218.1 million versus euro 172.6 million on 31 March 2007 and euro 204.0 at 31 December 2007. Capex for 1Q08 was euro 2.9 million.
3 The company now owns 710,063 of its shares or 5.6% before dilution. The buy-back program started in 2003.
DIVISIONAL RESULTS FOR THE QUARTER
Media & Entertainment Division
Sales at the Media & Entertainment Division declined 2.2%% year-on-year. At constant currencies sales would have grown 4%.
Orders decreased by 36.5%. This was largely due to an important Chinese order for digital cinema in 1Q07. Important to note is the increase in order intake of 28.7% compared to 4Q07 as this indicates a turnaround from the reduced growth rate in orders in the second half of 2007.
At the end of 1Q08 the order book totaled euro 57.2 million.
Gross profit decreased by 6.9%. EBIT margin was 1.6% versus 5.0% the year before.
Security & Monitoring Division
Sales grew 14.6%, with strong growth in the defense and traffic & surveillance markets. At constant currencies sales growth for the division would have been 23%.
Orders showed a slight decline, but grew at constant currencies. Growth was good in the broadcast and telecom markets with orders for broadcast master control rooms and IPTV monitoring. In the utility market orders Eastern Europe, the Middle East and Asia Pacific contributed to the growth in orders.
At the end of 1Q08 the order book totaled euro 128.4 million.
Gross profit increased by 9.9%. The EBIT margin was 4.6% versus 2.1% in 1Q07, thanks to a higher gross profit, but partially offset by increased sales & marketing costs.
Medical Imaging Division
Sales in the Medical imaging division increased by 9.5%. Sales in the PACS market were driven by a large shipment of mammography displays in the USA. Sales also experienced strong growth in the modality market.
Order intake for the Medical Imaging division grew by 25.2% with a contribution from all three geographical areas. The modality market did particularly well.
At the end of 1Q08 the order book totaled euro 44.8 million.
Gross profit rose 9.5%. EBIT margin was 15.1% compared to 10.4% in the same period of the year before. This increase is based on the higher gross profit and a favorable product mix.
Other markets
The simulation market had a higher order intake but lower sales in 1Q08. The presentation market saw a decline in order intake but a good growth in sales. The avionics market had a very good growth in order intake and in sales.
At the end of 1Q08 the order book totaled euro 95.9 million.
EBIT margin was (8.2%), down from (2.5%) in 1Q07, as the gross profit was unable to offset major investments in product development for the simulation and avionics markets.
OUTLOOK FOR FULL YEAR 2008
The following statements are forward looking and actual results may differ materially.
The ongoing positive evolution in sales and the growing order intake in 1Q08 confirm management’s confidence in sustained sales growth for 2008. On this basis management expects profit growth for the full year.
CONFERENCE CALL
Barco will hold a conference call with investors and analysts on 23 April, 2008, starting at 4.30 p.m. CET (10.30 a.m. EST), to discuss the results for the quarter. The call will be hosted by Martin De Prycker, CEO, Dirk De Man, CFO and JP Tanghe, IRO.
An audio cast of this conference call will be available on the Company’s website www.barco.com before 8.00 p.m. CET (2.00 p.m. EST).
ABOUT BARCO
Barco, a global technology company, designs and develops visualization products for a variety of professional markets. Barco has its own facilities for Sales & Marketing, Customer Support, R&D and Manufacturing in Europe, North America and Asia Pacific.
Barco is active in more than 90 countries with approximately 3600 employees worldwide.
The company is listed on NYSE Euronext Brussels (BAR).
For more information and the full report “3 months ended 31 March 2008”, please visit the Company’s website at www.barco.com.
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