2007 shows good growth in sales and EBIT

Barco CEO, Martin De Prycker, commented on these results: “For the full year 2007 sales on the basis of continuing operations grew by 9.7% while orders rose 6.6%. We achieved these results despite a significant negative currency impact. For instance the value of the US dollar versus the euro decreased with 9.2% in 2007. Excluding the exchange impact all divisions have increased their sales compared to 2006 and sales for the whole of Barco would have risen 15%. It is clear that targeting growth markets pays off.”

“Following the higher sales volume gross profit increased. Gross profit margin on the other hand was somewhat lower, due to the negative currency effect and the product mix. 2007 shows a larger share of the Media & Entertainment division in total sales of Barco and this division typically has lower gross profit margins than the other divisions. We estimate the currency impact on our operational profit at euro 10 million. Still we succeeded in growing the operational profit for the full year with 12.5%. This increase would have been around 32% excluding the currency impact. Even though the ongoing drop of the USD/euro rate favors USD-based competitors, our growth in orders, sales and operational profit proves that the challenges put to us by the evolution of the currency rates help us to become even more innovative and more efficient in the way we do business.”

“In 2007 we also announced the divestment of BarcoVision, the division which is active mainly in technology for the textile machine market. Pending final approval by antitrust authorities the divestment has not yet been closed. This is expected in the coming months and will be followed by a capital reduction to the amount of euro 70 million. This will result in a payment of approximately euro 5.8 per share. We also started the divestment of the third and final part of the former subcontracting division, Manufacturing Services. This deal was closed in January 2008. The net impact of this transaction is neutral.”

“Our expectations for organic growth in 2008 are supported by the order book of euro 304.5 million at the end of 2007, an increase of 9.7% compared to the year before. Focus in 2008 will be on improved operational efficiency and on working capital. In 2007 we have already seen the first results of our focus on improving working capital as we were able to decrease DSO (Days Standing Out) in accounts receivables. More has to be done however, in particular as far as reducing inventory is concerned.”



CONSOLIDATED RESULTS FOR THE QUARTER

Fourth Quarter 2007 Financial Highlights¹ on the basis of continuing operations² :

• Order book at the end of December 2007 was euro 304.5 million. This is an increase of 9.7% compared to the order book of euro 277.6 million the year before. Orders increased with 3.6% to euro 186.6 million.
• Sales reached euro 225.4 million, up 9.7% year-over-year and exceeded anticipations for growth between 7 and 9%.
• Gross profit rose by 4.9% to euro 86.9 million from euro 82.9 million the previous year.
• EBIT was euro 27.0 million, up 17.9%. EBIT margin was 12.0% in 4Q07 versus 11.1% in 4Q06.
• Net income up 247% to euro 20.7 million, from euro 5.9 million.
• Net income including net income from discontinued business is euro 23.0 million. In 2006 it was euro 8.1 million.
• Net earnings per share increased with 287% to euro 1.92 from euro 0.67 in 4Q06.

Fourth Quarter 2007 Financial Highlights on the basis of continuing operations:

* FX: Foreign Exchange Rate

Fourth Quarter 2007 Financial Highlights on the basis of reported results *:

* Including BarcoVision and mechanical part of Manufacturing Services
** Not including the parts of Manufacturing Services, divested in 2006

The following financial data are based on “continuing operations”

Sales and Orders

Sales for the quarter were euro 225.4 million, a 9.7% year-on-year increase. Growth came from all divisions, except Medical Imaging. Sales at the Media & Entertainment division increased with 38,0%.

Sales to Europe, Middle East and Africa represented 39.2% of consolidated sales, while 37.0% of sales were realized in the Americas and 23.8% in Asia Pacific.

Orders in 4Q06 orders were euro 186.6 million, an increase of 3.6% compared to the same quarter the year before. All divisions with the exception of Medical Imaging contributed to this growth. The Security & Monitoring division had a growth in orders of 14.3%.

The order book at the end of the quarter was euro 304.5 million or 9.7% higher than at the end of 4Q06.


Evolution order book

Gross Profit & Margin

Gross profit increased year-on-year by 4.9% to euro 86.9 million. Gross profit margin at 38.6% compared to 40.3% in the year ago quarter.


Operating Results (EBIT)

EBIT increased 17.9% year-on-year to euro 27.0 million. The negative currency impact amounted to euro 6.7 million.

EBIT margin increased to 12.0% from 11.1% in 4Q06.

Other operating income was euro 2.5 million compared to minus euro 3.6 million in 4Q06.


Income Taxes

Taxes were euro 5.6 million compared to euro 5.0 million in 4Q06.

 

Net Income

Net income for the quarter increased by 185% to euro 23.0 million from euro 8.1 million for 4Q06. These amounts include the net income from discontinued operations. Net margin for the quarter was 10.2% up from 3.9% the year before.

Net earnings per ordinary share (EPS) were euro 1.92, up from euro 0.67 in 4Q06. Fully diluted net earnings per share increased to euro 1.82 from euro 0.63.



CONSOLIDATED RESULTS FOR FISCAL YEAR 2007


Fiscal year 2007 Financial Highlights³ on the basis of continuing operations:

• Order book at the end of December 2007 was euro 304.5 million, an increase of 9.7% compared to the order book at 31 December 2006. Orders increased by 6.6% to euro 795.4 million year-over-year.
• Sales reached euro 747.2 million, a 9.7% increase year-over-year. Without foreign exchange impact growth would have been 15%.
• Gross profit rose to euro 289.7 million from euro 276.3 million the year before, an increase of 4.8%.
• EBIT was up 12.5% to euro 57.5 million from euro 51.1 million in 2006. EBIT margin was 7.7% versus 7.5% the year before.
• Net income up 68% % to euro 44.8, from euro 26.7 million. Net margin was 6% in 2007 versus 3.9% in 2006.
• Net income including net income from discontinued business grew 60% to euro 53.3 million or 7.1% net margin. In 2006 it was euro 33.3 million or a net margin of 4.9%.
• EBITDA was up 14.8% to euro 112.4 million versus euro 97.9 million in 2006. EBITDA margin was 15.0% in 2007 and 14.4% in 2006.
• Net earnings per share increased to euro 4.43 from euro 2.76 .

Fiscal Year 2007 Financial Highlights on the basis of continuing operations:

 

Fiscal Year 2007 Financial Highlights on the basis of reported results *:

* Including BarcoVision and mechanical part of Manufacturing Services
** Not including the parts of Manufacturing Services, divested in 2006


Sales and Orders

Sales grew 9.7% to euro 747.2 million. At constant foreign exchange rates sales growth would have reached 15%. Excluding the negative currency impact sales grew in all divisions. The division Media & Entertainment recorded the highest growth with 28%.

Sales to Europe, Middle East and Africa represented 45.5% of consolidated sales. 34.5% of sales were realized in the Americas and 20.0% in Asia Pacific.

Orders in 2007 increased 6.6% over those of 2006, with growth in all divisions with the exception of Medical Imaging.

The order book was 9.7% higher at the end of 4Q07: euro 304.5 million compared to euro 277.6 million the year before.


Gross Profit & Margin

Gross profit rose to euro 289.7 million from euro 276.3 million the year before. This 4.8% increase is the result of the higher sales volume. Gross profit margin was somewhat lower due to the negative currency impact and the product mix. The share of sales from the Media & Entertainment division was higher in 2007 than in 2006 and this division has lower gross profit margins than the other divisions.


Operating Results (EBIT)

EBIT increased by 12.5% to euro 57.5 million, from euro 51.1 million in 2006. The negative impact of foreign exchange rates was euro 10 million. Excluding this negative impact EBIT would have grown 32%. EBIT margin was at 7.7% up from 7.5% the year before.

Research & development investments increased with euro 8.6 million to 9.2% of sales versus 8.9% of sales in 2006. Sales and marketing investments increased with euro 1.7 million to 15.2% of sales versus 16.5% the year before. General and administration expenses were up euro 2.8 million to 6.7% of sales compared to 6.9% in 2006.

Other operating income was euro 0.6 million. In 2006 other operating result was euro minus 5.5 million.


Income Taxes

Income taxes amounted to euro 10.5 million. Income tax represents 19.2 % of pre-tax earnings.


Net Income

Net income increased with 60% to euro 53.3 million from euro 33.3 million in 2006. These amounts include the net income from discontinued operations. Net earnings per ordinary share (EPS) increased to euro 4.43 from euro 2.76. Fully diluted net earnings per share were euro 4.19 compared with euro 2.61 in the prior year.


Balance Sheet

At the end of December 2007 Barco had a net debt position of euro 53.4 million, compared to a net debt position of euro 12.4 million on 31 December 2006. In 2007 a euro 27.5 million dividend payment was made and euro 11.4 million was spent on the share buy-back program⁴ . On 31 December 2007 accounts receivable were at euro 202.4 million or 79 days compared to euro 187.3 million at the end of September 2007 or 95 days and euro 208.3 million or 89 days at the end of December 2006. Inventory was at euro 204.1 million versus euro 196.3 million on 30 September 2007 and euro 138.3 million on 31 December 2006. Capex for 2007, excluding capitalized R & D, was euro 13.0 million.

DIVISIONAL RESULTS FOR FISCAL YEAR 2007

Media & Entertainment division

Sales at the Media & Entertainment division grew 28.5% compared to 2006 with a strong increase in the events market. In the media market sales growth was 31% and thanks to a large project in China digital cinema sales grew fast as well. Excluding foreign exchange impact growth in sales would have been 34%.

Orders increased with 9% compared to 2006. In line with the positive trend in the market, the events business did very well, although a reduced growth rate was noted in the second half of the year. With new products to be introduced in the first half of 2008 order intake is expected to pick up again. Orders remained flat in the media market. They grew strongly in digital cinema in line with the expansion of this market.

The order book at the end of the year was euro 53.5 million compared to euro 75.3 the year before.

Gross profit improved 28% year-on-year. EBIT went from euro 2.6 million to euro 19.6 million. EBIT margin was 7.2% versus 1.2% the year before.


Security & Monitoring division

Growth in sales in the Security & Monitoring division was 5.2%. All markets contributed to this
growth except defense. Sales growth for the division would have been 9% excluding currency impact.

In 2007 orders grew 15.1%, with a strong performance in the broadcast, defense and air traffic control markets. In this way the order book at the end of 2007 was up 28.2% to euro 124.6 million from euro 97.2 million the year before.

Gross profit grew only moderately versus 2006, due to price pressure and currency erosion. The high EBIT margin of 16.1% of 4Q07 made up for the lower margins in the first 3 quarters of the year. For the full year it was 6.8% compared to 6.9% in 2006.


Medical Imaging division

Overall sales declined 2.3% compared to the year before. Excluding the negative currency impact they would have grown 3%. Sales in the PACS market were lower than the year before due to lower sales in the USA only. This decrease was partially offset by a very strong growth in the modality market.

Orders declined 6.3%, again because of the US market with the impact of the Deficit Reduction Act. Orders grew however, in the EMEA (Europe, Middle East and Africa) and in the APAC (Asia Pacific) markets. At the end of December 2007 the order book was euro 39.1 million versus euro 32.8 million the year before, an increase of 19.2%.

Due to the lower sales volume, product mix and cost, gross profit margin declined. EBIT margin also declined from 17.2% to 9.3%, due to the lower sales volume and the lower gross margin.


Other Markets

Sales in the simulation market increased 8.2%, mainly thanks to the flight simulation and oil & gas markets. As new products were only introduced at the end of 2007 sales in the presentation market declined. The avionics market showed a strong growth of 12.8%.

Orders increased, mainly driven by flight simulation and the oil & gas market.
The order book in “other markets” increased with 15.1% from euro 78.2 million in 2006 to 90 million in 2007.

EBIT margin improved in the simulation market. This increase was offset however, by increased R & D in the avionics market and lower sales in the presentation market.


DIVIDEND

The Board of Directors will propose to the Annual General Shareholders’ meeting of 24 April, 2008, to increase the dividend to euro 2.40. This would bring the pay-out ratio to 54.2 %.


OUTLOOK FOR 2008

The following statements are forward looking and actual results may differ materially.

Barco management anticipates further sales and EBIT growth in 2008. Management will in particular focus on operational efficiency and on working capital. It will also extend Barco’s product and competitive positioning in its selected growth markets. Furthermore an increase of natural hedging is targeted by increasing sourcing and R & D in Asia.

A capital reduction of euro 70 million will be done within 6 months after the closing of the divestment of the division BarcoVision. This will result in a payment of approximately euro 5.8 per share.




CONFERENCE CALL

Barco will host a conference call with investors and analysts on 13 February, 2008, starting at 4:30 p.m. CET (10:30 a.m. EST), to discuss the results for the quarter. Mr. Martin De Prycker, Barco’s CEO , Mr. Dirk De Man, CFO and JP Tanghe, IRO will host the call.

An audio cast of this conference call will be available on the Company’s website www.barco.com at 8:00 p.m. Brussels time (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 (Euronext Brussels: BAR) is headquartered in Belgium and is present in more than 90 countries with about 3600 employees worldwide.



For more information and the full report “3 and 12 month period ended 31 December, 2007”, please visit the Company’s website at www.barco.com


Our auditor has confirmed that his audit procedures of the consolidated financial statements are substantially completed and that these procedures have not revealed any material modification that would have to be made to the accounting information, derived from the consolidated financial statements and included in this communiqué.

For more information, please contact

JP Tanghe
Senior Advisor to the CEO
Barco nv

Telephone +32 56/26 23 22
jp.tanghe@barco.com