Oce Announces Provisional Results for the Fourth Quarter and 2006 Financial Year.TRUMBULL, Conn. -- Oce N.V. (Nasdaq: OCENY): Highlights: * Fourth quarter better than expected. * Normalized operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up by 37.7%. * Strong positive free cash flow (Euro 127 million). * Integration of Oce Imagistics completed and synergies achieved. Comments by CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Rokus van Iperen: "The Strategic Business Unit Wide Format Printing Systems delivered good results in the fourth quarter and for 2006 as a whole. The Strategic Business Unit Digital Document Systems booked a slightly better result in the fourth quarter, but its performance for the full year was lower than expected. This was attributable in particular to delivery and product issues which have been almost fully solved. The integration of Imagistics was successfully completed ahead of schedule and the anticipated synergies have been achieved. "Our three strategic thrusts continue to be: increasing our distributive dis·trib·u·tive adj. 1. a. Of, relating to, or involving distribution. b. Serving to distribute. 2. strength, ongoing innovation of our product range and optimizing our business processes. Within Digital Document Systems the successful Imagistics model will also be implemented in Europe so as to improve profitability. In addition our product range will consist of a well balanced mix of our own printing systems and printers sourced from third parties. In developing our own products we will focus on high volume and wide format printers." Oce closes 2006 better than expected [TABLE OMITTED] Fourth quarter: better than expected Total revenues in the fourth quarter increased by 8.8% to [euro] 832.1 million. Excluding exchange rate effects the increase amounted to 11.4%. Non-recurring revenues increased by 9.9% (excluding exchange rate effects the increase was 11.7%). Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues were 8.3% higher (up 11.2% excluding exchange rate effects). In the table on page 9 we give an indication of the development of total revenues after adjustment for the effects of the Imagistics acquisition and exchange rates. As can be seen from that table, total indicative revenues were 1.4% higher, with non-recurring revenues gaining 2.5% and recurring revenues up by 0.8%. The gross margin increased by 1.8% from 40.7% to 42.5%. The increase is the result of volume mix effects (0.8%). Hedge results contributed 1.0% to the increase in the gross margin. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were lower as a result of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). operation initiated in 2005. Additionally, exchange rate effects had a positive impact on the development of expenses. During the quarter [euro] 13 million was capitalized on R&D costs. This is [euro] 5 million higher than in the third quarter, specifically because of the introduction of the Oce VarioPrint 6250. As a result, relatively higher than normal development costs were incurred in the fourth quarter. Operating income decreased from [euro] 70.6 million to [euro] 43.8 million. The normalized operating income, as shown above, provides a better insight into how the business developed. Normalized operating income increased from [euro] 35.4 million in the fourth quarter of 2005 to [euro] 48.7 million in the fourth quarter of 2006. Financing expenses in the fourth quarter amounted to [euro] 12.9 million. Taxes were [euro]4.2 million. Net income amounted to [euro] 26.7 million (2005: [euro] 52.1 million). Net income per ordinary share outstanding amounted to [euro] 0.28. [TABLE OMITTED] Strategic Business Unit Digital Document Systems: financial results slightly improved Revenues in the Strategic Business Unit Digital Document Systems (DDS (1) (Digital Data Storage) See DAT. (2) (Data Dictionary System) See QuickBuild and OpenDDS. (3) (Dataphone Digital S ) grew by 12.0% to [euro] 598.5 million. This increase was primarily due to the acquisition of Imagistics (approx. 14%). Exchange rate effects were 2.5% negative. Non-recurring revenues increased by 13.3%. After adjustment for exchange rate effects (-1.7%) and acquisition effects non-recurring revenues increased by approx. 1.5%. This increase has to be compared with what was also a very strong fourth quarter in 2005. Recurring revenues increased by 11.4%. After taking into account the revenues that resulted from the acquisition of Imagistics and the effects of exchange rates (-2.9%) recurring revenues remained stable compared to the fourth quarter of 2005. The trend in recurring revenues excluding currency effects shows an improvement on a year-on-year basis (2006: - 0.5%; 2005: -3.8%). The operating income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) of DDS amounted to [euro] 20.1 million (2005: [euro] 40.5 million). Normalized EBIT was [euro] 25.2 million (2005: [euro] 19.0 million). The integration of Oce Imagistics within Oce North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. has been completed. Imagistics delivered a solid financial performance. The business synergies of [euro] 5 million planned for 2006 have been realized. The cost savings achieved during 2006 amounted to [euro] 12 million, which was higher than anticipated. Strategic Business Unit Wide Format Printing Systems: another strong quarter In the Strategic Business Unit Wide Format Printing Systems (WFPS WFPS Water-Filled Pore Space ) revenues grew by 1.5% to [euro] 233.6 million. Excluding exchange rate effects, revenues were 4.0% higher. Non-recurring revenues increased by 2.4% (excluding exchange rate effects, by 4.4%). This increase in revenues was due in particular to our success in selling color machines and the ongoing updating of our innovative black and white printers. Recurring revenues also developed well and increased by 1.0% (excluding exchange rate effects, by 3.4%). Revenues from service contracts, toner An electrically charged ink used in copy machines and laser printers. It adheres to an invisible image that has been charged with the opposite polarity onto a plate or drum or onto the paper itself. and ink as well as total revenues in the Imaging Supplies business group showed healthy growth. Operating income amounted to [euro] 23.7 million (2005: [euro] 30.1 million). The normalized operating income increased from [euro] 16.4 million to [euro] 23.5 million. Thanks to successful black and white and color products Oce has succeeded in gaining market share in Technical Document Systems. Particularly in the color market the Oce TCS (Transportation Control System) A widely used integrated information system for railroad transportation developed by the Missouri Pacific Railroad Company in the late 1960s and early 1970s. It was later implemented by Union Pacific when the companies merged. 300 and Oce TCS500 have been very successful. Provisional results 2006 financial year Total revenues in 2006 increased by 16.2%. Excluding acquisition and exchange rate effects the increase was 0.3%. Non-recurring revenues were up by 14.9%. This growth in revenues was due entirely to the acquisition of Imagistics. Recurring revenues increased by 16.7%. Excluding acquisition effects (15.6%) and exchange rate effects the increase amounted to 0.8%. The gross margin amounted to 42.1% (2005: 41.5%). This margin increase resulted from the acquisition of Imagistics. Operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. as a percentage of total revenues amounted to 38.8%. During 2006 a total amount of [euro] 25 million net was capitalized on R&D costs. With effect from December 1, 2005 the gross margin and operating expenses of Oce Imagistics have been reported in line with those of the Oce Group. The operating income for the year 2006 was [euro] 102.2 million (2005: [euro] 112.5 million). EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become amounted to [euro] 306.1 million, an increase of 19.1% compared to 2005 ([euro] 257.0 million). Net income went down from [euro] 82.2 million to [euro] 57.1 million. Net income per ordinary share amounted to [euro] 0.63 (2005: [euro] 0.93). Strategy 2007-2010 Oce offers customers a complete spectrum of innovative products and services consisting of a well balanced mix of products it has developed itself and high quality products sourced from third parties. Our direct sales and service organization, together with carefully selected distributors, ensure that service to each customer is optimal. The strategy is focused on value creation through growth. The three strategic thrusts aimed at achieving profitable growth are: distributive strength, competitive products and the optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. of business processes. Oce has various operational excellence projects for the optimization and harmonization har·mo·nize v. har·mo·nized, har·mo·niz·ing, har·mo·niz·es v.tr. 1. To bring or come into agreement or harmony. See Synonyms at agree. 2. Music To provide harmony for (a melody). of business processes as well as the supporting of ICT (1) (Information and Communications Technology) An umbrella term for the information technology field. See IT. (2) (International Computers and Tabulators) See ICL. 1. (testing) ICT - In Circuit Test. and the optimization of working capital. The aim of these projects is a cost reduction of [euro] 75 million to [euro] 100 million compared to the cost level in 2006. Digital Document Systems To improve the competitive position of DDS the concept of the balanced product mix will be fine-tuned further in the years ahead. More than in the past, third-party (OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ) products will be included in the range. This model is already being applied in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. by Oce Imagistics and will also be rolled out in Europe during 2007. In this way Oce will be able to offer the customer the best possible product range. Partly thanks to the use of open architecture software developed by the company itself and marketed under the PRISMA PRISMA Probing Rotation and Interior of Stars: Microvariability and Activity PRISMA Preparation of Regional Industry for the Single Market (EU) brand, the fleet of installed printers will link up seamlessly with the customer's document requirements and will be constantly brought into line with the evolving needs. Our integrated workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. software is also compatible with OEM systems and those of our competitors. In combination with the increase in our distributive strength, this strategy will lead to the required growth in the fleet of installed machines and the related improvement in the degree of capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. of the service organization, particularly for the Corporate and Commercial Printing Systems business groups. Oce Business Services will further strengthen this model by offering an integrated concept that will guarantee that the customer is provided with the best possible service in the area of documents and document management. Wide Format Printing Systems In WFPS the distributive strength will be further boosted by expanding both the direct and the indirect sales channels in Asia. In WFPS, too, the balanced product mix concept will be applied, specifically in Display Graphics. Financial objectives The financial objectives for the 2007-2010 period are an average organic revenues growth of at least 5% per year, maintaining the level of the relative gross margin and a Return on Capital Employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). (RoCE) of at least 13% by 2010. Balance sheet and cash flow The balance sheet total at the end of 2006 amounted to [euro] 2,652 million. Due to exchange rate changes and a reduction of the working capital, total assets decreased by [euro] 195 million compared to the 2005 year end. Net Capital Employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. (excluding cash) was [euro] 161 million lower at the end of 2006 compared to the end of 2005. The development of the balance sheet has made a substantial contribution to free cash flow, which amounted to [euro] 127 million in the fourth quarter and [euro] 119 million for the full year. Proposed dividend for 2006: [euro] 0.58 per ordinary share Oce proposes to shareholders that the dividend for 2006 be maintained at [euro] 0.58 per ordinary share of [euro] 0.50 nominal. If this proposal is accepted, the final dividend per ordinary share for 2006 will amount to [euro] 0.43 in cash. The interim dividend for 2006 amounted to [euro] 0.15 per ordinary share. April 19, 2007: General Meeting of Shareholders The Annual General Meeting of Shareholders will be held on April 19, 2007 in Venlo. The agenda for the meeting will be published on March 15, 2007. The annual report will be available on-line as from February 1, 2007 on the website: www.investor.oce.com Outlook 2007 We will continue to implement our strategy of expanding distribution strength, launching innovative new products and optimizing our business processes. We are convinced that this strategy will enable us to create significant value for our customers, employees and shareholders. At the moment the Board of Executive Directors is not making a prediction of the 2007 full year results. Board of Executive Directors Oce N.V. January 15, 2007 The full report can be downloaded at the international website http://www.oce.com/en/Investor/QR/2006-Q4.htm About Oce Oce N.V. (NASDAQ: OCENY) is a leading international provider of digital document management technology and services. The company's solutions are based on Oce's advanced software applications that deliver documents and data over internal networks and the Internet to printing devices and archives -- locally and around the world. Supporting the workflow solutions are Oce digital printers and scanners, considered the most reliable and productive in the world. Oce also offers a wide range of display graphics, consulting and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. solutions. Oce employs around 24,000 people, with 2006 annual revenues of $4 billion, operates in approximately one hundred countries and maintains research and manufacturing centers in the Netherlands, the Netherlands, The officially Kingdom of The Netherlands byname Holland Country, northwestern Europe. Area: 16,034 sq mi (41,528 sq km). Population (2005 est.): 16,300,000. Capital: Amsterdam. Seat of government: The Hague. Most of the people are Dutch. United States, Canada, Germany, France, Belgium, the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. , and Romania. Oce North America is headquartered in Trumbull, CT, with additional business units in Chicago, IL; New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. ; Boca Raton Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , FL; Salt Lake City, UT; Coventry, RI; and Vancouver, BC. For more information about Oce, visit www.oceusa.com. Outside the U.S., consult www.oce.com |
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