Barco continues to generate good cash flows. Big contracts for digital cinema bode well for the future

Kortrijk, Belgium, 22 July 2009 - Barco (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the three and six-month periods ended 30 June, 2009. ¹

Commenting on the results of 2Q09 Mr Van Zele, CEO, re-emphasized that Barco's strategy to focus on cash generation and a healthy balance sheet continued to bear fruit in 2Q09. Free cash flow generated in 2Q09 was 12.4 million euro, 8.2 million euro more than in the same quarter of 2008, thanks to a positive operating cash flow of 8.5 million euro and continued reduction of working capital. Also operating expenses were reduced by 11.8 million euro in 2Q09, bringing the total cost reduction for 1H09 to 26 million euro. At the end of the quarter Barco had a net cash position of 36.9 million euro, up from 24 million euro at the end of the previous quarter.

Sales were down 12 million euro or 6.8% versus the same quarter of last year, but nevertheless up 20 million euro compared to 1Q09. All operating divisions grew their sales compared to the previous quarter except for the medical division, where sales remained flat.

Barco's total order book at the end of the quarter remained healthy at 336.7 million euro, up 1.6% from last year. This order book does not yet reflect several big digital cinema contracts that have been signed during the quarter and that will help to offset the shortfalls in the events market. These contracts have a potential sales value over the next couple of years in excess of 250 million euro.

The company's incoming orders for the quarter were down 22.7% to 140.7 million euro, excluding recent big wins in digital cinema. This is a shortfall of 41.7 million euro compared to 2Q08, primarily in the events and the traffic and surveillance markets.

Gross profit margin was lower year-on-year and continued to be below target, mainly due to substantial inventory write-offs. However, it was improving versus 1Q09. EBITDA was 8.4 million euro compared to 21.4 million euro in 2Q08. Reported EBIT was minus 5.5 million euro for the quarter, depressed by non-cash charges such as reduced capitalization and increased inventory write-offs. Without these non-cash charges EBIT would have been positive for the quarter.

Mr Van Zele concluded his comments on the 2Q09 results by stating that the economic environment is expected to remain difficult in the second half of the year. Nevertheless Barco has a very healthy balance sheet and intends to keep it that way. Furthermore the ongoing management attention for increasing operational excellence will continue to bear fruit. For the remainder of 2009 he also expects the digital cinema market to further offset the decline in sales in other markets which are currently suffering from the economic crisis.

Mr Van Zele also announced that Barco had recently signed an 85 million euro revolving credit facility with key relationship banks. This agreement extends existing maturities with two and a half years.



CONSOLIDATED RESULTS FOR THE QUARTER

Second Quarter 2009 Financial Highlights on the basis of continuing operations:

• Order book at the end of June 2009 was 336.7 million euro. This is an increase of 1.6% compared to the order book of 331.2 million euro the year before. Order intake for the quarter decreased by 22.7% to 140.7 million euro.

• Sales of 164.7 million euro, down 6.8% year-over-year.

• Gross profit declined by 22.2% to 47.0 million euro from 60.4 million euro the previous year. Gross profit margin was 28.5%. Gross profit was 39.0 million in 1Q09, a gross profit margin of 26.9%.

• EBITDA was 8.4 million euro compared to 21.4 million euro in 2Q08.

• EBIT was minus 5.5 million euro versus 6.7 million euro before restructuring in 2Q08. EBIT was negatively affected by non-cash charges such as lower R & D capitalization versus higher amortization and increased inventory write-offs.

• Net income including income from discontinued business was minus 5.2 million euro. In 2Q08 it was 4.6 million euro.

• Net earnings per share were minus 0.44 euro compared to 0.39 euro in 2Q08.

• Free cash flow at the end of the quarter was 12.4 million euro compared to 4.2 million euro the year before.

Second Quarter 2009 Financial Highlights on the basis of reported results*:

* Including the medical advanced visualization business unit Voxar

** 2Q08 before restructuring

The following financial data are based on “continuing operations”


Sales and Order Intake

Sales for the quarter were 164.7 million euro, a 6.8% year-on-year decrease. Compared to 1Q09 sales remained flat in the medical division, but increased in all other divisions.

Sales to Europe, Middle East and Africa represented 46.8% of consolidated sales, while 33.6% of sales were realized in the Americas and 19.6% in Asia Pacific.

Orders in 2Q09 were 140.7 million euro, a decrease of 22.7% compared to the same quarter the year before.

The order book at the end of the quarter was 336.7 million euro or 1.6% higher than at the end of 2Q08.


Evolution order book

Gross Profit

Gross profit decreased year-on-year by 22.2% to 47.0 million euro. Gross profit margin at 28.5% compared to 34.2% in the year ago quarter. Contributing elements to this decrease are a less favorable mix, sell off of slow moving products and very substantial inventory write offs (primarily in the events segment).


EBIT

EBITDA was positive at 8.4 million euro. EBIT however, decreased to minus 5.5 million euro from 6.7 million euro (before restructuring) the previous year, mainly driven by non-cash items such as excess amortization of capitalized R & D and inventory write-offs.

Research & development expenses increased year-on-year from 18.3 million euro to 19.2 million euro, or from 10.3% to 11.7% of sales. The 18.3 million euro in 2Q08 consisted of 20.5 million R & D cash expenses and a net positive impact of capitalization versus amortization of R & D to the amount of 2.2 million euro. In 2Q09 cash expenses were 15.6 million euro and there was a net negative impact of 3.6 million euro of capitalization versus amortization. Sales & Marketing expenses decreased from 28.6 million euro to 24.5 million euro, respectively 16.2% and 14.9% of sales. General & administration also decreased from 11.9 million euro or 6.7% of sales to 10.6 million euro or 6.4% of sales.

Other operating income was 1.9 million euro. 2Q08 had other operating income of 5.1 million euro.


Income Taxes

In 2Q09 there was a positive tax impact of 1.1 million euro compared to a tax expense of 0.8 million euro in 2Q08.


Net Income

Net income for the quarter decreased to minus 5.2 million euro from 4.6 million euro for 2Q08. These amounts include the net income from discontinued operations. Net margin for the quarter was minus 3.2% from 2.6% the year before.

Net earnings per ordinary share (EPS) were minus 0.44 euro, down from 0.39 euro in 2Q08. Fully diluted net earnings per share decreased to minus 0.41 euro from 0.36 euro.



DIVISIONAL RESULTS FOR 2Q09

Media & Entertainment division

Sales in the Media & Entertainment division remained almost flat in 2Q09 compared to the same quarter the year before. Sales are stabilizing and bottoming out in the video & lighting and media segments, but remain weak in the events segment. Sales in the digital cinema market again almost doubled compared to 2Q08 but were still hampered by supply chain shortages. Compared to 1Q09 sales for the division grew by 15.7%.

Order intake is down 26.7% for the division compared to 2Q08 with a clear downward trend in orders from rental companies. Order intake remains stable in fixed installations. In the digital cinema market orders are depending on financing structures. The latter being further developed, very large frame agreements have been made with key integrators and exhibitors worldwide.

The order book at the end of June was 79.4 million euro, up 2.8% from the year before.

Gross profit decreased strongly year-on-year due to a drop in gross margin, which results to a large extent from a shift towards lower margin products and the forced sell-off of media inventory. Furthermore there were also accelerated inventory write-offs in the media segment. EBIT for 2Q09 was at minus 7.8 million euro compared to minus 0.9 million euro the year before. Cost containment actions are ongoing. A further reduction in staff has been carried through and resources are re-allocated between the various market segments served by the Media & Entertainment division.


Security & Monitoring division

Sales in the Security & Monitoring division declined 17.1% year-on-year, despite a strong performance in the defense market, more particularly in the EMEA (Europe, Middle East, Africa) and the APAC (Asia-Pacific) regions. This good performance in sales was a result of the strong order intake in 2008. On the other hand a low order intake in 1Q09 resulted in weak sales for the division in civil applications in North America. Sales performance in general suffers from delays in customer projects. Compared to 1Q09 sales grew by almost 24%.

Order intake for the division was down 16% year-on-year, mainly due to weakening market conditions in the Asian-Pacific region. Specifically in the civil markets there is strong pressure from local competition.

The order book at the end of the quarter was 130.8 million euro, up 9.1% year-on-year.

Gross profit declined compared to 2Q08 as the positive margin evolution in the defense market was offset by price pressure in the civil markets. Despite the decline in gross profit EBIT was on a break even level as lower margins were compensated by strong reductions in operating expenses. There was also an increase in inventory write offs of 1 million euro and warranty obligation for 0.7 million euro.


Medical Imaging division

Sales at the Medical division remained flat compared to the previous quarter but declined 11.0% year-on-year. The EMEA and APAC regions performed well. Sales in North America were weaker than the year before but this market shows signs of recovery.

Order intake declined 3.4% compared to 2Q08 as the sales potential of several large system integrators declined in all regions in the quarter. However, when comparing with 1Q09 a modest recovery can be observed.

The order book at the end of the quarter was 46.4 million euro, an increase of 11.3% compared year-on-year.

Gross profit increased to 40%, up from 38.7% in 2Q08, due to favorable changes in product mix, positive currency effects and higher efficiency in operations. EBIT margin was strong at 12.7% thanks to the positive evolution in gross profit as well as a reduction in operating expenses.


Avionics & Simulation division

Sales in the Avionics & Simulation division were up 17.3% year-on-year with a strong growth of 38.2% in the simulation market. The Avionics market on the other hand went down 29.1% compared to 2Q08. Compared to the previous quarter sales went up almost 10%.

Order intake for the division dropped in line with the global weakness of the aircraft market and with customer decisions in the simulation market being delayed. However, there are signs for a stronger demand in the avionics segment in 2H09, with an expected early recovery in the refurbishment and retrofit segment.

The order book at the end of June 2009 was 81.3 million euro, a drop of 13.3% year-on-year.

Gross profit margins were up both in the avionics and in the simulation segments, resulting in a 7.8 percentage points increase in gross profit margin for the division. EBIT was 1.1 million euro. Operating expenses in the avionics segment were drastically reduced.



CONSOLIDATED RESULTS FOR THE FIRST HALF

First Half 2009 Financial Highlights on the basis of continuing operations

First Half 2009 Financial Highlights on the basis of reported results*:

* Including the medical advanced visualization business unit Voxar

** 2H08 before restructuring

BALANCE SHEET

At the end of June 2009 Barco had a net cash position of 36.9 million euro, compared to a net debt position of 32.8 million euro on 31 December 2008 and a net cash position of 24.0 million euro on 31 March 2009. Barco did not buy back any of its own shares in 1H09 ² . On 30 June 2009 accounts receivable were at 122.2 million euro, down 46.1 million euro compared to 31 December 2008 and 6.0 million euro down compared to the end of 1Q09. End June DSO was 67 days, down from 89 days the year before, a reduction of 25%. Inventory was at 161.6 million euro, a decrease of 19.1 million versus end March 2009. Trade payables were 53.4 million euro, down 7.2 million euro from end March 2009. Capex for 1H09, excluding capitalized R & D, was 1.8 million euro.


OUTLOOK FOR 2009

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

Management expects the economic environment to remain difficult also in the second half of 2009. Nevertheless management points at the very healthy balance sheet of the company and its ongoing efforts to increase operational excellence, which will continue to bear fruit. Management also anticipates the digital cinema market to further offset the decline in sales in other markets which are currently suffering from the economic crisis.


CONFERENCE CALL

Barco will host a conference call with investors and analysts on 22 July, 2009 at 4:30 p.m. CET (10:30 a.m. EST), to discuss the results for the quarter. Eric van Zele, CEO, 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 (NYSE Euronext Brussels: BAR) is headquartered in Belgium and is present in more than 90 countries with about 3300 employees worldwide.


For more information and the full report “3 and 6 month period ended 30 June, 2009”, please visit the Company's website at www.barco.com

¹ Following IFRS rules comparison must be made on the basis of “continuing operations”. This means that the results of the medical advanced visualization activities of the business unit Voxar are 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”, unless otherwise indicated. Barco divested Voxar to Toshiba Medical Systems Corporation, Tokyo, Japan, in 1Q09.

² The company now owns 737,963 of its own shares or 5.82% before dilution. The buy-back program started in
2003. In 1H09 Barco did not buy back any of its own shares.

For more information, please contact

JP Tanghe
Senior Advisor to the CEO
Barco nv

Phone:+32 56/26 23 22
Fax:+32 56/26 22 62
jp.tanghe@barco.com