Oce N.V.

Urbanusweg 43, 5914 CA

VENLO, The Netherlands

www.oce.com
 

Sales

$3.3 billion

Business Description 
Océ is one of the world’s leading suppliers of high quality products, services and complete solutions for use by professionals in print and document management environments, primarily in environments where large numbers of documents are processed.

Strategic Business Units

The Company has two strategic business units: Digital Document Systems and Wide Format Printing Systems. Each of the two units have been further divided into the following groups:

Digital Document Systems
• Corporate Printing
• Commercial Printing
• Facility Services
• Software & Professional Services

Wide Format Printing Systems
• Technical Document Systems
• Display Graphics Systems
• Imaging Supplies

Digital Document Systems

During 2002, Océ combined its strategic business units Document Printing Systems (“DPS”) and Production Printing Systems (“PPS”) into the Digital Document Systems (“DDS”) unit to better align the Company’s business units with the market developments for its products and services. The DDS business unit has been further divided into four business groups, tailored to serve specific types of customers or market activities: Corporate Printing, Commercial Printing, Software and Professional Services and Facility Services.

The most important reasons for the reallocation of activities within DDS were the convergence of the originally highly different market segments in which PPS and DPS units were active, the continuing transfer from analog to digital products and the need for digital print solutions in the market for commercial printing. This convergence was most noticeable in the office environment, where digital networks are causing a blurring of the borders between the use of copiers in traditional office environments, in graphic departments and in data processing centers.

To respond to this change in the market, the Company formed the new Corporate Printing business group within the DDS segment to concentrate on organizations in which documents support the primary business processes. The second business group within the DDS business unit is the Commercial Printing group, which focuses mainly on organizations that use Océ equipment and services for commercial applications, such as marketing services, quick printers and copy shops, the printing industry and newspaper production.

The last two business groups within the DDS business unit are the Facility Services group and the Software & Professional Services group, respectively. Each of these groups focus on relatively new areas of activities which play an important role in Océ’s strategy in document management markets. Both of these groups emphasize the great importance that Océ attaches to offering products and services to meet the needs of customer-specific document processes. The Software & Professional Services group focuses on providing software, services and support to customers seeking digital solutions for document production systems. The Facility Services group focuses on customers who want to outsource their document management activities.

The Company’s existing range and the recent introductions of products by the DDS business unit give Océ a unique position in the market. Océ offers a complete range of print machines operating at speeds from 45 to 1,200 pages per minute. In connection with the restructuring in 2002, machines sold by the DDS business unit are now marketed and sold under the family name of “Océ VarioPrint” (cutsheet) or “Océ VarioStream” (continuous feed) printers, and include a number of products with a range of various speeds. For example, the Océ VarioPrint 2000 series is sold for use in typical office applications and can print in a range of various speeds. The Company continues to enhance this line of machines and intends to introduce the latest addition to this machine series in 2003, which will be called the Océ VarioPrint 2090, will have multi functions and will be able to print up to 85 pages per minute. The DDS business unit also offers the Océ VarioPrint 5000, a cutsheet machine that prints up to 158 pages per minute and offers great versatility and high flexibility in terms of input and output. This machine serves as one of the DDS business unit’s flagship products, notably in the insurance industry and for printing in corporate data centers. Forthe most demanding applications the DDS business unit offers the new Océ VarioStream 6100, as an entry-level system as well as the Océ VarioStream 7000, the successor to the highly successful PageStream series. The Océ VarioStream 7000 is the very latest development in continuous feed systems, featuring a faster speed and excellent print quality.

Corporate Printing

Corporate Printing provides print solutions to high-production environments and print management solutions through sales of hardware, software and services, at departmental and central levels. This group offers innovative print and document management products and services to assist customers in managing their documents efficiently and effectively. Corporate Printing primarily serves finance and communication organizations, banks, insurance companies, telecom companies, utility companies, governmental organizations, health care organizations, educational institutions, manufacturing companies, retail organizations, wholesale trade organization, transportation companies, logistics and consulting companies. The primary applications offered by this group are office applications, document production and transaction printing.

Commercial Printing

Commercial Printing provides print solutions to high production environments and print management solutions through sales of hardware and sales of software and services relating to the management, distribution and printing of documents, with a focus on print-for-pay applications and environments. Applications provided by this group include personalized mailshots, time-critical and cost-effective printing of limited print-runs of newspapers and printing-on-demand. Commercial Printing primarily serves newspaper publishers, the printing industry, copy shops and quick printers.

The significant machines developed by Océ for this market segment in 2002 were the Océ VarioPrint 5000, the Océ VarioStream 6100 and the Océ VarioStream 7000. The Océ VarioPrint 5000 is a strong product offering for the printing industry. The Company responded to an ever higher demand for print quality in combination with high speed by introducing its VarioStream machines. The Océ VarioStream 7000 (installed in a ‘twin’ configuration) can operate at a speed of 1,200 pages per minute and with a print resolution up to 600 dpi. The resolution can be easily and quickly adjusted to the required setting.

The growth of the digital print volume in the Commercial Printing business group is highest in the graphic arts industry and in the digital printing of newspapers. Currently, only a limited proportion of this volume is digitally printed. In conjunction with several major publishing houses, Océ took major steps in 2002 to create additional opportunities in this market enabling customers to perform smaller print-runs profitably.

In response to the demands of the printing industry, Océ also introduced the Océ Digital Newspaper Network in 2002. The Océ Digital Newspaper Network coordinates a network of print shops which are located in various big cities throughout the world to print a number of newspapers that are supplied in digital form. This network enables customers to supply newspapers to readers all over the world on the day of original publication. The benefits are that the news is much more up-to-date and the customer is able to achieve considerable savings on logistics costs.

Facility Services

The Company provides printing, copying and document management outsourcing services through its Facility Services group. Through this group, customers of the Company outsource document processing within the customer’s organization, such as copying, scanning, printing, distribution and other activities, to the Facility Services group. Applications offered by the Facility Services group include consulting and design, implementation and training, service and support. Often, the Facility Services group assumes full responsibility for management and operation of the total document processing functions within a customer’s organization.

Organizations are increasingly outsourcing their printing, distribution and copying non-core activities to specialized companies. Printing and copying activities and, to an increasing extent, the complete document management process, are no longer viewed by many organizations as a mainstream activity and are therefore outsourced to third parties. To respond to this growing customer demand, Océ combined all of its activities in this area into the Facility Services group. The Facility Services group is one of the fastest-growing activities within the Company. During 2002 revenues of this group increased by 17%, compared to a 25% increase in 2001 and a 48% increase in 2000.

One of the underlying reasons for the development of Facility Services as a separate activity is the close contact it provides with the customer. Customers are assured of a service that links seamlessly with the needs of their business processes, while Océ gains an in-depth knowledge of that business and closely monitors and improves the document flows within the business. This leads to the creation of new services, such as scanning and digital archiving and also involves the coordination and sourcing of non-digital print activities such as offset printing. The Company views its relationships with its Facility Services customers to be one of joint-cooperation and works closely with its customers, typically entering into long term contracts of three to five years.

Océ typically provides Facility Services by placing Océ employees on a customer’s site and assuming management responsibility for the outsourced services. Océ increasingly offers coordination of services through the customer’s own intranet, web-based or digital systems. By clicking on a simple menu, employees of the customer can request document services from on-site Océ-employees and also initiate complicated print assignments that may ultimately take the form of finished reports and manuals in the customer’s in-house style.

The Facility Services group is growing quickly in Europe and has established a good position in a comparatively short space of time, particularly in the industrial, education and government services sectors. Océ provides facility services under the name Archer Management Services in the United States, where it has established an excellent position, particularly in customer organizations that have a large number of branches nation-wide.

Software & Professional Services

The Company offers customer-specific document management solutions to its customers and provides systems integration and support to its customers through its Software & Professional Services group. Specific applications offered through the Software & Professional Services group include output management and workflow management, archiving, character recognition and document interpretation software and services. The professional services component of this group focuses on developing for both the DDS business unit and the WFPS business unit working methods, organizational methods and training for service providers. The services provided by this group include educational services, implementation services, consulting services and support services.

Over the past ten years, digital technology has become a crucial component in document environments. As a consequence, the way in which documents are created and the format and presentation of documents has changed significantly.

Océ expects that the transition to digital document management products will continue at a fast speed in the years ahead. Océ is responding to this development by placing greater emphasis on document management as an over-arching discipline. This involves organizing stored documents as well as controlling digital document flows and paper flows within a single integrated system. The opportunities in this area are primarily determined by the functionality of the software and the skill set within the organization.

In recent years Océ has developed a series of highly varied software programs under the name PRISMA, most of which are linked to the hardware solutions that the Company offers. These programs comprise a complete set of instruments that enable a customer to manage its document flow at various levels within an organization. Océ PRISMA offers a complete package of closely linked modules based on an open systems architecture that can be used to configure the right solution for every user environment. Océ PRISMA provides a practical answer to the challenge of managing input and output systems in complicated document environments involving a wide variety of technology platforms.

As a supplement to Océ PRISMA, Océ also offers a complete range of software and services for character recognition and the interpretation of a document’s structure, with the aim of enabling the automatic processing of large volumes of paper documents.

The use of these software products is usually based on close cooperation between the customer’s internal technology specialists and Océ’s service providers. To respond to increasing demand for these services, Océ has developed a solution delivery process to manage these demands. This ensures greater efficiency and responsiveness and also forms the platform from which Océ can grow further as a leading supplier of complete document management solutions.

Wide Format Printing Systems

The strategic business unit Wide Format Printing Systems (“WFPS”) consists of three business groups: Technical Document Systems, Display Graphics Systems and Imaging Supplies. In 2002 the growth in the number of placements of machines stagnated both in Technical Document Systems and in Display Graphics Systems. This was offset, however, by a constant flow of revenues from sales of services and supplies.

Technical Document Systems

Technical Document Systems provides scanning, printing, copying, archiving and managing of wide format documents in black-and-white and color by offering hardware, software and systems, consultancy and professional services to its customers. Customers in this market generally include architectural and engineering firms, construction companies, industrial companies, public utilities, telecoms, transport businesses and the government, specialized print shops and job printers. This latter group offers applications relating to building and construction drawings, design and production drawings, pipework and electrical circuit diagrams and maps.

The emphasis in this market is on an integral production concept, in which a central role is played by the total cost of ownership. Quality, reliability, speed and user-friendliness form the building blocks for this concept, but service is also crucial. Océ believes that it has succeeded in structuring this business group to achieve and maintain a high level of service world-wide. For example, in October 2002 Océ-USA, Inc. was awarded a prestigious prize by the Association for Service Management International for its best-in-class service organization.

In the markets in which Océ provides its Technical Document Systems, two distinct trends are emerging: demand for color and decentralization. Although printing in design engineering firms is still done predominantly in black-and-white, the use of color is advancing with increasing strength, and more and more customers are asking for color machines. Accordingly, color inkjet printers are rapidly gaining ground in the low volume segment. At the end of November 2002 Océ responded to this demand by introducing a color machine, the Océ TCS400, which is specifically focused on meeting these needs. The Océ TCS400 is a wide format color printer for use in construction companies and architectural and engineering firms.

Because the documents are increasingly distributed in digital form, decentralization of the print volume is increasing. Documents were traditionally printed first and then distributed. Now, however, customers are increasingly distributing documents digitally, after which the image is viewed and/or printed as and when required. This change creates a higher demand for smaller machines, and Océ has responded to this demand by introducing the Océ TDS400 and the Océ TDS600. The Océ TDS400 and the Océ TDS600 are wide format production systems for the printing, copying, scanning and finishing of technical documents. In an internet printing and scanning environment, printing is possible at any location. The flow of documents in this segment of the market is changing in character because parallel design processes are today often chosen by the customer (due to the gain in speed). This, in turn, creates a demand for consultation between designers and an intensive use of the digital infrastructure, which is achieved by means of data lines with a higher transmission capacity, the use of cheaper storage media, increasing the speed of internet access and by means of specific applications that facilitate such interactive teamwork. Océ intends to respond to this demand by providing services through sales of its document management software in combination with its printers.

In 2002, Océ converted its partnership with Autodesk, the supplier of the Océ’s software program “Océ Repro Desk”, into an exclusive licensing agreement. After entering into this license, the Company began to license to its customers the Océ Plan Center software program, which is based in part on the licensed technology. A dedicated team of experts within Autodesk’s Building Collaboration Services Division developed these programs. Océ intends to use this team to provide ongoing services in the area of on-line print management solutions.

Display Graphics Systems

Display Graphics provides scanning, processing and printing of wide format display graphics images in color by offering hardware, software, media, systems, consultancy and professional services. Customers of this group include print shops and job printers, sign shops, silk-screen printers and offset printers, photo processing laboratories, exhibition and display constructors, graphic arts design studios and advertising agencies. Applications offered by the Display Graphics group include posters, banners and billboards, fleet marking, wide format displays for exhibition and in-store presentations.

By far the most important development within the Display Graphics Systems business group in 2002 was the integration of the Gretag Professional Imaging Division (“GPID”), which was acquired in December 2001 and now operates under the name Océ Display Graphics Systems, Inc. (“ODGS”). This business, together with its machines and related customer base, further supplements Océ’s own activities and products. The Raster Graphics section of ODGS distributes a series of state-of-the-art piezo inkjet printers under the name “Arizona” and the Raster Imaging Process software of Onyx Graphics. The integration of the acquired GPID operations progressed favorably during 2002, despite the fact that this integration process and the realignment of the business group required significant amounts of management time and attention. In the market for Display Graphics Systems, which is fragmented in terms of both suppliers and customers, Océ has chosen to concentrate on the mid-volume and higher volume segments. Through the acquisition of GPID, Océ has strengthened its position substantially, particularly in the fast-growing job printer market. The job printer market increasingly demands ever bigger print capacity. The fastest machine of ODGS, the Océ Arizona 500, is able to process between 25 and 50 square meters per hour. Océ is also one of the main suppliers serving other large-scale users of wide format color printers, such as sign shops, silkscreen printers, photo processing laboratories and constructors of exhibition stands. As part of its endeavors to offer complete solutions Océ also intends to continue its presence in the low-volume sector by offering machines for outdoor applications.

Océ’s strength in the market for Display Graphics Systems is based, in part, on the strength of the brand, the Company’s world-wide presence and its own distribution channels and service activities. Based on these strengths the Company will work further to improve profitability, through organizational changes, and to secure growth through an expansion of the range of products and services offered. Océ is working on the further development of mid-volume machines for outdoor applications, featuring such variants as flatbed and roll-to-roll machines. Roll-to-roll machines enable a customer to roll-up printed material after printing, which is then further processed in subsequent stages. This technique is typically used in billboard applications. Flatbed machines enable a customer to print directly on the ultimate carrier material. A new flatbed machine, the Océ T220, is expected to be launched in the first quarter of 2003.

With respect to digital print shops and job printers, an overlap exists with the activities of the Technical Document Systems group and the Display Graphics Systems group. This overlap is used to create synergistic effects between the two business groups in providing their shared customers with support in the development of wide format full color applications. Because of its broad range for the very high production segment of the market and a series of in-house technologies, Océ believes it will be able to build a strong position in this area compared to its main competitors.

Imaging Supplies

Through Imaging Supplies, the Company provides wide format supplies (PPC, CAD inkjet and diazo), display graphics supplies (water-based, oil-based, solvent-based) and office supplies (A4 bulk paper as well as specialty supplies) to customers of both business units.

Traditionally, this group offered paper supplies and supplies relating to the Company’s own machines. During 2002 the range of supplies offered was expanded, especially in the form of Display Graphics and CAD applications and the Company is increasingly offering supplies for the machines of others, including the Company’s competitors. Océ has developed a complete range of supplies to sell in connection with its introduction of the Océ TCS400 wide format color printer, introduced at the end of 2002, and its introduction of the water-based inkjet technology for wide format color printers for graphics outdoor applications. Finally, standard A4-format paper still plays an important role in the revenues of this group because of volume of sales. Océ has also developed an extensive range of media supplies in the small format area to serve the Océ CPS700 family, Océ’s color printer.

The technical documents systems market successfully increased its market share in supplies in 2002, by expanding further through indirect channels, notably in the major European markets of Germany, the United Kingdom and France. As of December 1, 2002 customers are able to order supplies through the internet, and orders of supplies through this medium are clearly increasing. Logistics performance has been further improved, resulting in a high level of reliable and prompt deliveries. A new logistics center in Venlo, The Netherlands, now handles direct deliveries to customers in Belgium, The Netherlands, Luxembourg and Germany and ensures that inventories are kept at the required level in the other countries throughout the world.

Océ’s products and services are offered primarily through the Company’s direct sales and service organizations to enable the Company to monitor constantly the market with respect to its products and services and to communicate directly with the end-user of its products and services. In a number of geographical markets, part of the Company’s range of products are also distributed through specialized distributors.

Océ largely develops and manufactures its product range itself. Océ’s unique and strong technology base is the result of 125 years of experience and its consistent investment in research and development. Océ further invests in technology research and development through its acquisition of other companies, alliances with strategic partners and co-operation with co-developers and suppliers.

Océ operates in a total of eighty countries and has its own sales force in thirty countries. At November 30, 2002 Océ had more than 22,400 employees, of which more than half worked in sales and service. Océ’s research and manufacturing facilities are located in The Netherlands, Germany, Belgium, France, the Czech Republic, the United States, Canada and Japan.

Printers

Copiers