océ annual report 2010 - ku leuven...20,000 people worldwide. total revenues in 2010 amounted to...

OcéAnnual Report

202010

The Annual Report and other related publications

such as press releases, interim financial statements,

presentations and speeches are available via the

Océ corporate website: www.investor.oce.com.

Océ enables its customers to manage their documents efficiently and effectively by offering innovative

print and document management products and services for professional environments.

Océ N.V.

Report for the financial year 1 December 2009

to 31 December 2010*

* Océ has aligned its financial reporting with Canon’s, consequently starting the new

financial year on 1 January 2011. To facilitate transparency and comparison, the figures

presented in the Annual Report from page 1 up to and including page 45 and from

page 116 up to and including page 130 relate to the period 1 December 2009 -

30 November 2010 and the corresponding prior year period.

The figures presented in the Financial Statements from page 46 up to and including

page 113 relate to the period 1 December 2009 - 31 December 2010, the prior year

period runs from1 December 2008 - 30 November 2009.

�

6 Profile

7 Key figures

8 Strategic perspective

12 Ambitions and strategy

14 ReportfromtheChairmanoftheBoardofExecutiveDirectors

21 ReportoftheBoardofExecutiveDirectors

21 Financialreview

21 Results

2� Balance sheet

2� Cash flow

2� Dividend proposal for 2010

30 Managementaspects

30 Corporate governance

38 Risks and risk control

44 ReportoftheBoardofSupervisoryDirectors

46 FinancialStatements

�7 Consolidated income statement

�8 Statement of comprehensive income

�9 Consolidated statement of changes in equity

�0 Consolidated balance sheet

�2 Consolidated cash flow statement

�� Notes to the consolidated financial statements

108 Corporate balance sheet

108 Corporate income statement

110 Notes to the corporate financial statements

114 Otherinformation

11� Proposed appropriation of net income

11� Auditor’s report

116 Miscellaneous

116 Board of Supervisory Directors

118 Board of Executive Directors

120 Senior Executives

121 Principal Subsidiaries

123 Additional information for shareholders

126 Océ 2006 - 2010

128 List of terms and abbreviations

130 Forward-looking statements

Contents

Océ:printinganddocumentmanagement

services

Océ is one of the world’s leading providers of

document management and printing for

professionals. The broad Océ offering includes high

speed digital production printers and wide format

printing systems for both technical documentation

and color display graphics, as well as office printing

and copying systems.

Océ also provides document management

outsourcing. Many of the Fortune Global �00

companies and leading commercial printers are Océ

customers. The Company was founded in 1877.

With headquarters in Venlo, The Netherlands, Océ is

active in over 100 countries and employs more than

20,000 people worldwide. Total revenues in 2010

amounted to € 2.7 billion. Océ is listed on NYSE

Euronext in Amsterdam.

Océ is active with its own direct sales and service

organizations in more than 30 countries. The

Company has its own research and manufacturing

facilities in Europe, the United States, Canada and

Singapore.

OcéandCanon:Strongertogether In 2010 Océ

joined the Canon Group of companies with

headquarters in Tokyo, Japan, to create the global

leader in the printing industry. Canon develops,

manufactures and markets a growing line-up of

copying machines, printers, cameras, optical and

other products that meet a diverse range of

customer needs. At the end of December 2010,

Canon employed approximately 197,000 people

worldwide. Global revenues in 2010 were

$ ��.8 billion.

BusinessmodelOcé is active in the entire value

chain of printing systems: from development via

manufacturing, sales, services and maintenance to

the provision of business services and financing. The

commercial organization is coordinated by three

Strategic Business Units: Digital Document Systems

(small format), Wide Format Printing Systems (wide

format) and Océ Business Services. In a number of

countries and market segments where Océ has only

a limited market presence, part of the product range

Profile

6 Profile

is made available via specialized distributors.

Through its own Research & Development (R&D)

Océ develops core technologies and the majority of

its own product concepts. Direct customer feedback

serves as an important source of inspiration for new

products.

In the Océ business model cooperation with partners

plays a major role in numerous fields. These partner-

ships cover areas such as R&D, manufacturing, sales

(OEM), distribution and financing. Sustainability is a

constantly present factor in the conduct of the Océ

business.

FinancialyearAs of 2011 the Company’s financial

year runs from 1 January through 31 December.

ArticlesofAssociationThe present Articles of

Association were confirmed by a notary deed dated

22 April 2010. Océ N.V. is an international holding

Company within the meaning of Article 2:1�3, para.

3b of the Dutch Civil Code.

Foundation,registeredofficeandcommercial

registryThe Company was founded in 1877. Its

present legal form dates from 19�3. The registered

office is in Venlo, The Netherlands, and the Company

is registered in the commercial registry of the

Chamber of Commerce Limburg under No.

12002283.

Headoffice The head office is located in Venlo at

St. Urbanusweg �3, P.O. Box 101, �900 MA Venlo,

The Netherlands, telephone (+31) 77 3�92222,

fax (+31) 77 3��700, email [email protected],

website www.oce.com.

BoardofSupervisoryDirectors

P.A.F.W. Elverding, Chairman

T. Tanaka, Vice-Chairman

A. Baan

N. Eley

S. Liebman

J.M. van den Wall Bake

BoardofExecutiveDirectors

R.L. van Iperen, Chairman

H.A. Kerkhoven

A.H. Schaaf

CompanySecretary

F.W.T. Kool

Key figures

7 Key figures

2010 2009 x € million

Total revenues 2,674.3 2,6�7.6

Change on previous year (%) 1.0 − 9.0

Change, organic (%) − 2.0 − 9.7

Non-recurring* (%) 0.6 − 18.1

Recurring* (%) − 3.0 − 6.0

Gross margin 968.8 96�.8

As % of total revenues 36.2 36.�

Operating income (EBIT)** − 32.4 − 15.5

As % of total revenues − 1.2 − 0.6

Net income − 121.7 − 47.1

Net income attributable to shareholders − 123.8 − 48.9

As % of total revenues − 4.6 − 1.8

Balance sheet total 2,252.3 2,207.2

Equity attributable to shareholders 508.7 ��.2

Equity 543.9 �79.2

Equity as % of balance sheet total (solvency ratio) 24.1 26.2

Net Capital Employed 1,093.4 992.0

Return on Capital Employed (RoCE) − 2.3 − 1.0

Cash flow before financing activities (free cash flow) − 104.3 81.8

Number of employees at 30 November (in full-time equivalents) 20,708 21,63� employees

Per € 0.50 ordinary share

Net income attributable to shareholders (basic) − 1.49 − 0.61 euro

Net income attributable to shareholders (diluted) − 1.49 − 0.61

Equity attributable to shareholders 5.32 �.7�

Dividend − *** −

Number of € 0.50 ordinary shares

Average number outstanding 84,888,943 8�,8�7,678 shares

Share price Highest/lowest share price until 30 November 8.75/5.50 8.88/1.82 euro

Share price at 30 November 7.77 8.�9

* Non-recurring revenues: revenues from sales of machines, software and related services.

Recurring revenues: revenues from services, inks, toners, media, rentals, interest and business services.

** EBITDA 2010 amounted to € 166.9 million (2009: € 170.9 million).

*** Proposal to the General Meeting of Shareholders to be held on 19 April 2011.

Creatingagloballeaderintheprintingindustry

Scale benefits are driving the current period of

consolidation in the digital printing industry. Scale is

needed to remain competitive in a changing market

and industry. Market competition is increasing while

market growth is flattening, especially in the US and

Europe. Only players able to improve profitability

through increased scale, efficient processes and a

streamlined distribution infrastructure will play a

leading role in the printing industry going forward.

Being a global leader in digital printing brings scale,

breadth and ability to invest in interesting business

opportunities. These opportunities include the

accelerating shift from black & white to color; the

shift to digital printing in the graphic arts market and

display graphics; increased outsourcing by

customers to document related services; the growth

in software and services facilitating the smooth

Strategic perspective


integration of paper and digital document flows;

and the growing economic importance of the Asian

market. To further unlock its value, Océ needed to

partner with a strong, sizable and complementary

industry player.

Océ has played its part in the trend towards

consolidation of the digital printing industry. With the

acquisition of the American distributor Imagistics in

200�, several smaller distributors since then and

ultimately the combination with Canon, Océ has

positioned itself as a leader in digital printing and

document management. Through combination,

Canon and Océ intend to attain the No. 1 position in

the digital printing industry, best-in-class in terms of

sales size, sales growth and profit ratio. In each of its

key business domains – Document Printing,

Production Printing, Wide Format Printing and

Business Services – Océ and Canon intend to further

strengthen their foundations and become a global

leader in the printing industry over the next few

years.

In March 2010, Canon acquired the vast majority of

the shares of Océ. Together Canon and Océ are well

positioned to optimize the servicing of their

customers and become the undisputed market

leader. By enhancing the Océ portfolio with Canon

products and technologies and selling Canon

products through Océ distribution channels and vice

versa, customers will continue to benefit from an

enlarged range of high quality products and services

through an extended global sales and service network.

OcéintheworldofdigitalprintingRapid and continuous

change is influencing the markets in which Océ is active.

Several of these changes have been accelerated due to

the very challenging economic climate of recent years,

particularly in industrialized countries. Various developments

are relevant in this respect. Océ aims to anticipate and

respond to them while aligning its own organization,

systems and processes. The following section provides the

key trends and developments that are the cornerstones of

the Océ strategic plan. They will influence the future of Océ

as a leading supplier of a complete line of printing related

hardware and software products and related services.


Océ has been pursuing a strategy based on the three

pillars of distribution power, product portfolio and

operational excellence since 2007. The combination

with Canon will enable Océ to expand, strengthen

and optimize all three. It will also help Océ to

capitalize on a number of strengths and capabilities

in research & development, manufacturing &

logistics, purchasing and distribution. In addition, it

will facilitate the leveraging of Océ’s own strengths:

a professional direct sales and service organization,

leading market positions in key segments, and

strong technology and distribution partnerships.

Changesinthesector

EconomyThe new economic reality resulting from

the global crisis has a major impact on a number of

markets in which Océ operates. Particularly the

markets for financial services and wide format

technical drawing have experienced a strong decline.

Recovery to pre-crisis levels is expected to be slow,

especially in the construction industry. Mainly the

stagnation of construction projects in the United

States and in Europe caused a substantial decline.

Key players in the segments in which Océ operates

have reacted to the economic crisis by consolidating

services and solutions, integrating print needs within

a total ICT offering. This results in a continuous

increase in competitive pressure.

Commoditization Océ supplies highly innovative

products to markets in which innovation is essential.

The lifecycle of new products is becoming constantly

shorter. This calls for a regular flow of new models

and types, which have to be attractively priced. Océ

is striving to achieve this by making effective use of

its own and Canon’s core technologies, by

developing joint product platforms that serve as a

basis for bringing new versions to market fast. In

response to the price pressure that results from

commoditization, Océ invests in developing value-

added services.

Océ also seeks sustained competitive cost levels.

One of the ways of achieving this objective is by

outsourcing manufacturing activities to countries that

have high technical standards and lower wage

structures. Through its various partnerships, for

example with Miyakoshi, Océ is also able to put

more new and updated systems onto the market

within a shorter timeframe.

Another way is by leveraging the scale and

capabilities of Canon.

GrowthofoutsourcingIn the corporate

environment, printing processes and departments

that require high investments and personnel costs

are increasingly being outsourced to external

professional service providers. As a rule, the latter

can concentrate more volume on their systems,

allowing them to calculate a more favorable price. At

the same time, these service providers can continue

to differentiate themselves from the competition by

investing in the latest equipment. The high

production continuous feed printing systems

(primarily the Océ JetStream series and the Océ

ColorStream 10000 Flex printers) are for an

important part used by these service providers, and

the potential for the recently launched Océ

ColorStream 3�00 printing system is considerable.

In display graphics, outsourcing is the standard.

Production in this segment is largely in the hands of

professionals. With the exception of a number of

large retail chains, little printing is done in-house. In

addition, more volume is being concentrated on the

systems of professional service providers in the

technical document and production printing markets.

Outsourcing of complete document processes,

including mailroom activities, printing and archiving,

has led to the emergence of these specialists.

Changesinapplications

Increaseddigitization A rapidly developing trend in

digitization of document workflows is evidenced by

the increasing use of e-statements and e-marketing.

This offers new opportunities in workflow solutions,

and Océ is closely monitoring this trend to identify

which applications continue to be most suitable for

digital document management.

GraphicartsmarketgoesdigitalThe development

and use of electronic devices such as computers,

tablets and e-book readers compete with digital

printing for the transferred offset volume. Until

recently, the graphic arts market was not eager to

embrace the opportunities offered by digital printing.

The main reason for this was the higher cost per

print. Over the past few years, however, digital

printing has captured a significant part of the book

production market related to the printing-on-demand

of existing book titles and the production of small

print runs of new books. In that area, digital printing

has become a high quality and often a better priced

alternative to offset. In the wide format part of the

graphic arts market, digital printing of smaller print-

runs is an excellent alternative for techniques such

as screen and offset printing.

Océ is well positioned in both segments of the

graphic arts market, thanks to its powerful cutsheet

and continuous feed systems, flexible roll-to-roll and

flatbed systems as well as its workflow software.

Océ’s thorough knowledge of the market and the

technology, as well as its specialized sales

organization familiar with the specific needs and

characteristics of this market, offer a range of

interesting opportunities. Through its partnership

with manroland, Océ is even better positioned to

benefit from the trend towards digital; manroland

brings experience in high-speed paper handling and

provides access to the graphic arts market, while

Océ shares its knowledge of very high volume digital

printing.


MoreindividualizationThe importance of individual

communication between organizations and their

target groups has grown substantially over the last

decade. Software applications have made far-

reaching personalization possible both in marketing

and in commercial communications. Digital printing

provides a direct link-up with this and facilitates

individualization of the contacts, still largely

channeled via print. Though direct mail is the most

obvious application, other forms of communication,

such as personalized letters, insurance policies and

bank statements, are also given added value if they

contain a message targeting the individual.

Personalization is one of the principal drivers of the

very high volume segment of Océ. Through the

development of specific software, Océ can continue

to meet the demand of customers for personalized

products ranging from books and manuals to

individualized newspapers.

Colorreplacesblack&whiteThe costs of digital

color printing formed an obstacle to its widespread

use. As the costs per color print decrease and as

quality and productivity improve strongly, that

obstacle is becoming smaller. However, because of

stringent customer cost constraints in the current

economic climate, the replacement of black & white

by color has temporarily slowed down. In wide

format, the benefits of color printing are being used

in (in-store) marketing, whilst in small format the

applications of digital color printing include brochure

printing, direct mail, transaction documents,

TransPromo - a combination of transaction

documents and advertisements - and business

presentations. Together with Canon, Océ offers its

customers a complete portfolio of color printers in all

segments.


IndustrialprintingAnother opportunity is presented

by leveraging printing technology to industrial

printing applications. An increasing number of

industrial applications is coming within reach of the

digital printing domain. These include packaging, die-

cutting, printed electronics such as the imaging of

printed circuit boards, and decorative printing of

objects ranging from tiles to mobile phones.

SpeedtomarketiscrucialThe ability to respond

quickly to developments is an essential condition for

doing business effectively for many of Océ’s

customers. That means that all their development

and production processes are subject to tight

deadlines with numerous last-minute changes. The

great flexibility of digital printing makes it eminently

suitable for supporting these processes, most of

which take place fully in electronic form. Digital

printing allows formerly central processes such as

printing at one location and distributing the output to

many locations to be decentralized (distribute-and-

print), thereby generating substantial logistical

benefits and time reduction.

A good example is the production of user manuals

which can, if desired, be made completely country-

specific and customer-specific on the spot. Editorial

changes are possible even in the seconds prior to

production. Another area in which decentralized

printing is becoming popular is in-store marketing.

Retail chains are increasingly printing a larger

proportion of their advertising matter in-house.

Changesinourscope

GeographicexpansionOcé is an internationally

operating company. With a strong presence of its

own in the main European countries and the United

States, Océ is well represented in a large part of the

western world. Elsewhere, sales are generated by

distributors working together with Océ. Océ, with its

own sales companies in Malaysia, Singapore,

Thailand, Japan and China, intends to boost its sales

capability in Asia by leveraging the power of the

Canon brandname and combining its distribution

channels where beneficial. Combining offices and

stimulating joint sales processes will create many

opportunities for Océ products and services.

SustainabilityGlobally, concerns are increasing

about the future of the earth, the climate and the

availability of natural raw materials. This has resulted

in increasing attention or prerequisites in tenders for

sustainability. Businesses are expected to produce in

a sustainable way and to supply products that are

increasingly of a sustainable nature. Océ has an

excellent track record in this field, offering a product

portfolio with a high focus on sustainability. Océ

machines are manufactured in a highly sustainable

way, have only a limited environmental impact, are

very user-friendly and can be made ready for reuse

or can be recycled at the end of their product

lifecycle.

Océ:wellpositionedOcé’s position in the

marketplace is being strengthened by the

combination with Canon. By leveraging the trend

from analogue to digital, the shift from black & white

to color and its ability to access the required

investment capacity for innovative products and

services, Océ is even better poised to help its

customers build their business.

Through the acquisition of the majority of the shares of Océ by Canon, Océ has been able to make an

important step toward the realization of its strategy as outlined in last year’s Annual Report. The combination

with Canon has been created to arrive at sufficient scale and financing capacity. Together with its parent

company Canon, Océ is able to expand its distribution power, and its sales force has gained access to a broad

and highly competitive product portfolio. As a result Océ’s strategy is increasingly focusing on capturing the

Ambitions and strategy


To build and strengthen leading positions in very high production segments in small format environments

(cutsheet as well as continuous feed).

To expand the existing position in outsourcing services toward document management services with high added value.

To build a leading position in Display Graphics Systems in selected wide format markets.

To be a supplier of print media that makes total solutions possible.

To address a global customer base through Océ’s distribution channels.

To provide customers with eco-efficient and eco-effective document management.

To be an attractive employer worldwide and establish Océ as the employer of choice.

To challenge employees to come up with beyond the ordinary ideas.

To realize profitable growth.

To maintain a constructive dialogue with shareholders.

To cross sell the products of both companies.

To initiate joint product development.

To prepare for integration.

To cooperate in the technology sector with the top specialists in the industry.

To cooperate with high value suppliers of components, modules and machines.

To cooperate with market partners that make a substantial contribution toward boosting our distribution power.

To cooperate with leading vendor lease partners.

To require from partners that they adopt the same norms and standards with regard to sustainability as Océ itself

adopts.

To challenge partners to inspire Océ with new ideas.

To combine economic growth with reduced environmental footprint and increased well-being of people.

Strategic objectives for 2010

Customers

Employees

Shareholders

Canon

Partners

Society

Launched the Océ ColorStream 3�00 to confirm Océ’s leadership in continuous feed.

Introduced the Océ ColorWave 300 to strengthen offering in wide format color.

Expanded successful Océ Arizona series and bolstered top position in flatbed UV-curable ink.

Concentrated on selling additional services to customers of Océ Business Services and developed value added

services.

Increased use of Océ print media on Océ machines.

Improved productivity across many company areas.

Sales and service force trained to sell Canon portfolio to Océ customers.

Second global Océ Sustainability Week held.

Total revenues increased 1% to € 2,674 million (2009: € 2,648 million).

Organically, non-recurring revenues + 0.6%; recurring revenues - 3.0%.

Normalized operating income almost doubled to € 72 million (2009: € 37 million).

Normalized free cash flow decreased to - € 36 million (2009: € 82 million).

Cost-savings program delivered € 65 million.

Internal improvement initiative ‘Reaching our Potential’ surpassed target.

By year-end Océ offered Canon printing products to its customers worldwide.

Successful cooperation between both companies of their leading technologies and products.

Preparations for integration according to plan.

Created partnership with manroland to sell and develop products for the graphic arts market.

Expanded the Océ JetStream series developed together with Miyakoshi.

Continued partnership with Fujifilm to sell substantial numbers of Océ wide format systems.

Worked together with companies and educational institutions on developing new document services.

Océ among the Top 10 listed companies included in the Dutch Carbon Disclosure Leadership Index.

Océ included in Top 10 Dutch companies in annual Transparency Benchmark.

Océ honored with European Business Award ‘Ruban d’Honneur’ for environmental awareness.

Océ North America earns certification from Certified Green Partners.

Océ organized its third international Stakeholder Dialogue on sustainability.


Achievements in 2010

Customers

Employees

Shareholders

Canon

Partners

Society

benefits of closely cooperating with Canon, optimizing its business processes and expanding its businesses.

Canon and Océ are well positioned to become the global No.1 player in the digital printing industry with

leading positions in most of its market segments. This offers great opportunities as Océ seeks to create value

for all stakeholders by strengthening its profitability and by realizing sound growth.

Océ concentrates on strengthening existing and building new leading positions in the market for professional

document printing and document management systems while executing strict cost and cash control.

1� Report from the Chairman of the Board of Executive Directors | Encouraging performance in year of change

Encouraging performance in year of change

Generalmarketperspectiveandkeyresults

Following 2009, when Océ and Canon announced their

intention of creating the global leader in the printing

industry, 2010 was another historic year for our

Company. The transaction was completed in March

2010 and since then progress was made in three key

areas; cross selling, joint product development and

preparing the groundwork for integration.

In 2010, it was encouraging that we were able to

improve our normalized operating income in three

consecutive quarters, even though our bottom line was

impacted by substantial one-off items. Our profitability

improved, due to better utilization of our factories and

the results from our cost-savings program. 2010 was

also a year during which customers continued to be

cost conscious amidst ongoing economic uncertainty.

Report from the Chairman of the

Board of Executive Directors

Fortunately, revenue development improved versus

the trend of previous years, reflecting initial signs of

recovery in some of our core markets. Favorable

foreign exchange effects had an impact on 2010 total

revenues, that amounted to € 2,674 million. As of the

2010 third quarter, non-recurring revenues grew for the

first time in 10 quarters. This growth came primarily

from a slight increase in new printer sales, specifically

in the color continuous feed segment and in wide

format, in the rapidly-growing display graphics market

in particular.

Based upon the strategic pillars of Océ - strengthening

distribution power, expanding product portfolio and

driving operational excellence - as well as the

transaction with Canon, we achieved the following

three key priorities. Business continuity was ensured,

the decline in revenues was halted and normalized

operating results improved. Ongoing economic

uncertainty, however, impacted customer behavior as

well as the performance of the SBUs in the financial

year 2010.

Our cost-savings program led to higher margins and

lower operational costs, resulting in 2010 normalized

operating income - excluding one-off items - almost

doubling to € 72 million.

These positive developments in non-recurring

revenues and operating income were reinforced by our

commitment to ongoing innovation. In line with past

practice, we invested approximately 8% of overall

revenues in research and development in 2010.

R.L. van Iperen,

Chairman of the Board

of Executive Directors

of Océ N.V.

1� Report from the Chairman of the Board of Executive Directors | Encouraging performance in year of change

Recently launched, popular printers such as the

Océ JetStream series (in the Production Printing

environment) and the Océ Arizona ��0 XT (in the

Display Graphics Systems arena) remained important

reasons why customers continued to choose Océ.

OverviewofStrategicBusinessUnits

DigitalDocumentSystems The SBU Digital

Document Systems (DDS) focused on document flow

and printing management solutions for small format -

maximum A3. Revenues amounted to € 1,479 million;

organically, revenues declined by 3.1%. The share of

color in total DDS revenues increased by 3% point. In

the office segment, Océ designed its go-to-market

strategy jointly with Canon.

As of mid 2010, we started selling Canon office

printers through our own distribution channels, first in

the US and then in Europe. By year-end 2010, we were

offering Canon office printers to customers worldwide.

Therefore approximately 1�00 sales and service staff

throughout our European and US operating companies

were trained in selling and servicing these products in a

series of two-day workshops at a special Canon Camp

in Venlo as well as various US regional offices.

As anticipated, the phasing in of Canon printers and

phasing out of the former corresponding OEM portfolio

impacted sales in this segment. On a normalized basis,

higher margins and lower costs generated better

results.

In the printroom environment in business, government

and educational markets, we continued to address the

full color and black & white requirements of print

professionals. The market for very high volume black &

white cutsheet production printers remained

challenging. Similarly, in the graphic arts industry,

transactional printing sector and direct mail markets,

we supplied a range of high volume continuous feed

and cutsheet printing solutions. Around the world, we

provided customers with small format hardware and a

full range of related services and software. These

included consultancy, maintenance and financing

(rental and leasing) services as well as workflow and

output management software.

Sales of our very high volume continuous feed printing

systems rose particularly in the color arena. Sales of

our Océ JetStream and Océ ColorStream 10000 Flex

printing systems increased compared to previous

years. The Océ ColorStream 3�00 printing system was

launched successfully towards the end of the year.

Based on recent independent product placement data

for the first half of the year (source: InfoTrends) Océ

again led the continuous feed market with a 26%

share. This percentage included inkjet and toner-based

technologies in both the US and Western Europe. In

2010 sales of the Océ VarioStream 7000 series

witnessed a marked recovery.

In December 2010, we announced a strategic alliance

with manroland, consisting of cooperation in product

development and go-to-market strategies. We

contribute our knowledge of digital very high volume

printing, while manroland provides access to the

graphic arts market and experience in high-speed paper

handling.

WideFormatPrintingSystemsAs in previous

years, revenues of the SBU Wide Format Printing

Systems (WFPS) were impacted in 2010 by the

challenging market circumstances in its key market

segments, especially construction. Revenues

amounted to € 732 million; organically, revenues

declined by 0.�%. After a slow start to the year,

partially attributable to delivery issues of Océ

ColorWave 600 and Océ PlotWave 300 printing

systems, growth in the second half of 2010 was

mainly driven by non-recurring revenue development

of Display Graphic Systems.

In the second half of the year, however, non-recurring

revenues in wide format printing systems and software

for technical documentation grew strongly. In low-

volume segments, technical documentation product

placements were up 30% compared to 2009. This

development was partly offset by declining recurring

revenues in technical documentation and imaging

supplies. The impact of this was felt particularly in the

construction sector in Europe and the United States,

although this decline was compensated by lower

costs.

Specifically in the display graphics markets, sales

surged, particularly those of the Océ Arizona ��0 GT/XT

and Océ CS2�00 color printing systems, introduced in

early 2010. Customers perceive these systems as

delivering high productivity solutions at very

competitive total cost of ownership levels for

applications in wide format imagery such as banners,

outdoor advertising, scaffolding sheets and retail

promotional material. Revenues of our broad range of

imaging supplies experienced a slight decline due to

decreasing click volumes in wide format printing.

Revenues from small format media developed well.

OcéBusinessServicesIn 2010, Océ Business

Services (OBS) revenues amounted to � 463 million;

organically, revenues decreased by 0.8%, the US

weakening by 3.�% while Europe grew by 1.2%.

We continued to enable our customers to increase

efficiency, reduce cost, mitigate risk and enhance

operational performance by improving their critical

document management processes. The development

of centrally coordinated new services gradually took

shape.

In the US, we prudently managed our costs, fully in line

with our plan to meet the commercial challenges in the

American market place. A decline in print volumes of

mail services was partly offset by the growth of new

services, although the richer product mix contributed to

higher margins.

In Europe, OBS saw reduced activity at existing

customers. A profitability drive led to the review of

contracts. During the year, a pan-European OBS

organization was implemented, enabling the sales

companies to sharpen customer focus, expand service

portfolio and improve practice and performance. OBS

laid the groundwork for creating a joint back office

system throughout Europe.

OverviewofR&DandM&Lactivities

Research&DevelopmentIn the months leading

up to completion of the transaction with Canon in

March 2010, it was clear that customers of both

companies would have much to gain from the plans of

the combination to coordinate activities and link R&D

resources. We sustained our ongoing efforts to drive

smart, open innovation by identifying the areas in

which we could work closely together with Canon and

other partners.

16 Report from the Chairman of the Board of Executive Directors | Encouraging performance in year of change

In doing so, we accelerated the development of core

products in wide format, high volume cutsheet as well

as toner and inkjet-based continuous feed color printing

and workflow solutions. Following several Océ PRISMA

design-in projects in 2010, Canon hardware will in 2011

be powered by the PRISMA software suite. We made

significant progress in developing new businesses to

create the first fully digital inner layer printer, based on

inkjet technology for printed circuit boards. In the areas

of embedded systems, nanotechnology and

mechatronics, we continued to work closely with our

partners within the PrintValley consortium. And we

also defined the infrastructure and program of

Document Services Valley, established with the help of

Dutch government grants.

From the outset, there was strong enthusiasm among

R&D specialists at both Océ and Canon to work

together and jointly create new technologies and

products, boosting the printing sales of the

combination. This common understanding clearly

demonstrated the corporate values, customer-oriented

culture and technology-driven business model that Océ

and Canon share.

In the meantime, both companies are offering more

and more Canon printing systems with Océ technology

and Océ printing systems with Canon technology. It is

anticipated that the combination will launch major new

printing systems in 2011, as a result of close

cooperation between R&D specialists in both

companies.

Manufacturing&LogisticsThe phasing out of

certain OEM product categories and the phasing in

of innovative Canon products impacted activity level

at M&L during the year. In 2011, activity levels at

M&L are anticipated to increase due to the launch of

printing systems jointly developed with Canon. As

Canon will also be selling our printers, activity levels

are expected to rise even further. In the course of

the year, M&L kicked off a program to align product

quality with Canon’s quality requirements.

During the year, much attention was paid to

optimization of the M&L infrastructure. Year end, we

succeeded in realizing the targeted level of inventory.

Further improvement is to be expected in 2011.

Operating margins improved due to better utilization of

the factories in Venlo and Poing and the cost-savings

program.

In 2010, Océ enhanced the production processes of

small format cutsheet systems by decreasing the

footprint of, among others, the Océ VarioPrint 6000

series during assembly in the Venlo manufacturing

plant. Special business support teams were formed to

improve the alignment of research, industrialization and

customer use. This enabled Océ to create additional

applications, enlarging the target market for these

printing systems. For example, the business support

teams increased the paper flexibility of the Océ

VarioPrint 6000 series, broadening its commercial

appeal to an even wider range of commercial printing

companies.

Also the combination of Océ and Canon enables M&L

to share working methods with Canon and vice versa,

which is an inspirational platform for creating new

manufacturing processes at Océ.

Sustainedfocusonsustainability

To achieve our objective of becoming a leading printing

Company in all relevant segments, it is imperative that

we continue to optimize the sustainability of our

products and processes. In recent years, we

continuously improved our performance in our five

focal areas: paper, energy, reuse, product responsibility

and employer of choice. For details, reference is made

to Océ’s Sustainability Report 2010, which will be

available in April 2011.

In 2010, our efforts in the field of sustainability were

rewarded. In the UK, we were described as a company

“deserving recognition” when our international track

record in making a significant contribution to improving

the IT industry’s environmental performance was

singled out in the Green IT Awards.


Furthermore, we stepped ahead of tough competition

to be selected in September 2010 for the prestigious

Ruban d’Honneur in the European Business Awards.

As one of 1�,000 entrants from 30 countries, we were

ranked among the best 10 in the category

“Environmental Awareness.”

In the US, our Production Printing Systems division

earned the certification of an organization, Certified

Green Partners, dedicated to protecting the world’s

forest and natural resources. As part of the

certification, we pledged to use certified paper from

well-managed forests, purchase petroleum-free

products and recycle paper waste for all office

products.

Our transparency in sustainability was also recognized.

Océ was among the Top 10 listed companies included

in the Dutch Carbon Disclosure Leadership Index and

Océ has been included in the Top 10 Dutch companies

in the annual Transparency Benchmark.

During our annual Stakeholder Dialogue in November

2010, we invited customers, suppliers, employees and

NGOs to comment on our sustainability policy and

performance. The majority of participants, drawn from

a representative sample of stakeholders, told us they

believed the Company was “highly sustainable”.

Approximately 7�% of survey respondents said they

felt our five focal areas - paper, energy, reuse, product

responsibility and employer of choice - were relevant,

meaningful and comprehensive.

ReachingourPotential

In the summer of 2009, we embarked on a steady

course towards becoming a stronger and healthier

Océ. We kicked off an internal improvement initiative

that we called Reaching our Potential. Initial results

in 2010 included performance enhancements in

various areas and geographies of our Company, which

we expect will make an important contribution to

our 2011 results. Alongside the financial benefits,

Reaching our Potential is driving enthusiasm and

motivation as employees see that there is room for

improvement in our working methods and the results

that are forthcoming.

In a sweeping review of our performance culture, we

have determined the best way to achieve results is

to stimulate end-to-end ownership. This implies the

inclusion within a firm commitment to put strategy

into action through good leadership and behavior

throughout the management levels of our Company.

HumanResources

The developing cooperation with Canon was a major

source of additional change for the Océ workforce. As

hundreds of employees are involved in preparing the

integration, workload has increased significantly over

the last year. The completion of the offer by Canon

in March also kicked off a new period of considerable

change throughout the organization, creating both

uncertainty and new opportunities.

A key internal objective of the combination is to

provide new and enriched career opportunities for

employees involved. Océ increased its efforts in

2010 to improve productivity across many areas of

our Company. In particular, the sales and service force

was trained to sell the Canon portfolio to customers.

The workforce worldwide decreased by 98� FTEs

compared to last year, reflecting the continued

implementation of our cost-savings program.

PerspectivesfortheOcé-Canoncombination

At the initial 16 November 2009 announcement,

Océ and Canon clearly stated their aim of creating the

overall number one presence in the printing industry.

In achieving this objective, the combination worked

hard in 2010 to capitalize on the excellent

complementary fit in product range, channel mix,

business lines, and research and development.

Since the closing of the transaction in March 2010, we

have further strengthened our production printing

portfolio and aim to become a leading provider in this

segment in terms of quality, revenue and profitability.

In office printing and business services, the

combination aims to become a segment leader in the

foreseeable future.


In wide format printing, Océ and Canon have reviewed

the opportunities to jointly become the leading provider

in the overall wide format business, while securing

Océ’s market leadership in the technical document

systems market.

We will be responsible worldwide for Wide Format,

Commercial Printing and Business Services. Océ’s

office activities will be integrated in Canon’s Office

Imaging Products division.

CooperationwithCanon2010 was remarkable for

Océ as it signaled the kick-start of our cooperation

with Canon. Following the joint announcement of

the two companies in November 2009 to enter into

a compelling combination, Canon declared the public

offer for all the issued and outstanding ordinary shares

of Océ unconditional on � March 2010 with the

closing of the transaction five days later.

Among the significant benefits of the combination was

the refinancing of our multi-currency revolving credit

facilities and the United States Private Placements, by

Canon Inc.

Throughout 2010, the ever-growing cooperation

between Océ and Canon was managed under the

auspices of a Steering Committee, comprising

executive management members of both Océ N.V.

and Canon Inc. This Committee developed detailed

guidelines for cooperation between the companies,

focusing particularly on bringing the non-financial

considerations to life in daily business practice.

Meanwhile, hundreds of managers and employees

from both companies were involved on a daily basis in

capturing the benefits of the cooperation in teams

ranging from Sales & Services, Research &

Development, Manufacturing & Logistics to

Information Systems, Intellectual Property and

Finance & Administration.

ThreekeybusinessprioritieswithCanon

Early 2010, we determined three priorities for the

year, related to the cooperation with Canon:

• Cross selling our products;

• Initiate joint product development; and

• Prepare for integration.

In 2010, we started selling Canon products, first in the

US, then in Europe and by the end of the year to our

customers worldwide. In order to facilitate our sales

workforce to successfully sell Canon products, we

created a special Canon Camp, a two-day training and

information program on Canon and its printing systems

for hundreds of sales and service representatives in

Europe. Previously, a similar initiative was undertaken

in the United States. In addition, Canon is preparing its

sales and service force to sell Océ products.

Teams of Canon and Océ research and development

specialists jointly created innovative small format and

wide format printing systems, benefiting from

technology and expertise available throughout the

combination. Our first jointly developed products will

be launched in 2011.

Our first joint public appearances was at the prominent

IPEX trade show, in May 2010 in Birmingham (UK).

Here, we exhibited Canon production printers

connected to Océ software, showing how the two

companies’ leading technologies, hardware and

workflow solutions could be successfully integrated.

Since then, Canon and Océ customers have reacted

positively to the combination and many of them have

expressed interest in tailored solutions combining

hardware, software and services from both companies.

We have also achieved progress with regard to

preparing the integration. Across regions and

functions, several teams, consisting of Canon and Océ

specialists, are building the design of an integrated

organization. These preparations are progressing

according to plan.


In the fourth quarter of 2010, we successfully

participated in Canon Expo, the company’s five-yearly

open house held in September 2010 in New York and a

month later in Paris. At the Tokyo Expo in November

2010, we launched the Océ ColorStream 3�00, an

innovative digital color continuous feed system. This

very high volume inkjet printer was created and

developed at Océ’s technology plant in Germany.

It is enabling both Océ and Canon to serve commercial

printing companies that wish to offer both analogue

and digital color printing systems. We will also

participate in the Canon Expo to be held in Shanghai in

May 2011.

Awordofgratitudetoemployees

2010 was a year of tremendous change. Our

employees have become accustomed in recent years

to the fact that the only real constant is change.

However, the intensity of several transformations at

the same time was never more apparent than in 2010.

Thanks to the efforts and support of Océ employees

around the world, we have restored the positive and

upward trend of our Company. Ultimately, our results

and our contribution to the strength of our combination

with Canon reflect the commitment and efforts of our

employees. Also on behalf of my colleagues on the

Executive Board, I would like to thank all our

employees for their commitment and hard work.

Outlook

Our main priority in 2011 is to continue to improve the

business by focusing on revenue, profit and cash. We

will grow the business by strengthening our position in

mature markets, expanding in growth markets like

graphic arts and document services and boosting cross

selling with Canon. Also, jointly with Canon, we will

invest in regional growth markets like China and India.

In 2011, we will expand our product portfolio, amongst

others by introducing new printing systems, jointly

developed with Canon. Finally, we will continue to

prepare for the integration with Canon.

Rokus van Iperen

Chairman of the Board of Executive Directors

20 Report of the Board of Executive Directors | Financial review

Financial review

Results

Normalized operating income almost doubled to

€ 72 million in 2010 (2009: € 37 million).

The bottom line was impacted by substantial one-off

items.

x € million 2010 2009

Operating income -32 - 1�

Restructuring costs - �3

Divestment Arkwright and ODT - - 1

Change of control cost 104 -

Normalized operating income 72 37

Foreign currency exchange rate changes influenced

the results. The average rate of the US dollar over

the year was € 0.75 (2009: € 0.72) and of the Pound

sterling € 1.16 (2009: € 1.12).

The balance sheet positions are not determined

on the basis of the average rate that is used to

determine the operating income but on the basis of

the rate at 30 November 2010. For the US dollar this

amounted to € 0.77 (2009: € 0.66).

Report of the Board of

Executive Directors

Compared to 2009 the impact of foreign exchange

rates on operating income and the balance sheet

was as follows:

x € million 2010

Translation result 3

Transaction result 11

Net impact of hedging (2010 versus 2009) -3

Aggregate effect of exchange rates on

operating income 11

On the balance sheet the translation result

(in € million) was:

Total assets 158

Equity attributable to shareholders 87


The Board

of Executive Directors

of Océ N.V.

From left to right:

A.H. Schaaf,

H.A. Kerkhoven

and R.L. van Iperen,

Chairman.

RevenuesIn 2010, revenues amounted to

€ 2,674 million (2009: € 2,648 million), an increase

of 1.0%. Excluding exchange rates effects, the

revenues decreased by 2.0%. The sale of printing

systems, software and related services (non-

recurring revenues) increased organically by 0.6%.

Revenues from services, inks, toners, media, rentals,

interest and business services (recurring revenues)

decreased organically by 3.0%.

Revenues of the Strategic Business Unit Digital

Document Systems decreased by 0.2% to € 1,479

million. On an organic basis revenues decreased

by 3.1%. The share of color increased from 2�% in

2009 to 28% in 2010.

Non-recurring revenues amounted to € 493 million,

an organic decrease of 3.3%. Recurring revenues

amounted to € 986 million, an organic decrease of

3.0%. The decrease of revenues was largely due to

lower sales and print volumes in office, printroom

and black & white continuous feed.

Revenues of the Strategic Business Unit Wide

Format Printing Systems amounted to € 732 million,

an organic decrease of 0.�%. The share of color in

revenues increased from ��% to �9%. Organically,

non-recurring revenues increased by 8.3% and

recurring revenues decreased by �.0%.

Revenues of the Strategic Business Unit

Océ Business Services amounted to € 463 million,

an organic decrease of 0.8%.


Grossmargin The gross margin was 36.2% (2009:

36.�%). Normalized gross margin increased by 0.8%

point to 38.2%.

The gross margin improved due to better factory

utilization and the cost-savings program.

OperatingexpensesOperating expenses as a

percentage of total revenues amounted to 37.�%

(2009: 37.1%). Normalized for one-off expenses,

the relative operating expenses were 3�.�% (2009:

36.0%).

OperatingincomeThe operating income amounted

to − € 32 million (2009: − € 15 million).

FinanceexpensesFinance expenses (net)

amounted to € 71 million (2009: € 37 million).

Taxation Taxation amounted to − € 17 million

(2009: € 3 million).

NetincomeNet income decreased from

− € 47 million in 2009 to − € 122 million in 2010.

Net income per ordinary share attributable to

shareholders amounted to − € 1.49 (2009:

− € 0.61).


Table 1 InformationbyStrategicBusinessUnit

Digital Document Wide Format Océ Business Services total

Systems Printing Systems

x € million 2010 2009 2010 2009 2010 2009 2010 2009

Revenues 1,479 1,�83 732 707 463 ��8 2,674 2,6�8

Operating income (EBIT) –90 − 43 39 20 19 8 –32 − 15

Normalized operating

income 14 – � 39 30 19 12 72 37

Assets 1,577 1,�31 628 �36 143 127 2,252 * 2,207 *

Capital Employed (net) 1,093 992

Return on Capital Employed − 2.3% − 1.0%

* Total assets including ‘unallocated’ (2010: − € 96 million; 2009: € 113 million).

Table 2 Quarterlyrevenues

x € million 2010 2009

recurring non- total recurring non- total

recurring recurring

First quarter 453 161 614 �89 169 6�8

Second quarter 487 189 676 �91 18� 676

Third quarter 476 193 669 ��9 172 631

Fourth quarter 484 231 715 �66 217 683

Year total 1,900 774 2,674 1,90� 7�3 2,6�8

Table 3 Changes(organically)in2010quarterlyrevenuescomparedtothesamequarter

ofthepreviousyear

Digital Document Wide Format Océ Business Services total

Systems Printing Systems

re- non- total re- non- total re- non- total re- non- total

curring recurring curring recurring curring recurring curring recurring

First quarter - 6.2 - 1.2 - �.7 - 9.3 - 8.� - 9.0 - 0.� - - 0.� - �.6 - 3.8 - �.1

Second quarter - 2.� - �.2 - 3.0 - 3.2 6.� 0.1 - 1.7 - - 1.7 - 2.� - 0.7 - 2.0

Third quarter - 1.8 2.3 - 0.� - 2.9 11.7 2.0 - 1.7 - - 1.7 - 2.0 �.� 0.0

Fourth quarter - 1.3 - 8.6 - �.1 - �.6 21.3 �.2 0.7 - 0.7 - 1.6 1.2 - 0.7

Year - 3.0 - 3.3 - 3.1 - 5.0 8.3 - 0.4 - 0.8 - - 0.8 - 3.0 0.6 - 2.0

2� Report of the Board of Executive Directors | Financial review

Balancesheet

The balance sheet total increased to € 2,252

million at the end of 2010 (2009: € 2,207 million).

Corrected for exchange rates, the balance sheet total

decreased by € 274 million compared to last year.

Net Capital Employed increased from € 992 million

in 2009 to € 1,093 million in 2010.

ReturnonCapitalEmployedThe RoCE in 2010

amounted to − 2.3% (2009: − 1.0%).

EquityEquity amounted to € 544 million (2009:

€ 579 million). Changes in equity resulted from net

income realized in 2010 (− € 124 million), preference

dividends (− € 3 million), share-based compensation

( − € 1 million), capital movements resulting from

exchange rate effects (€ 87 million) and cash flow

hedges (€ 6 million). Equity as a percentage of the

balance sheet total amounted to 2�% (2009: 26%).

LoansLoans amounted to € 661 million (2009 year

end: € 500 million). Of this debt, an amount of

€ 6 million (1.0%) relates to non-current borrowings.

In addition, at 30 November 2010 no stand-by

credit facilities were contractually available to the

Océ Group.

Cashflow

The cash flow from operating activities amounted

to − € 13 million, a decrease of € 189 million

compared to 2009 (€ 176 million). This decrease

was largely due to working capital (inventories

− € 61 million, trade and other receivables − € 84

million and trade and other liabilities − € 21 million).

The cash flow from investing activities amounted to

− € 91 million (2009: − € 94 million).

The cash flow before financing activities (free cash

flow) amounted to − € 104 million (2009:

€ 82 million). The normalized free cash flow (cash

flow before financing activities, excluding one-offs)

amounted to – € 36 million (2009: € 82 million).

The cash flow from financing activities amounted to

€ 105 million (2009: − € 55 million). The increase of

the cash flow from financing activities mainly results

from proceeds and repayment of borrowings.

The cash dividend distributed to holders of ordinary

shares (final dividend for 2009 and interim dividend

for 2010) was nil (2009: nil). The dividend distributed

to holders of financing preference shares was nil

(2009: € 2.0 million).

Dividendproposalfor2010

In line with the Company’s dividend policy Océ will

propose to shareholders that no dividend on ordinary

shares will be declared over 2010.

Grossmargin

(as % of total revenues)

��

�0

3�

30

2�

20

1�

10

�Totalrevenues

(x € million)

1006 07 08

3,1�0

2,800

2,��0

2,100

1,7�0

1,�00

1,0�0

700

3�0

09 1006 07 08 09

2� Report of the Board of Executive Directors | Financial review

Table � Revenuesbygeographicalarea

2010 2009

x € million as % x € million as %

United States 918 34 930 3�

Germany 291 11 292 11

The Netherlands 288 11 29� 11

France 195 7 199 8

United Kingdom 173 6 172 6

Rest of Europe 524 20 �19 20

Countries outside Europe

and the United States 285 11 2�2 9

Total 2,674 100 2,6�8 100

Table � Cashflowstatement

x € million 2010 2009

Cash flow from operating activities -13 176

Cash flow from investing activities -91 - 9�

Free cash flow (before financing activities) -104 82

Cash flow from financing activities 105 - ��

Currency translation differences 6 - �

Change in cash and cash equivalents 7 23

Table 6 Ratios

2010 2009

Equity/Interest bearing debts 0.8 1.2

Equity/Total equity and liabilities 0.24 0.26

Inventories as % of total revenues 10.1 10.1

Trade receivables as % of total revenues 16.4 1�.�

Trade liabilities as % of total revenues 6.8 8.2


Table 7 Distributionofemployeesbygeographicalarea(infull-timeequivalents)

2010 2009

numbers as % numbers as %

United States 8,314 40 8,7�6 �0

The Netherlands 3,556 17 3,668 17

Germany 2,307 11 2,�01 12

France 1,354 6 1,363 6

United Kingdom 953 5 1,001 �

Rest of Europe 2,833 14 3,011 1�

Countries outside Europe

and the United States 1,391 7 1,3�� 6

Total 20,708 100 21,63� 100

Table 8 Distributionofemployeesbytypeoffunction(infull-timeequivalents)

2010 2009

numbers as % numbers as %

Business Services 6,723 32 7,00� 32

Marketing & Sales 4,243 20 �,�21 21

Service 4,062 20 �,328 20

Manufacturing & Logistics 1,776 9 1,923 9

Research & Development 1,565 8 1,��9 7

Finance & Administration 894 4 92� �

Other 1,445 7 1,�76 7

Total 20,708 100 21,63� 100


Reconciliationof2010figuresfrom12monthsto

13monthsThe change of the financial year meant that

2010 consisted of 13 months. In the financial review,

the key figures and the chapter Océ 2006 - 2010,

financial years of 12 months are compared.

November 2010 YTD December 2010 SEC December 2010 YTD x € million

Total revenues 2,67� 186 2,860

Gross margin 969 68 1,037

Operating expenses - 1,001 - 108 - 1,109

Operating income - 32 - �0 - 72

Income before income taxes - 10� - �1 - 1�6

Net income - 122 - �3 - 16�

To reconcile the 12 month results of 2010 with the

13 month results of the Financial Statements the

following reconciliations are made.

Consolidated income statement

Canon-relatedone-offitems November 2010 YTD December 2010 SEC December 2010 YTD x € million

andrestructuringcosts

Total revenues 2,67� 186 2,860

Gross margin 1,021 73 1,09�

Operating expenses - 9�9 - 81 - 1,030

Operating income 72 - 8 6�

Income before income taxes �1 - 10 31

Net income 19 - 12 7

* One-offs (see also page 7�, Segment information) x € million

Gross margin - �7

Operating expenses - 79

Operating income - 136

Finance expenses - 39

Share in income of associates - 2

Income before income taxes - 177

Income taxes �

Net income - 172

Consolidated income statement excluding one-offs*


Beforenetincomeappropriation 30 November 2010 31 December 2010 x € million

Assets

Non-current assets 1,271 1,23�

Current assets 981 908

Total assets 2,2�2 2,1�2

Equity and liabilities

Equity �� 88

Non-current liabilities �27 �32

Current liabilities 1,281 1,222

Total equity and liabilities 2,2�2 2,1�2

Consolidated Balance Sheet as at

November 2010 YTD December 2010 SEC December 2010 YTD x € million

Cash flow from operating activities - 13 - �0 - 63

Cash flow from investing activities - 91 - 11 - 102

Free cash flow - 10� - 61 - 16�

Cash flow from financing activities 10� 8 113

Currency translation differences 7 - 1 6

Changes in cash and cash equivalents 8 - �� - �6

Consolidated Cash Flow Statement


Excludingone-offs November 2010 YTD December 2010 SEC December 2010 YTD x € million

(Canon-relatedone-offitems

andrestructuringcosts)

Cash flow from operating activities �� - �9 6

Cash flow from investing activities - 91 - 11 - 102

Free cash flow - 36 - 60 - 96

Cash flow from financing activities 92 8 100

Currency translation differences 7 - 1 6

Changes in cash and cash equivalents 63 - �3 10

Consolidated Cash Flow Statement

Structure,policyandcomplianceOcé N.V. is an

international holding Company within the meaning

of Article 2:1�3, para. 3b of the Dutch Civil Code.

This implies that shareholder rights are not restricted

by the rules that are applicable in The Netherlands

to companies subject to what is known as the

“structure regime”. Océ’s corporate governance

structure is based on the Dutch legislation,

jurisdiction and codes of best practices.

In The Netherlands the Dutch corporate governance

code (referred to below as “the Dutch Code”) has

been applicable since December 2003. The Dutch

Code was given legal status with effect from

1 January 200�. As from the 2003 financial year

Océ has included in its Annual Report a paragraph on

corporate governance matters explaining the way in

which it applies the Dutch Code.

Management aspects

30 Report of the Board of Executive Directors | Management aspects | Corporate governance

Océ and Canon have agreed that Océ will continue

to adhere to the Dutch Code as long as Océ shares

are listed on NYSE Euronext Amsterdam. This

includes the principle that in case of a conflict of

interest the conflicted members of the Supervisory

Board will not participate in the decision making

process; this also applies to the members of the

Supervisory Board appointed on the nomination of

Canon.

The Executive Board and the Supervisory Board of

Océ subscribe to the basic principle that was applied

when drawing up the Dutch Code: a company is a

long-term collaboration between the various parties

involved. These parties, the stakeholders, are the

groups and individuals that directly or indirectly

influence (or are influenced by) the achievement

of the Company’s objectives and they include

employees, shareholders and other providers

of capital, suppliers and customers, but also

government and civil society. The Executive Board

and the Supervisory Board have overall accountability

for achieving the right balance between the interests

of the stakeholders so as to safeguard value creation

and ensure the continuity of the business.

CompliancewithandenforcementoftheDutch

CodeEach year Océ explains the main outlines of its

corporate governance structure in the Annual Report;

if there are substantial changes in this structure, they

will - depending on the subject - be submitted to the

General Meeting of Shareholders for discussion or

approval. At the Extraordinary General Meeting of

Shareholders held on 12 February 2010 the future

governance structure of Océ N.V. was discussed in

detail in the context of Canon’s offer.

IntroductionOcé’s corporate governance structure is based

on the fact that it is a publicly listed company. At the same

time Canon Inc. (“Canon”) holds, directly or through its

subsidiaries, approximately 90% of the ordinary shares in

Océ. These two elements determine how Océ’s governance

structure is tailored. The changes to the corporate

governance structure as a consequence of Canon’s offer are

also set forth in the Offer Memorandum dated 28 January

2010 and various press releases issued in connection with

the offer.

Corporate governance

The proposal to change the governance structure

and amend the Articles of Association accordingly

was adopted. More detailed information about Océ

corporate governance and the related rules and

regulations can be found on the Océ website

(www.investor.oce.com) under the heading

corporate governance. Transparent accountability

and an active dialogue with all stakeholders

contribute to realizing the objectives of the Dutch

Code. Océ complies with the Dutch Code and gives

adequate explanations in case of departures from

principles or best practices of the Dutch Code.

According to the Dutch Code departures from

principles or best practices are permitted as long

as adequate explanations are provided. Under

certain circumstances such departures may in fact

be justified. The ability to apply all provisions of the

Dutch Code depends on the concrete situation. As

regards compliance with best practice provisions

II.1.1 (appointment period of Executive Directors),

II.2.8 (severance pay for Executive Directors), III.2.1

(independence of members of the Supervisory

Board) and IV.1.2 (financing preference shares)

explanations are given under the relevant headings

on pages 3�, 3�, and 36.

ExecutiveBoard

The Executive Board currently consists of three

members who are appointed, suspended and

dismissed by the General Meeting of Shareholders.

Also the Supervisory Board may at all times suspend

one or more Executive Directors.

The General Meeting of Shareholders appoints the

Chairman of the Executive Board. The Supervisory

Board decides on the allocation of the activities to

be entrusted more specifically to particular members

of the Executive Board in consultation with the

Executive Board. Regardless of the allocation

of activities, the Executive Board acts as a body

with collective responsibility. The functioning of

the members of the Executive Board is regularly

evaluated by the Supervisory Board.

RemunerationoftheExecutiveBoard

In accordance with the Articles of Association of

Océ N.V. the remuneration policy for the Executive

Board is determined by the General Meeting of

Shareholders in response to a proposal by the

Supervisory Board.


The current remuneration policy, which was

approved by the General Meeting of Shareholders on

21 October 2008, has been applicable as from the

2009 financial year.

The Supervisory Board decides on the remuneration

and the other terms of employment of the members

of the Executive Board on the basis of the advice of

the Remuneration Committee and with due regard

for the policy referred to above.

RemunerationpolicyThe remuneration policy is

aimed at attracting and retaining the executives

needed to manage a publicly listed company that

operates on an international scale in the area of

technological activities. The aim of the modification

that was approved on 21 October 2008 is to

support the challenging strategic objectives of Océ

by setting more appropriate short-term and long-

term targets that are in line with market practice,

as recommended by the monitoring compliance

committee with the Dutch Code.

Towers Watson acted as the external consultants

of the Supervisory Board as regards formulating

and structuring the remuneration policy. The basic

principle is a remuneration which, on balance,

corresponds to the median level of a peer group of

about 1� Dutch companies (Aalberts Industries,

ASM International, ASML, CSM, DSM, Fugro,

Imtech, KPN, Nutreco, Philips Medical Systems,

SBM Offshore, TNT, USG People and Wolters

Kluwer).

The Supervisory Board has the right to replace

companies in cases where, due to specific

circumstances, such companies are in its opinion

no longer suitable as a reference or, for example, in

cases where a company is no longer publicly listed.

The Company considers variable pay (i.e. the short-

term and long-term bonus) to be an important part of

the total package.

The performance criteria to which the short-term

bonus and the long-term bonus are related are

focused respectively on value creation and on

boosting shareholder value over the short and longer

term.

The remuneration package for the Dutch*

members of the Executive Board is composed

as follows:

a Basicgrossannualsalary

The basic gross annual salaries are in line with

the previously mentioned median level for a

Dutch reference group in accordance with the

system applied by Towers Watson. The basic

gross annual salaries of the members of the

Executive Board in 2010 (based on twelve

months) were as follows (in euro):

basicgrossannualsalary

R.L. van Iperen 67�,736

H.A. Kerkhoven �06,0�8

A.H. Schaaf �06,0�8

As a percentage, the current ratio between the

basic gross annual salary of the Chairman and

that of the members of the Executive Board is

approximately 100:7�. In view of the role of the

Chairman and in line with the situation in the

peer group, this ratio will gradually be brought to

a ratio of 100:70. Future adaptations will depend

on developments in the above mentioned peer

group of Dutch companies. The development of

the basic salary of the Chairman will be based

on the development of the median for the said

peer group. The basic gross salaries were not

increased in 2010.

b Long-termcommitment

To strengthen the long-term commitment to

the Company and in view of the influence of

the members of the Executive Board on the

Company’s performance and market value, the

members of the Executive Board are requested

to build up a holding of shares in the Company

with a minimum value equivalent to at least half

of one year’s gross salary.

* In the event of the appointment of a non-Dutch Executive

it might be necessary to adopt the remuneration package in

accordance with the market conditions of the relevant country.


The basis for this is formed by the gross annual

salary on the first of January of each year and

the average stock market price of the Océ share

in the months of August and September in that

year. In accordance with principle II.2 of the

Dutch Code the shareholding is an investment

over the long-term.

Once each year, at the latest on the first of

October and until the moment when their

service contract terminates, the members of the

Executive Board will notify the Supervisory Board

of the number of Océ shares that they hold. In

connection with the review of the Company’s

strategic position the members of the Executive

Board were prohibited from trading in Océ

shares during the whole 2009 year and during

2010 until the settlement of Canon’s offer on

9 March 2010. As part of the recommendation

and support by the Executive Board of Canon

Inc.’s offer on Océ, each Executive Director was

obliged to tender all Océ shares held by him.

Consequently, taking into account also the very

small free float of Océ shares, the requested

long-term commitment as set forth in this

paragraph cannot be effected anymore.

For that reason it will be proposed to the

General Meeting of Shareholders to be held on

19 April 2011 to discontinue this element of the

remuneration policy.

The other elements of the package are as

follows:

c Short-termbonus

With effect from the 2009 financial year the

short-term bonus has been brought into line with

developments in the market on the basis of the

results of the previously mentioned comparative

market survey.

Three financial targets are used now: total

revenues, operating income and free cash flow

as these are applied in the Annual Report. For

an on-target performance a bonus of 1�% of

the basic gross annual salary is paid out for

each financial target. For a performance that is

substantially better than on-target a maximum

bonus of 2�% is paid out. In addition to the

financial targets there is a fourth (discretionary)

target which, if achieved, will give a maximum

bonus of 1�%.

The bonus in the event of a full on-target score

(= 100% achievement of all challenging targets)

is 60% of the basic gross annual salary (three

times 1�% on-target bonus for the financial

targets and 1�% discretionary) and in the event

of a performance that is substantially better than

on-target the maximum bonus is 90% of the

basic gross annual salary (three times 2�% for

the financial targets and 1�% discretionary).

For the total revenues financial target the bonus

build-up commences at 90% achievement of

the target, with a sliding scale of 1.�% for each

percentage point between 90% and 100%.

The maximum bonus of 2�% is paid for an

achievement of 110% of the target. For each

percentage point above the 100% on-target,

a sliding scale of 1% bonus for each one

percentage point overscore is applied.

For the operating income and free cash flow

financial targets the bonus build-up commences

at 80% performance, with an increase of 0.7�%

bonus for each percentage point of higher

performance up to the target and, in the event

of overperformance, with an increase of 0.�%

bonus for each percentage point overscore,

subject to a maximum score of 120% of the

target.

In the event of achievement of less than 90%

of the set targets for total revenues or less than

80% of the set targets for operating income

and free cash flow, no bonus is granted for the

financial objective not met. The extent to which

the financial objectives have been achieved is

determined by the Supervisory Board on the

basis of the annual Financial Statements and

the external auditor performed agreed upon

procedures related to the achievement of the

financial objectives.


In determining the performance compared

to the financial targets an adjustment will be

made to eliminate the influence of exchange

rate changes to the extent that these

involve translation differences. In the event

of acquisitions, divestments, restructuring

operations, impairments and other exceptional

circumstances the Supervisory Board may

decide, where such is reasonable, to fully or

partially disregard the effects of these on the

performance.

d Long-termbonus

With effect from the 2009 financial year a new

long-term cash plan was introduced that was

more in line with market practice and was

linked to TSR (Total Shareholder Return). As a

consequence of the current shareholder situation

TSR is no longer an appropriate yardstick to

measure the performance of the members of the

Executive Board and as part of the completion

of the offer by Canon all current long-term plans

were terminated in March 2010. For that reason

an adjusted long-term incentive policy will be

submitted for approval to the General Meeting of

Shareholders to be held on 19 April 2011.

For an overview of the individual remuneration of

the members of the Executive Board see page

103 of the Annual Report. An updated overview

of the Océ securities held by members of the

Executive Board can be found on www.afm.nl.

As per the end of the 2010 financial year the

members of the Executive Board held no ordinary

Océ shares and held no rights arising from

options on Océ shares. See page 12� for the

2010 disclosure.

PensionplanThe pension plan for the members of

the Executive Board consists of a combination of a

defined benefit and a defined contribution plan. Up

to a maximum salary of € 121,969 a provisionally

index-linked average earnings plan is applicable.

For members of the Executive Board appointed

after 1 January 2006 a defined contribution plan is

applicable for the salary in excess of that amount. In

respect of this pension plan the Company does not

run any (investment) risk.

Mr. Van Iperen, who was appointed prior to

1 January 2006, has a defined benefit plan for the

salary between € 121,969 and € 243,938 and a

defined contribution plan for the salary in excess of

that amount. An overview of the accrued pension

entitlements of the members of the Executive Board

and the related financing costs is shown on page 103.

For members of the Executive Board the contractual

retirement age is 6�.

The Chairman of the Executive Board has an

indicative retirement age of 60.

AppointmentperiodforExecutiveDirectors

Mr. Van Iperen was appointed for an indefinite

period prior to the introduction of the Dutch Code.

Océ does not comply with best practice provision

II.1.1, which prescribes an appointment period of

four years. Océ respects this arrangement that was

made in the past.

On 11 October 2006 Mr. Schaaf was appointed as

an Executive Director by the General Meeting of

Shareholders. It was agreed with him, too, that he

would be appointed for an indefinite period.

This does not comply with best practice provision

II.1.1.

On 21 October 2008 Mr. Kerkhoven was appointed

as an Executive Director by the General Meeting

of Shareholders. His appointment period is four

years, which therefore complies with best practice

provision II.1.1.

3� Report of the Board of Executive Directors | Management aspects | Corporate governance

PeriodofnoticeThe existing employment contracts

with the members of the Executive Board can

be terminated subject to a period of notice of

six months. If members of the Executive Board

terminate the contract themselves a period of notice

of three months is applicable.

SeverancepayIn the event of early notice of

termination being given by Océ, the severance

payment to Mr. Schaaf will amount to at most the

equivalent of 2� months of the basic gross annual

salary. This implies a partial departure from best

practice provision II.2.8.

In the event of premature notice of termination

being given by Océ, the severance payment to

Mr. Kerkhoven will amount to at most once his

basic gross annual salary. If the maximum of

once his basic gross annual salary is manifestly

unreasonable in the event of termination during the

first appointment period, Mr. Kerkhoven will in such

case qualify for a severance payment amounting to

at most twice his basic gross annual salary. As

Mr. Kerkhoven is in his first term, this is in conformity

with best practice provision II.2.8 of the Dutch Code.

Mr. Van Iperen was appointed as a member of

the Executive Board via internal promotion. No

prior agreements were made with him in respect

to severance pay and the policy that will continue

to be applied is that an amount of compensation

will be paid that is reasonable on the grounds of

the contractual situation, social developments and

jurisprudence.

For members of the Executive Board Océ does not

have any specific arrangement for compensation

upon termination of their service contract as a result

of a change of control.

As a consequence of the transaction with Canon

the nature and scope of tasks and responsibilities of

the members of the Executive Board may change

substantially. For that reason, and in line with their

respective employment agreements, it has been

agreed that in the event that the services of any

member of the Executive Board are terminated by

either such member or the Company, such member

shall be entitled to receive a severance payment of

an amount equal to two times such member’s basic

gross annual salary.

LoansSince 2002 Océ has no longer provided any

personal loans to members of the Executive Board.

All loans granted prior to 2002 have been repaid.

SupervisoryBoard

The Supervisory Board currently comprises six

members who are appointed in the same way as the

members of the Executive Board. The Supervisory

Board supervises the policy of the Executive Board

and the course of business in the Company and

the activities relating thereto. It has been agreed

with Canon that as long as Océ is a listed company

and Canon holds less than 9�% of the issued

and outstanding ordinary shares, the Supervisory

Board of Océ shall have at least two members

who are independent according to the Dutch Code.

Currently, Mr. P. Elverding and Mr. A. Baan are the

independent members. The non-compliance with

best practice provision III.2.1 was agreed as part of

Canon’s offer for Océ and is justified by Canon’s

large shareholding in Océ.

The Supervisory Board acts also as adviser to the

Executive Board. The Supervisory Board is supplied

in good time by the Executive Board with all the

information that it requires for the performance of its

task.

The Supervisory Board appoints one of their

members as their Chairman and one of their

members as Vice-Chairman.

SupervisoryBoardcommitteesThe following

committees operate at Océ:

Selection and Nomination Committee This

committee selects and nominates candidates for

appointment as a member of the Executive Board

or as a member of the Supervisory Board. At

periodic intervals this committee also assesses the

functioning of individual Supervisory Board members

and Executive Board members. This committee

consists of Mr. P.A.F.W. Elverding, Chairman,

Mr. T. Tanaka and Mr. S. Liebman. The Senior Vice

President Corporate Personnel & Organization acts

as secretary of this committee.

3� Report of the Board of Executive Directors | Management aspects | Corporate governance

Remuneration Committee This committee advises

the Supervisory Board on matters relating to the

remuneration of the members of the Executive

Board, draws up the remuneration report as referred

to in best practice provision II.2.9 of the Dutch Code

and monitors and evaluates the remuneration policy

of the Océ Group. The committee consists of

Mr. A. Baan, Chairman, Mr. P.A.F.W. Elverding and

Mr. T. Tanaka. The Senior Vice President Corporate

Personnel & Organization acts as secretary of this

committee. Decisions on the level of remuneration,

including the short-term and the long-term

bonus, fall within the competencies of the entire

Supervisory Board with due regard for the approved

remuneration policy.

Audit Committee This committee has a supervisory

task as regards monitoring the integrity of the

Company’s internal and external financial reporting,

its risk management, information technology and the

functioning of the internal and external auditors. This

committee consists of Mr. N. Eley, Chairman and

financial expert, Mr. A. Baan and Mr. J.M. van den

Wall Bake.

The role and powers of these committees are further

defined in regulations for these committees which

have been posted on the Océ website,

www.investor.oce.com.

RemunerationoftheSupervisoryBoard

In 2006 the General Meeting of Shareholders

fixed the remuneration of the Supervisory Board

at € 50,000 for its Chairman and € 37,000 for

its members with effect from the 2007 financial

year. For work performed in the Supervisory Board

committees the following additional payments are

applicable with effect from the 2007 financial year:

• Audit Committee, Chairman € 7,000 and

members € 5,000;

• Other committees, Chairman € 5,000 and

members € 3,000.

The remuneration for any financial year is

automatically increased if the Dutch CBS Price Index

figure for household consumption in September of

the preceding year is at least 10% higher than the

index figure that was last used as a criterion. This

increase corresponds to the percentage increase

in the most recently published index figure. For the

2010 financial year the total remuneration of the

present and former members of the Supervisory

Board amounted to € 284,643 (2009: € 285,423).

As at the end of the 2010 financial year the members

of the Supervisory Board held no ordinary Océ

shares (2009: nil) and held no rights arising from

options on Océ shares (2009: nil).

GeneralMeetingofShareholders

A General Meeting of Shareholders is held each

year. Other meetings of shareholders may be held

at the request of the Executive Board, the Chairman

of the Supervisory Board or two Supervisory Board

members. Shareholders who represent at least 10%

of the Company’s issued capital may also request

the Executive Board and the Supervisory Board to

convene a meeting. The agenda for the meeting is

drawn up by the party that convenes the meeting.

Proposals by shareholders who individually or jointly

represent 1% of the issued capital or a value of

€ 50 million can be placed on the agenda provided

that such proposals have been submitted at least

60 days prior to the meeting. All shares carry a

voting right pro rata to their nominal value.

Resolutions are adopted by an absolute majority

of votes, except in those cases where a qualified

majority is prescribed by law or in the Company’s

Articles of Association.


CapitalandsharesThe Company’s authorized

capital consists of ordinary shares and convertible

cumulative financing preference shares. Each share

has the right to cast one vote attached to it. For

details of the composition of the authorized capital

and an explanation of the various classes of shares in

issue, see pages 91 and 92 of this Annual Report.

All 20 million issued convertible cumulative financing

preference shares are held by Canon as of 9 March

2010. In a press release of 2� February 2010 Canon

has stated that it will only vote the number of

financing preference shares that corresponds with

the economic interest of all issued financing shares,

i.e. approximately 3.1� million votes on the 20 million

financing preference shares held by Canon. With this

statement Océ fully complies with article IV.1.2 of

the Dutch Code.

AlterationoftheArticlesofAssociationThe

Company’s Articles of Association may be altered by

the General Meeting of Shareholders.

RecorddateAccording to the new legislation on

shareholders’ rights, a mandatory record date is

fixed at 28 days before the day on which the General

Meeting of Shareholders will be held.

DividendpolicyWhilst maintaining consistency in

the dividend distribution to shareholders, endeavors

will be made to distribute to shareholders a stable,

but preferably gradually increasing dividend in line

with the development of income and subject to

the conditions that there is sufficient latitude for

making a payment from the income and/or the free

cash flow and that healthy balance sheet ratios are

maintained.

According to the Offer Memorandum of 28 January

2010 Canon may elect not to cause Océ to pay

(cash) dividends to shareholders.

IssuingpolicyUntil the meeting held on 23 April

2009 the General Meeting of Shareholders had given

its authorization to the Executive Board for the issue

of shares and for the limiting or preclusion of the

related statutory pre-emptive right. This authorization

expired on 23 October 2010. No new authorization

was requested in 2010.

AuthorizationfortheExecutiveBoardto

purchasesharesintheCompanyUntil the

meeting held on 23 April 2009 the General Meeting

of Shareholders had granted authorization to the

Executive Board for the purchase of shares in the

Company. This authorization expired on 23 October

2010. No new authorization was requested in 2010.

InvestorRelations(IR)policyandcommunication

withshareholders

Océ pursues an IR policy aimed at providing

shareholders and other stakeholders with regular and

extensive information about developments within

the Company. The CEO and the CFO have primary

responsibility for relations with shareholders and

financial journalists. For more detailed information

about Océ’s IR policy see page 123 of this Annual

Report.

All quarterly presentations and teleconferences

about the financial results as well as the

shareholders’ meetings are made simultaneously

accessible via audio webcasting to all shareholders

and other interested parties who are not present.

The webcasts are announced in advance and are

subsequently posted on the Océ website. This

method of providing information to shareholders

complies with best practice provision IV.3.1.


Transactionsinvolvingaconflictofinterest

During the financial year no transactions as referred

to in best practice provision II.3.� took place

involving a conflict of interest relating to members of

the Executive Board. Therefore there was no need to

report on the basis of best practice provisions II.3.2

and II.3.3.

In view of Canon’s shareholding in Océ and the

composition of the Supervisory Board (potential)

conflicts of interest in case of related party

transactions have the permanent attention of both

the Executive Board as well as the Supervisory

Board. In particular the two independent members

of the Supervisory Board, i.e. Messrs. Elverding

and Baan, play an important role in the compliance

with best practice principle III.6 and best practice

provisions III.6.1 - III.6.�. Related party transactions

that are of material significance to Océ are set forth

on page 106 of this Annual Report.

Theriskmanagementandinternalcontrolsystem

The Board of Executive Directors is responsible for

the structure and functioning of the system of risk

management and internal control that is applied

within Océ. This system is focused on identifying

and controlling the strategic, operational and

financial risks and risks in the area of legislation and

regulations so as to enable the Company’s objectives

to be achieved. The system is based on the first

reference model of the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

As regards information technology the reference

model of the Information Technology Governance

Institute (CobIT, Control objectives for Information

and related Technology) has been applied.

Océ applies the structure of these models in the

measures that have been taken to control its business

processes and in the principal objectives for financial

reporting. The details of the models are worked out

centrally and are applied as consistently and clearly as

possible in the various parts of the organization and

legal entities. An overall risk analysis is anchored in

the strategic business plans. During the year under

review no material weaknesses were found in the

internal structure for risk control.

38 Report of the Board of Executive Directors | Management aspects | Risks and risk control

During 2010, an analysis was made of the authorization

design and implementation in Océ’s ERP solutions. It

was found that the authorization rules (segregation of

duties) are generally being respected and that agreed

waivers and mitigating controls are in place for the

exceptions. In a number of areas, however, the design

of the standard business processes needs to be

adapted in order to meet the needs of the business.

These changes are foreseen for 2011.

Triggered by the change of control in March 2010,

the largest Océ entities were included in the

scope for the Canon Group Sarbanes-Oxley �0�

compliance. Océ applies its risk management and

internal control system to meet the Canon Group

Sarbanes-Oxley �0� requirements.

Another aspect of the change of control is the

fact that Océ changed its financial year, which has

implications for the comparability of the financial

information included in this Annual Report. The

financial year 2010 consists of 13 months (from

1 December 2009 to 31 December 2010), as

compared to the 12 months in the financial year

2009 (from 1 December 2008 to 30 November

2009).

Internalriskcontrolstructure Risk categories

(x means: is applicable)

strategic / legislation & financial

operational regulations

Policy principles and procedures x x x

Strategic plans and budgeting process x - x

Organization structure and authorization manual x x x

Supervisory Board x x x

Audit Committee (AC) - x x

Selection and Nomination Committee x x x

Remuneration Committee x x x

Information Manual (IM) - x x

Letter of Representation (LOR) x x x

Governance, Compliance and Risk Management (GCRM) x x x

Disclosure Committee (DC) - x x

Internal audits x x x

Internal Controls Committee US (ICC) - x x

Risks and risk control

To provide an insight into the way in which Océ

controls the relevant risks an overview is given

on the previous page of the internal risk control

structure and how it relates to the various risk

categories.

WillingnesstotakerisksOcé’s willingness to take

risks is largely determined by the Company’s

objectives.

The willingness to take risks with regard to research

and development is relatively high. The resultant

risks are managed within the structure of a project-

based organization which brings together various

disciplines of the Océ organization, such as research

and development, marketing, manufacturing and

controlling. The Board of Executive Directors is

directly involved in monitoring the progress of the

research and development projects.

Océ applies a neutral willingness to take risks with

regard to operational risks that result from the

business processes. Océ takes the view that these

operational risks are inherent in the conduct of a

business. The risks are managed at transaction level

within the structure of Governance, Compliance

and Risk Management. Endeavors are made to limit

the consequences of operational risks as much as

possible without causing unnecessary hindrance to

the business processes.

With regard to the risks in the area of product

safety and the environment Océ applies a low

risk tolerance. Océ sets high requirements for the

process quality via the Océ Technical Standards. In

general terms it can be said that the Océ Technical

Standards are more strict than external standards

and norms. The process quality that is used to

manage the product safety and environmental risks

is certified at periodic intervals.

The risks that Océ is not willing to bear itself have

been transferred to insurance companies. Examples

include the insurance against fire and consequential

losses and against transport damage. The insurance

policy of Océ is comparable to that of other Dutch

companies with international activities.

InternalriskcontrolstructureA brief explanatory

description of the main elements of the internal risk

control structure is given below.

39 Report of the Board of Executive Directors | Management aspects | Risks and risk control

PolicyprinciplesandproceduresThese form the

basis for the internal risk control structure and are

drawn up centrally by the Board of Executive

Directors of Océ. All group companies must operate

in accordance with these policy principles and

procedures.

They include the following elements:

• Océ policy principles

The policy principles provide a high level indication

of the objectives of the Océ Group, how these

should be achieved and the ethical criteria that

should be complied with. The Board of Executive

Directors communicates these principles to all

employees and ensures that they are adhered

to. The policy principles are reviewed at periodic

intervals and amended where necessary.

• Whistle blowing procedure

In addition to the national legislation that is

applicable to each separate group company, the

Supervisory Board has formally approved a group

procedure that has been implemented worldwide.

The aim of the procedure is to ensure that

throughout the whole Océ Group any infringement

of legislation and of existing policy, principles

or procedures can be reported without the

person making such report suffering any adverse

consequences in his or her legal position.

• Code of ethics for senior financial officers

This code is addressed to all members of

the Board of Executive Directors and senior

financial officers in the Océ Group and is aimed

at emphasizing and promoting ethical and

responsible behavior by this group of employees.

The code is more detailed than the Océ policy

principles and primarily deals with the financial

processes and reporting systems.

StrategicplansandbudgetingprocessStrategic

plans are drawn up for all parts of the Océ

organization (operational and non-operational) and are

converted into budgets. On a monthly basis the

results actually achieved are evaluated in detail by

the Strategic Business Units and the Board of

Executive Directors and compared to the budgets.

Cash flow management is an important part of this

process.

Organizationstructureandauthorizationmanual

Within the organization the entire complex of tasks,

responsibilities and powers is set out in the

organization structure. The allocation of

responsibilities and powers is laid down in detail in

various authorization manuals. Océ ensures that all

employees are aware of the organization structure

and the sections of the authorization manuals that

are of relevance to them.

InformationManual(IM)This contains a detailed

description of the guidelines for management

reporting and external financial reporting. External

financial reporting is based on IFRS guidelines.

LetterofRepresentation(LOR)All Managing

Directors and Controllers of the group companies

submit a detailed declaration on a quarterly basis.

This declaration states, among other things, that the

financial reporting is reliable and complies with the

IM. In addition, specific answers are given to various

questions about potential risks. Important

observations made in the LORs are reported to the

Board of Executive Directors and the Audit

Committee. The content of the LOR submitted by

the management of the group companies is

supported by a detailed risk analysis.

Governance,ComplianceandRiskManagement

(GCRM)After the termination of Océ’s registration

with the Securities and Exchange Commission in

2007, the internal control structure that existed for

compliance with the Sarbanes-Oxley Act 2002 - now

called Governance, Compliance and Risk

Management - is kept intact. The GCRM structure

enables Océ to comply with the EU Transparency

Directive, the national legislation and regulations

relating to risk management and control systems in

the countries in which Océ is active. In addition,

Océ is applying the GCRM structure to meet the

Sarbanes-Oxley requirements of the Canon Group.

GCRM ensures that the business processes are

documented with the aid of models which describe

the measures that have been taken to manage

operational risks in the business processes and

in the financial reporting at transaction level. The

models have been drawn up centrally and are

applied as unambiguously as possible in the various

organizational units and group companies.

�0 Report of the Board of Executive Directors | Management aspects | Risks and risk control

Within this structure a management assessment

of the effective control of the financial reporting

process takes place each year. This management

assessment is conducted within Océ by the

management of the group companies and corporate

staff departments designated for such purpose.

The results of this assessment are reported to and

discussed by the Board of Executive Directors and

the Audit Committee. The internal audit department

participates in this evaluation.

DisclosureCommittee(DC)The DC consists of the

Group Controller (Chairman), representatives of

operating companies, the Corporate Supply Centers,

the Strategic Business Units and Océ corporate staff

departments (Investor Relations, Corporate Strategy,

Group Finance & Administration), the Company

Secretary & Chief Legal Officer, the Chief

Information Officer (CIO), the Corporate Risk Officer

and the Group Internal Auditor.

The DC evaluates the findings of the in-depth risk

analyses that are conducted by all group companies.

The results of this evaluation are initially reported to

and discussed with the Board of Executive Directors

and are subsequently discussed by the Audit

Committee.

InternalauditsThe Group Internal Auditor reports to

the Board of Executive Directors and has access to

the Chairman of the Audit Committee and to the

external auditors. Within the framework of control

mechanisms and assurance processes an audit plan

is drawn up by the Group Internal Auditor each year.

The internal audit plan is focused on the most

important business processes and risks. The plan is

discussed with the external auditors and is approved

by the Board of Executive Directors and the Audit

Committee.

The internal audits relate to financial reporting

systems and the existence and proper functioning

of operational processes, procedures and systems.

The internal control framework is largely evaluated

as part of the activities of the internal auditors.

The internal auditors report on the effectiveness

of elements of the internal control framework. The

findings of the internal auditors are discussed and

agreed with the relevant management. Subsequently

the findings are discussed with the Board of

Executive Directors, the external auditors and the

Audit Committee.

AuditCommittee(AC)The Audit Committee, which

consists of three members of the Supervisory Board,

independently monitors the process of risk

management on the basis of the supervisory role

fulfilled by the Supervisory Board. The Audit

Committee focuses on the quality of internal and

external reporting, on the effectiveness of internal

controls with regard to processes and on the

functioning of the external and internal auditors. The

Audit Committee meets at least four times a year.

The relevant financial officers and the external and

internal auditors are generally invited to attend these

meetings.

InternalControlsCommitteeUS(ICC)Océ

implemented an Internal Controls Committee (ICC)

to monitor its business operations in the United

States. The members of the Internal Controls

Committee are the CFO of Océ-USA Holding, Inc.,

the CEO of Océ North America, Inc., the Presidents

of the principal operating companies, the General

Counsel and the Internal Audit Director in the United

States, as well as the CFO of Océ N.V. (who also

chairs the ICC).

ExternalauditOn 22 April 2010, the Annual General

Meeting of Shareholders appointed Ernst & Young

Accountants LLP as the external auditors of

Océ N.V. The external auditors carry out the

activities relating to the issue of an audit opinion on

the annual Financial Statements. The external

auditors focus on the financial reporting and take into

consideration the systems that are intended to

ensure reliable reporting. The external auditors report

on any matters relating to internal control measures

that have been identified during the auditing of the

annual Financial Statements. The observations made

by the external auditors are discussed in the Audit

Committee.

Directors’responsibilitystatement

DutchCorporateGovernanceCode In line with

best practice provision II.1.� of the Dutch Corporate

Governance Code of December 2008, Océ issues a

declaration about the effectiveness of the system of

internal controls of the processes on which the

financial reporting is based. Océ’s system of internal

controls is based on internationally accepted

standards for internal control, including COSO.


The Board of Executive Directors assessed the

effectiveness of the system of internal controls for

financial reporting for the year ended 31 December

2010. During this assessment, no shortcomings

were identified that might possibly have a material

impact on the financial reporting. On the basis

of the results of the above assessment and the

risk analyses that were carried out within the Océ

specific risk control framework of Governance,

Compliance and Risk Management, the Board

of Executive Directors is of the opinion – after

consulting with the Audit Committee and the

external auditors and with the approval of the

Supervisory Board - that the system of internal

controls provides a reasonable degree of certainty

that the financial reporting contains no inaccuracies

or misstatements of material importance. An

inherent element in how people and organizations

work together in a dynamic world is that systems of

internal control cannot provide an absolute degree

(though they can provide a reasonable degree) of

certainty as regards the prevention or detection

of material inaccuracies or misstatements in the

financial reporting, the prevention of losses and fraud

or the violation of laws and regulations.

The Board of Executive Directors confirms that in

its view the system of internal controls, focused on

the financial reporting, functioned effectively over

the year ended 31 December 2010. There are no

indications that the system of internal controls will

not function effectively in 2011.

EUTransparencyDirectiveThe Board of Executive

Directors as required by Article �:2�c of the Dutch

Financial Markets Supervision Act (Wet op het

Financieel Toezicht) confirms to the best of its

knowledge that:

• the annual Financial Statements for the year

ended 31 December 2010 give a true and fair view

of the assets, liabilities, financial position and

profit and loss of Océ N.V. and its consolidated

companies;

• the additional information disclosed in the Annual

Report 2010 gives a true and fair view of the

position of Océ N.V. and its consolidated

companies as at 31 December 2010 and the state

of affairs during the financial year 2010 of

Océ N.V. and its consolidated companies;

• the Annual Report 2010 describes the principal

risks and uncertainties facing Océ N.V. and its

consolidated companies.

Riskanalysis2010

StatementrelatingtotheRiskProfile At the time

of authorization for issue of the Annual Report by

the Board of Executive Directors the governance

of Océ N.V. is based upon Océ N.V. being a listed

company. Therefore, the risk analysis 2010 has been

performed on a stand-alone basis for Océ N.V. Risks

inherent to the change of control and the current

cooperation phase with Canon are part of this risk

analysis. The analysis concerns the identification of

the main risks, of the control measures that relate to

them and of the actions taken.


The risks are subdivided into five groups:

Risks related to the three strategic pillars:

1 Lack of sufficient distribution power.

2 No full line competitive product and services

portfolio.

3 Failure to implement the corporate operational

excellence programs successfully.

Risks that are related to the market or are of a

financial nature:

� A (temporary) significant decline in the demand

for products and/or services (market risk).

� Risks relating to the cash flow or the availability

of liquid funds or financing (financial risks).

1 Lack of sufficient

distribution

power

1 Inadequate market coverage in the office segment

2 Productivity per sales employee too low

3 Number of indirect sales channels too low

� Utilization of service employees too low

- Access to Canon distribution channels

- Continual improvement of productivity

- Intensive training programs further expanded,

including cross training for Canon products

- Improved tooling and processes as a result of our

corporate excellence program

- Access to Canon distribution channels

- Partnerships with distributors in countries where

Océ does not have sufficient presence

- Partnerships to serve specific markets

- Further implementation of multi-tier service organization

- Broadening the deployability of service employees

across more products

- Implementation of restructuring program

Majorrisks,controlmeasuresandactions

2 No full line

competitive

product and

services portfolio

1 Delay in product introductions

2 Insufficiently competitive cost level

3 Insufficient competitive offerings by Océ Business Services

- Realize opportunities from cooperation with Canon

- Sharper R&D focus on own unique strengths

- Combine development activities with partners that add

scale and innovation strength

- Optimize through cooperation with Canon

- Focus on design-to-cost as basis for make or buy decision

- Productization of identified services

3 Failure to

implement

the corporate

operational

excellence

programs

successfully

1 Implementation of programs delayed, more expensive

than planned or does not result in the planned savings

2 Disruption of business processes resulting from

implementation of corporate operational excellence

programs and ERP implementations

- Direct steering of individual projects by Senior

Executives, cost control via project controllers

- Increased focus on corporate operational excellence

programs

- Support from external experts to strengthen the programs

- The corporate operational excellence programs are less

dependent on ERP implementations

- Support from external experts including the execution of

risk analyses before and during implementation

Group Risk ControlMeasures/Actions


Venlo, 2� February 2011


R.L. van Iperen, Chairman

H.A. Kerkhoven

A.H. Schaaf

� A (temporary)

significant

decline in

the demand for

products and/or

services (market

risk)

1 Cyclical decrease in level of activities in the economy as

a whole and specifically in relevant (printing) market

sectors

2 Structural decline in the total market for printed

documents, both analogue and digital (due to

substitution by electronic documents)

- Spread of activities over various geographical areas,

sectors and (printing) document application areas

- Enter into long-term contracts with customers resulting

in recurring revenues (currently about 70% of total

revenues)

- Sharp focus on bringing organization, working

capital and costs into line with changes in level of

activities (e.g. via corporate excellence programs)

- Increasing the flexibility with which organization, working

capital and costs level can be brought into line with

changes in level of activities

- Develop distribution power and competitive digital

printing products focused on applications that are

currently still mainly printed analogue (especially in high

volume continuous feed and display graphics)

- Expansion of activities that are not print-related or only to

a limited extent

� Risks relating

to the cash flow

or the availability

of liquid funds of

financing (financial

risks)

1 Exchange rate sensitivity of results and cash flows

(foreign exchange risk)

2 Interest rate sensitivity of results and cash flows (interest

rate risk)

3 Receivables cannot be collected (credit risk)

� Insufficient committed credit facilities (liquidity risk)

� Insufficient results or cash flows, resulting in the

covenants to committed credit facilities not being met

- Short-term: hedge transaction exposure in the main

currencies

- Medium and long-term: natural hedges including

(out)sourcing (to) from Asia

- Intercompany loan with arm’s length pricing

- Active attention for acceptance of customers and

management of debtor items

- Risk significantly reduced because of Canon

shareholding

- Risk of financial covenants diminished because of Canon

financing

- Sharp focus on results and cash flows

Group Risk ControlMeasures/Actions

Risksthatarerelatedtothemarketorthatareofafinancialnature

�� Report of the Supervisory Board

To the Annual General Meeting of Shareholders of Océ N.V., Venlo.

AnnualReportWe present to you the Annual Report

for 2010 which, together with the Financial Statements

for 2010, has been drawn up by the Executive Board.

After having taken note of the report by the auditors

Ernst & Young Accountants LLP, we approved and

signed off the Financial Statements.

We have discussed the Annual Report with the

Executive Board in the presence of the external

auditors and the head of the internal audit department.

The Financial Statements are submitted to you

herewith for discussion and adoption. In the

Company’s Articles of Association a distinction is made

between the adoption of the Financial Statements, the

determination of the income appropriation and the

granting of a release and discharge for the

management and for our supervision thereof. We

recommend that you adopt the Financial Statements,

that you approve the income appropriation and that you

grant a release and discharge to the Executive Board

for its management during the past financial year and

to the Supervisory Board for its supervision thereof.

Results In 2010 certain of Océ’s markets showed clear

signs of recovery. Revenues in continuous feed and

wide format printing systems improved, benefiting from

better printer sales. Revenues in business services were

stable, while revenues in the office segment were under

pressure. Normalized operating income improved over

the year. Due to change of control related one-off items

reported net income was negative.

Strategicposition On 9 March 2010 Canon Inc.

successfully completed its offer for all the issued and

outstanding ordinary shares in the capital of Océ.

Currently, Canon holds, directly or through its

subsidiaries, approximately 90% of the ordinary shares

in the capital of Océ. For the reasons set forth in the

Position Statement issued on 28 January 2010, both

the Supervisory Board (in its composition at that time)

and the Executive Board recommended to

shareholders that they accept the offer by Canon.

Report of the Board of

Supervisory Directors

CompositionoftheSupervisoryBoardThe

successful completion of Canon’s offer had

consequences for the composition of the Supervisory

Board. Messrs. G.J.A. van de Aast, M. Arentsen,

R.W.A. De Becker and D.M. Wendt resigned as per

9 March 2010 and effective per the same date Messrs.

T. Tanaka, N. Eley, S. Liebman and J.M. van den Wall

Bake were appointed as new members of the

Supervisory Board. These four new members have

been appointed on the nomination of Canon. It has

been agreed with Canon that as long as Océ is a listed

Company and Canon holds less than 9�% of the issued

and outstanding ordinary shares in Océ, the Supervisory

Board shall have at least two members who are

independent according to the Dutch corporate

governance code. Upon the completion of the offer by

Canon, Messrs. P.A.F.W. Elverding and A. Baan remained

in office and are the independent members of the

Supervisory Board referred to here above. Mr. Elverding

is the Chairman of the Supervisory Board. We are grateful

to Messrs. Van de Aast, Arentsen, De Becker and Wendt

for their commitment and contribution to Océ during their

respective terms of office.

CorporategovernanceThe successful completion of

the offer by Canon also had consequences for Océ’s

corporate governance structure. At the Extraordinary

General Meeting of Shareholders held on 12 February

2010 the future governance structure of Océ was

discussed in detail in the context of Canon’s offer. The

proposal to change the governance structure and to

amend the Articles of Association accordingly was

adopted.

SupervisionandadviceDuring the year under review,

the Supervisory Board had intensive contact with the

Executive Board. In the first months of the year the

Supervisory Board was intensely involved in the

completion of the conditional offer made by Canon. In

the Position Statement issued on 28 January 2010, the

Supervisory Board and the Executive Board addressed

the background of the proposed transaction as well as

its financial and strategic merits.

�� Report of the Supervisory Board

After the successful completion of the offer by Canon,

the Supervisory Board (in its new composition)

discussed in each meeting inter alia the progress made

with respect to the cooperation between Océ and

Canon, as well as the planning of the future integration.

In view of Canon’s shareholding in Océ and the

composition of the Supervisory Board, (potential)

conflicts of interest in case of related party transactions

had and still have the permanent attention of both the

Executive Board as well as the Supervisory Board. In

particular the two independent members of the

Supervisory Board, i.e. Messrs. Elverding and Baan,

play an important role in complying with the relevant

principles and provisions of the Dutch corporate

governance code.

During the 2010 financial year various related party

transactions between Canon and Océ took place. The

most important transactions were the refinancing by

Canon of a large part of Océ’s debt and the phase in of

Canon products. All these transactions have a sound

business rationale, were entered into at arm’s length

conditions and took into account the interests of all

Océ stakeholders. Also the proper procedures for the

decision making process in case of a (potential) conflict

of interest were followed. During the financial year

2010 no transactions took place in which members of

the Executive Board had interests that were in conflict

with those of Océ.

A recurring item on the agenda of the Supervisory

Board is the development of the financial results and

the external reporting thereof. Prior to discussing this

item in the full meeting of the Supervisory Board, it is

first extensively discussed by the Audit Committee.

Other items discussed by the Audit Committee include

the system of internal controls, the Company’s risk

profile, financial reporting, compliance with

recommendations made by the internal and external

auditors and the outcome of investigations carried out

by the internal audit department. Also the activities,

remuneration and independence of the external

auditors are regularly discussed, as well as various

subjects like foreign exchange risks, pensions, tax,

ICT and treasury/financing of the Company. The Audit

Committee met four times in 2010 and each time the

Supervisory Board received feedback on the Audit

Committee’s discussions.

The Supervisory Board met with both the external

auditors and the head of the internal audit department

prior to approving the Financial Statements. The

Supervisory Board held a meeting without the

members of the Executive Board to discuss the

functioning of the Supervisory Board and its members.

As the majority of the current members of the

Supervisory Board have been in office since 9 March

2010 only, no full assessment was made.

The performance of the Executive Board and its

individual members was also reviewed and discussed.

On pages 118 and 119 of this Annual Report you can

find the details of the current division of tasks and

responsibilities between the members of the

Executive Board.

The Remuneration Committee held two meetings in

2010. Matters discussed include the amendment of

the long-term bonus plan of the Executive Board. With

effect from the 2009 financial year a new long-term

cash plan was introduced that was linked to TSR (Total

Shareholder Return). As a consequence of the current

shareholder situation, TSR is no longer an appropriate

yardstick to measure the performance of the members

of the Executive Board and as part of the completion of

the offer by Canon all current long-term plans were

terminated in March 2010. For that reason an amended

long-term bonus policy will be submitted for approval

to the General Meeting of Shareholders, which will be

held on 19 April 2011.

We would like to thank management and employees

for their commitment and hard work across a wide

range of aspects of Océ in 2010. After the successful

completion of Canon’s offer, Océ embarked on the

next step in its history. We wish the management and

employees every success in realizing the benefits of

the combination with Canon.

Venlo, 2� February 2011

Board of Supervisory Directors

P.A.F.W. Elverding, Chairman

T. Tanaka, Vice-Chairman

A. Baan

N. Eley

S. Liebman


�6 Financial statements

Financial statements

�7 Financial statements | Consolidated income statement

Consolidated income statement for the year ended

The figures ( ) refer to the notes 31December 30 November x € 1,000

2010* 2009

Total revenues (1) 2,860,026 2,6�7,�622,6�7,�62

Cost of sales (1), (2) -1,823,163 - 1,681,7�6- 1,681,7�6

Gross margin (1) 1,036,863 96�,81696�,816

Selling and marketing expenses -617,819 - �91,78�- �91,78�

Research and development expenses (�) -201,723 - 173,�77- 173,�77

General and administrative expenses -289,652 - 216,2�6- 216,2�6

Other income (net) (�) - 231231

Operating expenses (2) -1,109,194 - 981,286- 981,286

Operating income -72,331 - 1�,�70

Finance expenses (6) -77,230 - �0,896- �0,896

Finance income (6) 4,820 13,73113,731

Share in income of associates (12) -1,699 2,1872,187

Income before

income taxes -146,440 - �0,��8- �0,��8

Income taxes (7) -18,319 3,31�3,31�

Net income -164,759 - �7,13�- �7,13�

Net income

attributable to Shareholders -166,972 - �8,929- �8,929

Minority interest 2,213 1,79�1,79�

-164,759 - �7,13�- �7,13�

Earnings per ordinary

share for net income

attributable to

shareholders (8) Basic -2.00 - 0.61- 0.61 euro

Diluted -2.00 - 0.61- 0.61

* The financial year 2010 consists of a 13-month

periodstartingon1December2009andending

on31December2010(referenceismadeto

page54ofthesummaryofsignificant

accountingpolicies).

�8 Financial statements | Consolidated statement of comprehensive income

Consolidated statement of comprehensive income

31December 30 November x € 1,000

2010 2009

Net income (loss) -164,759 - �7,13�

Changes in other comprehensive income (loss):

Hedging reserve (gross) 7,469 12,187

Income tax relating to hedging reserve -396 - 2,01�

Available-for-sale reserve -92 38

Currency translation reserve 73,410 - 60,702

Other comprehensive income (loss) 80,391 - �0,�92

Total comprehensive income (loss) -84,368 - 97,626

Comprehensive income (loss) attributable to:

Shareholders -86,581 - 99,�21

Minority interest 2,213 1,79�

-84,368 - 97,626

�9 Financial statements | Consolidated statement of changes in equity

Consolidated statement of changes in equity

Equityattributabletoshareholders

x € 1,000 share share other retained net income minority total

capital premium reserves earnings attributable to interest equity

(19) (20) shareholders

Balance at 1 December 2008 �3,669 �12,026 - 91,870 169,7�2 1,968 3�,976 680,�11

Changes in 2009:

Net income - - - - - �8,929 1,79� - �7,13�

Other comprehensive income - - - �0,�92 - - - - �0,�92

Total comprehensive income - - - �0,�92 - - �8,929 1,79� - 97,626

Share-based compensation (2�):

• value of employee services - - - 118 - - 118

• proceeds from shares reissued - - 728 - 172 - - ��6

Movement in other legal reserves - - �9,686 - �9,686 - - -

Appropriation of net income - - - 1,968 - 1,968 - -

Dividend - - - - 2,�� - - 1,79� - �,339

Balance at 30 November 2009 �3,669 �12,026 - 91,9�8 119,�26 - �8,929 3�,976 �79,220

Changes in 2010:

Net income - - - - - 166,972 2,213 - 16�,7�9

Other comprehensive income - - 80,391 - - - 80,391

Total comprehensive income - - 80,391 - - 166,972 2,213 - 8�,368


• value of employee services - - - - 2�� - - - 2��

• proceeds from shares reissued - - 2�8 - 112 - - 136

Movement in other legal reserves - - - 2,2�6 2,2�6 - - -

Appropriation of net income - - - - �8,929 �8,929 - -

Dividend - - - - 2,76� - - 3,831 - 6,�96

Balance at 31 December 2010 �3,669 �12,026 - 13,�6� 69,622 - 166,972 33,3�8 �88,138

�0 Financial statements | Consolidated balance sheet

Consolidated balance sheet as at

Assets 31December 30 November x € 1,000

2010 2009

Non-current assets Intangible assets (9) 569,639 �63,369�63,369

Property, plant and equipment (10) 297,422 316,039316,039

Rental equipment (11) 76,491 81,8��81,8��

Associates (12) 2,869 �,171�,171

Derivative financial instruments (13) 60 �,032�,032

Trade and other receivables (1�) 180,649 186,�16186,�16

Deferred income tax assets (1�) 99,039 92,73692,736

Available-for-sale financial assets (16) 7,995 8,1618,161

1,234,164 1,2�7,8681,2�7,868

Current assets Inventories (17) 294,095 266,673266,673

Derivative financial instruments (13) 6,449 16,23�16,23�

Trade and other receivables (1�) 541,567 ��2,�9��2,�9�

Current income tax receivables 9,258 12,1��12,1��

Cash and cash equivalents (18) 56,155 101,76�101,76�

907,524 9�9,3129�9,312

Total 2,141,688 2,207,1802,207,180

�1 Financial statements | Consolidated balance sheet

Equityandliabilities 31December 30 November x € 1,000

2010 2009

Equity Share capital (19) 53,669 �3,669

Share premium 512,026 �12,026

Other reserves (20) -13,565 - 91,9�8- 91,9�8

Retained earnings 69,622 119,�26119,�26

Net income attributable to shareholders -166,972 - �8,929- �8,929

Equity attributable to shareholders 454,780 ��,2��,2��

Minority interest 33,358 3�,976

488,138 �79,220�79,220

Non-current Borrowings (21) 6,996 �6�,136�6�,136

liabilities Derivative financial instruments (13) - 27,16227,162

Retirement benefit obligations (22) 368,445 378,602378,602

Trade and other liabilities (23) - �,�18�,�18

Deferred income tax liabilities (1�) 12,632 10,�1110,�11

Provisions for other liabilities and charges (2�) 43,203 38,�2338,�23

431,276 92�,3�292�,3�2

Current liabilities Borrowings (21) 657,535 3�,�623�,�62

Derivative financial instruments (13) 4,928 9,0699,069

Trade and other liabilities (23) 533,244 611,338611,338

Current income tax liabilities 9,447 8,9388,938

Provisions for other liabilities and charges (2�) 17,120 38,80138,801

1,222,274 703,608703,608

Total 2,141,688 2,207,1802,207,180

�2 Financial statements | Consolidated cash flow statement

Consolidated cash flow statement for the year ended


2010 2009

Operating income -72,331 - 1�,�70- 1�,�70

Adjustments for:

Depreciation, amortization and impairment 244,892 186,399186,399

Share-based compensation -5,027 �,�7��,�7�

Result on divestments, disposals 66 - 1,0�0- 1,0�0

Unrealized gains/losses on financial instruments/other 21,211 - 1�,761- 1�,761

Changes in:

Retirement benefit obligations -13,528 - 7,99�- 7,99�

Provisions for other liabilities and charges -17,613 12,7�612,7�6

Rental equipment -49,608 - 37,�2�- 37,�2�

Inventories -15,047 72,17972,179

Trade and other receivables 49,298 97,0�097,0�0

Trade and other liabilities -130,981 - �1,191- �1,191

Operating cash flows:

Interest received 3,524 6,9066,906

Interest paid -64,811 - 62,2�8- 62,2�8

Income taxes -12,627 - 1�,111- 1�,111

Cash flow from

operating activities -62,582 17�,38�17�,38�

Investment in intangible assets -72,055 - 83,606- 83,606

Investment in property, plant and equipment -53,082 - �1,838- �1,838

Divestment in intangible assets 4,258 383383

Divestment in property, plant and equipment 3,896 11,73�11,73�

Payments/receipts regarding other non-current assets -1,441 601601

Capital increase/decrease in associates -276 - 3- 3

Dividend from associates 57 211211

Sale of finance lease portfolio 16,573 26,62�26,62�

Sale of subsidiaries (net of cash) - 2,3062,306

Cash flow from

investing activities -102,070 - 93,�87- 93,�87

�3 Financial statements | Consolidated cash flow statement


2010 2009

Proceeds from borrowings 660,091 �1,073�1,073

Repayments of borrowings -543,273 - 93,721- 93,721

Dividend paid to shareholders 17 - 1,960- 1,960

Repurchase of/proceeds from treasury shares 136 ��6��6

Dividend paid to minority interest -3,831 - 1,79�- 1,79�

Cash flow from

financing activities 113,140 - ��,8�7- ��,8�7

Currency translation differences 5,902 - 3,��6- 3,��6

Change in cash

and cash

equivalents - 45,610 22,�0�22,�0�

Cash and cash

equivalents at start

of financial year 101,765 79,36179,361

Cash and cash

equivalents at end

of financial year 56,155 101,76�101,76�

Introduction The following summary of significant

accounting policies is intended as a guide in

interpreting the consolidated financial statements.

The consolidated financial statements of Océ N.V.

have been prepared in accordance with the

International Financial Reporting Standards (IFRS) as

adopted by the European Union.

The corporate income statement is presented in

abbreviated format in accordance with article 2:�02

of Part 9 of the Dutch Civil Code.

On 9 March 2010 Canon had acquired 77.�1% of the

share capital of Océ. As of that date Canon obtained

the power to govern Océ’s financial and operating

policies.

By approval of the amendment of the Articles of

Association by the Annual General Meeting of

Shareholders on 22 April 2010, the financial year of

Océ N.V. has changed. The 2011 financial year runs

from 1 January to 31 December. This change was

made to align the financial year of Océ N.V. with the

financial year of Canon Inc. As a consequence thereof

the 2010 financial year consists of 13 months, starting

at 1 December 2009 and ending on 31 December

2010. The figures presented in the financial statements

will therefore not be entirely comparable.

Based on the 2010 12-month period comparable to

previous financial years, revenues, gross margin,

operating expenses and net income would have been

respectively € 2,674 million, € 969 million,€ 2,674 million, € 969 million,2,674 million, € 969 million,€ 969 million,969 million,

- € 1,001 million and - € 122 million (these figures€ 1,001 million and - € 122 million (these figures1,001 million and - € 122 million (these figures€ 122 million (these figures122 million (these figures

are unaudited).

�� Financial statements | Notes to the consolidated financial statements

The consolidated financial statements have been

prepared under the historical cost convention unless

otherwise stated.

The financial statements of Océ N.V. have been

authorized for issue by both the Supervisory Board

and the Executive Board on 2� February 2011. The

financial statements are subject to adoption by the

General Meeting of Shareholders on 19 April 2011.

Consolidation The consolidated financial statements

comprise the financial statements of Océ N.V. and

its participations.

(a) Subsidiaries

Subsidiaries are all entities over which Océ has

the power to govern the financial and operating

policies, generally accompanying a shareholding

of more than half of the total shares issued

and the related voting rights. As from the date

that these criteria are met, the financial data

of the relevant company are consolidated for

100%. Intercompany transactions, intercompany

balances and unrealized gains on intercompany

transactions are eliminated. Unrealized losses

are also eliminated unless the transaction

provides evidence of an impairment of the asset

transferred.

Business combinations are accounted for using

the ‘purchase’ method. The cost of a business

combination is measured as the fair value of

the assets obtained, equity instruments issued

and liabilities incurred or assumed at the date

of exchange, including any directly attributable

costs.

Summary of significant accounting policies

Notes to the consolidated

financial statements

Identifiable assets acquired and liabilities and

contingent liabilities incurred or assumed in a

business combination are recognized initially

at their fair values at the acquisition date,

irrespective of the extent of any minority interest.

The excess of the cost over the Océ Group’s

interest in the net fair value of the identifiable

assets, liabilities and contingent liabilities is

recognized as goodwill. The principal subsidiaries

are listed on pages 121 and 122 of this report.

The minority interest in the net assets of

subsidiaries is presented as a separate

component of equity. Transactions with minority

interests are accounted for as transactions with a

third party.

(b) Associates

Associates are all entities over which the Group

has significant influence but not the power to

govern the financial and operating policies. This

is mostly linked to a voting right of 20% to �0%

of the total shares issued and the related voting

rights. Associates are accounted for using the

‘equity’ method.

The Group’s associates include goodwill

identified on acquisition, net of any accumulated

impairment loss. Océ’s share in its associates’

profits or losses after acquisition is recognized in

the consolidated income statement. Its share in

post-acquisition movements in equity reserves

is recognized in equity reserves of the Group.

The carrying amounts of associates are adjusted

for cumulative post-acquisition movements of

the associates. When Océ‘s share in the losses

of an associate equals or exceeds its interest

in the associate, including any other unsecured

receivables, Océ does not recognize further

losses, unless it has incurred obligations that will

probably result in an outflow of cash or made

payments on behalf of the associate.

Unrealized gains on transactions between the

Group and its associates are eliminated to the

extent of the Group’s interest in the associates.

Unrealized losses are also eliminated unless the

transaction provides evidence of an impairment

of the asset transferred.

�� Financial statements | Notes to the consolidated financial statements

Foreigncurrencytranslation Items included in

the financial statements of each of the Group’s

entities are presented in the currency of the

primary economic environment in which the entity

operates (‘the functional currency’). Foreign currency

transactions are translated into the functional

currency using the exchange rates prevailing at the

dates of the transactions. Foreign exchange gains

and losses resulting from the settlement of such

transactions and from the translation at closing

rates at the balance sheet date of monetary assets

and monetary liabilities denominated in foreign

currencies are recognized in the income statement,

except when deferred in equity as qualifying cash

flow hedges or as intercompany loans that have a

permanent nature.

The consolidated financial statements are presented

in euros, which is the Group’s functional and

presentation currency. The results and financial

position of all subsidiaries that have a functional

currency that is different from the euro are translated

into euros as follows: assets and liabilities for each

balance sheet presented are translated at the closing

rate at the balance sheet date, income and expenses

for each income statement presented are translated

at average exchange rates and all resulting exchange

differences are recognized in ‘Other comprehensive

income’ under ‘Currency translation differences’.

When a foreign operation is (partially) disposed of

or sold, (the proportional share of) the related

currency translation differences that were recorded

in ‘Other comprehensive income’ are recognized in

the income statement as part of the gain or loss on

disposal or sale.

Goodwill and fair value adjustments arising on

the acquisition of a foreign entity are recognized

as assets and liabilities of the foreign entity and

translated at closing rate at the balance sheet date.

Revenuerecognition Revenues comprise the fair

value of the considerations received or receivable

from the sale of goods and services to third parties

in the ordinary course of the Group’s activities

excluding the taxes levied on revenues and taking

into account any discounts granted. Océ recognizes

revenue when the amount of revenue can be reliably

measured, it is probable that future economic

benefits will flow to Océ and specific criteria have

been met as described below.

(a) Sales of machines

Revenues are recognized at the moment

that both delivery to and installation on the

customer’s premises have taken place. If a sales

contract contains an acceptance clause, revenue

is recognized at the moment that the customer

has confirmed acceptance. When machines are

sold to a distributor the revenues are recognized

at the moment of delivery. If Océ has offered the

customer a finance lease arrangement, revenue

is recognized at commencement of the lease

term. The present value of the lease payments

is recognized as a receivable. The difference

between the gross receivable and the present

value of the receivable is recognized as unearned

interest. Unearned interest is recognized in the

income statement as ‘Interest from finance

lease’ over the term of the lease using the ‘net

investment’ method, which reflects a constant

periodic rate of return.

(b) Operating leases (defined by Océ as ‘Rental

equipment’)

Leases in which a significant portion of the

risks and rewards of ownership are retained by

Océ are classified as ‘Rentals’. Revenues from

‘Rentals’ are recognized in the income statement

on a ‘straight-line’ basis over the term of the

contract.

(c) Service

Service revenues are mostly obtained from

maintenance contracts that have been

concluded for machines sold or leased out and

from business services activities. Revenues

are recognized pro rata over the period of the

contract. If service contracts have been invoiced

in advance, the considerations are included in the

balance sheet as deferred income under ‘Trade

and other liabilities’.

�6 Financial statements | Notes to the consolidated financial statements

(d) Supplies

Revenues are recognized at the moment of

delivery.

Researchanddevelopmentexpenses Research

expenses are charged directly to the income

statement. Development expenses are capitalized if

they comply with the relevant criteria as described

under ‘Intangible assets’.

Governmentgrants Océ receives development

credits related to the research and development

activities performed by the Group and grants for the

purpose of giving financial support.

Government grants are not recognized until there

is reasonable assurance that Océ will comply with

the conditions attached to them, and that the

government grants will be received.

Development credits are recognized as a reduction

of research and development expenses at the

moment that the related expenses occur. These

credits are subject to a contingent repayment

obligation, which is disclosed in the notes as a

contingent liability unless repayment is remote.

When the repayment obligation has become

revenue-based unconditional, a current liability is

recognized which is charged to the research and

development expenses.

Grants for the purpose of giving financial support

with future related costs are deferred and recognized

in the income statement over the period necessary

to match them with the costs that they are intended

to compensate.

Leases Leases in which a significant portion of the

risks and rewards of ownership are retained by the

lessor are classified as operating leases. Payments

made by Océ under operating leases (net of any

incentives received from the lessor) are charged to

the income statement on a ‘straight-line’ basis over

the period of the lease.

Intangibleassets

(a) Goodwill

Goodwill represents the excess of the cost of

an acquisition over the fair value of the Group’s

share in the net identifiable assets of the

acquired subsidiary at the date of acquisition.

Goodwill on acquisition of entities that qualify

as subsidiaries is presented under ‘Intangible

assets’.

Goodwill on acquisitions of entities that qualify as

associates is included in ‘Associates’. Goodwill

on acquisition of subsidiaries is allocated

to cash-generating units for the purpose of

impairment testing. The allocation is made to

those cash-generating units or group of units

that are expected to benefit from the business

combination through which the goodwill arose.

Goodwill is tested annually for impairment; an

impairment loss is recognized for the amount by

which the cash-generating unit’s carrying amount

exceeds its recoverable amount. The recoverable

amount of the cash-generating unit is determined

by the higher of its fair value less cost to sell and

its value in use. Goodwill is carried at cost less

accumulated impairment losses. Impairment

losses on goodwill are not reversed. Gains and

losses on the disposal of an entity include the

carrying amount of goodwill related to the entity

sold.

(b) Software

Acquired software is capitalized on the basis of

costs incurred to acquire and to bring the specific

software to use. Amortization is calculated using

the ‘straight-line’ method to allocate the cost of

acquired software over the estimated useful life

(3-7 years).

Development costs of software for internal use,

that will generate probable future economic

benefits to the company and that can be

measured reliably, are capitalized. Development

costs consist of direct personnel costs on the

basis of an hourly rate including a mark-up

for directly attributable overhead costs and

borrowing costs incurred for qualifying assets

during the development period. Amortization

is calculated using the ‘straight-line’ method to

allocate the cost of software for internal use over

the estimated useful life (3-7 years).

(c) Technology

Technology comprises the costs (or purchase

costs) of product development, licenses and

license agreements.


Cost of products development are capitalized

if they meet the recognition criteria by

demonstrating:

• the intention, technical feasibility and ability to

complete the intangible asset;

• the ability to use or sell the intangible asset;

how the intangible asset will generate future

economic benefits; and

• if the cost can be reliably measured.

Costs of product development consist of direct

personnel costs on the basis of an hourly rate

including a mark-up for directly attributable

overhead costs and borrowing costs incurred for

qualifying assets during the development period.

Product development costs are amortized over

the estimated useful life (�-10 years).

Acquired licenses and license agreements are

carried at cost less accumulated amortization

and any impairment. Amortization is calculated

using the ‘straight-line’ method to allocate the

cost of licenses and license agreements over the

estimated useful life (�-20 years).

(d) Customer base

Customer base is carried at cost less

accumulated amortization and any impairment.

Amortization is calculated using the ‘straight-line’

method to allocate the cost of customer base

over the estimated useful life (�-10 years).

(e) Trademarks and other

Trademarks and other intangible assets are

carried at cost less accumulated amortization and

any impairment. Amortization is calculated using

the ‘straight-line’ method to allocate the cost of

trademarks and other over the estimated useful

lives (2-10 years).

The estimated useful life of other intangible

assets is � years.

Property,plantandequipment Property, plant and

equipment are carried at cost less cumulative

depreciation and any impairment. Costs of assets

manufactured by Océ include direct manufacturing

cost, production overhead and borrowing costs

incurred for qualifying assets during the construction

period.

Costs of assets acquired by Océ include expen-

ditures that are directly attributable to the acquisition

of the assets.

Asset retirement obligations are capitalized as part

of the cost of property, plant and equipment and

expensed as either depreciation over the asset’s

useful life or as impairment charges.

Subsequent costs are capitalized as a separate asset

if it is probable that future economic benefits

associated with the asset will flow to Océ and if the

costs can be reliably measured.

The carrying amount of any replaced part is

derecognized. All other costs of repair and

maintenance are charged to the income statement

during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other

assets is calculated using the ‘straight-line’ method

based on the estimated useful lives, taking into

account any residual values. Depreciation of specific

pieces of equipment used for the manufacture of

machines takes place pro rata to the expected

number of units to be manufactured. Océ leases

certain property, plant and equipment from third

party lessors. Leases of property, plant and equip-

ment where Océ has transferred substantially all the

risks and rewards of ownership are classified as a

finance leases and included in ‘Property, plant and

equipment’. Finance lease assets are capitalized at

commencement of the lease at the lower of the fair

value of the leased assets and the net present value

of the minimum lease payments.

The corresponding finance lease obligations, net of

finance charges, are included in ‘Borrowings’. The

assets leased via finance lease agreements are

depreciated over the lower of the lease period and

the assets’ useful life.

The estimated useful lives of the various classes of

property, plant and equipment are as follows:

• property and plant: 20 to �0 years;

• production equipment: 3 to 10 years;

• other equipment: 3 to � years;

• other non-current assets: 3 to 7 years.

Rentalequipment Rental equipment is carried

at the all-in manufacturing cost, plus the cost of

ensuring that the equipment can operate effectively

at the customers’ premises less cumulative

depreciation on a ‘straight-line’ basis. The estimated

useful life of the various types of machines ranges

from 3 to � years.


Deferredincome taxDeferred income tax liabilities

are recognized for all taxable temporary differences

arising between the tax bases of assets and liabilities

and their carrying amounts in the consolidated

financial statements (‘liability’ method). Deferred

income tax assets are recognized for all deductible

temporary differences, unused carry forward losses

and unused carry forward tax credits, to the extent

that it is probable that future taxable profit will be

available against which the deferred income tax

assets can be offset. Deferred income tax assets

are derecognized if in subsequent periods there are

indicators that the expected future taxable profits

will not be available or if the statute of limitation of

the deferred income tax assets has lapsed. Deferred

income tax is not recognized if it arises from initial

recognition of an asset or liability in a transaction

other than a business combination that at the time

of the transaction affects neither accounting nor

taxable profit or loss. Also no deferred income tax

is recognized regarding the initial recognition of

goodwill. Deferred income tax is measured at the tax

rates that are expected to apply to the period when

the asset is realized or the liability is settled, based

on tax rates (and tax laws) that have been enacted

or substantively enacted at the balance sheet date.

Deferred income tax assets and liabilities are offset

when there is a legally enforceable right to offset

current tax assets against current tax liabilities and

when the deferred income tax relates to the same

fiscal authority.

Available-for-salefinancialassets Available-for-

sale financial assets are non-derivatives that are

either designated in this category or not classified in

any of the other categories of financial instruments

under IAS 39. Available-for-sale financial assets

are accounted for using trade date accounting

and are carried at fair value. Gains and losses on

available-for-sale financial assets are recognized

in other comprehensive income. When securities

classified as available-for-sale are sold or impaired,

the accumulated gains and losses are reclassified

to the income statement. Available-for-sale financial

assets are included in non-current assets unless

management intends to dispose of the available-

for-sale financial assets within 12 months after the

balance sheet date.

Derivativefinancialinstrumentsandhedging

activitiesDerivative financial instruments are

carried at fair value. Derivative financial instruments

are accounted for using trade date accounting.

The method of recognition of the resulting gains

or losses depends on whether the derivatives are

designated as a hedging instrument, and if so, the

nature of the item being hedged. Océ designates

certain derivative financial instruments as either:

(a) hedges of exposure to changes in fair value of

recognized assets and liabilities (fair value hedge);

or (b) hedges of exposure to variability in cash

flows attributable to a particular risk associated with

recognized assets or liabilities or highly probable

forecast transactions (cash flow hedge).

At the inception of the hedge, Océ documents

the relationship between hedging instruments

and hedged items, as well as its risk management

objectives and strategy for undertaking the hedge.

Océ also documents its assessment (prospective

and retrospective), both at hedge inception and on

an ongoing quarterly basis, whether the hedges are

highly effective in offsetting changes in fair values

or variability in cash flows attributable to the hedged

risks. Derivatives are classified as non-current if the

remaining term of the derivatives is 12 months or

more and as current if the remaining term of the

derivatives is less than 12 months.

(a) Fair value hedge

Changes in the fair value of derivatives that are

designated and qualify as fair value hedges are

recognized in the income statement, together

with any changes in the fair value of the hedged

asset or liability that are attributable to the

hedged risk. Océ applied only fair value hedge

accounting for hedging fixed rate borrowings.

The gain or loss relating to the effective

portion of interest rate swaps hedging fixed

rate borrowings was recognized in the income

statement within ‘Finance expenses’. The gain

or loss relating to the ineffective portion was

recognized in the income statement as ‘Other

income (net)’. Changes in the fair value of the

hedged fixed rate borrowings attributable to

interest rate risk were recognized in the income

statement as ‘Finance expenses’. If the hedge no

longer met the criteria for hedge accounting, the

adjustment to the carrying amount of a hedged

item for which the effective interest method was

used was amortized to the income statement

over the period to maturity.


(b) Cash flow hedge

Océ applies cash flow hedge accounting for the

hedging of foreign exchange risks of forecasted

transactions using FX-contracts and applied cash

flow hedge accounting for hedging cash flow

interest rate risk on floating rate loans using

interest rate swaps. The gains or losses relating

to the effective portion of derivatives that are

designated and qualify as cash flow hedges are

recognized in ‘Other comprehensive income’

as ‘Other reserves - Hedging reserve’, the

ineffective portion is recognized immediately in

the income statement as ‘Other income (net)’.

Amounts accumulated in ‘Other comprehensive

income’ are reclassified to the income statement

in the periods when the hedged items affect the

income statement depending on the nature of

the hedged items. In case of foreign exchange

risks this is ‘Gross margin’, in case of interest

rate risks this was ‘Finance expenses’.

When a hedging instrument expires or is sold,

or when a hedge no longer meets the criteria for

hedge accounting, any cumulative gain or loss

recognized in ‘Other comprehensive income’

at that time remains in ‘Other comprehensive

income’ and is recognized in the income

statement when the forecast transaction

occurs. When a forecast transaction is no longer

expected to occur, the cumulative gain or loss

that was recognized in ‘Other comprehensive

income’ is immediately reclassified to the income

statement.

(c) Derivatives that are not designated or do not

qualify for hedge accounting

Derivatives that are not designated or do not

qualify for hedge accounting are measured at fair

value through the income statement.

Tradeandotherreceivables

(a) Trade receivables

Trade receivables are recognized initially at fair

value and subsequently remeasured at amortized

cost using the effective interest method

less provision for impairment. A provision for

impairment of trade receivables is recognized

when there is objective evidence that Océ will

not be able to collect amounts due according to

the original terms of the receivables. The amount

of the provision is the difference between the

asset’s carrying amount and the present value of

estimated future cash flows, discounted at the

original effective interest rate.

The amount of the provision is recognized in the

income statement within ‘Selling and marketing

expenses’.

Trade receivables also include finance lease

receivables. Finance lease receivables comprise

the present value of the lease payments

receivable by Océ and the unguaranteed residual

values, less provision for impairment. The

difference between the nominal value and the

present value of the lease payments and the

unguaranteed residual values is recognized as

unearned interest.

(b) Other receivables

Other receivables and prepayments are initially

recognized at fair value and subsequently

remeasured at amortized cost. Duties and taxes

are recognized and measured at amortized cost.

If the time to maturity is less than 12 months, trade

and other receivables are presented as ‘Current

assets’. Otherwise they are presented as ‘Non-

current assets’, measured at their present value.

Inventories Inventories are measured at the

lower of cost and net realizable value. Cost is

determined by using the ‘First-in-First-out’ method

(FIFO). The costs of inventory comprise all costs

of purchase, costs of conversion and other costs

incurred in bringing the inventories to their present

location and condition. Inventories of semi-finished

products, spare parts and finished products are

measured at manufacturing cost including a mark-

up for indirect costs relating to manufacturing and

excluding borrowing costs. Net realizable value is

the estimated selling price in the ordinary course of

business, less estimated costs of completion and

costs to sell.

Cashandcashequivalents Cash and cash

equivalents include cash in hand, bank deposits that

are repayable on call, balances in bank accounts,

checks and bills of exchange received.

EquityThe ordinary shares and financing preference

shares are classified as equity. Incremental costs

directly attributable to the issue of new shares are

recognized in equity as a deduction, net of tax, from

the proceeds. Treasury shares are deducted from

equity for the considerations paid, including any

directly attributable cost (net of income tax), until

60 Financial statements | Notes to the consolidated financial statements

the shares are cancelled or reissued. When treasury

shares are reissued, any consideration received

net of any attributable incremental cost and related

income tax, is included in equity.

Share-basedcompensation Océ operated four

types of share-based compensation plans: (a) share

option plans, (b) share plans with cash-alternatives

as well as equity-settlement, (c) cash-settled share

plans and (d) conversion-options on convertible

debentures to employees. All share-based

compensation arrangements were settled on

9 March 2010 as a result of the completion of

the offer for Océ by Canon.

The fair value of the employee service received

in exchange for the grant of the share-based

compensation was recognized as an expense in

the income statement over the vesting period.

The total amount to be expensed was determined

by reference to the fair value of the share-based

compensation granted, excluding the impact of any

non-market based vesting condition regarding the

equity part of the share-based compensation plan.

Non-market based vesting conditions were included

in assumptions about the number of grants that

were expected to vest. At each balance sheet date,

the entity revised its estimates of the number of

grants that were expected to vest. It recognized

the impact of the revision, if any, in the income

statement, with a corresponding adjustment to

equity or liability depending on the settlement type

of the share-based compensation plan. For cash-

settled share-based compensation plans and share-

based compensation plans with cash alternatives the

liability was remeasured at each balance sheet date

during the vesting period and for share option plans

also during the exercise period.

(a) Share option plans

The share option plans were share-based

compensation plans with cash-alternatives

in which the fair values of the settlement

alternatives were the same. Therefore only a

liability was recognized for the fair value of the

share options during the vesting period to the

extent the employees had rendered service.

The liability was remeasured at each balance

sheet date and derecognized at the moment

of exercise or expiration. The fair value was

determined using a binomial option-pricing

model.

(b) Share plans with cash-alternatives as well as

equity-settlement

The share plans were share-based compensation

plans with cash-alternatives as well as equity-

settlement. The share plans gave the holder the

right to receive part of the plan in cash, to fulfill

their tax obligation, without forfeiting the right on

equity instruments for the remaining part of the

plan. Due to their hybrid settlement nature, these

plans were divided in an equity-settled share-

based compensation plan (equity) and a share-

based compensation plan with cash-alternatives

(liability) based on the estimated average tax

obligation.

(c) Cash-settled share plans

Cash-settled share plans were share-based

compensation plans measured at fair value and

recognized as a liability.

(d) Conversion-options on convertible debentures to

employees

Conversion-options on convertible debentures

to employees were cash-settled share-based

compensation plans (reference is made to

‘Borrowings’). The fair value of the conversion-

options of convertible debentures to employees

was measured using a binomial option-pricing

model and was recognized as a liability. The

conversion-options of the convertible debentures

to employees vested immediately.

Borrowings Borrowings are recognized initially

at fair value, plus directly attributable transaction

costs. Borrowings are subsequently remeasured at

amortized cost using the ‘effective interest’ method.

Borrowings are accounted for using settlement date

accounting. The carrying amount of borrowings is

adjusted for changes in fair value of the risk being

hedged if the borrowings are designated as a

hedged item in a fair value hedge. Borrowings are

classified as current liabilities unless the remaining

term of the borrowings or the remaining term of the

facility under which the borrowings are drawn is

12 months or more.

Océ issued convertible debentures to employees.

Convertible debentures were compound financial

instruments consisting of a plain debenture and a

conversion-option (reference is made to note (2�)

‘Share-based compensation’). The fair value at

inception of the plain debenture was determined


using a market interest rate for an equivalent non-

convertible debenture. Subsequently the convertible

debenture was remeasured at amortized cost using

the ‘effective interest’ method until extinguished on

conversion or maturity of the debenture.

Borrowingcosts Borrowing costs are recognized as

an expense in the period in which they are incurred.

Borrowing costs that are directly attributable to the

acquisition, construction or production of a qualifying

asset, an asset that necessarily takes a substantial

period of time to get ready for its intended use or

sale, are capitalized as part of the cost of that asset.

The borrowing costs eligible for capitalization are

those borrowing costs that would have been avoided

if the expenditure on the qualifying asset had not

been made.

Retirementbenefitobligations Subsidiaries

operate various pension schemes. The schemes

are generally funded through payments to insurance

companies or trustee-administered funds. Océ

has both defined benefit and defined contribution

plans. For defined contribution plans, Océ pays

fixed contributions to a separate entity. Océ has

no legal or constructive obligations to pay further

contributions if the fund does not hold sufficient

assets to pay all employees the benefits relating to

employee service in the current and prior periods.

The contributions are recognized as ‘Employee

benefit expenses’ in the income statement when

they are due.

A defined benefit plan is a pension plan that is not a

defined contribution plan.

Under defined benefit plans the pension

entitlements are calculated according to the

‘projected unit credit’ method. Actuarial gains and

losses in excess of a threshold of the higher of 10%

of the pension liabilities and 10% of the fair value

of the plan assets are charged or credited to the

income statement over the employees’ expected

average remaining working lives. Changes in pension

plans are charged directly to the income statement

if they are unconditional in nature or if they are

the result of a significant change. Calculations are

made each year by qualified actuaries. The liability

recognized in the balance sheet in respect of defined

benefit plans is the present value of the defined

benefit obligations at the balance sheet date, less

the fair value of the plan assets and after adding or

subtracting unrecognized actuarial gains or losses

and past-service costs.

The present value of the defined benefit obligations

are determined by discounting the estimated

future cash flows using interest rates of high-

quality corporate bonds that are denominated in the

currency in which the benefits will be paid and that

have terms to maturity approximating the terms of

the related defined benefit obligations.

The expected return on plan assets is determined

by multiplying the sum of the fair value of plan

assets plus the average employer and employee

contributions minus the average expected benefits

and average expected risk benefits with the

expected return on plan assets percentage.

Past-service costs are recognized immediately in

the income statement, unless the changes to the

pension plan are conditional on the employees

remaining in service for a specific period of time

(the vesting period). In this case, the past-service

costs are amortized on a ‘straight-line’ basis over the

vesting period.

Provisionsforotherliabilitiesandcharges

(a) Other long-term employee benefits

Other long-term employee benefits include

long-service leave awards, jubilee and other

long-service benefits. The expected costs of

these benefits are accrued over the period of

employment using an accounting method similar

to that for defined benefit plans. Actuarial gains

and losses arising from experience adjustments

and changes in actuarial assumptions are charged

or credited to the income statement immediately.

(b) Employee termination benefits

Employee termination benefits are payable when

employment is terminated before the normal

retirement date, or whenever an employee

accepts voluntary redundancy in exchange for

these benefits. Océ recognizes termination

benefits when Océ is demonstrably committed

to either terminating the employment of current

employees according to a detailed formal plan

without possibility of withdrawal, or when Océ

is providing termination benefits as a result of an

offer made to encourage voluntary redundancy.

Benefits falling due more than 12 months after

balance sheet date are discounted at present

value.


(c) Restructuring and other

Provisions for restructuring and other liabilities

are recognized when Océ has a present legal

or constructive obligation as a result of past

events, for which it is probable that an outflow of

resources will be required to settle the obligation

and when the amount can be reliably estimated.

The provisions are measured at the present

value of the expenditures that are expected to

be required to settle the obligation. The discount

rate used to determine the present value reflects

the current market assessments of the time

value of money and the risks specific to the

obligation.

Tradeandotherliabilities Trade and other

liabilities are recognized initially at fair value and

subsequently remeasured at amortized cost using

the effective interest method, except for share-

based compensation (reference is made to note (2�)

‘Share-based compensation’).

Impairmentofnon-financialassets Assets that

have an indefinite useful life, for example goodwill,

are not subject to amortization but are tested

annually for impairment or more frequently when

indicators arise. Assets with a finite useful life

are subject to depreciation or amortization and

are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying

amount may not be fully recoverable. An impairment

loss is recognized for the amount by which the

assets’ carrying amount exceeds its recoverable

amount. The recoverable amount is the higher of

an asset’s fair value less costs to sell and its value

in use. For the purposes of assessing impairment,

assets are grouped based on the lowest level for

which there are separately identifiable cash flows

(cash-generating units). Impairment is recognized as

an expense in the income statement. Non-financial

assets, which are impaired, are tested periodically

to determine whether the recoverable amount has

increased and the impairment has to be reversed.

Impairment losses on goodwill are not reversed.

Impairmentoffinancialassets Océ assesses at

each balance sheet date whether there is objective

evidence that a financial asset or a group of financial

assets is impaired. An impairment loss is recognized

for the amount by which the carrying amount

of a financial asset exceeds its estimated future

cash flows. Impaired financial assets are tested

periodically to determine whether the estimated

future cash flows have increased and the impairment

has to be reversed.

In the case of a financial asset classified as available-

for-sale, a significant or prolonged decline in the fair

value of the available-for-sale financial asset below

its acquisition cost is considered as an indicator that

the available-for-sale financial asset is impaired. If

any such evidence exists for an available-for-sale

financial asset, the cumulative loss – measured as

the difference between the acquisition cost and the

current fair value, less any impairment loss on that

financial asset previously recognized in the income

statement – is removed from other comprehensive

income and recognized in the income statement.

Impairment losses recognized in the income

statement on equity instruments classified as

available-for-sale are not reversed through the

income statement.

ConsolidatedcashflowstatementThe consoli-

dated cash flow statement has been prepared

using the ‘indirect’ method. Cash flows in foreign

currencies have been translated at average exchange

rates. Currency translation differences are shown

separately in the consolidated cash flow statement.

Cash flows from investing activities consist mostly

of investments and divestments in property, plant

and equipment, intangible assets, the sale of the

finance lease portfolio and acquisitions insofar as

these are paid for in cash. Acquisitions or disposals

of subsidiaries are presented as ‘Net of cash

balances acquired’.

Segmentreporting An operating segment is a

component of an entity that engages in business

activities for which it may earn revenues and incur

expenses (including revenues and expenses relating

to transactions with other components of the

same entity), whose operating results are regularly

reviewed by the entity’s chief operating decision

maker to make decisions about resource allocation

to the segment and to assess its performance, and

for which discrete financial infomation is available.


The Executive Board of Océ N.V. assesses the

performance of the segments and decides how todecides how to

allocate resources. Océ has determined based on. Océ has determined based on

the internal reporting structure that the strategic

business units Digital Document Systems, Wide

Format Printing Systems and Océ Business

Services represent reportable segments. The

same accounting policies that are applied to the

consolidated financial statements are also applied

to the operating segments. Prices for transactions

between segments are determined on an arm’s

length basis. Segment results, assets and liabilities

include items directly attributable to a segment as

well as those that can reasonably and consistently

be allocated. Selected information on a country

and regional basis is provided in addition to the

information about operating segments.

Earningspershareattributabletoshareholders

Earnings per ordinary share are calculated by

dividing the net income attributable to holders of

ordinary shares by the weighted average number

of ordinary shares outstanding during the year. In

making this calculation the (ordinary) treasury shares

are deducted from the number of ordinary shares

outstanding. The calculation of the diluted earnings

per share is based on the weighted average number

of ordinary shares outstanding plus the potential

increase as a result of the conversion of convertible

debentures to employees and the settlement of

share-based compensation plans (share plans and

share option plans). Anti-dilutive effects are not

included in the calculation. With regard to convertible

debentures to employees it is assumed that these

are converted in full. An adjustment is made to net

income to eliminate interest charges, whilst allowing

for effect of taxation. Regarding share plans it is

assumed that all outstanding equity-settled share

plans and share plans with settlement alternatives

will vest and will be settled in shares.

The potential increase arising from share option

plans is based on a calculation of the value of the

options outstanding. This is the number of options

times the exercise price, divided by the average

share price during the financial year. This potential

increase is only applied if the option has intrinsic

value.

On a regular basis, the IASB issues new accounting

standards, amendments and revisions to existing

standards and interpretations. These new accounting

standards, amendments and revisions to existing

standards and interpretations are subject to

endorsement by the European Union. In 2010 the

following new accounting standards, amendments

and revisions to existing standards and

interpretations were issued by the IASB, or became

effective to Océ:

Standards, amendments, revisions and

interpretations effective to Océ in 2010*:

IAS1(Amendment)‘PresentationofFinancial

Statements’The amendment is applicable for

annual periods beginning on or after 1 January

2009. The amendment intends to improve users’

capability of analyzing and comparing the information

in financial statements. As a result of the application

of this amendment, Océ presents the statement of

comprehensive income separately from the income

statement.

6� Financial statements | Notes to the consolidated financial statements

IAS23(Amendment)‘Borrowingcosts’The

amendment to IAS 23 is applicable for annual

periods beginning on or after 1 January 2009.

The amendment requires an entity to capitalize

borrowing costs directly attributable to the

acquisition, construction or production of a qualifying

asset (one that takes a substantial period of time to

get ready for use or sale) as part of the cost of that

asset. The option of immediately expensing those

borrowing costs has been removed. Océ did not use

the option to expense interest cost immediately,

therefore the application of this amendment did

not have a significant impact on the consolidated

financial statements.

IAS27(Revision)‘Consolidatedandseparate

FinancialStatements’ IAS 27 (Revised) is applicable

for annual periods beginning on or after 1 July 2009.

IAS 27 (Revised) supersedes IAS 27 (issued in 2003)

and aligns the requirements with the requirements

of US standard SFAS No. 160 ‘Noncontrolling

Interests in Consolidated Financial Statements’.

The revision of IAS 27 did not have a significant

impact on the consolidated financial statements.

New accounting standards

* Some standards were early adopted in 2009 and disclosed in the

Annual Report 2009

IAS39(Amendment)‘Eligiblehedgeitems’ The

amendment to IAS 39 is applicable for annual

periods beginning on or after 1 July 2009. The

amendment clarifies how the principles that

determine whether a risk or portion of cash flows

that is eligible for designation should be applied in

particular situations. This amendment did not have a

significant impact on the consolidated financial

statements.

IFRS1andIAS27(Amendment)‘Costofan

InvestmentinaSubsidiary,Jointly-controlled

EntityorAssociate’The amendments of IFRS 1

and IAS 27 are applicable for annual periods

beginning on or after 1 January 2009. The

amendments no longer require the application of

the ‘cost’ method for accounting an investment in a

subsidiary, jointly-controlled entity or associate. The

amendments did not have a significant impact on the

consolidated financial statements.

IFRS2(Amendment)‘VestingConditionsand

Cancellations’The amendment to IFRS 2 is

applicable for annual periods beginning on or

after 1 January 2009. The amendment provides

clarification of the definition of vesting conditions

and the treatment of all non-vesting conditions. This

amendment did not have a significant impact on the


IFRS3(Revision)‘BusinessCombinations’ IFRS 3

(Revised) is applicable for annual periods beginning

on or after 1 July 2009. IFRS 3 (Revised) supersedes

IFRS 3 (issued in 200�) and aligns accounting for

business combinations with the requirements of US

standard SFAS No. 1�1 ‘Business Combinations’.

Océ did not acquire any enterprises, the revision of

IFRS 3 did not have an impact on the consolidated



IFRS7(Amendment)‘ImprovingDisclosures

aboutFinancialInstruments’ The amendments to

IFRS 7 are applicable for annual periods beginning on

or after 1 January 2009. The amendments introduce

a three-level hierarchy for fair value measurement

disclosures and require companies to provide

additional disclosures about the relative reliability

of fair value measurements. In addition, the

amendments clarify and enhance the existing

requirements for the disclosure of liquidity risk. This

amendment led to an enhanced disclosure regarding

financial instruments in 2010.

IFRS8‘SegmentReporting’ IFRS 8 is applicable for

annual financial statements for periods beginning on

or after 1 January 2009. IFRS 8 supersedes IAS 1�

‘Segment Reporting’ and aligns segment reporting

with the requirements of US standard SFAS No. 131

‘Disclosures about Segments of an Enterprise and

Related Information’. The application of IFRS 8 didThe application of IFRS 8 did

not have a significant impact on the consolidated


IFRIC18‘TransfersofAssetsfromCustomers’

IFRIC 18 is applicable to transfers of assets from

customers received on or after 1 July 2009. IFRIC 18

clarifies the requirements of IFRS from agreements

in which a company receives an item of property,

plant and equipment from a customer, that the

company must then use either to connect the

customer to a network or to provide the customer

with ongoing access to a supply of goods or services

(such as electricity, gas or water). In the Océ

Business Services segment, Océ takes over print

rooms from customers (outsourcing) in order to

provide the customer with ongoing access to print

services. In most situations the existing equipment

is replaced by Océ equipment, therefore IFRIC 18

did not have a significant impact on the consolidated



interpretations not relevant to Océ:

IAS32andIAS1(Amendment)‘Puttable

FinancialInstrumentsandObligationsArising

onLiquidation’The amendments to IAS 32 and

IAS 1 are applicable for annual periods beginning on

or after 1 January 2009. The amendments require

financial instruments ‘puttable at fair value’ and

financial instruments that give right to payments

on liquidation under certain circumstances to be

classified as equity. Océ does not have financial

instruments ‘puttable at fair value’ and financial

instruments that give right to payments on

liquidation under certain circumstances, therefore

this amendment did not have an impact on the


IFRIC12‘ServiceConcessionArrangements’

IFRIC 12 is applicable for reporting periods starting

on or after 1 January 2008. IFRIC 12 was endorsed

by the European Union on 2� March 2009. IFRIC 12

addresses how service concession operators should

apply existing IFRS to account for the obligations

they undertake and rights they receive in service

concession arrangements. Océ is not a service

concession operator. IFRIC 12 is therefore not

relevant to Océ.

IFRIC15‘AgreementsfortheConstructionof

RealEstate’IFRIC 1� is applicable for annual periods

beginning on or after 1 January 2009. IFRIC 1�

applies to the accounting for revenue and associated

expenses by entities that undertake the construction

of real estate directly or through subcontractors. Océ

is not a real estate constructor. IFRIC 1� is therefore

not relevant to Océ.


IFRIC17‘DistributionofNon-cashAssetsto

Owners’ IFRIC 17 is applicable for annual periods

beginning on or after 1 July 2009. IFRIC 17 provides

guidance on how an entity should measure

distributions of assets other than cash when it pays

dividends to its shareholders. Océ does not

distribute non-cash assets to owners. IFRIC 17 is

therefore not relevant to Océ.


interpretations not yet effective to Océ:

IFRS9‘FinancialInstruments’IFRS 9 is applicable

for annual periods beginning on or after 1 January

2013. IFRS 9 is subject to endorsement by the

European Union. IFRS 9 addresses the classification

and measurement of financial assets. The publication

of IFRS 9 represents the completion of the first part

of a three-part project to replace IAS 39 ‘Financial

Instruments: Recognition and Measurement’. IFRS 9

enhances the ability of investors and other users of

financial information to understand the accounting of

financial assets and reduces complexity. Océ is

currently investigating the impact of IFRS 9 on the


AmendmentstoIFRS7‘Disclosures‘The amend-

ments to IFRS 7 are applicable for reporting periods

starting on or after 1 July 2011. The amendments

will allow users of financial statements to improve

their understanding of transfer transactions of

financial assets (for example, securitisations),

including understanding the possible effects of any

risks that may remain with the entity that transferred

the assets. The amendments also require additional

disclosures if a disproportionate amount of transfer

transactions are undertaken around the end of a

reporting period. Océ is currently investigating thecurrently investigating theinvestigating the

impact of these amendments on the consolidatedon the consolidated

financial statements..

Financialriskfactors

The Group’s activities are exposed to a variety

of financial risks: market risk (foreign exchange

risk, interest rate risk and price risk), credit risk,

liquidity and capital risk. The Group’s overall

risk management program focuses on the

unpredictability of financial markets and seeks to

minimize potential adverse effects on the Group’s

financial performance. The Executive Board provides

both written policies for the total risk management

and policies for specific areas such as foreign

exchange risk, interest rate risk, credit risk, use of

derivative financial instruments and non-derivative

financial instruments and the investment of excess

liquidity. The Executive Board delegates authorities

and responsibilities with regard to the execution of

the policies for foreign exchange risk and interest

rate risk to committees chaired by the CFO. The

Executive Board however retains the power to

reverse decisions taken by these committees. Risk

management is executed centrally in close co-

operation with the subsidiaries. The Group identifies,

evaluates and hedges certain financial risks, using

derivative financial instruments.


Marketrisk

Foreign exchange risk Océ charges its customers

for products and services in the customers’ local

currency. The sales organizations incur a large

part of their costs in local currency. However, as

a substantial part of total costs associated with

manufacturing and development of products is made

in the Euro-zone, an exposure to foreign exchange

risk (transaction risk) arises in respect of the

payments of the flows of goods from the Euro-zone

to countries outside the Euro-zone. The relocation

of part of the manufacturing activities to Asia has

reduced the net level of US dollar foreign exchange

risk since these goods are paid for in US dollars. At

Océ, net cash flows in currencies other than the

euro are managed actively by the Foreign Exchange

Committee in line with the Foreign Exchange policy

(FX policy).

In general, Océ applies a policy of managing the 12-

month position of mainly the US dollar, the Japanese

yen, the Australian dollar and the Pound sterling on

a roll over basis, with hedging being applied up to a

maximum of 80% of the net cash flows.

Financial and capital risk management

The Foreign Exchange Committee meets once

every two weeks to review recent FX market

developments and FX positions in order to decide

whether hedges are still effective and in line with

the FX policy and market expectations. If necessary,

additional hedging actions are taken.

Intercompany loans are provided in local currency.

As a result, the Group is exposed to foreign

exchange risk (transaction risk). The transaction risk

arising from intercompany loans is hedged for 100%.

If at 31 December 2010 the euro had weakened

12% (2009: 12% weakened) against the currencies

of importance to Océ with all other variables held

constant, the income before income tax would

not have changed, similar to 2009. The impact on

equity would have been a loss of € 12.4 million

(2009: € 14.0 million loss) in the hedging reserve.

The percentage used for this sensitivity analysis

is a weighted average of the 6-month historical

volatilities of the currencies against the euro.

Currency translation risks are not hedged. This risk is

regarded as an inherent part of doing business as a

multinational company.

Interest rate risk The cash flow interest rate risks

arise from the exposure to variability in future cash

flows of the floating rate financial instruments.

If at 31 December 2010 the euro and US dollar

interest rates for all maturities had been 0.��%

higher (2009: 0.27% higher) with all other variables

held constant, the income before income tax would

not have changed (2009: € 0.5 million higher). The

impact on equity would have been nil (2009: € 1.5

million gain). The percentage used for this sensitivity

analysis is a weighted average of the 30-day

historical volatilities of the euro and US dollar 2-year

interest rates.


Price risk Océ has no significant exposure to

security price risk because of the small amounts

of investments held by Océ, which are classified

as ‘Available-for-sale financial assets’. Océ has

no commodity price risk regarding any financial

instruments.

Creditrisk

Océ has no significant concentrations of credit risks.

Océ has policies in place to ensure that products are

sold to customers with an appropriate credit history.

Deposits, derivatives and cash transactions are only

entered into with financial institutions having an S&P

rating of at least A- or higher (or its equivalent issued

by Moody’s or Fitch). The Group has policies in place

that limit credit exposure to financial institutions.

Liquidityandcapitalrisk

Prudent liquidity risk management implies

maintaining sufficient cash, the availability of funding

and the ability to close out market positions. Océ

aims to fulfill these requirements by securing

sufficient financing facilities through Canon.

Capital risk management The Group’s objectives

when managing capital are to safeguard its ability

to continue as a going concern in order to provide

returns for shareholders and benefits for other

stakeholders and to maintain an optimal target

capital structure to reduce the cost of capital.

Management has assessed the Group ability on a

going concern basis and Canon has expressed the

intention to support Océ as a lender for the future

(reference is made to the ‘Events after the balance

sheet date’ on page 107). Based on this, Océ has

prepared its financial statements on a going concern

basis.


Contractualpaymentsduebyperiod 12 months 1-3 years 3-� years more than total

At 31 December 2010 or less � years

x € 1,000

Cash outflows from financing activities:

Foreign exchange contracts 366,916 60 - - 366,976

Borrowings 660,70� �,629 2,239 128 667,701

Cash inflows from financing activities:

Foreign exchange contracts 36�,��0 - - - 36�,��0

Cash outflows from operating activities:

Trade and other liabilities* 399,2�9 - - - 399,2�9

Total 1,061,320 �,689 2,239 128 1,068,376

Contractualpaymentsduebyperiod 12 months 1-3 years 3-� years more than total

At 30 November 2009 or less � years

x € 1,000

Cash outflows from financing activities:

Interest rate swaps 9,3�8 18,6�3 177,067 - 20�,078

Foreign exchange contracts �88,911 2,993 2,997 2�,�21 620,322

Borrowings �0,8�6 �17,380 �0,971 27,731 ��6,938

Cash inflows from financing activities:

Interest rate swaps 7�9 1,�01 171,003 - 173,2�3

Foreign exchange contracts �9�,297 2,��7 2,�60 23,877 62�,291

Cash outflows from operating activities:

Trade and other liabilities* �90,221 �,�18 - - �9�,739

Total ��3,300 ��0,�86 �7,�72 29,27� 1,070,�33

* The contractual payments regarding ‘Trade and other liabilities’ are

excluding ‘Deferred income’ and ‘Accrued expenses’, because these

are not financial instruments. Reference is made to note (23).

When preparing the financial statements

management is required to make estimates and

assumptions regarding the future. In doing so,

management takes past experiences as its basis

for making the best possible estimate of future

developments. The actual results will, by definition,

rarely equal the estimates and assumptions made

by management. The estimates and assumptions

that bear a significant risk of causing a material

adjustment to the carrying amount of assets and

liabilities within the next financial year are disclosed

below.

Impairmentofgoodwill Océ tests at least annually

whether goodwill has suffered any impairment (see

note (9)) by comparing the recoverable amounts of

cash-generating units with their carrying amounts.

The recoverable amount is the higher of the fair

value less cost to sell and the value in use. In

determining the recoverable amount, Océ makes

estimates and assumptions concerning discount

rates and future inflation rates, revenues, costs,

working capital and investments.


OtherintangibleassetsIntangible assets with

estimated useful lives are carried at cost less

cumulative amortization and any impairment.

Amortization is calculated using the ‘straight-line’

method based on the estimated useful lives.

Management makes estimations regarding the

useful lives and residual values and assumes that

amortization takes place on a ‘straight-line’ basis.

The assets’ useful lives are reviewed, and adjusted

if appropriate, at each balance sheet date. Océ tests

annually or more frequently when indicators arise

whether other intangible assets have suffered any

impairment by comparing the recoverable amounts

of the other intangible assets with their carrying

amounts. In determining the recoverable amounts

of other intangible assets, Océ makes estimates

and assumptions about the net present value of

future cash flows based on the value in use. In doing

so Océ also makes assumptions and estimates

regarding the discount rate used for calculating the

net present value.

Critical accounting estimates and assumptions

Property,plantandequipmentandrental

equipment Property, plant and equipment and

rental equipment are carried at cost less cumulative

depreciation and any impairment. Depreciation is

calculated using the ‘straight-line’ method based on

the estimated useful lives, taking into account any

residual values. Management makes estimations

regarding the useful lives and residual values and

assumes that depreciation takes place on a ‘straight-

line’ basis. The assets’ residual values and useful

lives are reviewed, and adjusted if appropriate, at

each balance sheet date.

Financialinstruments The fair value of financial

instruments traded in active markets is based on

quoted market prices at the balance sheet date. The

fair value of financial instruments that are not traded

in an active market is determined using generally

accepted valuation techniques. These valuation

techniques include estimates and assumptions

about forward rates, discount rates based on a single

interest rate or on a yield-curve based on market

conditions existing at the balance sheet date. The

fair value of borrowings and interest rate swaps

is calculated based on the present value of the

estimated future cash flows based on the yield-curve

applicable at the balance sheet date. The fair value

of forward foreign exchange contracts is determined

using quoted forward exchange rates at the balance

sheet date.

The nominal value less impairment provision of

trade receivables and trade payables is assumed

to approximate the fair value due to the short

term nature. The fair value of non-current financial

liabilities is estimated by discounting the future

contractual cash flows at the current market interest

rate that is available to the Group for similar financial

instruments.


Share-basedcompensation For equity-settled

share-based compensation plans, estimates were

made regarding the expected number of equity

instruments (or its value) necessary for settlement.

The fair value of share options granted was

determined using binomial option-pricing models.

In doing so, Océ used market prices and made

estimates and assumptions about the risk-free rate,

expected dividends, and expected volatility. The

fair value of shares granted was determined by

reference to their market price and, if applicable,

market based performance conditions.

Inventories In determining the net realizable value

of inventories, Océ estimates the selling prices in

the ordinary course of business, cost of completion

and cost to sell. In doing so, Océ makes estimates

and assumptions based on current market prices,

historical usage of various product categories versus

current inventory levels and specific identified

obsolescence risks (e.g. end of life of related

machines, the remaining service period of these

machines and the impact of new environmental

legislation).

Provisionforimpairmentoftradeandfinance

leasereceivables In determining the provision for

impairment of trade and finance lease receivables

Océ makes its estimates and assumptions based

on aging and specific developments regarding

customers (e.g. creditworthiness and market

developments). The provision for impairment of

trade and finance lease receivables is reviewed

periodically to assess the adequacy of the provision.


Capitalizationofdevelopmentexpenses In

determining the development expenses to be

capitalized, Océ makes estimates and assumptions

based on expected future economic benefits

generated by products that are the result of these

development costs. Other important estimates

and assumptions in this assessment process are

the required internal rate of return, the distinction

between research and development and the

estimated useful life.

Provisionforrestructuring Océ recognizes a

provision for restructuring regarding cost-saving

restructuring measures. Provisions for restructuring

include, amongst other, estimates and assumptions

about severance payments and termination fees.

Revenuerecognition Océ makes estimates

regarding revenues not yet invoiced but at the

balance sheet date realized. Océ makes assumptions

regarding the allocation of revenues containing

multiple elements.

Incometaxes Océ is subject to income taxes in

numerous jurisdictions. Estimates are required in

determining the worldwide provision for income

taxes. There are some transactions and calculations

for which the ultimate tax position is uncertain

during the ordinary course of business. The Group

recognizes liabilities for anticipated tax audit issues

based on estimates of whether additional taxes

will be due. Where the final tax outcome of these

matters is different from amounts that were initially

recorded, such differences will impact the income

tax and deferred tax provisions in the period in which

such determination is made.

Océ recognizes deferred tax assets to the extent

that it is probable that future taxable profits will be

available for the deferred tax asset to be recovered.

This is based on estimates of taxable future income

by jurisdiction in which Océ operates and the period

over which deferred tax assets are recoverable. In

the event that actual results or new estimates differ

from previous estimates and depending on the

possible tax strategies that may be implemented,

changes to the recognition of deferred tax assets

could be required, which could impact the financial

position and net income.

DefinedbenefitplansDefined benefit plans

represent obligations that will be settled in the

future. To project these obligations over a longer

period of time, Océ is required to make assumptions

regarding the development of these obligations.

Post-employment benefit accounting is intended

to reflect the recognition of future costs of defined

benefit plans over the employee’s expected

service period, based on the term of the plans

and the investment and funding decisions made.

Post-employment benefit accounting requires

Océ to make assumptions about variables such

as discount rate, rate of compensation increase,

return on plan assets and future mortality rates. Océ

periodically consults outside actuaries regarding

these assumptions. Changes in these assumptions

can have significant impact on the defined benefit

obligations. Reference is made to note (22).


Classesoffinancialinstruments derivative financial (derivative) financial derivative financial loans and available-for-sale

instruments at fair instruments instruments receivables/ financial assets

x € 1,000 value through designated in a designated in a liabilities at

profit or loss fair value hedge cash flow hedge amortized cost

Carrying amounts at 31 December 2010

Assets:

Available-for-sale financial assets (16) - - - - 7,99�

Derivative financial instruments* (13) 980 - �,�29 - -

Trade and other receivables** (1�) - - - 703,�17 -

Cash and cash equivalents (18) - - - �6,1�� -

980 - �,�29 7�9,672 7,99�

Liabilities:

Borrowings (21) - - - 66�,�31

Derivative financial instruments* (13) 982 - 3,9�6 -

Trade and other liabilities*** (23) - - - 399,2�9

982 - 3,9�6 1,063,780

Carrying amounts at 30 November 2009

Assets:

Available-for-sale financial assets (16) - - - - 8,161

Derivative financial instruments* (13) 8,1�� 6�1 12,�80 - -

Trade and other receivables** (1�) - - - 722,�00 -

Cash and cash equivalents (18) - - - 101,76� -

8,1�� 6�1 12,�80 82�,16� 8,161

Liabilities:

Borrowings (21) - �,�38 - �9�,060

Derivative financial instruments* (13) 10,�36 - 2�,69� -

Trade and other liabilities*** (23) - - - �9�,739

10,�36 �,�38 2�,69� 990,799

* Derivative financial instruments are classified as financial

instruments at fair value through profit or loss. When applying cash

flow hedge accounting the gains/losses are temporarily recognized

in the hedging reserve. In note (20) disclosure is provided regarding

the transfers from and to the hedging reserve.

** Trade and other receivables are excluding prepayments.

*** Trade and other liabilities are excluding deferred income and

accrued liabilities.

The carrying amount of all financial instruments measured at fair

value is measured using observable market prices other than

quoted prices (level 2), except for available-for-sale financial assets.

Listed securities in the available-for-sale category (€ 0.2 million)

are measured using quoted prices in active markets (level 1) and

unlisted securities in the available-for-sale category (€ 7.8 million)

are measured using unobservable prices (level 3). The amount of

unobservable prices is considered limited. is considered limited.


Segmentinformation

Segment x € million Digital Document Wide Format Océ Business unallocated total

information Systems Printing Systems Services

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Total revenues 1,584 1,�83 777 707 499 ��8 - - 2,860 2,6�8

Inter-segment

revenues 54 �8 9 10 - - - - 63 �8

Operating income -122 - �3 33 20 17 8 - - -72 - 1�

Financial income

and expenses (net) -73 - 37 -73 - 37

Share in income

of associates -2 2 -2 2

Income taxes -18 3 -18 3

Net income -165 - �7

Total assets 1,390 1,�31 507 �36 136 127 109 113 2,142 2,207

Liabilities 725 72� 128 272 113 78 688 �� 1,654 1,628

Equity 665 707 379 26� 23 �9 -579 - ��1 488 �79

Capital expenditure* 92 117 64 3� 11 11 167 162

Depreciation -94 - 9� -23 - 23 -11 - 11 -128 - 128

Amortization -42 - 39 -19 - 1� -1 - 2 -62 - �6

Impairment -31 - 2 -23 - - - -54 - 2

One-offitems total x € million

Intangibles (see note (9)) -44

Property, plant and equipment (see note (10)) -7

Inventories (see note (17)) -41

Rentals and finance lease debtors -8

Integration costs, other -36

Total operating income -136

Finance expenses (see note (6)) -39

Share in income of associates (see note (12)) -2

Income before income taxes -177

Taxation (see note (7)) 5

Net income -172

All one-off items are included in the results of Digital Document Systems.

* Net capital expenditure in intangible assets, property, plant and

equipment and rental equipment.


Segmentinformation total revenues assets capital expenditure*

Geographical x € million 2010 2009 2010 2009 2010 2009

information

United States 984 930 782 7�1 33 3�

The Netherlands 309 29� 529 603 80 77

Germany 309 292 290 300 28 30

France 210 199 99 10� 8 �

United Kingdom 183 172 73 77 3 2

Rest of Europe 561 �19 242 269 9 9

Countries outside Europe and the United States 304 2�2 127 103 6 �

Total 2,860 2,6�8 2,142 2,207 167 162

* Net capital expenditure in intangible assets, property, plant and equipment

and rental equipment.

Exchange rates average exchange exchange rate at the

of currencies of rate of 1 euro balance sheet date

importance to Océ of 1 euro

2010 2009 2010 2009

Pound sterling 0.86 0.89 0.86 0.91

US dollar 1.34 1.38 1.34 1.�1

Australian dollar 1.45 1.79 1.31 1.6�

Japanese yen 117.49 129.97 108.73 129.76

(1) Development x € million total revenues cost of sales gross margin

of total revenues,

cost of sales 2010 2009 2010 2009 2010 2009

and gross margin

Sales of goods 1,094 1,01� -703 - �6� 391 ��9

Revenues from business services 499 ��8 -415 - 38� 84 73

Revenues from rental and services 1,241 1,1�0 -705 - 732 536 �18

Interest from finance lease 26 26 - - 26 26

Total 2,860 2,6�8 -1,823 - 1,682 1,037 966


(2) Expenses 2010 2009 x € 1,000

by nature

Material costs -826,555 - 770,987- 770,987

Employee benefit expenses (3) -1,265,876 - 1,213,0�7

Depreciation, amortization and impairment charges -244,894 - 186,399- 186,399

Operating lease expenses -67,610 - �9,862- �9,862

Other expenses -527,422 - �32,727- �32,727

Total -2,932,357 - 2,663,032- 2,663,032

(3) Employee 2010 2009 x € 1,000

benefit expenses

Wages and salaries* -1,021,220 - 978,6�6

Social security -185,376 - 18�,��2

Pension costs for (22):

• defined contribution plans -16,894 - 13,617

• defined benefit plans -43,340 - 31,337

Share-based compensation:

• change in fair value outstanding share-based

compensation (2�) 4,641 - �,2�0

• settlement of share-based compensation -3,687 - 6��

Total -1,265,876 - 1,213,0�7

* An amount of € 10.3 million of retention bonuses€ 10.3 million of retention bonuses10.3 million of retention bonuses

is included in ‘Wages and salaries’ in 2010.

(�) Research and 2010 2009 x € 1,000

development

expenses Research and development expenses -214,473 - 178,633

Development credit repayable and net subsidies

received 12,750 �,1�6

Total -201,723 - 173,�77

(�) Other income 2010 2009 x € 1,000

(net)

Sale of Arkwright - 231

Total - 231

In ‘Research and development expenses’ an

amount of € 47.7 million was recognized regarding

amortization and impairment of capitalized

development expenses (2009: € 20.3 million).€ 20.3 million).

In 2010 an amount of € 64.7 million of development

expenditure was capitalized (2009: € 71.5 million).


(6) Finance 2010 2009 x € 1,000

income and

expenses (net) Interest expenses -29,425 - �2,198

Redemption of loans -19,977 -

Reclassification from the hedge reserve -19,471 -

Commitment fees -3,067 - �,307

Unwinding of discount of provisions (2�) -439 - ��9

Foreign exchange results on financing activities (net) -4,597 - 2,�01

Fair value results on financial instruments:

• interest rate swaps: fair value hedges -73 - 70

• fair value adjustments on borrowings 73 70

Other finance expenses -254 - 331

Finance expenses -77,230 - �0,896

Finance income (interest income) 4,820 13,731

Total -72,410 - 37,16�

(7) Income taxes 2010 2009 x € 1,000

Current tax -14,541 - 7,082

Deferred tax -3,778 10,396

Total income tax in income statement -18,319 3,31�

Tax calculated at domestic tax rates applicable to

income in the respective countries 45,862 17,310

Income not subject to tax 4,040 11,��9

Non-deductible items -7,356 - 6,268

Tax credits 158 -

Derecognition of previously recognized tax assets -23,742 2,6302,630

Unrecognized tax assets current year -12,382 - 2�,877

Movement in provision for tax risks -24,762 3,690

Minimum tax requirements -137 - 630

Total tax charge in income statement -18,319 3,31�

As a result of the acquisition by Canon, the

US Private Placements have been redeemed and

the drawings under the multicurrency revolving

credit facility have been discontinued. Both have

been replaced by loans from Canon (see note (21)).

The early redemption of the US Private Placements

caused a loss of € 20.0 million.

As a result of the discontinuing of the drawings

under the multicurrency revolving credit facility,

Océ also unwound the interest rate swaps which

were designated as a cash flow hedge with the

drawings under the multicurrency revolving credit

facility. As the hedged item was redeemed, the loss

of � 19.5 million accumulated in the hedging reserve

was expensed to the income statement.


(8) Earnings per 2010 2009 x € 1,000

ordinary share

for net income Net income attributable to shareholders -166,972 - �8,929

attributable to Dividend attributable to holders of financing

shareholders preference shares -2,765 - 2,��3

Net income attributable to holders of ordinary shares -169,737 - �1,�82

Weighted average number of ordinary shares

outstanding (x 1,000) 84,889 8�,8�8

Basic earnings per ordinary share -2.00 - 0.61 euro

Net income attributable to holders of ordinary shares -169,737 - �1,�82

Interest costs of convertible debentures to employees

(net) anti-dilutive anti-dilutive

Net income attributable to holders of ordinary shares

based on full conversion -169,737 - �1,�82


outstanding (x 1,000) 84,889 8�,8�8

Adjustment for assumed conversion (x 1,000) anti-dilutive anti-dilutive

Adjustment for assumed equity-settlement of

share-based compensation (x 1,000) anti-dilutive anti-dilutive


outstanding on the basis of full conversion (x 1,000) 84,889 8�,8�8

Diluted earnings per ordinary share -2.00 - 0.61 euro

The effective tax rate in 2010 was - 12.�% (2009:

6.6%). The weighted average tax rate in 2010 was

31.3% (2009: 3�.3%). The income not subject to

tax has decreased in comparison to previous years

as a result of the cessation of business activities

of the Belgian Coordination Centre (less ‘interest

income’ not subject to tax). The derecognition of

previously recognized carry forward losses consists

of derecognition of tax losses either due to local

tax regulations relating to the acquisition by Canon

(Germany € 5.0 million, France € 2.3 million),

the limitation on the tax loss carry forward period

in conjunction with the forecasted results (Norway,

Spain, Denmark and UK for a total of € 15.2 million) or

differences between estimated tax results and actual

tax results (mainly in the US for € 3.6 million).

Unrecognized carry forward losses current year relate

mostly to the losses in Germany for which no carry

forward losses have been recognized.

Océ has indentified additional uncertain tax positions

in 2010 for € 24.8 million.


(9) Intangible x € 1,000 goodwill acquired separately and acquired through internally generated total

assets business combinations

software technology customer trademarks software technology

base and other

Cost 3�0,968 �3,893 22,�66 103,876 ��,6�� 71,�90 99,�� 7�6,991

Accumulated amortization and impairments - 6�3 - 31,772 - 7,9�2 - 31,83� - 21,776 - 3�,009 - 2�,�93 - 1�3,�70

Carrying amount at 1 December 2008 3�0,32� 22,121 1�,62� 72,0�1 22,878 36,�81 7�,0�1 �93,�21

Movements in carrying amount in 2009:

Expenditure - 6,0�� 1� - 1,011 �,0�9 71,�67 83,606

Divestments - 201 - 87 - 11 - - 1 - 83 - - 383

Net expenditure - 201 �,967 � - 1,010 �,976 71,�67 83,223

Reclassifications - 1,608 - - - 1,608 - - -

Acquisition of subsidiaries - - - 3,�00 - - - 3,�00

Amortization - - 10,290 - 893 - 13,092 - 3,9�� - 7,323 - 20,330 - ��,872

Impairment - - - - - 2,167 - - - 2,167

Exchange differences - �7,276 - 1,262 - 16 - 7,60� - 2,27� - �0� 2 - �8,836

At 30 November 2009 302,8�8 18,1�� 13,719 ��,8�� 13,89� 33,729 126,190 �63,369

Cost 303,�91 �3,337 22,000 9�,�02 38,286 6�,73� 171,013 7�9,263

Accumulated amortization and impairments - 6�3 - 3�,193 - 8,281 - �0,��8 - 2�,391 - 32,00� - ��,823 - 18�,89�

Carrying amount at 30 November 2009 302,8�8 18,1�� 13,719 ��,8�� 13,89� 33,729 126,190 �63,369


Expenditure 27 �,1�6 297 - 227 1,603 6�,7�� 72,0��

Divestments - - 3 - - 3,��6 - 629 - 70 - - �,2�8

Net expenditure 27 �,1�3 297 - 3,��6 - �02 1,�33 6�,7�� 67,797

Amortization - - 10,008 - 1,03� - 12,06� - 988 - 7,73� - 30,��6 - 62,387

Impairment/decommissioning - - 3,820 - - - 10,986 - 1�,1�0 - 16,100 - �6,0�6

Exchange differences 38,363 812 22 �,88� 1,�3� 272 119 �6,906

At 31 December 2010 3�1,238 10,281 13,003 ��,107 2,9�3 12,6�9 1��,398 �69,639

Cost 3�1,901 �8,38� 22,920 99,�� 1�,302 68,367 23�,88� 8�1,31�

Accumulated amortization and impairments - 663 - �8,10� - 9,917 - ��,��8 - 11,3�9 - ��,708 - 91,�87 - 271,676

Carrying amount at 31 December 2010 3�1,238 10,281 13,003 ��,107 2,9�3 12,6�9 1��,398 �69,639


Recognitionofamortizationcostsinthe 2010 2009 x € 1,000

incomestatement:

Cost of sales -3,432 - 6,016

Selling and marketing expenses -5,628 - 10,�23

Research and development expenses -13,558 - 22,�8�

General and administrative expenses -39,769 - 16,7�8

Total -62,387 - ��,872

Océ impaired favorable supply contracts (trademarks

and others) for € 9.5 million and technology for

€ 16.1 million due to changes in the product

portfolio from certain OEM suppliers to Canon. The

remaining impairment of € 1.4 million on trademarks

and others relates to several other issues.

Purchased software and internally generated

software were decommissioned for € 18.9 million

as a result of future integration with Canon.

All impairment charges were allocated to general and

administrative expenses.

The average remaining amortization period of

intangible assets are approximately:

• 3 years for software

• � years for technology

• � years for customer base

• 2 years for trademarks and other

Océ has allocated goodwill on acquisitions in

previous years to � of the cash-generating units

(CGU) for the purpose of impairment testing. In 2010

Océ has split-up CGU Digital Document Systems

in CGU Production Printing and CGU Document

Printing.

The 6 cash-generating units are:

• Technical Document Systems (WFPS)

• Display Graphics Systems (WFPS)

• Production Printing (DDS)

• Document Printing (DDS)(DDS)

• Océ Business Services (OBS)

• Imaging Supplies (WFPS)

The carrying amount of internally developed

intangible assets on which amortization has not

commenced as at 31 December 2010 amounted

to € 27.3 million for internally developed technology

(2009: € 23.3 million) and € 2.6 million for internally

developed software (2009: € 15.2 million).

Goodwillallocationtocash-generatingunits:

x € 1,000 Technical Document Display Graphics Document Océ Business total

Systems Systems Printing Services

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

United States 29,707 26,3�� - - 271,764 2�1,070 23,578 20,917 325,049 288,3�1

Canada - - - - 8,631 7,2�� - - 8,631 7,2��

France - - 938 938 - - - - 938 938

United Kingdom - - - - 5,752 �,��6 - - 5,752 �,��6

Slovakia 443 ��3 - - 425 �2� - - 868 868

Total 30,150 26,797 938 938 286,572 2��,196 23,578 20,917 341,238 302,8�8

There is no goodwill allocated to the CGUs

Production Printing and Imaging Supplies.


The assumptions mentioned above have been used

for the analysis of each CGU.

Further assumptions in the cash flow projections are:

•benefits from restructurings are included in the

cash flow projections to the extent that these

restructurings are committed as at 31 December

2010;

• relative gross margin is kept stable at the level of

2010 for all CGUs.

The calculations show that there are no impairment

losses for the carrying amounts of the CGUs.

Sensitivityanalysis The goodwill is mainly allocated

to the CGU Document Printing. Therefore, a sensitivity

analysis has only been performed around the key

assumptions for this CGU.

The difference between the recoverable amount and

carrying amount is limited.

The recoverable amount equals the carrying amount of

the CGU Document Printing if the value of the key

assumptions individually changes as follows:

•6.7% lower weighted average revenue growth;

•0.6% lower relative gross margin;

•0.6% higher pre-tax discount rate.

The goodwill mainly relates to the acquisition of

Imagistics International Inc. in 200�.

The recoverable amounts are based on the respective

values in use, using cash flow projections covering a

�-year period which have been derived from Océ’s

strategic plan that was approved by the Supervisory

Board on 3 December 2010. Cash flows beyond this

period are extrapolated for another 6 years because of

the relative long lifecycle of the Océ products.

Management believes that the extrapolation for the

6-year period can be determined reliably and gives a

appropriate reflection of Océ’s cash-generating

potential. The growth rates are based on external

sources and do not exceed the weighted average

growth rates for the business in which the CGU

operates. The growth rates used are indicated below.

Thekeyassumptionsusedforvalue-in-usemeasurementsperCGU

towhichgoodwillhasbeenallocated:

as % Technical Document Display Graphics Document Océ Business

Systems Systems Printing Services

2010 2009 2010 2009 2010 2009 2010 2009

Weighted average revenue

growth 2010 - 2019 3.4 1.0 4.9 10.7 2.7 3.� 2.6 3.0

Perpetual growth rate 2.0 - 1.� 2.0 2.0 2.0 2.0 2.0 2.0

Pre-tax discount rate 8.4 9.� 8.4 9.� 8.4 9.� 8.4 9.�


(10) Property, plant property production other other non- under not in total

and equipment and plant equipment equipment current construction production

assets and pre- process

x € 1,000 payments

Cost 32�,�76 �12,937 11�,706 33�,996 1�,210 2,173 1,20�,�98

Accumulated depreciation and impairments - 173,91� - 336,062 - 70,772 - 269,71� - - 222 - 8�0,686

Carrying amount at 1 December 2008 1�1,661 76,87� �3,93� 6�,281 1�,210 1,9�1 3�3,912


Expenditure �,217 2,988 2�,233 10,331 9,872 197 �1,838

Divestments - 3,063 - 1,110 - �,�� - 1,221 - 66 - 1 - 10,916

Net expenditure 1,1�� 1,878 18,778 9,110 9,806 196 �0,922

Reclassifications 1,�20 �,9�1 997 2,�� - 10,012 - -

Sale subsidiaries - 172 - 621 - - 27 - 1�0 - - 970

Depreciation - 9,16� - 20,72� - 19,��2 - 20,�09 - - 32 - 69,771

Exchange differences - 1,910 - 68� - 3,72� - 1,600 - �� - 79 - 8,0��

At 30 November 2009 1�3,089 61,67� �0,��2 ��,899 13,799 2,036 316,039

Cost 321,6�1 398,382 107,716 332,1�3 13,799 2,229 1,17�,920

Accumulated depreciation and impairments - 178,��2 - 336,708 - 67,17� - 277,2�� - - 193 - 8�9,881

Carrying amount at 30 November 2009 1�3,089 61,67� �0,��2 ��,899 13,799 2,036 316,039


Expenditure 1,168 12,272 18,366 10,872 10,�0� - �3,082

Divestments - �1� - �3� - �72 - 2,�16 - 121 - � - 3,962

Net expenditure 7�� 11,838 17,79� 8,��6 10,283 - � �9,120

Reclassifications 97 1�0 - 2�9 1,7�2 - 1,7�0 - -

Depreciation - 8,9�2 - 20,369 - 19,381 - 18,21� - - 13 - 66,930

Impairment - - 8,076 - 88 - 8 - - - 8,172

Exchange differences 1,73� �67 3,6�8 1,293 �1 61 7,36�

At 31 December 2010 136,723 ��,77� �2,276 �8,177 22,393 2,079 297,�22

Cost 32�,619 �01,28� 10�,706 333,�0� 22,393 2,311 1,189,818

Accumulated depreciation and impairments - 187,896 - 3��,�11 - 63,�30 - 28�,327 - - 232 - 892,396

Carrying amount at 31 December 2010 136,723 ��,77� �2,276 �8,177 22,393 2,079 297,�22


Lease payments amounted to € 67.6 million (2009:

€ 59.9 million) related to operating lease of buildings

and production equipment are included in the

income statement.

The book value of ‘Property, plant and equipment’

includes an amount of € 10.9 million of assets

financed through finance leases (2009: € 7.0 million).7.0 million).million).

Recognitionofdepreciationcosts 2010 2009 x € 1,000

intheincomestatement:

Cost of sales -33,491 - 37,180

Selling and marketing expenses -19,428 - 18,0�8

Research and development expenses -8,723 - 9,06�

General and administrative expenses -5,288 - �,�68

Total -66,930 - 69,771

(11) Rental 2010 2009 x € 1,000

equipment

Cost 305,059 3�3,�12

Accumulated depreciation and impairments -223,215 - 233,�08

Carrying amount at 1 December 2009/2008 81,844 109,90�

Movements in carrying amount:

Installed in rental 93,411 86,080

Divestments -43,803 - �8,��6

Depreciation -61,357 - �8,�89

Exchange differences 6,396 - 6,99�

At 31 December/30 November 76,491 81,8��

Cost 308,149 30�,0�9

Accumulated depreciation and impairments -231,658 - 223,21�

Carrying amount at 31 December/30 November 76,491 81,8��

In the income statement, depreciation is included

in full in ‘Cost of sales’.

‘Other equipment’ consists of Océ Business

Services machines and internally used machines.

‘Other non-current assets’ consists of furniture,

fittings and vehicles.

An impairment loss was recognized of € 6.7 million€ 6.7 million

on ‘Production equipment’ following Océ’s decision

to impair tooling due to changes in the product

portfolio from certain OEM suppliers to Canon.


(12) Associates 2010 2009 x € 1,000

At 1 December 2009/2008 4,171 2,110


Share in income -1,699 2,187

Investment/divestment 276 3

Dividend -57 - 211

Exchange differences 178 82

At 31 December/30 November 2,869 �,171

(13) Derivative 2010 2009 x € 1,000

financial instruments

assets liabilities assets liabilities

Interest rate swaps - - 6�1 2�,09�2�,09�

Foreign exchange contracts - - - 3,067

Cap on financing preference shares 60 - �,391 -

Non-current 60 - �,032 27,16227,162

Foreign exchange contracts 6,417 4,867 1�,8�1 9,0699,069

Embedded derivatives 32 61 383 --

Current 6,449 4,928 16,23� 9,0699,069

Total 6,509 4,928 21,266 36,23136,231

In 2010 Océ impaired Heliozid Océ-Reprographic

(Cyprus) Ltd. as a result of a change-of-control clause

in the articles of association for � 2.0 million. This

amount is included in ‘Share in income’.

No goodwill is included in ‘Associates’ as at

31 December 2010 (2009: nil).


Foreignexchangecontracts The principal amounts

of foreign exchange contracts at the balance sheet

date are as follows:

• in respect of future cash flows: € 99.4 million

(2009: € 175.5 million);17�.� million); million);

• in respect of intercompany loans: € 86.5 million

(2009: € 264.9 million);26�.9 million); million);

• in respect of external loans: nil

(2009: € 45.1 million).��.1 million). million).

Caponconvertiblefinancingpreferenceshares

Océ agreed revised conditions in 2006 on the

financing preference shares which were approved

by the Annual General Meeting of Shareholders

of 20 April 2006. Based on the revised conditions

the holders of financing preference shares can

convert these shares into ordinary shares at a price

of € 18.01 per share on 30 November 2012. The

conversion option however is capped at 130% of the

conversion price; the difference between the actual

share price and the capped price is recognized as a

derivative financial asset (cap). The cap is measured

using a binomial option-pricing model. Due to the

acquisition by Canon, Océ shares are no longer

actively traded. As a result of this the volatility is near

zero and the option has only limited time value.

Embeddedderivatives Océ enters into purchase

and sales contracts denominated in various

currencies. In some cases this currency is not the

functional currency of any party to the contract.

In these cases the embedded foreign exchange

contract is bifurcated from its host contract

(purchase or sales contract).

Hedgeaccounting Océ has designated certain

qualifying derivative financial instruments as hedge

instruments for fair value hedge accounting or cash

flow hedge accounting to manage its volatility in

earnings. The principal amount and fair value of

interest rate swaps designated in a fair value hedge

are as follows: nil (2009: € 4.5 million) and nil (2009:

€ 0.7 million). The fair value of the hedge items

amounts to nil (2009: € 5.2 million).

The principal amount and fair value of derivative

financial instruments designated in a cash flow

hedge are as follows:

• foreign exchange contracts € 99.1 million and

€ 1.6 million (2009: € 111.0 million and111.0 million and million and

€ 10.9 million);10.9 million); million);

• interest rate swaps nil and nil (2009:

€ 166.0 million and - € 24.1 million).166.0 million and - € 24.1 million). million and - € 24.1 million).2�.1 million). million).

Regarding cash flow hedges of foreign exchange

risks of forecasted transactions, the underlying cash

flow is expected to occur within a range between

1 and 12 months after the balance sheet date. For

movements in the hedging reserve, reference is

made to note (20).

InterestRateSwapsDue to the discontinuation

of the drawings under the multicurrency revolving

credit facility (see (21) Borrowings), Océ has

unwound interest rate swaps which were intended

to hedge (cash flow hedge) the drawings under the

multicurrency revolving credit facility.

As the forecasted transactions of the hedge are

no longer expected to occur, Océ reclassified the

accumulated loss in the hedge reserve of € 19.5

million to the income statement. (See (6) Finance

income and expenses).


(1�) Trade and 2010 2009 x € 1,000

other receivables

Finance lease receivables (net) 165,398 173,081

Other receivables 15,251 13,�3�

Non-current 180,649 186,�16

Trade receivables (gross) 432,120 ��3,3�8

Provision for impairment of trade receivables -47,767 - �3,999

Trade receivables (net) 384,353 �09,3�9

Finance lease receivables (net) 69,072 72,936

Prepayments 18,699 16,611

Duties and taxes 12,766 10,8�7

Canon current account* 6,131 -

Other receivables 50,546 �2,7�2

Current 541,567 ��2,�9�

Total 722,216 739,011

Provisionforimpairmentoftradereceivables:

At 1 December 2008/2009 -43,999 - ��,68�


Addition to provision -20,596 - 18,8�1

Receivables written off as uncollectable 16,498 16,770

Unused amounts reversed 2,034 1,7�0

Exchange differences -1,704 2,027

At 31 December/30 November -47,767 - �3,999

* Reference is made to the related-party transactions on page 106.


There is no significant concentration of credit risk

with respect to trade receivables, as Océ has a large

number of customers internationally dispersed.

Océ holds collateral (goods and equipment delivered)

as security on part of its trade and finance lease

receivables which reduces the exposure to credit risk

on trade and other receivables.

The estimated credit risk amounts to € 53.8 million

as at 31 December 2010 (2009: € 47.9 million).�7.9 million). million).

The maximum exposure to credit risk as at

31 December 2010 is the total carrying amount

of financial assets in the disclosure ‘Classes of

financial instruments’ on page 73.

Theagingoftradereceivables gross impaired provision for net

at31December2010is impairment

asfollows:

x € 1,000

Not yet due 2��,�19 18,261 - 1,9�3 2�3,�76

Less than 3 months past due 121,��9 16,�70 - �,731 11�,818

3-6 months past due 1�,038 6,��0 - 3,06� 10,973

More than 6 months past due �1,11� 39,822 - 37,028 �,086

Total �32,120 81,003 - �7,767 38�,3�3

Theagingoftradereceivables gross impaired provision for net

at30November2009is impairment

asfollows:

x € 1,000

Not yet due 283,762 16,�90 - 1,722 282,0�0283,762 16,�90 - 1,722 282,0�0

Less than 3 months past due 113,3�1 3�,88� - �,128 109,213113,3�1 3�,88� - �,128 109,213

3-6 months past due 1�,9�6 7,2�� - 3,7�7 11,1891�,9�6 7,2�� - 3,7�7 11,189

More than 6 months past due �1,299 39,1�9 - 3�,392 6,907�1,299 39,1�9 - 3�,392 6,907

Total ��3,3�8 97,878 - �3,999 �09,3�9��3,3�8 97,878 - �3,999 �09,3�9

‘Other receivables’ also includes an amount of

€ 101,000 (2009: € 197,000) which was provided197,000) which was provided) which was provided

to personnel in the form of loans.

The carrying amount of the trade and other

receivables approximates the fair value.


Financeleasereceivablescompriseof 2010 2009 x € 1,000

thefollowingcomponents:

Finance lease receivables (gross) 271,039 280,136

Unearned interest -40,136 - �1,938

Residual value 9,600 9,6�7

240,503 2�7,8��

Provision for impairment -6,033 - 3,8��

Finance lease receivables (net) 234,470 2�3,990

Thegrossfinanceleasereceivablescanbe

subdividedintothefollowingdurationcategories:

12 months or less 80,551 8�,1�1

1-� years 185,913 186,137

More than � years 4,575 9,8�8

Total 271,039 280,136

Thenetfinanceleasereceivablescanbe

subdividedintothefollowingdurationcategories:

12 months or less 69,072 72,936

1-� years 161,975 163,203

More than � years 3,423 7,8�1

Total 234,470 2�3,990

Provisionforimpairmentoffinancelease

receivables:

At 1 December 2009/2008 -3,855 - 7,070


Addition to provision -10,438 - 7,102

Receivables written off as uncollectable 3,616 6,�68

Unused amounts reversed 5,004 3,372

Exchange differences -360 377

At 31 December/30 November -6,033 - 3,8��

Océ provides for 3 types of lease arrangements.

Operating lease arrangements, in which the risks

and returns of ownership of the equipment are

retained by Océ (defined by Océ as ‘Rentals’).

Finance lease arrangements in which Océ acts as

the lessor and finance lease arrangements in which

third parties act as the lessor. With the last 2 types,

the risks and returns of ownership of the equipment

are transferred to the lessee.


(1�) Deferred Thechangesindeferredincometax 2010 2009 x € 1,000

income tax assetsandliabilitiesareasfollows:

At 1 December 2009/2008 82,325 81,�82

Income statement -3,778 10,396

Acquisition of subsidiary - - 3,�00

Equity -2,411 - 3,�81

Exchange differences 10,271 - 2,�72

At 31 December/30 November 86,407 82,32�

Thecompositionofdeferredincome 2010 2009 x € 1,000

tax(net)isasfollows:

Net carry forward losses 91,033 61,726

Temporary differences (net) 27,439 2�,�91

Deferred income tax on equity -396 2,01�

Provision for tax risks* -31,669 - 6,907

Total 86,407 82,32�

* Reference is made to note (7) for the movement in the provision for tax risks.

Thecompositionoftemporarydifferences 2010 2009 x € 1,000

isasfollows:

assets liabilities assets liabilities

Intangible assets 1,759 60,372 1,�63 67,�17

Tangible assets 35,189 5,414 33,271 7,�89

Leasing 287 13,063 172 20,730

Current assets 35,883 8,708 29,732 6,09�

Non-current liabilities 54,247 2,406 �9,677 �72

Current liabilities 8,282 18,245 17,260 13,781

Total 135,647 108,208 1�1,�7� 116,08�

Theclaimforgrosscarry 0 - � � - 10 10 - 1� 1� - 20 unlimited total x € million

forwardlossesfalls years years years years

dueasfollowsasat:

30 November 2009 0.2 18.2 6.9 23.6 67.7 116.6

31 December 2010 1.6 61.6 7.0 39.3 3�.2 1��.7

Theclaimfornetcarry 0 - � � - 10 10 - 1� 1� - 20 unlimited total x € million

forwardlossesfalls years years years years

dueasfollowsasat:

30 November 2009 - 12.� 6.8 17.8 2�.0 61.7

31 December 2010 - 36.6 7.0 3�.9 12.� 91.0


(16) Available- 2010 2009 x € 1,000

for-sale financial

assets

At 1 December 2009/2008 8,161 8,�67


Additions 438 1��

Disposals -512 - �99

Gains/losses transferred to equity -143 �1

Exchange differences transferred to equity 51 - 13

At 31 December/30 November 7,995 8,161

Listed securities (Japan) 221 313

Unlisted securities (Euro-zone countries) 7,774 7,8�8

Total 7,995 8,161

There were no impairments on ‘Available-for-sale

financial assets’ in 2010 (2009: nil).

(17) Inventories 2010 2009 x € 1,000

Raw and other materials 39,719 �6,�79

Semi-finished products and spare parts 61,779 8�,368

Finished products and trade inventories 192,597 13�,826

Total 294,095 266,673

(18) Cash and 2010 2009 x € 1,000

cash equivalents

Cash and bank balances 53,986 �9,192

Time deposits 2,169 �2,�73

Total 56,155 101,76�

As at 31 December 2010 and 30 November 2009,

the total amount of cash and cash equivalents was

freely available.

Measurement of unlisted securities is

based on actuarial calculations.

An impairment charge was recognized on semi-

finished products and spare parts for € 14.0 million

and on finished products and trade inventories for

€ 26.9 million followings Océ’s decision to impair

inventories due to changes in the product portfolio

from certain OEM suppliers to Canon.


(19) Share capital ordinary priority financing total x € 1,000

shares shares preference

shares

At 30 November 2009 �3,669 - 10,000 �3,669

At 31 December 2010 �3,669 - 10,000 �3,669

Authorizedcapital The authorized capital amounts to

€ 87,500,000 and is subdivided into:

•145,000,000 ordinary shares of € 0.50 each;

•30,000,000 convertible cumulative financing

preference shares of € 0.50 each.

All issued shares are fully paid-in.

Overviewofmovements in2010 at exercise of at

ofnumberofsharesoutstanding: 1 December share-based 31 December

2009 compensations 2010

Ordinary shares 87,337,108 - 87,337,108

Treasury shares - 2,�6�,788 19,�66 - 2,��6,322

Ordinary shares 8�,871,320 19,�66 8�,890,786

Financing preference shares 20,000,000 - 20,000,000

Overviewofmovementsin2009 at exercise of at

ofnumberofsharesoutstanding: 1 December share-based 30 November

2008 compensations 2009

Ordinary shares 87,337,108 - 87,337,108

Treasury shares - 2,�23,808 �8,020 - 2,�6�,788

Ordinary shares 8�,813,300 �8,020 8�,871,320

Financing preference shares 20,000,000 - 20,000,000

On 9 March 2010 Canon had acquired 77.�1% of the share

capital of Océ. As of that date Canon obtained the

power to govern Océ’s financial and operating policies.


Ordinaryshares During the financial year the total

number of ordinary shares outstanding increased

by 19,�66 to 8�,890,786 as at 31 December 2010.

The main reason for this was the exercise of share

options in connection with the share option plan.

Convertiblecumulativefinancingpreference

shares In 1996 �,000,000 financing preference

shares were placed with the Trust Office ‘Stichting

Administratiekantoor Preferente Aandelen Océ’

in return for the issue of registered depository

receipts with limited cancellability to a number

of institutional investors. As a result of the share

split the number of financing preference shares

increased to 20,000,000. With effect from 3 May

2006 conversion into ordinary shares was possible

subject to the provisions of article 37 of the Articles

of Association of Océ N.V. As part of the offer by

Canon, the Trust Office transferred on 9 March

2010 all 20,000,000 preference shares to Canon

in return for the corresponding depository receipts

(“decertificering”). Subsequently the Trust Office

was dissolved. The directors of the Trust Office prior

to the dissolution were: P.H. Vogtländer (Chairman),

H.G. van Everdingen, J. Klaassen, R. Pieterse and

J. Zuidam.

Cumulativeprotectivepreferenceshares Since

April 1979 Océ N.V. has had an irrevocable obligation

to issue to the Lodewijk Foundation (Lodewijk

Stichting), at its first request, protective preference

shares. As part of the offer by Canon the Lodewijk

Foundation had irrevocably renounced its rights to

call for the issue of protective preference shares by

Océ. As of 9 March 2010 the protective preference

shares are no longer part of Océ’s authorized share

capital.

Currently, the dissolution of the Lodewijk Foundation

is in process.

The directors of the Lodewijk Foundation are:

N.J. Westdijk (Chairman), S.D. de Bree,

M.W. den Boogert and F.J.G.M. Cremers.

The Lodewijk Foundation is a legal entity

independent of Océ N.V. as defined in article

�:71 para. 1 sub c Wft.


(20) Other Legalreserves

reserves x € 1,000

hedging available- currency other legal treasury total

reserve for-sale translation reserves shares

At 1 December 2008 - 16,0�8 - �27 - 1�3,822 113,�13 - 3�,976 - 91,870

Cash flow hedges:

• recognized in hedging reserve 1�,980 - - - - 1�,980

• reclassified to the income statement - �,808 - - - - - �,808

Currency translation differences:

• subsidiaries - - - 60,762 - - - 60,762

• associates - - 82 - - 82

• sale of subsidiary (reclassified to the

income statement) - - - 22 - - - 22

Available-for-sale financial assets - 38 - - - 38

Other comprehensive income 10,172 38 - 60,702 - - - �0,�92

Changes in other legal reserves:

• capitalized development costs - - - �8,326 - �8,326

• non-distributed income of associates - - - 1,360 - 1,360


• proceeds from shares reissued - - - - 728 728

At 30 November 2009 - �,886 - 389 - 21�,�2� 163,099 - 3�,2�8 - 91,9�8

Cash flow hedges:

• recognized in hedging reserve - 3,800 - - - - - 3,800

• reclassified to the income statement 10,873 - - - - 10,873

Currency translation differences:

• subsidiaries - - 73,232 - - 73,232

• associates - - 178 - - 178

Available-for-sale financial assets - - 92 - - - - 92

Other comprehensive income 7,073 - 92 73,�10 - - 80,391

Changes in other legal reserves:

• capitalized development costs - - - - 2,861 - - 2,861

• non-distributed income of associates - - - 60� - 60�


• proceeds from shares reissued - - - - 2�8 2�8

At 31 December 2010 1,187 - �81 - 1�1,11� 160,8�3 - 3�,000 - 13,�6�


(21) Borrowings 2010 2009 x € 1,000

Convertible debentures to employees - 3,8�7

8.18% semi-annual USPP Notes due in 2011 - 100,2�6

8.31% semi-annual USPP Notes due in 2013 - 38,�02

8.38% semi-annual USPP Notes due in 2016 - 1,992

7.82% semi-annual USPP Notes due in 2016 - 21,96�

Drawn under € 500 million facility (2.786% - 3.222%) - 183,918


Other borrowings - �,6�1

Finance lease obligations 6,996 �,693

Non-current 6,996 �6�,136

Convertible debentures to employees - 906

Bank overdrafts 3,894 12,�37

Canon USD loans* 224,484 -

Canon EUR loans* 410,000 -

Other borrowings 15,000 18,923

Finance lease obligations 4,157 3,096

Current 657,535 3�,�62

Total 664,531 �99,�98

Océ N.V. is a company incorporated under Dutch

law. In accordance with the Dutch Civil Code,

legal reserves have to be established in certain

circumstances.

The hedging reserve, the available-for-sale reserve,

the currency translation reserve and other legal

reserves are legal reserves that limit distributions

to shareholders to the extent that these reserves

individually have a credit balance.

The reclassification of € 10.9 million (2009: - € 4.8

million) from the hedging reserve to the income

statement consists of a gain of € 3.6 million foreign

exchange results (2009: € 4.5 million), included in€ 4.5 million), included in, included in

‘costs of sales’, and a loss of € 14.5 million interest

results (2009: € 0.3 million), included in ‘finance€ 0.3 million), included in ‘finance, included in ‘finance

expenses’.

For an overview of the contractual redemption

payments and interest payments, reference is made

to the disclosure ‘Contractual payments due by

period’ on page 69.



Thecarryingamountsoftheborrowings 2010 2009 x € 1,000

aredenominatedinthefollowingcurrencies:

Euro 427,762 ��,806

US dollar 235,153 3�7,972

Pound sterling - 32,703

Other 1,616 6�,117

Total 664,531 �99,�98

Theaverageeffectiveinterestrates 2010 2009 as %

areasfollows:

Convertible debentures to employees - 3.62

Debentures and other borrowings 2.00 �.38

Finance lease obligations 12.97 13.23

FinanceleaseobligationsRedemption of the

finance lease obligations will take place up to and

including 201�.

As a result of the change of control to Canon, the

US Private Placements have been redeemed and

the drawings under the multicurrency revolving

credit facility have been discontinued. Both have

been replaced by loans of Canon. The loans were

concluded at LIBOR plus an at arm’s length spread.

The early redemption of the US Private Placements

caused a loss of € 20.0 million (see note (6)) which

is the difference between the carrying amount of the

loans and the settlement amount.

As a result of the acquisition by Canon, Océ has also

redeemed the convertible debentures to employees;

this caused a loss of € 0.9 million.

The fair value of borrowings is € 1.4 million higher than

the carrying amount (2009: € 17.2 million higher).17.2 million higher). million higher).


(22) Retirement 2010 2009 x € 1,000

benefit obligations Balancesheet:

Defined benefit plans -368,445 -- 378,602

Pensioncostsfor:

• defined contribution plans -16,894 -- 13,617

• defined benefit plans -43,340 -- 31,337

Total -60,234 -- ��,9��

Recognitionofpensioncostsinthe

incomestatement:

Cost of sales -23,335 -- 20,803

Selling and marketing expenses -19,334 -- 16,9��

Research and development expenses -10,800 -- 10,1�9

General and administrative expenses* -6,765 2,9�3

Total -60,234 -- ��,9��

* The general and administrative expenses 2009 include

€ 3.7 million proceeds from curtailments.€ 3.7 million proceeds from curtailments. proceeds from curtailments.

Defined contribution plans:

The contributions are recognized as ‘Defined

contribution plans’ under ‘Trade and other liabilities’

at the moment that the liability is incurred.

Defined benefit plans:

Theweightedaverageactuarial 2010 2009 as %

assumptionsare:

Discount rate 4.78 �.9�

Expected return on plan assets 5.73 �.88

Expected increase in salaries 2.60 2.�2

Expected increase in benefits 1.25 1.�2

Thepensioncostsfordefinedbenefitplans 2010 2009 x € 1,000

chargedtotheincomestatementare

asfollows:

Current service costs -28,191 -- 18,�71

Interest costs -79,317 -- 77,260

Expected return on plan assets 65,423 �7,�68

Amortization of actuarial gains/losses -896 1,�07

Amendments/curtailments/settlements -359 �,�19

Total -43,340 -- 31,337


Theamountsincludedinthebalancesheet 2010 2009 x € 1,000

aredeterminedasfollows:

Present value of funded obligations -1,355,100 - 1,230,311

Fair value of plan assets 1,133,347 986,3�3

Surplus/deficit -221,753 - 2�3,968

Present value of unfunded obligations -249,136 - 2�3,289

Funded status -470,889 - �87,2�7

Unrecognized actuarial gains/losses 102,371 108,663

Unrecognized past service costs 73 - 8

Retirement benefit obligation in the balance sheet

at 31 December/30 November -368,445 - 378,602

Movementsindefinedbenefitobligations:

Defined benefit obligations at 1 December 2009/2008 -1,473,600 - 1,198,2�3

Current service costs -28,191 - 18,�71

Interest costs -79,317 - 77,260

Employee contributions -17,917 - 12,897

Actuarial gains/losses -32,473 - 2�3,269

Amendments/curtailments 1,610 997

Settlements 1,669 1,291

Benefits paid 61,968 �7,022

Exchange differences -37,985 27,3�0

Defined benefit obligations at 31 December/30 November -1,604,236 - 1,�73,600

Movementsinthefairvalueofplanassets:

Fair value of plan assets at 1 December 2009/2008 986,343 880,993

Expected return on plan assets 65,423 �7,�68�7,�68

Actuarial gains/losses 41,297 72,2�872,2�8

Employer contributions 56,868 �0,731�0,731

Employee contributions 17,917 12,89712,897

Amendments/curtailments -433 906906

Settlements -1,669 -

Benefits paid -61,968 - �7,022- �7,022

Exchange differences 29,569 - 21,978- 21,978

Fair value of plan assets at 31 December/30 November 1,133,347 986,3�3986,3�3


Compositionofplanassets: 2010 2009 x € 1,000

Equity instruments 464,022 393,603393,603

Fixed income 542,964 �11,�76�11,�76

Property 92,277 67,33767,337

Other 34,084 13,82713,827

Fair value of plan assets at 31 December/30 November 1,133,347 986,3�3986,3�3

Financedandnon-financeddefined 2010 2009 2008 2007 2006

benefitobligations:

x € 1,000

Present value of funded obligations -1,355,100 - 1,230,311 - 987,779 - 1,1��,201 - 1,289,��9

Fair value of plan assets 1,133,347 986,3�3 880,993 1,139,0�0 1,1�9,�17

Surplus/deficit -221,753 - 2�3,968 - 106,786 - 1�,161 - 1�0,132

Experience adjustments on plan liabilities 32,004 13,939 - 9,�9� �0,0�3 -

Experience adjustments on plan assets 41,297 72,2�8 - 316,0�9 - 6�,�0� 9,786

IAS 19 requires a �-year history to be disclosed for Océ does not have the required information available

experience adjustments on plan liabilities. to determine the experience adjustments arising on

plan liabilities for 2006.

(23) Trade and 2010 2009 x € 1,000

other liabilities

Trade accounts payable 169,904 207,��207,��

Notes payable 5,598 8,�3�8,�3�

Canon current account* 3,318 -

Other taxes and social securities payable 41,890 69,6�169,6�1

Dividend financing preference shares 5,902 3,1373,137

Defined contribution plans 4,002 �,888�,888

Salary expenses and payroll taxes 129,360 1�3,2311�3,231

Share-based compensation (2�) - �,370�,370

Deferred income 61,128 �8,71��8,71�

Other liabilities 39,275 �3,�73�3,�73

Accrued expenses 72,867 62,�0362,�03

Total 533,244 616,8�6616,8�6

Less non-current - �,�18�,�18

Current 533,244 611,338611,338

The carrying amount of the trade and other liabilities

approximates the fair value.

The expected employer contributions to defined

benefit plans in 2011 amount to € 40.8 million

(estimate 2010: € 44.5 million).



(2�) Provisions for x € 1,000 other employee restructuring other total

other liabilities long-term termination

and charges employee benefits

benefits

At 1 December 2009 27,061 8,300 29,020 12,9�3 77,32�

Additions charged to the income statement �,19� 3,�93 22,876 1�,227 ��,791

Unused amounts reversed to the

income statement - 1,�16 - - 790 - 2,873 - �,179

Used - 3,708 - �,1�� - �3,07� - �,�16 - �6,��2

Unwinding of discount �39 - - - 1,212 - 773

Exchange differences 286 28 382 - 8� 612

At 31 December 2010 26,7�7 7,667 8,�1� 17,�8� 60,323

Non-current 2�,03� 3,900 2,36� 11,90� �3,203

Current 1,722 3,767 6,0�0 �,�81 17,120

Total 26,7�7 7,667 8,�1� 17,�8� 60,323

Otherlong-termemployeebenefitsinclude long-

service leave awards, jubilee and other long-service

benefits.

Employeeterminationbenefits relate mainly to an

early retirement program in Germany (‘Altersteilzeit’).

This program is used to create an incentive for

employees, within a certain age group, to transit

from (full or part-time) employment into retirement

before their legal retirement age.

Restructuring relates mainly to the restructuring

measures taken to achieve further reduction in

costs.

Other relates among other things to legal

proceedings, guarantee commitments and onerous

contracts in respect of buildings.


(2�) Share-based settlement type fair value at settlement total expenses fair value at

compensation 30 November 2009 in equity recognized in the 31 December 2010

x € 1,000 income statement

Share option plans cash-alternatives 2,909 - - 2,909 -

Share plans cash-alternatives �3� - - �3� -

Call options on

convertible

debentures to

employees cash 926 - - 926 -

�,370 - - �,370 -

Share plans equity �73 - 302 - 271 -

Total �,9�3 - 302 - �,6�1 -

AsaresultoftheacquisitionbyCanon,allshare-

basedcompensationarrangementshavebeen

settledasper9March2010.

As an incentive for the achievement of Océ’s

objectives over the long-term and compensation

to stimulate a long-term involvement with the

Company, Océ operated several share-based

compensation plans, which were granted to certain

senior Company executives.

At 31 December 2010, the liability arising from

share-based compensation amounted to nil (2009:

€ 4.4 million). The intrinsic value of vested share

option plans at 31 December 2010 was nil (2009: nil).

Calloptionsonconvertibledebentures

Convertible debentures to employees contained

the right to convert the debentures into the value

of ordinary shares. Because cash conversion

was applicable, the call option on the convertible

debentures was recognized as a liability, measured

using a binomial option-pricing model.

Shareoptionplans Up to and including the 200�

financial year, Océ issued share option plans to a

group of eligible employees in which option rights

and/or Share Appreciation Rights (SARs) in respect

of ordinary shares in Océ were granted. In addition,

conditional options were also granted to a limited

number of participants.

Share option plans had an average vesting period of

2½ years and an exercise period of 6 years. During

the exercise period, the employees had an American

call option on ordinary shares Océ. The fair value

of the option plan was measured using a binomial

option-pricing model.


Regulation Participation in the Océ share option

plans was subject to regulations so as to prevent

the misuse of inside information. Participants

were prohibited from trading in Océ options on the

Euronext Options Exchange in Amsterdam and were

not allowed to dispose of or pledge the options that

they had been granted. Participants had to transfer

the exercise of their options to an independent

Trustee designated by the Company; this Trustee

would then exercise the options according to the

instructions given by the participants. Participants

could only give such instructions if they were not

in possession of inside information during the

designated exercise periods. A designated period

was a period of at most 9 stock exchange trading

days after publication of the quarterly results.

Total number of options/SARs As at 31 December

2010 nil unconditional option rights or SARs (2009:

1,613,800 at an average exercise price of € 11.40) in

respect of ordinary shares were outstanding.

The table below gives an overview of the rights that

were granted under these share option plans.

Shareplans At the end of 200� the share option

plan for the members of the Executive Board and

at the end of 200� the share option plan for other

senior managers were replaced by share plans. For

former senior executives of Imagistics International

Inc. a separate plan was in place. All share plans

were subjected to a service condition. At the end of

the vesting period, holders could choose between

full settlement in shares or partial settlement in cash,

to fulfill their tax obligation, and the remaining part in

shares (plan 2006) or in cash (plan 2007 and 2008).

With effect from 2009 the annual share plans for the

members of the Executive Board had been replaced by

long-term cash plans. Reference is made to note (26)

for details regarding these long-term cash plans for the

members of the Executive Board.

share option number exercise price outstanding at forfeited/ exercised settled outstanding at

plan of year of options in euro 30 November expired 31 December

granted 2009 2010

Exercisable 2002 716,000 9.77 - 13.19 103,�00 - - - 103,�00 -

2003 793,000 10.7� - 1�.�1 290,�00 - - - 290,�00 -

200� 1,138,�00 12.21 - 12.30 �90,800 - �,000 - - �86,800 -

200� 1,01�,000 11.2� - 1�.19 729,000 - 8,000 - - 721,000 -

Total 3,662,�00 1,613,800 - 12,000 - 1,601,800

Average exercise price in euro per share 11.�0 11.�7 - 11.99 -


Share plan Executive Board At the beginning of

200� a conditional right to shares was granted to

the members of the Executive Board for the first

time. The share plan comprised the conditional

granting of shares in Océ N.V. Each year a plan

with a 3-year vesting period started in which the

Company’s performance was measured at the end

of the vesting period against that of a peer group

of companies. The number of conditional shares

corresponded to a percentage (at most 60%) of

the fixed reference salary divided by the price of

the share on the stock market on the first day of

the vesting period. The relative ranking that Océ

achieved in the peer group determined the definitive

number of shares that were granted. At the end of

the vesting period, the Executive Board could have

chosen to settle part of the plan in cash to pay the

tax amount due. The remaining shares vested should

be retained by the members of the Executive Board

for a specific period (lock-up period).

Share plan senior managers At the beginning of 2006

a conditional right to shares was granted to senior

managers for the first time. The share plan senior

managers comprised the conditional granting of

shares in Océ N.V. The vesting period was 3 years

and the non-market based performance condition

was a target operating income. Depending on

growth in target operating income, the vesting of the

number of shares could vary between 0% and 120%

of the conditional number of shares granted. With

effect from 2007, the grant changed from right to

shares Océ N.V. to phantom shares Océ N.V.

Share plan Imagistics The share plan Imagistics

comprised the conditional granting of shares in

Océ N.V. The graded vesting period comprised

3 years; on 1 December of each year 33.3% of the

grant vested.

share plan year number of stock price conditionally granted vested forfeited/ settled conditionally

conditionally at grant day outstanding expired outstanding

shares in euro shares at shares at

granted 30 November 31 December

2009 2010

Board of Executive

Directors 2007 98,666 12.70 98,666 - - - - 98,666 -

Board of Executive

Directors 2008 87,�00 11.�8 87,�00 - - - - 87,�00 -

Senior managers 2008 �21,2�0 12.39 �39,208 - - - 3,�00 - �3�,708 -

Senior managers 2009 �9�,�00 3.�0 ��7,139 - - - �,�00 - ��1,639 -

Imagistics 2006 80,131 12.�9 20,976 - - 20,976 - - -

Imagistics 2007 �0,000 12.39 26,666 - - 13,33� - - 13,332 -

Imagistics 2008 �0,000 3.�0 �0,000 - - 13,33� - - 26,666 -

Imagistics 2009 �0,000 8.60 - �0,000 - - - �0,000 -

Total 1,�01,9�7 1,170,0�� 0,000 - �7,6�� - 9,000 - 1,1�3,�11 -


Theindividual Periodic pay Periodic pay Expenses Performance Share-based Pension Total

remunerationofthe (1 Dec 2009 (Dec 2010) (13 month related pay compensation* contributions

membersofthe to 30 Nov period)

ExecutiveBoard 2010)

overthefinancial

year2010was:

in euro

R.L. van Iperen 67�,736 �6,228 36,20� 32�,89� 1�1,197 181,16� 1,�2�,�2�

H.A. Kerkhoven �06,0�8 �2,171 36,20� 2�7,072 ��,089 102,609 989,193

A.H. Schaaf �06,0�8 �2,171 76,209 2��,�21 88,3�6 173,176 1,130,381

* As a result of the acquisition by Canon, all share-based compensation arrangements have been settled

as per 9 March 2010.

Theindividual Periodic pay Expenses Performance Share-based Pension Total

remunerationofthe (1 Dec 2008 (12 month related pay compensation contributions

membersofthe to 30 Nov period)

ExecutiveBoard 2009)

overthefinancial

year2009was:

in euro

R.L. van Iperen 67�,736 33,207 276,6�2 8,186 169,117 1,161,888

H.A. Kerkhoven �06,0�8 33,207 207,�80 - 100,300 8�7,03�

A.H. Schaaf �06,0�8 7�,123 207,�80 1�,68� 117,�67 920,902

For more information, see pages 32 to 3�.

in euro age on indicative increase in accrued capital build-up in

31 December retirement age accrued pension pension rights defined contribu-

2010 entitlements as at tion plan as at

in 2010 31 December 31 December

2010 2010

R.L. van Iperen �7 60 �,�18 268,177 91�,6�0

H.A. Kerkhoven �8 6� 2,�36 �,06� 217,970

A.H. Schaaf �6 6� 2,�36 10,288 �73,18�

Pensionentitlements The accrued pension

entitlements of the members of the Executive Board

and the annual pension amounts that would be

paid to them on the basis of their years of service

as at 31 December 2010. The pension scheme for

members of the Executive Board is a hybrid scheme

(defined benefit plan plus defined contribution plan).

As at 31 December 2010 the members of the

Executive Board held nil ordinary shares Océ

(2009: 79,316) and nil rights to options listed on the

Euronext Options Exchange (2009: nil).

SeverancepaymentAs a consequence of the

transaction with Canon the nature and scope of

tasks and responsibilities of the members of the

Executive Board may change substantially. For that

reason, and in line with their respective employment

agreements, it has been agreed that in the event

that the services of any member of the Executive

Board are terminated by either such member or the

Company, such member shall be entitled to receive

a severance payment of an amount equal to two

times such member’s basic gross annual salary.

(26) Directors’

remuneration


Operating lease receivables are receivables arising

from contracts for the equipment rented out to third

parties.

Futureminimumrentalrevenues: 2010 2009 x € million

12 months or less 66.8 77.3

1-3 years 59.7 66.�66.�

3-� years 15.3 17.117.1

More than � years 1.5 0.9

Total 143.3 161.8

Operating lease receivables

Theindividualremuneration(including Periodic pay Periodic pay Periodic pay

expenseallowance)ofthemembers (1 Dec 2009 to (Dec 2010) (1 Dec 2008 to

oftheSupervisoryBoardwas: 30 Nov 2010) 30 Nov 2009)

in euro

P.A.F.W. Elverding, Chairman 62,428 4,833 62,08�

T. Tanaka, Vice-Chairman 31,750 3,583 -

A. Baan 50,706 3,917 �7,9�6

N. Eley 32,417 3,666 -

S. Liebman 29,750 3,333 -

J.M. van den Wall Bake 33,353 3,500 -

G.J.A. van de Aast 11,921 - �6,9�6

M. Arentsen 12,456 - �8,9�6

R.W.A. De Becker 9,931 - 19,862

D.M. Wendt 9,931 - 39,723

F.J. de Wit, Vice-Chairman (until 23 April 2009) - - 19,88�

Total 284,643 22,832 28�,�23

As at 31 December 2010 the members of the

Supervisory Board held nil ordinary shares in Océ

(2009: nil) and nil rights to options listed on thenil) and nil rights to options listed on the) and nil rights to options listed on the

Euronext Options Exchange (2009: nil).

The total remuneration of the Executive Board andremuneration of the Executive Board and

Supervisory Board amounts to € 3,852,473

(2009: € 3,215,248).

There are no loans outstanding to the members of

the Supervisory Board and no guarantees given on

behalf of members of the Supervisory Board. For

more information, see pages 3� and 36.


Contingencies: 2010 2009 x € million

Guarantee commitments 18.7 16.1

Government development credits 0.8 ��.9

Commitments, contingencies and legal proceedings

Governmentdevelopmentcredits Government

development credits are received for product

development. These credits are subject to a

contingent repayment. The decrease of the

contingent government development credits is

caused by the lapse of contingent repayment

condition.

Othercommitments Other commitments, such as

purchase contracts etc., have been entered into in

the ordinary course of business.

SeverancepaymentAs a consequence of the

transaction with Canon the nature and scope of

tasks and responsibilities of the members of the

Executive Board may change substantially. For that

reason, and in line with their respective employment

agreements, it has been agreed that in the event

that the services of any member of the Executive

Board are terminated by either such member or the

Company, such member shall be entitled to receive

a severance payment of an amount equal to two

times such member’s basic gross annual salary.

Legalproceedings Océ is involved in a number of

legal proceedings, most of which relate to matters

resulting from the normal conduct of business.

Océ does not expect these court cases to result in

obligations that may have a material effect on the

Company’s financial position. To cover those cases

in which it is likely that the outcome of the legal

proceedings will be unfavorable for Océ and in which

the resulting obligation can be reliably estimated,

a provision has been made in the consolidated

financial statements. Reference is made to note (2�).

Thematuritydatesofoperatinglease 2010 2009 x € million

commitmentsareasfollows:

12 months or less 75.1 72.7

1-3 years 94.8 101.9

3-� years 43.7 �0.0�0.0

More than � years 76.3 91.991.9

Total 289.9 316.�

Therepurchasecommitmentsareexpected 2010 2009 x € million

tooccurasfollows:

12 months or less 0.3 0.90.9

1-3 years 0.3 0.3

Total 0.6 1.2

CommitmentsRepurchase commitments

amounting to € 0.6 million at 31 December 2010

(2009: € 1.2 million) exist under the terms of lease

contracts with third parties.

As a result of these commitments the machines

can be sold again upon their return. The estimated

market value upon return is higher than the

repurchase commitment.

Operatingleasecommitments Total contracted

operating lease commitments amount to € 289.9

million at 31 December 2010 (2009: € 316.5 million).316.� million). million).

These contracted operating lease commitments fall

due over the next years. The nature of the operating

lease commitments relates to buildings, vehicles and

machines.


Related-party transactions

Océ is not a party to any transaction or loan with any

other party that controls Océ, is controlled by Océ or

is under common control with Océ, or any associates,

individuals or enterprises with significant control over

Océ or its Executive Board except for the items

mentioned below:

The total credit facility amounts to € 640 million,

of which € 634.5 million has been drawn as at

31 December 2010.

The credit facility is unsecured and has no financial

covenants or commitment fees.

In 2010 Océ purchased products from Canon against

normal commercial terms and prices. Océ sold

products to Canon against normal commercial terms

and prices.

In 2010 Océ and Canon have started cooperation in

the field of research and development. This

cooperation is governed by various agreements

which address inter alia, the issues of intellectual

property rights and confidentiality.


On 31 January 2011, Océ and Canon reached

agreement on the renewal of the financing facility

of € 670 million with a duration of 12 months,

ending on 31 January 2012.

Events after the balance sheet date

External Auditors fees

2010 2009 x € 1,000

Audit services 1,991 1,673

Audit-related services 702 132

Tax services 368 616

Other services - 986

Total 3,061 3,�07

In the General Meeting of Shareholders held on

22 April 2010, Ernst & Young Accountants LLP

was appointed as external auditor for a maximum

period of four years. The table below presents

the aggregate fees for audit services and other

services rendered by the network organizations of

PricewaterhouseCoopers in 2009 and Ernst & Young

Accountants LLP in 2010.

The audit-related services in 2010 were mainly

Canon-related charges, such as the opening balance

sheet audit and specific audit procedures for

US GAAP and US GAAS.

108 Financial statements | Corporate balance sheet | Corporate income statement

before net income Assets 31December 30 November

appropriation 2010 2009 x € 1,000

Financial fixed Subsidiaries 824,790 786,097786,097

assets (27) Receivables from subsidiaries 725,848 �1�,071�1�,071

Associates 2,699 �,168�,168

Derivative financial instruments (28) 60 �,032�,032

Other receivables 172 172172

Deferred income tax assets 40,854 23,02923,029

Available-for-sale financial assets 232 32�32�

1,594,655 1,332,8931,332,893

Current assets Receivables from subsidiaries 225,407 166,030166,030

Derivative financial instruments (28) 6,417 1�,8�11�,8�1

Other receivables 511 123123

Current income tax receivables 8,431 10,36910,369

Cash and cash equivalents (29) 1,146 �0,701�0,701

241,912 2�3,07�2�3,07�

Total 1,836,567 1,�7�,9671,�7�,967

31December 30 November

2010 2009 x € 1,000

Income of subsidiaries after taxes -142,849 - �0,178- �0,178

Other income after taxes -24,123 1,2�91,2�9

Net income attributable to shareholders -166,972 - �8,929- �8,929

Corporate balance sheet as at

Corporate income statement for the year ended

109 Financial statements | Corporate balance sheet

Equityandliabilities 31December 30 November

2010 2009 x € 1,000

Equity attributable Ordinary shares 43,669 �3,669

to shareholders (30) Financing preference shares 10,000 10,000

Share premium 512,026 �12,026

Treasury shares -34,000 - 3�,2�8

Legal reserves 20,435 - �7,700

Retained earnings 69,622 119,�26

Net income attributable to shareholders -166,972 - �8,929

454,780 ��,2��,2��

Non-current Borrowings (31) - 3��,698

liabilities Payables to subsidiaries 15,300 -

Derivative financial instruments (28) - 27,162

Deferred income tax liabilities 287 -

15,587 382,860

Current Borrowings (31) 650,589 6,362

liabilities Payables to subsidiaries 703,698 619,661

Derivative financial instruments (28) 4,867 9,069

Other liabilities (32) 7,046 13,771

1,366,200 6�8,863

Total 1,836,567 1,�7�,967

110 Financial statements | Notes to the corporate financial statements

Notes to the corporate

financial statements

Summaryofsignificantaccountingpolicies The

corporate financial statements of Océ N.V. have

been prepared in accordance with provisions of

Part 9, Book 2 of the Dutch Civil Code. Océ has

applied the option in article 2:362 para. 8 of Part 9,

of the Dutch Civil Code to use the same accounting

principles for the recognition and measurement of

assets and liabilities and determination of results

for the corporate financial statements as the


(27) Financial x € 1,000 subsidiaries receivables associates derivative other deferred available- total

fixed assets from financial receivables income for-sale

subsidiaries instruments tax assets* financial

assets

At 1 December 2008 719,183 ��,�33 2,110 �71 278 8,019 286 1,18�,980


Investments 231,896 - - - - - - 231,896

Share in income - �0,178 - 2,187 - - - - - �7,991

Dividend - �3,796 - - 211 - - - - - ��,007

Additions - 80,7�8 - - - 1�,010 - 9�,7�8

Repayments - - 11,279 - - - 106 - - - 11,38�

Gains/losses - - - �,�61 - - �1 �,�12

Exchange differences - 61,008 - 10,931 82 - - - - 13 - 71,870

At 30 November 2009 786,097 �1�,071 �,168 �,032 172 23,029 32� 1,332,893


Investments 113,�2� - - - - - - 113,�2�

Share in income - 1�2,8�9 - �10 - - - - - 1�2,�39

Impairment - - - 2,000 - - �10 - - 1,�90

Dividend - �,382 - - �7 - - - - - �,�39

Additions - 19�,6�7 - - - 17,31� - 211,962

Repayments - - 9�2 - - - - - - 9�2

Gains/losses - - - - �,972 - - - 1�1 - �,113

Exchange differences 73,�99 18,072 178 - - - �9 91,798

At 31 December 2010 82�,790 72�,8�8 2,699 60 172 �0,8�� 232 1,�9�,6��

* The deferred income tax assets consist mainly of carry forward losses.

Investments in subsidiaries are carried at net asset

value. The net asset value is established by valuing

assets, provisions and liabilities and calculating the

result in accordance with the accounting policies

applied in the consolidated financial statements.

For a list of principal subsidiaries reference is

made to pages 121 and 122. Investments in Group

companies are included at the pro rata value of

Océ’s share in their net asset value. For principles

of recognition and measurement of assets, liabilities

and results, reference is made to the notes to the



(28) Derivative 2010 2009 x € 1,000

financial

instruments assets liabilities assets liabilities

Interest rate swaps - - 6�1 2�,09�

Foreign exchange contracts - - - 3,067

Cap on financing preference shares 60 - �,391 -

Non-current 60 - �,032 27,162

Interest rate swaps - - - -

Foreign exchange contracts 6,417 4,867 1�,8�1 9,069

Current 6,417 4,867 1�,8�1 9,069

Total 6,477 4,867 20,883 36,231

(29) Cash and 2010 2009 x € 1,000

cash equivalents

Cash and bank balances 1,146 701

Time deposits - �0,000

Total 1,146 �0,701

(30) Equity

attributable to

shareholders

(31) Borrowings 2010 2009 x € 1,000

Convertible debentures to employees of subsidiaries - 3,8�7

8.18% semi-annual USPP Notes due in 2011 - 100,2�6

8.31% semi-annual USPP Notes due in 2013 - 38,�02

8.38% semi-annual USPP Notes due in 2016 - 1,992

7.82% semi-annual USPP Notes due in 2016 - 21,96�


Other borrowings - �,229

Non-current - 3��,698

Convertible debentures to employees of subsidiaries - 906

Bank overdrafts 1,105 �,��6

Canon USD loans* 224,484 -

Canon EUR loans* 410,000 -

Other borrowings 15,000 -

Current 650,589 6,362

Total 650,589 362,060

For a specification of the equity attributable to

shareholders reference is made to ‘Consolidated

statement of changes in equity for the year

ended 31 December’ on page �9 and

the notes (19) and (20).



Redemptionofborrowingisasfollows: 2010 2009 x € 1,000

12 months or less 650,589 6,362

1-3 years - 28�,89�

3-� years - ��,0�0��,0�0

More than � years - 2�,7�3

Total 650,589 362,060

The fair value of borrowings is € 1.4 million higher

than the carrying amount (2009: € 17.1 million higher).17.1 million higher). million higher).

Reference is also made to note (21) of the notes to the


Theaverageeffectiveinterestrates 2010 2009 as %

areasfollows:

Convertible debentures to employees of subsidiaries - 3.62

Debentures and other borrowings 2.00 �.31

(32) Other 2010 2009 x € 1,000

liabilities

Preference dividend 5,902 3,137

Other 1,144 10,63�

Current 7,046 13,771

(33) Employees Océ N.V. does not have any employees.


Océ N.V. forms a fiscal unity with several Dutch

entities for corporation tax purposes. The full list

of Dutch entities which are part of the fiscal unity

is included in the list containing the information

referred to in article 2:379 and article 2:�1� of the

Dutch Civil Code, which is filed at the office of the

Chamber of Commerce Limburg. In accordance

with the standard conditions, a company and its

subsidiaries that form the fiscal unity are jointly and

severally liable for taxation payable by the fiscal

unity. All current tax and carry forward losses of

the entities within the fiscal unity are transferred to

Océ N.V. As the stand alone tax position does not

provide relevant information to users, reference is

made to the disclosures in the consolidated financial

statements.

Reference is made to note (26) of the consolidated


For events after the balance sheet date, reference

is made to the notes of the consolidated financial

statements on page 107.

Fiscal unity in The Netherlands

Directors’ remuneration

Events after the balance sheet date

2010 2009 x € million

Bank guarantees for subsidiaries 31.3 32.6

Collateral securities provided for subsidiaries 5.5 �0.�

Commitments and contingencies

11� Financial statements | Other information

Proposedappropriationofnetincome 2010 2009 x € 1,000

Preference dividend 2,765 2,��3

Cash dividend interim - -

Cash dividend final - -

Added to retained earnings:

Retained earnings -169,737 - �1,�82

Total net income attributable to shareholders -166,972 - �8,929

Other information

Upon adoption of this proposed net income

appropriation, the dividend for the 2010 financial year

will be: € 0.14 (rounded) per financing preference

share of € 0.50 and € 0.00 per ordinary share of

€ 0.50. This proposed net income appropriation is in

conformity with article 32 of the Company’s Articles

of Association.

ExtractfromtheArticlesofAssociationrelating

tonetincomeappropriationThe rules for net

income appropriation as laid down in the Articles of

Association can – where of relevance at the present

time – be summarized as follows (for literal text see

article 32 of the Articles of Association).

2� February 2011

The Executive Board shall, subject to approval of the

General Meeting, reserve such amounts as it may

deem necessary. Then, on the financing preference

shares, �.�% of the paid-up amount including share

premium, which percentage is fixed for the period

until 1 December 2012 and will subsequently be

adapted each time eight years thereafter. Insofar as

the net income has not been set aside in the form

of reserves, it shall be at the disposal of the General

Meeting of Shareholders.

Signatures to the Financial Statements and other

information set out on pages �7 to 11�:


P.A.F.W. Elverding

T. Tanaka

A. Baan

N. Eley

S. Liebman



R.L. van Iperen

H.A. Kerkhoven

A.H. Schaaf

11� Other information | Auditor’s report

To:TheShareholdersandtheBoardof

SupervisoryDirectorsofOcéN.V.

Reportonthefinancialstatements

We have audited the accompanying financial statements

for the period from 1 December 2009 up to and including

31 December 2010 of Océ N.V., Venlo as set out on pages

�6 up to and including page 113. The financial statements

include the consolidated financial statements and the

company financial statements. The consolidated financial

statements comprise the consolidated statement of

financial position as at 31 December 2010, the consolidated

statements of comprehensive income, changes in equity

and cash flows for the period from 1 December 2009 up to

and including 31 December 2010, and notes, comprising

a summary of the significant accounting policies and other

explanatory information. The company financial statements

comprise the company balance sheet as at 31 December

2010, the company profit and loss account for the period

from 1 December 2009 up to and including 31 December

2010 and the notes, comprising a summary of the

accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair

presentation of these financial statements in accordance

with International Financial Reporting Standards as adopted

by the European Union and with Part 9 of Book 2 of the

Dutch Civil Code, and for the preparation of the Report

of the Board of Executive Directors in accordance with

Part 9 of Book 2 of the Dutch Civil Code. Furthermore

management is responsible for such internal control

as it determines is necessary to enable the preparation

of the financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these

financial statements based on our audit. We conducted our

audit in accordance with Dutch law, including the Dutch

Standards on Auditing. This requires that we comply with

ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on

the auditor’s judgment, including the assessment of the

risks of material misstatement of the financial statements,

whether due to fraud or error.

In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design

audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting

estimates made by management, as well as evaluating the

overall presentation of the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

Opinion with respect to the consolidated financial

statements

In our opinion, the consolidated financial statements give

a true and fair view of the financial position of Océ N.V. as

at 31 December 2010, its result and its cash flows for the

period from 1 December 2009 up to and including

31 December 2010 in accordance with International

Financial Reporting Standards as adopted by the European

Union and with Part 9 of Book 2 of the Dutch Civil Code.

Opinion with respect to the company financial statements

In our opinion, the company financial statements give a true

and fair view of the financial position of Océ N.V. as at 31

December 2010 and of its result for the period from

1 December 2009 up to and including 31 December 2010 in

accordance with Part 9 of Book 2 of the Dutch Civil Code.

Reportonotherlegalandregulatoryrequirements

Pursuant to the legal requirement under Section 2:393

sub � at e and f of the Dutch Civil Code, we have no

deficiencies to report as a result of our examination

whether the Report of the Board of Executive Directors,

to the extent we can assess, has been prepared in

accordance with Part 9 of Book 2 of this Code, and whether

the information as required under Section 2:392 sub 1 at

b-h has been annexed. Further we report that the Report

of the Board of Executive Directors, to the extent we can

assess, is consistent with the financial statements as

required by Section 2:391 sub � of the Dutch Civil Code.

Amsterdam, 2� February 2011

Ernst & Young Accountants LLP

Signed by G.A. Arnold

Independent auditor’s report

116 Miscellaneous | Board of Supervisory Directors

P.A.F.W.(Peter)Elverding(1948),Chairman,

Gulpen-Wittem

Postheld former Chairman of the Board of

Executive Directors of Royal DSM N.V.

Nationality Dutch.

Appointed in 2006.

Currenttermofoffice until 201�.

Maximumperiodofoffice until 2018.

OcécommitteesChairman Selection and

Nomination Committee and member Remuneration

Committee.

Supervisorydirectorships Chairman of the

Supervisory Boards of ING Group N.V., Camille

Oostwegel Holding B.V. and Q-Park N.V. and

member of the Supervisory Boards of SHV

Holdings N.V. and Royal FrieslandCampina N.V.

Otherposts member of the Board of Foundation

Instituut GAK.

T.(Toshizo)Tanaka(1940),Vice-Chairman,

Tokyo(Japan)

PostRepresentative Director, Executive Vice

President & CFO of Canon Inc.

Nationality Japanese.

Appointed in 2010.

Currenttermofoffice until 201�.


Océcommitteesmember Selection and Nomination

Committee and member Remuneration Committee.

Supervisorydirectorships none.

Otherposts none.

A.(Adri)Baan(1942),Eindhoven

Postsheld former member of the Board of

Management of Royal Philips Electronics N.V.

and former member of the Group Management

Committee of Royal Philips Electronics N.V.

Nationality Dutch.

Appointed in 2003.

Currenttermofoffice until 2011.

Maximumperiodofoffice until 201�.

OcécommitteesChairman Remuneration

Committee and member Audit Committee.


Supervisory Boards of Royal Volker Wessels Stevin

N.V., Wolters Kluwer N.V. and Dockwise Ltd. and

member of the Supervisory Board of Imtech N.V.

Otherposts Chairman Administratiekantoor

KASBANK N.V., member of the Board of Trustees

Amsterdam University and Amsterdam Medical

Center, Chairman Foundation for Resocialization

of Criminal Juveniles, adviser Warburg Pincus, and

member of the foundation holding ASML preferential

shares.

N.(Norman)Eley(1954),Berkshire(United

Kingdom)

Posts Chief Financial Officer of Canon Europe

Ltd., and responsible for EMEA Finance Function,

Procurement and Facilities Management.

Nationality British.

Appointed in 2010.

Currenttermofofficeuntil 2013.


Océcommittees Chairman Audit Commitee.

Supervisorydirectorshipsnone.

Otherposts none.


As at 2� February 2011

117 Miscellaneous | Board of Supervisory Directors

S.(Seymour)Liebman(1949),NewYork(United

States)

Post Executive Vice President, Chief Administrative

Officer and General Counsel of Canon U.S.A., Inc.

and Executive Officer of Canon Inc.

Nationality American.

Appointed in 2010.



Océcommittees member Selection and Nomination

Committee.

Supervisorydirectorships member of the Boards

of Directors of Zygo Corporation, the Long Island

Association and the Information Technology Industry

Council.

Otherposts member of the Board of Governors of

the Touro Law Center.

J.M.(Maurits)vandenWallBake(1950),Laren

Post Of Counsel with Stibbe N.V.

Appointed in 2010.



Océcommittees member Audit Committee.


Supervisory Board of SCA Hygiene Products B.V.

and member of the Supervisory Board of Amfors

Holding B.V.

OtherpostsChairman of the board of Stichting

Twickel (Twickel Foundation) and of the Board of

Stichting de Oude Kerk te Amsterdam (Amsterdam

Old Church Foundation). Member of the Board of

Stichting Continuiteit Vistaprint.

CurrenttermofofficeofthemembersoftheSupervisoryBoard

Name Date of first Maximum term Due to resign Eligible for

appointment of office (12 years) at the Annual re-appointment

until General Meeting

of Shareholders in

P.A.F.W. Elverding, Chairman April 2006 2018 2014 Yes

T. Tanaka, Vice-Chairman March 2010 2022 2014 Yes

A. Baan March 2003 2015 2011 Yes

N. Eley March 2010 2022 2013 Yes

S. Liebman March 2010 2022 2013 Yes

J.M. van den Wall Bake March 2010 2022 2012 Yes

As at 2� February 2011

R.L.(Rokus)vanIperen(1953),Venlo

Post Chairman of the Board of Executive Directors.

Nationality Dutch.

Appointed member of the Board of Executive

Directors in May 199� and Chairman of the Board of

Executive Directors in September 1999.

Functionalresponsibilities Corporate Strategy,

Corporate Personnel and Organization, Secretariat of

the Company, Corporate Legal Affairs, Sustainability,

Corporate Public Affairs and Corporate and

Marketing Communication.

Geographicalresponsibilities United States,

Canada, Mexico, France, Germany, Belgium,

Switzerland and Japan.

Otherposts Chairman of the Supervisory Board

of Technical University Eindhoven and of the

Supervisory Board of Academic Hospital Maastricht.

Previouspostswith Océ since 1978. After several

posts within R&D, appointed Vice President in 1986.

From 1989 responsible for the Printing Systems

business unit. Managing Director of Océ-Belgium N.V.

from 1992 until being appointed as member of the

Executive Board of Océ N.V. in 199�.


118 Miscellaneous | Board of Executive Directors

H.A.(Hans)Kerkhoven(1962),Breda

Post member of the Board of Executive Directors

and CFO.

Nationality Dutch.

Appointed October 2008.


FunctionalresponsibilitiesFinance &

Administration (Corporate Treasury, Corporate

Tax, Internal Audit Department, Investor Relations

and Group Controlling), Corporate Information

Management and financing companies.

Geographicalresponsibilities United Kingdom, the

Nordic countries, Iberia.

Otherposts none.

Previousposts from 1988 until 200� various

financial management posts for Unilever in The

Netherlands, Hungary and Singapore. From 200�

financial management posts at Mittal Steel (now

called ArcelorMittal). From 2006 until 2008 Vice

President Finance and Performance Management

at ArcelorMittal in Luxembourg. Joined Océ N.V.

on 1 October 2008 and appointed a member of the

Executive Board of Océ N.V. and Chief Financial

Officer on 22 October 2008.

A.H.(Anton)Schaaf(1954),StrasslachDingharting

(Germany)

Post member of the Board of Executive Directors

and CT&OO.

Nationality Dutch.

Appointed October 2006.

FunctionalresponsibilitiesResearch &

Development, Manufacturing & Logistics and

purchase of non-product related commodities and

services, Direct Export/Emerging Markets and Océ

Business Services Europe.

Geographicalresponsibilities The Netherlands,

Germany (Océ Printing Systems G.m.b.H.), Italy and

Australia.

Otherposts Chairman of the Supervisory Board of

Embedded Systems Institute Eindhoven.

Previousposts from 1987 until 200� various

posts worldwide within Siemens AG, including

Executive Vice President, member of the Executive

Board and Chief Technology Officer of Siemens

Communications in Germany. Chief Technology

Officer of Deutsche Telekom AG from 200�. Joined

Océ N.V. on 1 July 2006 as Chief Technology &

Operations Officer and appointed a member of the

Executive Board of Océ N.V. on 11 October 2006.

119 Miscellaneous | Board of Executive Directors

120 Miscellaneous | Senior Executives

StrategicBusinessUnits

Digital Document Systems S. Landesberger and J.W.C. Verschaeren

Wide Format Printing Systems T. Egelund

Océ Business Services J.C.L. Vermeeren and J.R. Marciano

Research&Development

Wide Format Systems and Cutsheet Systems S.J. Wittermans

Continuous Feed Systems M. Maier

Software M. Pracchi

Manufacturing

Venlo (The Netherlands) M.L.M. Pennings

Poing (Germany) A. Mittelsteiner

GlobalLogisticsOrganization M.L.M. Pennings

CorporateStaff

Secretariat of the Company, Corporate Legal Affairs F.W.T. Kool

Corporate Personnel & Organization P.H.G.M. Creemers

Group Controlling M.B.H.M. Nohlmans

Chief Information Officer W.A.W. de Herder

Corporate Communications J. Hol

Corporate Public Affairs H.M. Loozen

Corporate Strategy P.F.A. Middelhoek

Internal Audit Department S.M.G. Jeuken

Senior Executives

February 2011

121 Miscellaneous | Principal Subsidiaries

February 2011

Europe

Austria Océ-Österreich GesmbH J. van Boerdonk Vienna www.oce.at

Belgium Océ-Belgium N.V./S.A. M.A.M.E. van Mierlo Brussels www.oce.be

Océ Software Laboratories Namur S.A. B. Hucq Gembloux www.osl.be

Czech Republic Océ-Czeská republika, s.r.o. J. Pachman Prague www.oce.cz

Denmark Océ-Nordic Holding ApS J. Bjørkmann Copenhagen www.oce.dk

Océ-Danmark a/s J. Bjørkmann a.i. Copenhagen www.oce.dk

Finland Océ-Finland Oy J.P. Koskenmies Helsinki www.oce.fi

France Océ-France S.A. S.J.J. Notermans Montévrain www.oce.fr

Océ Print Logic Technologies S.A. R. Even Créteil www.oce-plt.com

Océ Business Services S.A. S.J.J. Notermans Montévrain www.oce.fr

Germany Océ-Deutschland G.m.b.H. J. van Boerdonk Mülheim/Ruhr www.oce.de

Océ Printing Systems G.m.b.H. A. Mittelsteiner and Poing www.oce.de

M. Maier

Océ-Deutschland J. van Boerdonk Mülheim/Ruhr www.oce.de

Business Services G.m.b.H.

Hungary Océ-Hungária Kft. G. Németh Budapest www.oce.hu

Ireland Océ-Ireland Ltd. B. Curley Dublin www.oce.ie

Italy Océ-Italia S.p.A. G.J.M. Rongen Milan www.oce.it

Netherlands Océ-Technologies B.V. L.C. Versluys Venlo www.global.oce.com

Océ-Nederland B.V. A.G.M. van Helvoort ‘s-Hertogenbosch www.oce.nl

Norway Océ-Norge A.S. J. Bjørkmann Oslo www.oce.no

Poland Océ-Poland Limited Sp. Z o.o. B.A.F.C. Raab Warsaw www.oce.com.pl

Portugal Océ-Portugal Equipamentos Gráficos S.A. C. Alonso Lisbon www.oce.pt

Romania Océ-Software S.R.L. D. Golcea Timisoara www.oce.ro

Slovakia Océ-Slovenská republika s.r.o. J. Pachman Bratislava www.oce.sk

Spain Océ-España S.A. C. Alonso Barcelona www.oce.es

Sweden Océ Svenska AB J. Bjørkmann Stockholm www.oce.se

Switzerland Océ (Schweiz) A.G. Ph. Convents Glattbrugg www.oce.ch

United Kingdom Océ (UK) Limited B. Curley Brentwood www.oce.co.uk

Principal Subsidiaries*

* Where holdings are less than 9�% of total equity, the percentage of capital held is stated. A list of affiliated

companies is available for public inspection at the Chamber of Commerce Limburg in conformity with the

provisions of Article 2:379 of the Dutch Civil Code.

122 Miscellaneous | Principal Subsidiaries

February 2011

NorthAmerica

United States Océ North America, Inc. J.D. Skrzypczak Trumbull, CT www.oceusa.com

• Commercial Printing Division M. Baboyian Boca Raton, FL www.oceusa.com

• Corporate Printing Division J. Reilly Trumbull, CT www.oceusa.com

• Wide Format Printing Division P. Chapuis Chicago, IL www.oceusa.com

Océ Business Services, Inc. J.R. Marciano New York, NY www.oceusa.com

Océ Reprographic Technologies, Corp. D. Patenaude Phoenix, AZ www.oceusa.com

Onyx Graphics, Inc. L. Hansen a.i. Salt Lake City, UT www.onyxgfx.com

Canada Océ-Canada Inc. P. D’Souza Toronto www.oce.ca

Océ Display Graphics Systems A. Mainoli Vancouver www.oceusa.com/odgs

Mexico Océ Mexico S.A. de C.V. J. Escudero Mexico City www.oceusa.com

Asia/Pacific

Australia Océ-Australia Ltd. S. Wheeler Clayton www.oce.com.au

China Océ Office Equipment W. Verheyen Shanghai www.oce.com.cn

(Shanghai) Co., Ltd.

Hong Kong Océ (Hong Kong China) Ltd. W. Verheyen Hong Kong www.oce.com.hk

Japan Océ-Japan Corporation Y. Yamamoto Tokyo www.oce-japan.jp

Malaysia Océ Malaysia Sdn. Bhd. M. Sak Petaling Jaya www.ocemal.com.my

Singapore Océ (Singapore) Pte. Ltd. M. Sak Singapore www.oce.com.sg

Thailand Océ (Thailand) Ltd. A. Lübbers Bangkok www.oce.co.th

Othercountries

Brazil Océ-Brasil Comércio e Indústria Ltda. E. Petroni São Paulo www.oce.com.br

DirectExport/EmergingMarkets

Netherlands Océ Direct Export/Emerging Markets W. Snijders Venlo www.ocedirectexport.com

Financingcompanies

Australia Océ-Australia Finance Pty. Ltd. S. Wheeler Clayton www.oce.com.au

France Océ-France Financement S.A. E. Scoffier a.i. Noisy-le-Grand www.oce.fr

Germany Océ-Deutschland Financial D. de Grand Mülheim/Ruhr www.oce.de

Services G.m.b.H.

Spain Océ-Renting S.A. L. Wijnhoven Barcelona www.oce.es

United States Océ-Financial Services, Inc. M. Gingold Boca Raton, FL www.oceusa.com

Minorityholdings

Cyprus Heliozid Océ-Reprographic (Cyprus) Ltd. 2�.0%

Netherlands MuTracx B.V. �3.�%

Singapore Datapost Pte. Ltd. 30.0%

123 Miscellaneous | Additional information for shareholders

InvestorRelations(IR)policy

The aim of Océ’s Investor Relations (IR) policy is to

keep its shareholders informed in good time and in the

most effective way about developments within the

Company in order to provide them with a clear picture

on which to base their investment decisions with

regard to Océ. This relates to information about the

financial results, the Company’s strategic choices and

objectives and about social aspects such as sustainable

business practices.

The principal document for the provision of information

is this Annual Report. In addition the Interim Financial

Report is available as well as the quarterly results

publications and press releases. Océ gives explanatory

comments on its financial publications via conferences

calls and audiowebcasts.

Additional information for shareholders

Extensive information can be found via the Investor

Information link on the Océ website

www.investor.oce.com. This also comprises

information relating to Corporate Governance, as well

as the agendas and minutes of (Annual) General

Meetings of Shareholders.

Investors and/or their advisers are welcome to submit

any questions directly to Océ’s Investor Relations

department by telephone (+31) 77 3�922�0 or via

email ([email protected]).

Quarterlyresults 2010 2009 x € million

(netincomeattributabletoshareholders)

First quarter − 5.5 1�.9

Second quarter − 96.3 − 14.8

Third quarter 5.1 − 25.6

Fourth quarter − 27.1 − 23.4

Financial year − 123.8 − 48.9

Quarterlyresults 2010 2009 in euro

(basicearningsperordinaryshare,calculatedon

thebasisoftheweightedaveragenumberof

sharesoutstanding)

First quarter − 0.07 0.16

Second quarter − 1.14 − 0.18

Third quarter 0.05 − 0.31

Fourth quarter − 0.33 − 0.28

Financial year − 1.49 − 0.61

12� Miscellaneous | Additional information for shareholders

Importantannouncementdates(subjectto

change)

19 April 2011 Annual General Meeting

of Shareholders

26 April 2011 first quarter results 2011

July 2011 second quarter results and

Interim Financial Statements 2011

October 2011 third quarter results 2011

January 2012 provisional results full year 2011

February 2012 publication of 2011 Annual Report

For updates of publication dates, see:

www.investor.oce.com

Stockexchangelisting Ordinary shares Océ are

listed on the NYSE Euronext in Amsterdam.

Statutoryregulationonnotificationofcontrolling

interestandcapitalholdingsinsecuritiesissuing

institutions Since 1992 a statutory obligation exists

in The Netherlands to notify any controlling interest

or holding of capital in publicly listed companies in

the event that such holding moves below or above

a certain threshold value. An automatic notification

and registration reference system is used by

the supervisory authority, the Dutch Authority

for Financial Markets (AFM). This system can be

consulted via the website www.afm.nl/registers.

Notificationsofsubstantialshareholdingsin

OcéN.V.(of5%ormore)

As at end of the financial year the following

notifications of substantial shareholdings in Océ N.V.

(of �% or more) had been made to the AFM:

• 9 March 2010: Canon Inc. total voting rights 7�.20%

and shareholding 77.�1% consisting of 63,092,6�1

Océ ordinary shares and 20,000,000 Océ cumulative

convertible financing preference shares.

• 1 November 2006: Pictet & Cie total voting rights 0%

and shareholding �.6�%, consisting of �,878,�99

Océ ordinary shares.

The above overview is based on the AFM notifications

and registrations only and does not necessarily

represent the actual holdings of these shareholders as

changes within the limits of thresholds do not need to

be notified to the AFM*. For a current status of the

AFM notifications, please consult the AFM reference

system on their website www.afm.nl/registers.

Holdersofsharesthatcarryaspecialcontrolling

rightundertheCompany’sArticlesof

Association There are no holders of such shares.

* On 20 March 2010 Canon Inc. and Océ N.V. stated in a joint press

release that Canon Inc. holds 73,93�,�29 ordinary shares in Océ N.V.,

which represent 8�.6�% of the total number of ordinary shares

Océ N.V.. On this date, the total number of shares held by Canon Inc.

(including Océ’s cumulative convertible financing preference shares)

represent 87.�1% of the total issued share capital of Océ N.V.

Currently Canon holds approximately 90% of the Océ shares.

12� Miscellaneous | Additional information for shareholders

ExecutiveDirectorsandSupervisoryDirectors

whonotifythesharesandthevotingrightsthat

theyhold As a consequence of the unconditional offer

of Canon for all the issued and outstanding shares in

Océ N.V., the members of the Executive Board

tendered all their ordinary and restricted shares to

Canon on 9 March 2010. The personnel options held by

Mr. Van Iperen were cancelled and settled as explained

in the Offer Memorandum dated 28 January 2010.

None of the members of the Supervisory Board held

shareholdings in Océ N.V. as a consequence of which

no notifications were made to the AFM as per

31 December 2010.

Océ 2006 - 2010

126 Miscellaneous | Océ 2006 - 2010

Consolidatedincomestatement 2010 2009 2008 2007 2006

amounts x € million

Total revenues 2,674 2,6�8 2,909 3,098 3,110

Operating income –32 − 15 46 121 102

Net income –122 − 47 4 79 57

Net income attributable to shareholders –124 − 49 2 77 55

Key figures:

Total revenues 2,674 2,6�8 2,909 3,098 3,110

• Increase/decrease in % 1 − 9 − 6 − 16

Expenses on research and development 182 179 230 228 221

• As % of total revenues 6.8 6.7 7.9 7.3 7.1

Operating income –32 − 15 46 121 102

• As % of total revenues –1.2 − 0.6 1.6 3.9 3.3

Net income attributable to shareholders –124 − 49 2 77 55

• As % of total revenues –4.6 − 1.8 0.1 2.5 1.8

• As % of average equity attributable to shareholders –23.0 − 8.0 0.3 11.3 8.1

Return on Capital Employed (RoCE) –2.3 − 1.0 3.0 7.3 5.6

Retained net income attributable to shareholders –126 − 51 − 1 20 4

• As % of net income attributable to shareholders 100.0 100.0 100.0 27.1 8.�

Employee benefit expenses 1,163 1,213 1,266 1,332 1,3��

• As % of total revenues 43.5 ��.8 �3.� �3.0 �3.�

Number of employees (FTEs) 20,708 21,63� 23,1�8 23,798 23,78�

Earnings per ordinary share attributable

to shareholders (in euro):

Basic –1.49 − 0.61 − 0.01 0.88 0.63

Diluted –1.49 − 0.61 − 0.01 0.87 0.63

Per ordinary share (in euro):

Free cash flow –1.23 0.96 0.22 2.26 1.�1

Equity attributable to shareholders 5.32 �.7� 6.9� 7.32 7.�8

Dividend − * − 0.15 0.64 0.58

Weighted average number of ordinary shares outstanding

(x 1,000) 84,889 8�,8�8 8�,786 8�,31� 83,899

Share price (in euro):

Year’s highest 8.75 8.88 13.88 18.68 1�.39

Year’s lowest 5.50 1.82 3.06 11.1� 10.92

Year end (30 November) 7.77 8.�9 3.�6 12.39 12.�9

* Proposal to the General Meeting of Shareholders, to be held on 19 April 2011.

127 Miscellaneous | Océ 2006 - 2010

Consolidatedbalancesheet 2010 2009 2008 2007 2006

amounts x € million

Assets:

Non-current assets 1,271 1,2�8 1,392 1,281 1,399

Current assets 981 9�9 1,1�� 1,199 1,198

Non-current assets held for sale − − 3 11 9

Total 2,252 2,207 2,��9 2,�91 2,606

Equity and liabilities:

Equity 544 �79 681 713 721

Non-current liabilities 427 92� 1,063 1,0�1 1,079

Current liabilities 1,281 70� 80� 737 806

Total 2,252 2,207 2,��9 2,�91 2,606

Key figures:

Property, plant and equipment 304 316 3�� 373 �28

• Net capital expenditure 43 �1 66 �� 7�

• Depreciation 62 70 80 91 9�

Rental equipment 85 82 110 108 112

• Net capital expenditure 47 38 60 71 67

• Depreciation 51 �9 63 68 71

Finance lease receivables (including short-term finance

leases and non-current assets held for sale) 238 2�6 301 276 313

• As % of balance sheet total 11 11 12 11 12

Inventories 270 267 3�3 328 3�0

• As % of total revenues 10 10 12 11 11

Trade accounts receivable 437 �09 �81 �99 ��9

• As % of total revenues 16 1� 17 16 18

Ratio of current assets to current liabilities 0.8 1.3 1.� 1.6 1.�

Equity as % of balance sheet total 24 26 27 29 28

Atarm’slength Transactions at normal market

conditions.

CEO Chief Executive Officer.

CFO Chief Financial Officer.

CIO Chief Information Officer.

Continuousfeedprinting Printing on rolls of paper

or on pinfeed forms.

CorporateOperationalExcellence All activities

aimed at optimizing and harmonizing the business

processes.

CT&OO Chief Technology & Operations Officer.

Cutsheetprinting Printing on separate sheets of

paper (up to A3 size).

DDS The Strategic Business Unit Digital Document

Systems.

Displaygraphics Wide format graphic arts

applications.

Documentmanagement The complete process

of the creation, distribution and presentation of

documents.

EBIT Earnings Before Interest and Taxes. Financial

term used to describe the result before deduction of

financing costs (net) and tax charges.

EBITDA Earnings Before Interest, Taxes,

Depreciation and Amortization. Financial term used

to describe the result before deduction of financing

costs (net), tax charges, depreciation, amortization

and impairments.

Eco-effective Method of manufacturing aimed at

achieving a closed circuit as much as possible for

industrial products.

Eco-efficient Minimizing undesirable effects on the

environment.

Environmentalfootprint Extent to which a

person or system has an adverse impact on the

environment.

Electrophotography Conversion of a photographic

image into an electrical charge that is used to apply

the toner to the right place on the paper.

Embeddedsoftware Basic software for controlling

Océ products.

List of terms and abbreviations

128 Miscellaneous | List of terms and abbreviations

Finishing In relation to printers post-printing

operations such as: folding, cutting, stapling,

collecting, gluing, franking, collating etc.

Flatbedprinters Wide format printers in which the

printhead moves across a flat plate, enabling the

printing of rigid surfaces.

Focalareas The five areas that Océ focuses on in its

sustainability policy.

Freecashflow The cash flow before financing

activities (including dividends).

Hedging Providing cover against foreign exchange

risks by means of forward buying or selling of

expected physical net outflows and inflows in

foreign currencies that are not the functional

currency of the reporting unit. Interest risks can also

be hedged.

IAS International Accounting Standards see IFRS.

IASB International Accounting Standards Board.

An independent international accounting standard

setter.

IFRIC International Financial Reporting

Interpretations Committee. The International

Accounting Standards Board’s interpretative body.

IFRS International Financial Reporting Standards.

Standards and interpretations adopted by the

International Accounting Standards Board.

Imagingsupplies All materials required for printing,

such as print media (paper, plastics, and textiles),

inks and toners.

Inkjettechnology Printing technique in which the

printed image is built up from very fine droplets of

ink.

Media In relation to printing all materials on which a

print is produced.

Non-recurringrevenues Revenues from the sale of

machines, software and related services.

Normalized Excludes Canon-related one-off items

and restructuring costs.

OBS The Strategic Business Unit Océ Business

Services.

Océ,OcéGroup,Group Indicates Océ N.V.

(the holding company) and all consolidated Océ

companies. The terms Group, Océ Group or Océ are

sometimes used to refer to the business as a whole.

OEM Original Equipment Manufacturer refers to

the producer of a machine that is used in the sales

process of another producer or distributor.

Organicgrowth The development of revenues

excluding acquisition and exchange rate effects.

Outsourcing The contracting out of document

processes within a company to a specialized external

party such as Océ Business Services.

Ppm Prints per minute.

Print-for-pay Printing processes of companies

whose primary process is commercial printing.

Print-for-use Printing processes that serve to

support a company’s primary business processes.

Printing-on-demand The printing of a document (for

example a book) at the moment when the customer

orders it and in the quantities that the customer

requires. As a result, books no longer have to be

kept in stock by the supplier.

Productization Modifying a service or a concept to

make it suitable as a commercial product.

Professionalprintproviders Businesses that

produce prints on a commercial basis (print-for-pay)

for third parties (copy shops and job printers).

Recurringrevenues Revenues from services,

inks, toners, media, rentals, interest and business

services.

RoCE Return on Capital Employed operating income

for the year, after normalized taxes (20%) as a

percentage of average Net Capital Employed. Net

Capital Employed is total assets excluding cash

and cash equivalents, minus non-interest bearing

liabilities corrected for derivatives.

Roll-to-roll Method of (wide format) printing for very

long media in which the printed material is directly

wound onto another roller.

Shareholders Shareholders of Océ N.V./holders of

shares in Océ N.V.

Stakeholders All those who have an interest in

Océ’s activities.

129 Miscellaneous | List of terms and abbreviations

Transactionprinting The printing of documents

that support a company’s primary business

process, such as invoices, daily statements, order

confirmations, packing lists and waybills.

TransPromo Refers to the use of personalized

advertising in business correspondence sent out

to customers, such as bank statements, energy

statements, policies etc.

TrustOffice Stichting Administratiekantoor

Preferente Aandelen Océ Foundation that handled

the administration of Océ preference shares that had

been issued in the form of depositary receipts.

Volumesegment Internationally accepted standard

used within the industry to subdivide the printing

and copying markets into segments based on the

number of prints or copies produced per machine

per month.

WFPS The Strategic Business Unit Wide Format

Printing Systems.

Wft Wet op het financieel toezicht Dutch Financial

Supervision Act.

Workflowmanagement Used by Océ to mean:

managing the volume of print assignments and the

related activities within an organization.

130 Miscellaneous | Forward-looking statements

This Annual Report contains information as referred to

in article �:�9 in conjunction with article �:�3 of the

Dutch Financial Supervision Act (Wet op het financieel

toezicht).

Any forward-looking statements in this report refer to

future events and may be expressed in a variety of

ways, such as “expects”, “projects”, “anticipates”,

“intends” or other similar words (“Forward-looking

statements”).

Océ N.V. (“Océ”) has based these forward-looking

statements on its current expectations and projections

about future events. Océ’s expectations and

projections may change and Océ’s actual results,

performance or achievements could differ significantly

from the results expressed in, or implied by, these

forward-looking statements, due to possible risks and

uncertainties and other important factors which are

neither manageable nor foreseeable by Océ and some

of which are beyond Océ’s control.

When considering these forward-looking statements,

you should bear in mind these risks, uncertainties and

other important factors described in this Annual Report

or in Océ’s other annual or periodic filings.

For a non-limitative discussion of the risks,

uncertainties and other factors that may affect Océ’s

actual results, performance or achievements, we refer

you to this Annual Report and other publications issued

by Océ.

In view of these uncertainties, no certainty can be

given about Océ’s future results or financial position.

We advise you to treat Océ’s forward-looking

statements with caution, as they speak only as of the

date on which the statements are made. Océ is under

no obligation to update or revise publicly any forward-

looking statement, whether as a result of new

information, future events or otherwise, except as may

be required under applicable (securities) legislation.

Forward-looking statements

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