**Exhibit10.1**

 

Triple P N.V.

# **Consolidated Financial Statements**

 
| **Contents**                                          |
|-------------------------------------------------------|
| Report of Independent  Auditors                       |
| Consolidated Balance  Sheets                          |
| Consolidated  Statements of Operations                |
| Consolidated  Statements of Shareholders’ Equity |
| Consolidated  Statements of Cash Flows                |
| Notes to  Consolidated Financial Statements           |
| Valuation and Qualifying Accounts (Schedule  II)      |

 

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Triple P N.V.

**Reportof Independent Auditors**

 

 

To the Shareholders and Supervisory Board ofTriple P N.V.,

 

We have audited the accompanying consolidated balance sheet of Triple PN.V. as of December 31, 2002, and the related consolidated statements ofoperations, shareholders’ equity, and cash flows for the year then ended. Ouraudit also included the financial statement schedule attached to theconsolidated financial statements. These consolidated financial statements andthe financial statement schedule are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements and schedule based on our audit. The consolidated financial statementsand financial statement schedule of Triple P N.V. and subsidiaries for thefiscal years ended December 31, 2001 and 2000, were audited by other auditorswho have ceased operations. Those auditors expressed an unqualified opinion onthose statements in their report dated February 7, 2002.

 

We conducted our audit inaccordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basisfor our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Triple P N.V. atDecember 31, 2002 and the consolidated results of their operations and theircash flows for the year then ended in conformity with accounting principlesgenerally accepted in the United States of America. Also, in our opinion, therelated financial statement schedule, when considered in relation to the basicconsolidated financial statements taken as a whole, presents fairly in allmaterial respects the information set forth therein.

 

 
| March 4, 2003                  |
|--------------------------------|
| Eindhoven, The  Netherlands    |
| Ernst & Young  Accountants |

 

2

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Triple P N.V.

**Reportof Independent Auditors (former Auditor)**

 

**This report is a copy of a report previously issued by ArthurAndersen in connection with Triple P N.V.’s filing on Form 20-F for the yearended December 31, 2001.  The report hasnot been re-issued by Arthur Andersen nor has Arthur Andersen provided aconsent to the inclusion of its report in this Form 20-F.**

 

To Triple P N.V.

 

We have audited the accompanying consolidated balance sheets of TripleP N.V. and subsidiaries as of December 31, 2000 and 2001, and the relatedconsolidated statements of operations, shareholders’ equity and cash flows foreach of the three years in the period ended December 31, 2001. These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

 

We conducted our audits in accordance with auditing standards generallyaccepted in the United States. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

 

In our opinion, the financial statements referred to above presentfairly, in all material respects, the consolidated financial position of TripleP N.V.. and subsidiaries at December 31, 2000 and 2001, and the consolidatedresults of their operations and their cash flows for each of the three years inthe period ended at December 31, 2001 in conformity with accounting principlesgenerally accepted in the United States.

 

Our audit was made for the purpose of forming an opinion on the basicfinancial statements taken as a whole. The schedule listed in the index offinancial statements is presented for purposes of complying with the Securitiesand Exchange Commissions rules and is not part of the basic financialstatements. This schedule has been subjected to the auditing procedures appliedin the audit of the basic financial statements and, in our opinion, fairlystates in all material respects the financial data required to be set forththerein in relation to the basic financial statements taken as a whole.

 
| February 7, 2002          |
|---------------------------|
| Eindhoven,The Netherlands |
| Arthur Andersen           |

 

3

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Triple P N.V.

**Consolidated Balance Sheets**

(in thousands, except shares and per share amounts)

 

 
|                                                                                                            |   | **At December 31,** |       |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------------|------------|
|                                                                                                            |   | **2001**            |       | **2002** |   |
|                                                                                                            |   | **EUR**             |       | **EUR** |   |
| **Assets**                                                                                                      |   |                |       |   |   |
| **Current Assets**                                                                                              |   |                |       |   |   |
| Cash and cash  equivalents                                                                                      |   | 1,010               |       | 4,207 |   |
| Restricted cash                                                                                                 |   | 59                  |       | 59 |   |
| Accounts  receivable, net of an allowance for doubtful accounts of EUR 1,155 in 2001  and EUR 1,202 in 2002     |   | 15,291              |       | 12,090 |   |
| Inventories                                                                                                     |   | 3,916               |       | 3,136 |   |
| Prepaid expenses  and other current assets                                                                      |   | 3,336               |       | 1,870 |   |
| Current assets  of discontinued operations                                                                      |   | 1,860               |       | — |   |
| **Total  current assets**                                                                                       |   | **25,472**          | ** ** | **21,362** | ** ** |
|                                                                                                            |   |                | ** ** |   | ** ** |
| **Non-Current Assets**                                                                                          |   |                |       |   |   |
| Property and  equipment, at cost                                                                                |   | 4,603               |       | 3,999 |   |
| Less:  accumulated depreciation and amortization                                                                |   | 2,365               |       | 2,375 |   |
| Net property and  equipment                                                                                     |   | 2,238               |       | 1,624 |   |
| Non-current  assets of discontinued operations                                                                  |   | 165                 |       | — |   |
| Total  non-current assets                                                                                       |   | 2,403               |       | 1,624 |   |
| **Total assets**                                                                                                |   | **27,875**          | ** ** | **22,986** | ** ** |
|                                                                                                            |   |                |       |   |   |
| **Liabilities and shareholders’  equity**                                                                  |   |                |       |   |   |
| **Current liabilities**                                                                                         |   |                |       |   |   |
| Short-term part  of long-term liabilities                                                                       |   | 485                 |       | 470 |   |
| Accounts payable                                                                                                |   | 7,835               |       | 8,444 |   |
| Accrued  liabilities                                                                                            |   | 7,147               |       | 5,213 |   |
| Customer  deposits                                                                                              |   | 1,369               |       | 665 |   |
| Deferred revenue                                                                                                |   | 4,084               |       | 3,981 |   |
| Restructuring  reserve                                                                                          |   | —              |       | 715 |   |
| Current  liabilities of discontinued operations                                                                 |   | 1,643               |       | — |   |
| **Total  current liabilities**                                                                                  |   | **22,563**          | ** ** | **19,488** | ** ** |
|                                                                                                            |   |                | ** ** |   | ** ** |
| **Long-term liabilities**                                                                                       |   |                |       |   |   |
| Pension  obligations                                                                                            |   | 190                 |       | 259 |   |
| Reserve for  anticipated loss on disposition of discontinued operations                                         |   | 628                 |       | — |   |
| Other long-term  liabilities                                                                                    |   | 1,002               |       | 725 |   |
| Total long-term  liabilities                                                                                    |   | 1,820               |       | 984 |   |
| **Total  liabilities**                                                                                          |   | **24,383**          | ** ** | **20,472** | ** ** |
|                                                                                                            |   |                | ** ** |   | ** ** |
| Commitments and  Contingencies (Note 7)                                                                         |   |                |       |   |   |
|                                                                                                            |   |                |       |   |   |
| **Shareholders’ equity**:                                                                                  |   |                |       |   |   |
| Preferred  shares, EUR 0.04 par value per share;  Authorized - 19,750,000 shares;  Outstanding - none           |   | —              |       | — |   |
| Common shares,  EUR 0.04 par value per share;  Authorized - 43,750,000 shares;  Outstanding - 30,469,345 shares |   | 1,219               |       | 1,219 |   |
| Additional  paid-in capital                                                                                     |   | 53,293              |       | 53,293 |   |
| Accumulated  deficit                                                                                            |   | (50,906             | )          | (51,998 | ) |
| Cumulative  translation adjustment                                                                              |   | (114                | )          | — |   |
| Total shareholders’  equity                                                                                |   | 3,492               |       | 2,514 |   |
| **Total liabilities and shareholders’  equity**                                                            |   | **27,875**          | ** ** | **22,986** | ** ** |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

4

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Triple P N.V.

**ConsolidatedStatements of Operations**

(in thousands, except per share amounts)

 
|                                                                                                                                |   | **At December 31,** |       |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|------------|
|                                                                                                                                |   | **2000**            |       | **2001** |   | **2002** |   |
|                                                                                                                                |   | **EUR**             |       | **EUR** |   | **EUR** |   |
| Net revenues                                                                                                                        |   | 122,353             |       | 110,874 |   | 96,373 |   |
| Cost of revenues                                                                                                                    |   | 100,252             |       | 91,793 |   | 79,438 |   |
| **Gross Profit**                                                                                                                    |   | **22,101**          | ** ** | **19,081** | ** ** | **16,935** | ** ** |
|                                                                                                                                |   |                |       |   |   |   |   |
| Sales and  marketing expense                                                                                                        |   | 10,227              |       | 9,743 |   | 9,777 |   |
| Research and  development expense                                                                                                   |   | 661                 |       | — |   | — |   |
| General and  administrative expense                                                                                                 |   | 5,770               |       | 4,658 |   | 5,660 |   |
| Goodwill  amortization                                                                                                              |   | 191                 |       | 189 |   | — |   |
| Restructuring  charge                                                                                                               |   | —              |       | — |   | 1,370 |   |
| Total operating  expenses                                                                                                           |   | 16,849              |       | 14,590 |   | 16,807 |   |
|                                                                                                                                |   |                |       |   |   |   |   |
| **Operating income from continuing  operations**                                                                                    |   | **5,252**           | ** ** | **4,491** | ** ** | **128** | ** ** |
|                                                                                                                                |   |                |       |   |   |   |   |
| Interest income                                                                                                                     |   | 68                  |       | 197 |   | — |   |
| Interest expense                                                                                                                    |   | (409                | )          | (360 | ) | (417 | ) |
| Other income  (expense), net                                                                                                        |   | (176                | )          | (82 | ) | (231 | ) |
| Total other  income (expense), net                                                                                                  |   | (517                | )          | (245 | ) | (648 | ) |
|                                                                                                                                |   |                |       |   |   |   |   |
| **Net income (loss) from continuing  operations**                                                                                   |   | **4,735**           | ** ** | **4,246** | ** ** | **(520** | **)** |
|                                                                                                                                |   |                |       |   |   |   |   |
| Profit (loss)  from discontinued operations                                                                                         |   | 326                 |       | (377 | ) | — |   |
| Profit (loss) on  disposal of discontinued operations, including a provision for estimated  operating losses during disposal period |   | —              |       | (628 | ) | — |   |
| Net Income (loss) from discontinued operations                                                                                      |   | 326                 |       | (1,005 | ) | — |   |
|                                                                                                                                |   |                |       |   |   |   |   |
| **Net income (loss)**                                                                                                               |   | **5,061**           | ** ** | **3,241** | ** ** | **(520** | **)** |
|                                                                                                                                |   |                |       |   |   |   |   |
| Preferred stock  dividend                                                                                                           |   | 980                 |       | 572 |   | — |   |
| Preferred stock  withdrawal premium                                                                                                 |   | —              |       | 454 |   | — |   |
| Net income  (loss) available to common stockholders                                                                                 |   | 4,081               |       | 2,215 |   | (520 | ) |
|                                                                                                                                |   |                |       |   |   |   |   |
| **Basic and diluted earnings per  share**                                                                                           |   |                |       |   |   |   |   |
| Net income  (loss) per share from continuing operations                                                                             |   | 0.12                |       | 0.10 |   | (0.02 | ) |
| Net income  (loss) per share from discontinued operations                                                                           |   | 0.01                |       | (0.03 | ) | — |   |
| Total net income  (loss) per share                                                                                                  |   | 0.13                |       | 0.07 |   | (0.02 | ) |
|                                                                                                                                |   |                |       |   |   |   |   |
| **Basic and diluted weighted average  shares outstanding**                                                                          |   | 30,469              |       | 30,469 |   | 30,469 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

5

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Triple P N.V.

**ConsolidatedStatements of Shareholders’ Equity**

(in thousands of euros exept share amounts)

 
|                              |   | **Preferred Shares****Number** |       | **Common  shares(1)****Amount** |       | **Additional****Paid-in  Capital(1)** | ** **     | **Accumulated****Deficit** |       | **Accumulated****Translation  ** |       | **Total****Shareholders’** |       |
|-----------------------------------|--------|--------------------------------|------------|---------------------------------|------------|---------------------------------------|----------------|----------------------------|------------|--------------------------------------------|------------|---------------------------------|------------|
|                              |   | **Number**                     |       | **Amount**                      |       | **Number**                            | **Adjustment** |                       | **Equity** |                                       |
| **Balance at  January 1, 1999**   |   | 24,000,000                     |       | 2,178                           |       | 30,469,345                            |           | 1,219                      |       | 62,005                                     |       | (56,794                         | )          | (106 | ) | 8,502 |   |
|                              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   |   |   |
| Net Income                        |   |                           |       |                            |       |                                  |           |                       |       |                                       |       | 5,061                           |       | — |   | 5,061 |   |
| Translation adjustment            |   |                           |       |                            |       |                                  |           |                       |       |                                       |       | —                          |       | (7 | ) | (7 | ) |
| Comprehensive income              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   | 5,054 |   |
| Preferred dividend                |   |                           |       |                            |       |                                  |           |                       |       |                                       |       | (980                            | )          | — |   | (980 | ) |
|                              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   |   |   |
| **Balance at  December 31, 2000** |   | 24,000,000                     |       | 2,178                           |       | 30,469,345                            |           | 1,219                      |       | 62,005                                     |       | (52,713                         | )          | (113 | ) | 12,576 |   |
|                              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   |   |   |
| Net Income                        |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | 3,241                           |       | — |   | 3,241 |   |
| Translation adjustment            |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | —                          |       | (1 | ) | (1 | ) |
| Comprehensive income              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   | 3,240 |   |
| Preferred dividend                |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | (980                            | )          | — |   | (980 | ) |
| Withdrawal preferred shares       |   | (24,000,000                    | )          | (2,178                          | )          | —                                |           | —                     |       | (8,712                                     | )          | (454                            | )          | — |   | (11,344 | ) |
|                              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   |   |   |
| **Balance at  December 31, 2001** |   | 0                              |       | 0                               |       | 30,469,345                            |           | 1,219                      |       | 53,293                                     |       | (50,906                         | )          | (114 | ) | 3,492 |   |
|                              |   |                           | ** ** |                            | ** ** |                                  | ** **     |                       | ** ** |                                       | ** ** |                            | ** ** |   | ** ** |   | ** ** |
| Net loss                          |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | (520                            | )          | — |   | (520 | ) |
| Translation adjustment            |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | —                          |       | 114 |   | 114 |   |
| Comprehensive income              |   |                           |       |                            |       |                                  |           |                       |       |                                       |       |                            |       |   |   | (406 | ) |
| Preferred dividend                |   | —                         |       | —                          |       | —                                |           | —                     |       | —                                     |       | (572                            | )          | — |   | (572 | ) |
|                              |   |                           | ** ** |                            | ** ** |                                  | ** **     |                       | ** ** |                                       | ** ** |                            | ** ** |   | ** ** |   | ** ** |
| **Balance at  December 31, 2002** |   | **0**                          | ** ** | **0**                           | ** ** | **30,469,345**                        | ** **     | **1,219**                  | ** ** | **53,293**                                 | ** ** | **(51,998**                     | **)**      | **0** | ** ** | **2,514** | ** ** |

 

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(1)  The common shares andadditional paid-in capital have been restated for all periods presented toreflect the revision of the par value from Dutch guilders 0.20 per share to EUR0.04 per share, which occurred during 2001.

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

6

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Triple P N.V.

**ConsolidatedStatements of Cash Flows**

(in thousands)

 
|                                                                                                    |   | **Year Ended December 31,** |       |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                                                    |   | **2000**                    |       | **2001** |   | **2002** |   |
|                                                                                                    |   | **EUR**                     |       | **EUR** |   | **EUR** |   |
| **Cash flow from operating activities**                                                                 |   |                        |       |   |   |   |   |
|                                                                                                    |   |                        |       |   |   |   |   |
| Net income  (loss) from continuing operations                                                           |   | 4,735                       |       | 4,246 |   | (520 | ) |
|                                                                                                    |   |                        |       |   |   |   |   |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) continuing  operations:   |   |                        |       |   |   |   |   |
| Depreciation and  amortization                                                                          |   | 2,149                       |       | 1,524 |   | 1,022 |   |
| Impairment of  fixed assets                                                                             |   | —                      |       | — |   | 1,019 |   |
| Provision for  doubtful accounts                                                                        |   | 913                         |       | 316 |   | 268 |   |
| Provision for  inventories                                                                              |   | —                      |       | 104 |   | 142 |   |
| Restructuring  reserve                                                                                  |   | —                      |       | — |   | 715 |   |
| Reserve for  losses of discontinued operations                                                          |   | —                      |       | 628 |   | (628 | ) |
| Other long-term  liabilities                                                                            |   | (297                        | )          | (943 | ) | 262 |   |
| Currency  translation adjustment                                                                        |   | —                      |       | — |   | 114 |   |
|                                                                                                    |   |                        |       |   |   |   |   |
| Changes in  operating assets and liabilities from continuing operations:                                |   |                        |       |   |   |   |   |
| Accounts  receivable                                                                                    |   | (719                        | )          | 1,492 |   | 2,933 |   |
| Inventories                                                                                             |   | 329                         |       | 288 |   | 638 |   |
| Other current  assets                                                                                   |   | 1,778                       |       | (4 | ) | 1,466 |   |
| Accounts payable                                                                                        |   | (477                        | )          | (2,674 | ) | 609 |   |
| Accrued  liabilities                                                                                    |   | (195                        | )          | 546 |   | (1,934 | ) |
| Customer  deposits                                                                                      |   | 497                         |       | (1,129 | ) | (704 | ) |
| Deferred revenue                                                                                        |   | 49                          |       | 509 |   | (103 | ) |
|                                                                                                    |   |                        |       |   |   |   |   |
| **Net cash provided by continuing  operations**                                                         |   | **8,762**                   | ** ** | **4,903** | ** ** | **5,299** | ** ** |
|                                                                                                    |   |                        |       |   |   |   |   |
| Net income  (loss) from discontinued operations                                                         |   | 326                         |       | (1,005 | ) | — |   |
|                                                                                                    |   |                        |       |   |   |   |   |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) discontinued  operations: |   |                        |       |   |   |   |   |
| Depreciation and  amortization                                                                          |   | 139                         |       | 135 |   | — |   |
|                                                                                                    |   |                        |       |   |   |   |   |
| Changes in  operating assets and liabilities from discontinued operations:                              |   |                        |       |   |   |   |   |
| Accounts  receivable                                                                                    |   | 539                         |       | 1,147 |   | 597 |   |
| Inventories                                                                                             |   | 134                         |       | 38 |   | 155 |   |
| Other current  assets                                                                                   |   | (211                        | )          | 182 |   | 288 |   |
| Accounts payable                                                                                        |   | 145                         |       | (516 | ) | (421 | ) |
| Accrued  liabilities                                                                                    |   | (512                        | )          | (93 | ) | (788 | ) |
| Customer  deposits                                                                                      |   | (48                         | )          | (15 | ) | — |   |
| Deferred revenue                                                                                        |   | 252                         |       | (11 | ) | (434 | ) |
|                                                                                                    |   |                        |       |   |   |   |   |
| **Net cash provided by (used in)  discontinued operations**                                             |   | **764**                     | ** ** | **(138** | **)** | **(603** | **)** |

 

7

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|                                                                              |   | **Year Ended December 31,** |       |
|-----------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                              |   | **2000**                    |       | **2001** |   | **2002** |   |
|                                                                              |   | **EUR**                     |       | **EUR** |   | **EUR** |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Cash flow from investing activities**                                           |   |                        |       |   |   |   |   |
|                                                                              |   |                        |       |   |   |   |   |
| Property and  equipment purchased                                                 |   | (868                        | )          | (58 | ) | (1,427 | ) |
| Intangible  assets                                                                |   | (3                          | )          | — |   | — |   |
| Decrease in  other non current assets                                             |   | 15                          |       | — |   | — |   |
| Restricted cash                                                                   |   | (351                        | )          | 329 |   | — |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Net cash provided by (used in)  investing activities of continuing operations** |   | **(1,207**                  | **)**      | **(387** | **)** | **(1,427** | **)** |
|                                                                              |   |                        |       |   |   |   |   |
| Property and  equipment purchased, net                                            |   | (108                        | )          | (50 | ) | 165 |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Net cash used in investing  activities of discontinued operations**             |   | **(108**                    | **)**      | **(50** | **)** | **165** | ** ** |
|                                                                              |   |                        |       |   |   |   |   |
| **Cash flow from financing activities**                                           |   |                        |       |   |   |   |   |
|                                                                              |   |                        |       |   |   |   |   |
| Borrowings under  short-term credit facilities                                    |   | 3,236                       |       | 9,687 |   | 6,541 |   |
| Repayments under  short-term credit facilities                                    |   | (3,236                      | )          | (9,687 | ) | (6,541 | ) |
| Paid lease  obligation                                                            |   | (45                         | )          | (289 | ) | (485 | ) |
| Preferred stock  dividend                                                         |   | (980                        | )          | (980 | ) | (572 | ) |
| Preferred stock  withdrawal                                                       |   | —                      |       | (11,344 | ) | — |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Net cash used in financing  activities of continuing operations**               |   | **(1,025**                  | **)**      | **(12,613** | **)** | **(1,057** | **)** |
|                                                                              |   |                        |       |   |   |   |   |
| (Increase)  decrease cash position of discontinued operations                     |   | (457                        | )          | (763 | ) | 820 |   |
|                                                                              |   |                        |       |   |   |   |   |
| Impact of  exchange rate on cash                                                  |   | (7                          | )          | (1 | ) | — |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Increase (decrease) in cash and  cash equivalents of continued operations**     |   | **6,722**                   | ** ** | **(8,275** | **)** | **3,197** | ** ** |
|                                                                              |   |                        |       |   |   |   |   |
| Cash and cash  equivalents at beginning of year                                   |   | 2,563                       |       | 9,285 |   | 1,010 |   |
|                                                                              |   |                        |       |   |   |   |   |
| Cash and cash  equivalents at end of year                                         |   | 9,285                       |       | 1,010 |   | 4,207 |   |
|                                                                              |   |                        |       |   |   |   |   |
| **Supplemental  cash flow information**                                           |   |                        |       |   |   |   |   |
| Cash paid for  interest                                                           |   | 341                         |       | 163 |   | 417 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

8

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Triple P N.V.

**Notes toConsolidated Financial Statements**

December 31, 2002

 

**1**

**Organizationand operations**

 

Triple P is a provider of high quality Information and CommunicationTechnology (‘ICT’) infrastructure solutions for medium and large businesses inthe Benelux.These solutions include ICT-consultancy, project management andimplementation services, and operational management and maintenance services.The Company’s solutions are compatible with the established products of amongothers Compaq, Toshiba, IBM, Sun Microsystems, Hewlett Packard, Citrix, Cisco,Nortel, Microsoft, Novell and Oracle.

 

Until December 31, 2002, Triple P organized its business in threedivisions: Systems & Networks, Services, and Software & SystemsIntegration. The Company’s Systems & Networks Division provided system andnetwork integration consulting and re-sold system and network products. TheCompany’s Services Division provided consulting, project management andimplementation services as well as management services and maintenanceservices. The Company’s Software & Systems Integration Division providedstandard software, implementation and customization and maintenance services inthe home-care and publishing markets. As of January 1, 2003 these three divisions were integrated into asingle organization.

 

**2**

**Basis ofpresentation and summary of significant accounting policies**

 

**Basis ofPresentation**

The consolidated financial statements are stated in thousands of eurosand are prepared in accordance with United States Generally Accepted AccountingPrinciples (US GAAP).

 

The consolidated financial statements are prepared using discontinuedoperations accounting for the Belgian subsidiary, Triple P Belgium N.V./S.A.,as the Company decided to discontinue these operations and no longer serve anycustomer in the Belgian healthcare market. Further reference is made to Note 5.

 

Unless indicated otherwise, all financial information in the notes tothe consolidated financial statements exclude discontinued operations.

 

**Use ofEstimates**

The preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting periods. Actual results could differ from those estimates.

 

**Foreigncurrency translation**

Assets and liabilities denominated in foreign currencies are translatedinto euros at the year end exchange rate. Transactions in foreign currenciesare translated at the exchange rate in effect at the time of the transaction.The exchange results are recorded under other income and expense in the statementof operations and were insignificant for all periods presented.

 

The Company has no derivative instruments.

 

**Principlesof Consolidation**

All significant intercompany balances and transactions have beeneliminated in consolidation. The consolidated financial statements include thefinancial statements of Triple P N.V. and the following subsidiaries:

 

9

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| **Name**                               |   | **Legal Seat**               |   | **Ownership  %** |   |
|----------------------------------------|--------|------------------------------|--------|------------------|--------|
| *Active*                               |   |                         |   |             |   |
| Triple P  Management B.V.              |   | Vianen - The Netherlands     |   | 100              | %      |
| Triple P  Nederland B.V.               |   | Vianen - The Netherlands     |   | 100              | %      |
| Triple P  Healthcare B.V.              |   | Vianen - The Netherlands     |   | 100              | %      |
| Triple P  eActivity B.V.               |   | Zeist - The Netherlands      |   | 100              | %      |
| Mediasystemen  B.V.                    |   | Haarlem - The Netherlands    |   | 100              | %      |
|                                   |   |                         |   |             |   |
| *Inactive*                             |   |                         |   |             |   |
| Triple P  Services / B-Catel B.V.      |   | Driebergen - The Netherlands |   | 100              | %      |
| Telesystems  Europe B.V.               |   | Zeist - The Netherlands      |   | 100              | %      |
| Triple P  Intellectual Properties B.V. |   | Vianen - The Netherlands     |   | 100              | %      |
| Triple P Lab  Info Systems B.V.        |   | Eindhoven - The Netherlands  |   | 100              | %      |
| F.W. Salomons  Holding B.V.            |   | Driebergen - The Netherlands |   | 100              | %      |
| Omega N.V./S.A.                        |   | Mechelen - Belgium           |   | 100              | %      |
| Triple P USA, Inc.                     |   | Fairfax - USA                |   | 100              | %      |

 

The Company has a minority interest of 41% in Es@s N.V./S.A., a BelgianICT-company. The investment is accounted for under the equity method ofaccounting.

 

**Cash andcash equivalents**

The Company considers investments in highly liquid debt instrumentswith original maturities of 90 days or less at the date of purchase to be cashequivalents.

 

**Restrictedcash**

All cash not directly accessible (legally restricted) are considered tobe restricted cash. As of December 31, 2002, restricted cash relates primarilyto bank guarantees issued for lease commitments and rental contracts.

 

**Accountsreceivable**

Accounts receivable are stated at face value, less an allowance forpossible doubtful accounts. The Company provides an allowance for possibledoubtful accounts based on management’s periodic review of accounts, includingthe delinquency of account balances. Accounts are considered delinquent when payments had not been receivedwithin agreed upon terms and are written off when management determined thatcollection is not probable.

 

**Inventories**

Inventories are stated at the lower of cost (first-in, first-out) ormarket value and consist principally of hardware purchased for resale, spareparts and work in progress less a provision for obsolete and slow-movinginventories.

 

**Propertyand Equipment**

Property and equipment is stated at the acquisition cost lessstraight-line depreciation. The depreciation is calculated on the basis ofacquisition cost less residual value and the estimated useful life of therelated asset. The estimated useful lives are:

 
| Office equipment |   | 2-10 years |   |
|------------------|--------|------------|--------|
| ERP-software     |   | 5 years    |   |

 

Maintenance and repairs are charged to expense as incurred. Majorbetterments and improvements which extend the useful life of the item arecapitalized and depreciated over the remaining useful life of the asset. Thecost and accumulated depreciation of property, plant and equipment retired orotherwise disposed of are removed from the related accounts, and any residualvalues are charged or credited to income.

 

**Recoverabilityof long-lived assets**

The Company evaluates the carrying value of all long-lived assetswhenever events or circumstances indicate the carrying value of assets mayexceed their recoverable amounts. An impairment loss is recognized when theestimated future cash flows (undiscounted and without interest) expected toresult from the use of an asset are less than the carrying amount of the asset.

 

10

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Measurement of an impairment loss is based on fair value of the assetcomputed using discounted cash flow if the asset is expected to be held andused. Measurement of an impairment loss for an asset held for sale would bebased on fair market value less estimated costs to sell.

 

In August 2001, the Financial Accounting Standards Board issuedStatement of Financial Accounting Standards No. 144, Accounting for theImpairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 establishes asingle accounting model for long-lived assets to be disposed of by saleconsistent with the fundamental provisions of SFAS No. 121, Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.Under this statement, a long-lived asset that is to be abandoned is considereddisposed of when it ceases to be used.

 

**CapitalLeases**

The Company recognizes capital leases as assets and liabilities in thebalance sheet at amounts equal at the inception of the lease to the fair valueof the leased property or, if lower, at the present value of the minimum leasepayments. Lease payments are apportioned between the finance charge and thereduction of the outstanding liability. The finance charge is allocated toperiods during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability for each period.

 

A capital lease gives rise to depreciation expense for the asset(included in depreciation expense) as well as a finance expense (included inother income and expenses, net) for each accounting period. The depreciationpolicy for leased assets is consistent with that for depreciable assets thatare owned.

 

**Revenuerecognition**

The Company generates revenues from (i) the design, delivery andinstallation of ICT-infrastructure systems including third party software, (ii)the provision of maintenance and management services based on service levelagreements, (iii) the provision of consulting services and (iv) licensing therights to its proprietary software products directly to end users either asstand-alone products or as part of a software solution.

 

Revenue from the design, delivery and installation ofICT-infrastructure systems including third party software is generallyrecognized on a time and materials basis or when the system has been installedand accepted by the customer. The completed contract method is used for thosecontracts with customer-specific acceptance criteria and for which the Companydoes not have sufficient history to enable it to prepare reliable costestimates. The Company records losses on contracts at the time such lossesbecome known.

 

Revenue from the providing of maintenance and management services isrecognized ratably over the term of the contract period. If maintenanceservices are included in the software license fee, a portion of the softwarelicense fee representing the fair market value of the maintenance servicesbased on the value established by independent sales of such maintenanceservices to customers is allocated to maintenance revenue and recognized overthe period for which the Company is obligated to perform maintenance services.

 

Consulting services, other than in connection with the design, deliveryand installation of ICT-infrastructure systems, are usually performed on a timeand materials basis and are recognized as the services are provided.

 

Proprietary software products are licensed under perpetual licenseagreements and revenue is recognized when persuasive evidence of an agreementexists, delivery has occurred, the vendors fee is fixed or determinable andcollection of the related receivable is deemed probable.  In 2002 the Company had no such revenues.

 

Customer deposits represent cash received from customers in advance offulfilling customer purchase orders. Revenue related to such transactions isrecognized upon the fulfillment of customer orders. Deferred revenue primarilyconsists of revenue deferred under maintenance and management contracts. TheCompany generally invoices its customers in advance and, as discussed above,recognizes revenue on a pro rata basis over the term of the service levelagreement.

 

A provision for warranty costs is recorded upon revenue recognitionwhen appropriate.

 

11

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**StockOption Plan**

The Company applies the intrinsic value-based method of accountingprescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accountingfor Stock Issued to Employees”, and related interpretations, in accounting forits fixed plan stock options. Generally, compensation expense is only recordedon the date of grant if the current market price of the underlying stockexceeds the exercise price. Pro forma information regarding net income and netincome per share is required by FAS 123 for awards granted after June 30, 1995,as if the Company had accounted for its stock-based awards to employees underthe fair value method of FAS 123. The Company’s net income and net income pershare would have decreased to the following pro forma amounts if compensationcost for stock options granted under the Employee Plan had been recorded basedon the fair value method at the grant dates.

 
|                                                                                             |   | **2000** |   | **2001** |   | **2002** |   |
|--------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Net Income** (in  thousands of euros):                                                         |   |     |   |     |   |     |   |
| As reported  after preferred stock dividend                                                      |   | 4,081    |   | 2,215    |   | (520     | )      |
| Deduct:  Total stock based compensation expense  under the fair value method for all awards |   | 280      |   | 146      |   | 144      |   |
| Pro Forma                                                                                        |   | 3,801    |   | 2,069    |   | (664     | )      |
|                                                                                             |   |     |   |     |   |     |   |
| **Net income per share**  (euros)                                                                |   |     |   |     |   |     |   |
| Basic and  diluted (1) as reported                                                               |   | 0.13     |   | 0.07     |   | (0.02    | )      |
| Basic and  diluted (1) Pro Forma                                                                 |   | 0.12     |   | 0.07     |   | (0.02    | )      |

 

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(1)  Options to purchase1,690,138,  976,725 and 906,627 shares ofcommon stock were outstanding as of December 31, 2000, 2001 and 2002respectively.These shares were not included in the computation of dilutedearnings per share as the options’ exercise price was greater than the commomshares’ average market price.

 

**IncomeTaxes**

The Company accounts for income taxes following the asset and liabilitymethods which requires recognition of deferred tax assets and liabilities forthe expected future tax consequences of events that have been included in thefinancial statements or tax returns. Under this method, deferred tax assets andliabilities are determined based on the difference between the financialstatements and tax bases of assets and liabilities using currently enacted taxrates.

 

**FairValue of Financial Instruments**

The Company considers its cash and cash equivalents, restricted cash,accounts receivable and accounts payable to be its only significant financialinstruments and believes that the carrying amounts approximates fair valuebecause of the short maturity of these instruments.

 

**Concentrationof credit risk**

The Department of Justice in The Netherlands accounted forapproximately EUR 24.5 million, or 20%, EUR 32.5 million, or 29% and EUR 30.7million, or 32%, of consolidated net revenues in the years ended December 31,2000, 2001 and 2002, respectively.  TheCompany has a master-contract with the Department of Justice in The Netherlandsbased on which more than hundred separate purchasing units order ICT-systemsthey need.

 

**Comprehensiveincome**

Comprehensive income represents net income plus translationadjustments.

 

**Netincome (loss) per share**

Basic earnings per share are computed by dividing income available tocommon stockholders by the weighted average number of common shares outstandingduring the period.

 

Diluted earnings per share have been adjusted for the assumedconversion of all potentially dilutive securities. Potentially dilutivesecurities are those that do not have a current right to participate fully inearnings but could do so in the future by virtue of their option or conversionrights.The exercise of options or conversion of convertible securities is notassumed if the result would be antidilutive for the period being calculated.

 

12

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**Netincome (loss) per share:**

(in thousands of euros, except per share amounts)

 
|                                                                                        |   | **Year ended December 31,** |   |
|---------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                        |   | **2000**                    |   | **2001** |   | **2002** |   |
| Weighted average  common shares outstanding                                                 |   | 30,469                      |   | 30,469 |   | 30,469 |   |
| Dilutive stock  options(1)                                                                  |   | —                      |   | — |   | — |   |
| Diluted number  of shares                                                                   |   | 30,469                      |   | 30,469 |   | 30,469 |   |
|                                                                                        |   |                        |   |   |   |   |   |
| Net income  (loss) from continuing operations                                               |   | 4,735                       |   | 4,246 |   | (520 | ) |
| Net income  (loss) from discontinued operations                                             |   | 326                         |   | (1,005 | ) | — |   |
| Net income  (loss)                                                                          |   | 5,061                       |   | 3,241 |   | (520 | ) |
| Preferred stock  dividend                                                                   |   | (980                        | )      | (572 | ) | — |   |
| Preferred stock  withdrawal premium                                                         |   | —                      |   | (454 | ) | — |   |
| Net income  (loss) available to common stockholders                                         |   | 4,081                       |   | 2,215 |   | (520 | ) |
|                                                                                        |   |                        |   |   |   |   |   |
| Net income  (loss) per share from continuing operations - basic and diluted                 |   | 0.12                        |   | 0.10 |   | (0.02 | ) |
| Net income  (loss) per share from discontinued operations - basic and diluted               |   | 0.01                        |   | (0.03 | ) | — |   |
| **Total net income (loss) per share  available to common stockholders - basic and diluted** |   | 0.13                        |   | 0.07 |   | (0.02 | ) |

 

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(1)  Options to purchase 1,690,138, 976,725 and 906,627shares of common stock were outstanding as of December 31, 2000, 2001 and 2002,respectively.These shares are not included in the computation of dilutedearnings per share as the options’ exercise price was greater than the commonshares’ average market price.

 

**Newaccounting policies**

In June 2001, the Financial AccountingStandards Board issued SFAS No. 141, “Business Combinations” and SFAS No. 142,“Intangible Assets.” SFAS No. 141 requires that all business combinationsinitiated after June 30, 2001 be accounted for under the purchase method andaddresses the initial recognition and measurement of goodwill and otherintangible assets acquired in a business combination. SFAS No. 142 addressesthe initial recognition and measurement of intangible assets acquired outsideof a business combination and the accounting for goodwill and other intangibleassets subsequent to their acquisition. SFAS No. 142 provides that intangibleassets with finite useful lives be amortized and that goodwill and intangible assetswith indefinite lives not be amortized, but instead tested at least annuallyfor impairment. The adoption of SFAS No. 141 and 142 did not impact theCompany’s financial position, result of operations or cash flows. Per December31, 2001 and 2002 the Company had no goodwill on its balance sheet.

 

In August 2001, the FASB issued SFAS 144,“Accounting for the Impairment or Disposal of Long-Lived Assets.” Thisstatement addresses the impairment or disposal of long-lived assets andsupersedes SFAS 121, “Accounting for the Impairment of Long-Lived Assets andfor Long-Lived Assets to be Disposed Of,” and Accounting Principles BoardOpinion No. 30, “Reporting the Results of Operations, for a disposal of asegment of a business.” SFAS 144 is effective for fiscal years beginning afterDecember 15, 2001. The adoption of this standard did impact the Company’sfinancial position, result of operations or cash flows.

 

In June 2002, the FASB issued SFAS 146,“Accounting for Costs Associated with Exit or Disposal Activities.” Thisstatement defines the accounting and reporting for costs associated with exitor disposal activities and is effective for exit or disposal activities thatare initiated after December 31, 2002, with early application encouraged. SFAS146 supersedes Emerging Issues Task Force (EITF) issue 94-3, “LiabilityRecognition for Certain Employee Termination Benefits and Other Costs to Exitan Activity.” The Company will adopt SFAS 146 as of January 1, 2003 and doesnot expect the adoption of the statement to have a significant impact on itsfinancial position, result of operations or cash flows.

 

In November 2002, the FASB issued FASBInterpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.” The disclosure provisions of FIN 45 are effective for financialstatements of interim or annual periods that end after December 15, 2002. Theprovisions for initial recognition and measurement are effective on a prospectivebasis for guarantees that are issued or modified after December 31, 2002,irrespective of a guarantor’s year-end. The adoption of this standard did not impact the Company’s financialposition, result of operations or cash flows.

 

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In November 2002, the EITF 00-21 “RevenueArrangements with Multiple Deliverables” was released. The provisions of EITFIssue No. 00-21 will apply to revenue arrangements entered into in fiscalperiods beginning after June 15, 2003. The Company has not yet determined theimpact of the adoption of EITF Issue No. 00-21 on its financial position,result of operations or cash flows.

 

In December 2002, the FASB Issued StatementNo.148, “Accounting for Stock-Based Compensation -Transition and Disclosure -anAmendment of FASB Statement No. 123,” (“SFAS 148”). SFAS 148 amends FASBStatement No. 123, “Accounting for Stock Based Compensation” (“SFAS 123”) andprovides alternative methods for accounting for a change by registrants to thefair value method of accounting for stock-based compensation. Additionally,SFAS 148 amends the disclosure requirements of SFAS 123. The statement iseffective for fiscal years ending after December 15, 2002, and disclosures areeffective for the first fiscal quarter beginning after December 15, 2002. Theadoption of this standard did not impact the Company’s financial position,result of operations or cash flows.

 

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**3**

**Balancesheet data**

 

**Propertyand equipment consist of the following**

(in thousands of euros)

 
|                             |   | **At  December 31,** |   |
|----------------------------------|--------|---------------------------|--------|
|                             |   | **2001**                  |   | **2002** | ** ** |
| Office equipment                 |   | 803                       |   | 540 |   |
| ERP-software                     |   | 1,435                     |   | 1,084 |   |
| **Total property and equipment** |   | 2,238                     |   | 1,624 |   |

 

Changes in property and equipment are as follows 

(in thousands of euros):

 
|                                   |   | **Office  equipment** |   | **ERP-software** | ** ** | **Total** | ** ** |
|----------------------------------------|--------|-----------------------|--------|------------------|------------|-----------|------------|
| Book value  January 1, 2002       |   | 803                   |   | 1,435            |       | 2,238     |       |
| Additions, net                         |   | 311                   |   | 1,116            |       | 1,427     |       |
| Depreciation                           |   | (574                  | )      | (448             | )          | (1,022    | )          |
| Write down                             |   | —                |   | (1,019           | )          | (1,019    | )          |
| **Book  value December 31, 2002** |   | 540                   |   | 1,084            |       | 1,624     |       |
|                                   |   |                  |   |             |       |      |       |
| Cost value                             |   | 2,614                 |   | 1,385            |       | 3,999     |       |
| Accumulated  depreciation              |   | (2,074                | )      | (301             | )          | (2,375    | )          |
| **Book  value December 31, 2002** |   | 540                   |   | 1,084            |       | 1,624     |       |

 

In 2000 the Company selected an ERP-software solution. The latest phaseof the implementation has been completed May 1, 2002. The Company investedEUR 496,000, EUR 1,001,000 and EUR 1,116,000 in the years 2000, 2001 and 2002,respectively, for this technology.

 

During the last quarter of 2002 certain seperately identifiable componentsof the ERP-software solution were written off as such components will no longerbe used by the Company. This write down was a direct result of the streamliningand restructuring of the Company in which the Company’s three former divisionshave been integrated into a single organization with one software system. Totalimpairment in connection with the write down of assets in this respect were EUR1,019,000 of which EUR 655,000 was recorded as a restructuring charge and EUR364,000 was recorded as a general and administrative expense (see Note 4).

 

**Inventory consist of the following**

(in thousands of euros)

 
|                  |   | **At  December 31,** |       |
|-----------------------|--------|---------------------------|------------|
|                  |   | **2001**                  |       | **2002** | ** ** |
| Trade goods           |   | 3,386                     |       | 2,911 |   |
| Other                 |   | 796                       |       | 533 |   |
| **Total inventories** |   | 4,182                     |       | 3,444 |   |
| Provision             |   | (266                      | )          | (308 | ) |
| **Total Inventories** |   | **3,916**                 | ** ** | **3,136** | ** ** |

 

**Prepaidexpenses and other current assets consists of the following**

(in thousands of euros)

 
|                                                 |   | **At  December 31,** |   |
|------------------------------------------------------|--------|---------------------------|--------|
|                                                 |   | **2001**                  |   | **2002** | ** ** |
| Prepaid ERP-  software                               |   | 547                       |   | — |   |
| Prepaid expenses                                     |   | 1,068                     |   | 283 |   |
| Other  receivables                                   |   | 1,721                     |   | 1,587 |   |
| **Total prepaid expenses and other  current assets** |   | 3,336                     |   | 1,870 |   |

 

The Company will transfer the prepaid ERP-Software to property andequipment and begin depreciation over a five year period after the ERP-Softwarecomes into use.

 

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**Accruedliabilities consist of the following**

(in thousands of euros)

 
|                                          |   | **At  December 31,** |   |
|-----------------------------------------------|--------|---------------------------|--------|
|                                          |   | **2001**                  |   | **2002** | ** ** |
| Accrued payroll  (bonus, vacation allowances) |   | 1,663                     |   | 1,791 |   |
| Accrued taxes  and social security premiums   |   | 2,758                     |   | 1,806 |   |
| Other accrued  liabilities                    |   | 2,726                     |   | 1,616 |   |
| **Total accrued liabilities**                 |   | 7,147                     |   | 5,213 |   |

 

**Otherlong-term liabilities**

(in thousands of euros)

 
|                                  |   | **At  December 31,** |   |
|---------------------------------------|--------|---------------------------|--------|
|                                  |   | **2001**                  |   | **2002** | ** ** |
| Deferred gain on  sale of building    |   | 324                       |   | 173 |   |
| Financial lease  obligation           |   | 678                       |   | 208 |   |
| Long-term loan                        |   | —                    |   | 344 |   |
| **Total other long-term liabilities** |   | 1,002                     |   | 725 |   |

 

In 1994, the Company sold a building in a sale leaseback transaction.The deferred gain represents the difference between the sale price as agreedupon by the Company with a third party and the acquisition price of thebuilding. The deferred gain is being amortized over the contractual lease termof the building (10 years).The lease contract expires September 2004.

 

The Company entered into a loan agreement with NationaleNederlanden.  Redemption of the loan isin three annual installments until the year 2005.  Interest on the loan accures 4%.

** **

**4**

**Restructuring**

 

The Company applies the criteria defined inEmerging Issues Task Force consensus (EITF) 94-3, “Liability Recognition forCertain Employee Termination Benefits and Other Costs to Exit an Activity(including Certain Costs Incurred in a Restructuring)”, in determining when aliability for restructuring or exit costs should be recognized. With respect toemployee termination costs, authorized plans that have been communicated to theemployees involved in a sufficient level of detail for them to estimate theirtermination benefits. Other exit costs include write down of certain assets andunused leasehold facilities. Related costs are determined based on expectedsettlement fees and commited payments, taking into account future potentialbenefits, if any, from those commitments.

 

The Company applies Statement of Financial Accounting Standards (SFAS)No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.

 

The Management Board, with the approval of the Supervisory Board,further streamlined and restructured the Company in the last quarter of 2002.Legally, financially and organizationally, the Company’s three former divisionswere integrated into a single organization. As a result of this restructuring, the Company incurred a restructuringcharge of EUR 1,370,000 for the impairment of certain unused assets, thetermination of employee contracts and unused leasehold facilities.  Asa result of these measures the Company’s annual fixed costs are expected todecrease by about EUR 1.5 million commencing in the 2003 fiscal year.  A discussion of the components ofrestructuring charge follows.

 

**Impairmentof certain assets**

The Company’s three former divisions have been integrated into a singleorganization with one software system. As a result the Company has written downthe seperately identifiable elements of the ERP-system that will no longer beused. Total losses incurred in 2002 in connection with the write down of assetsas a direct result of the restructuring were EUR 655,000.

 

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**Employeecontract termination**

In connection with the restructuring the Company decided to terminate29 employee contracts. The total amount provided for and charged to expense in2002 with respect to this reduction in workforce force was EUR 550,000which is included in the restructuring reserve at December 31, 2002.  Payments related to employee contracttermination are foreseen in 2003.

 

**Unusedleasehold facilities**

As a result of the reduction in workforce of 29 employees inDecember 2002, the Company now has vacant office space in its mainbuilding. The Company conducted a formal evaluation of the situation based onwhich management recorded a provision of EUR 165,000 as part of their 2002restructuring charge and included in the restructing reserve atDecember 31, 2002. The amount is based on an estimated period of one yearfor finding a new sub-lessee.

 

**5**

**Discontinuedoperations and divestitures**

 

During the year 2001, the Company divested its ITC independent trainingcenter business. This divestiture had no significant impact on the results ofoperations. At the same time the Company decided to stop financing its USsubsidiary, Triple P USA Inc.  As aresult of this decision the Company no longer transfers cash to the USsubsidiary.  In July 2002 theCompany began the process to legally dissolve the subsidiary which is expectedto be finalized in the second quarter of 2003. Management believes that noreserve is necessary in connection with possible liabilities related to TripleP USA Inc. as all known liabilities have been settled.

 

In December 2001, the Company decided to discontinue operations ofits Belgian subsidiary, Triple P Belgium N.V./SA. As a result of this decisionthe company no longer serves any customer in the Belgian healthcare market. TheCompany provided for the estimated loss on disposal of the discontinued Belgianoperations an amount of EUR 628,000 representing EUR 578,000 net asset value ofthe Belgian subsidiary and EUR 50,000 estimated disposal expense. OnFebruary 11, 2002 the Company sold its Belgian subsidiary to the Belgianmanagement. In 1997, the Company issued a guarantee to a customer of Triple PBelgium N.V./SA.  The sale and purchaseagreement, provided that Triple P N.V. will be subrogated by Triple P BelgiumN.V./SA in connection with this guarantee. During 2002, the Company was informedby the Belgian management that the customer accepted the project andaccordingly paid the final installment. Although management believes that basedon current estimates no provision for potential liabilities is necessary,future events could require management to make adjustments for revisions tothese estimates.

 

The consolidated financial statements of the Company for fiscal years2000 and 2001 have been reclassified to account for the disposal of the Belgiansubsidiary as discontinued operations. Accordingly, the net revenues, costs andexpenses, assets and liabilities and cash flows associated with thediscontinued operations have been excluded from the respective captions in theaccompanying consolidated balance sheet, statement of operations and statementof cash flows.

 

The following table includes assets and liabilities of discontinuedoperations which have been excluded from the respective captions in theaccompanying consolidated balance sheet (in thousands of euros):

 
|                                       |   | **At  December 31,  2001** |       |
|--------------------------------------------|--------|---------------------------------|------------|
| **Total assets**                           |   |                            |       |
| Current assets:                            |   |                            |       |
| Cash                                       |   | 820                             |       |
| Accounts  receivable, net                  |   | 597                             |       |
| Inventories                                |   | 155                             |       |
| Prepaid expenses  and other current assets |   | 288                             |       |
| Total current  assets                      |   | 1,860                           |       |
|                                       |   |                            |       |
| **Non-current  assets:**                   |   |                            | ** ** |
| Property and  equipment, net               |   | 165                             |       |
| Total  non-current assets                  |   | 165                             |       |
| **Total assets**                           |   | 2,025                           |       |
|                                       |   |                            |       |
| **Total liabilities**                      |   |                            |       |
| Current  liabilities:                      |   |                            |       |
| Accounts payable                           |   | 421                             |       |
| Accrued  liabilities                       |   | 788                             |       |
| Customer  deposits                         |   | —                          |       |
| Deferred revenue                           |   | 434                             |       |
| Total current  liabilities                 |   | 1,643                           |       |
| **Total liabilities**                      |   | 1,643                           |       |

 

17

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Total net sales and operating results of the Belgian subsidiary priorto the date of discontinuance were EUR 8.0 million and EUR (0.4 million)respectively for the year ended December 31, 2001 and EUR 9.2 million andEUR 0.3 million respectively fot the year ended December 31, 2000.

 

In the first quarter of 2002 the Company disposed of its interest inthe Belgian subsidiary. No expenses were incurred other than the expensesaccrued for at December 31, 2001. As of December 31, 2002 there wereno remaining assets or liabilities for discontinued operations.

 

**6**

**Borrowingarrangements**

 

**Short-termborrowings**

The Company has an euro denominated revolving credit facility agreementwith IFN Finance B.V. (ABN-AMRO) whereby the Company may borrow up to 70%of eligible accounts receivable. Borrowings under this facility are secured bythe Company’s accounts receivable. Borrowings are subject to a maintenancecovenant requiring the ratio of equity to total assets equal at least 15%. IFNFinance issued a waiver for this maintenance covenant allowing the Company toexceed the 15% solvency ratio by December 31, 2003, in exchange for apotential higher interest rate on outstanding loan amounts. Interest on suchborrowings accrues at the European Central Bank’s discount rate plus 1.5% witha minimum of 5.25% and is payable monthly. In addition, the Company pays abasic fee of 0.075% of total net revenues including VAT. This credit agreement,which took effect May 18, 2000, was renewed in May 2001 for a periodof one year with an automatic renewal for a period of one year. The agreementmay be terminated at the end of each period by either party uponexpiration of a 90-day notice period.

 

As of December 31, 2001 and 2002, no amounts were outstandingunder this facility with IFN Finance B.V.

 

**7**

**Commitmentsand contingencies**

 

**Capitalleases**

The Company and its subsidiaries lease their ERP-software includingimplementation expense under a capital lease with a lease term of three yearsthat will expire in 2004. Interest on the capital leases accrues between 5.809%and 7.695%.

 

The following table gives an analysis ofassets under capital lease(in thousands of euros):

 
|                      |   | **At  December 31,** |   |
|---------------------------|--------|---------------------------|--------|
|                      |   | **2001**                  |   | **2002** | ** ** |
| Equipment at  cost        |   | 1,497                     |   | 1,497 |   |
| Accumulated  depreciation |   | 62                        |   | 772 |   |
| **Net book value**        |   | 1,435                     |   | 725 |   |

 

18

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The following table gives the future minimumlease payments for the above capital leases (in thousands of euros):

 
|                                      |   | **At  December 31,** |   |
|-------------------------------------------|--------|---------------------------|--------|
|                                      |   | **2001**                  |   | **2002** | ** ** |
| 2002                                      |   | 547                       |   | — |   |
| 2003                                      |   | 501                       |   | 501 |   |
| 2004                                      |   | 214                       |   | 214 |   |
| Total minimum  lease obligations          |   | 1,262                     |   | 715 |   |
|                                      |   |                      |   |   |   |
| Interest                                  |   | 99                        |   | 37 |   |
| **Present value of minimum  obligations** |   | 1,163                     |   | 678 |   |
|                                      |   |                      |   |   |   |
| Capital lease  obligations                |   |                      |   |   |   |
| Current                                   |   | 485                       |   | 470 |   |
| Non-current                               |   | 678                       |   | 208 |   |
| **Total**                                 |   | 1,163                     |   | 678 |   |

 

**Operatingleases**

The Company and its subsidiaries lease their current facilities andautomobiles under operating leases that expire at various dates through theyear 2007. Part of the leasehold facilities are sub-leased.

 

Total gross rent expense for the years ended December 31, 2000,2001 and 2002 was approximately EUR 4,444,000, EUR 3,727,000 and EUR4,365,000, respectively. Total income from sub-leases for the years endedDecember 31, 2000, 2001 and 2002 was approximately EUR 712,000, EUR422,000 and EUR 373,000 respectively. Total net rent expense for the years ended December 31, 2000, 2001and 2002 were approximately EUR 3,732,000, EUR 3,305,000 and EUR 3,993,000.

 

Future minimum annual rental payments undernon-cancelable operating leases as of December 31, 2002 (inthousands of euros):

 
|       |   | **Gross** |   | **Sub-leased** |       | **Net**   |       |
|------------|--------|-----------|--------|----------------|------------|-----------|------------|
| 2003       |   | 3,733     |   | 394            |       | 3,339     |       |
| 2004       |   | 2,546     |   | 273            |       | 2,273     |       |
| 2005       |   | 1,230     |   | 327            |       | 903       |       |
| 2006       |   | 789       |   | 327            |       | 462       |       |
| 2007       |   | 382       |   | 218            |       | 164       |       |
| Thereafter |   | 0         |   | 0              |       | 0         |       |
|       |   | **8,680** |   | **1,539**      | ** ** | **7,141** | ** ** |

 

**Guarantees**

The guarantees provided by the Company and its subsidiaries on behalfof third parties amount to EUR 545,000 and relate to bank guarantees issued forlease commitments and rental contracts.

 

The following table summarizes the Company’s guarantees and itsexpiration dates (in thousands of euros):

 

At December 31, 2002

 
|       |   | **Total  Amount** |   | **< 1  year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **> 5  years** | ** ** |
|------------|--------|-------------------|--------|------------------|------------|---------------|------------|---------------|------------|-------------------|------------|
|       |   |              |   |             |       |          |       |          |       |              |       |
| Guarantees |   | 545               |   | 48               |       | 312           |       | 175           |       | 10                |       |

 

**Litigation**

The Company is engaged as plaintiff or defendant in several lawsuits inThe Netherlands and Belgium originating before 2002. Although the Companyvigorously defends against these claims it maintains reserves to an amount ofapproximately EUR 513,000 for specific lawsuits as a matter of

 

19

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course, which represent estimates of its probable liabilities withrespect to these specific claims. The Company does not believe that based oncurrent judgement and estimates the outcome in any of these lawsuitsindividually or in the aggregate would have a material adverse impact on theCompany’s business, results of operations or financial condition. As thislitigation may take several years to complete future events could requiremanagement to make significant adjustments for revisions to these estimates.

 

**8**

**Employeebenefit plan**

 

The Company has a defined benefit pension plan and a definedcontribution pension plan.

 

**DefinedBenefit Plan**

Under the Company’s plan, employee benefits are based on length ofservice and final yearly pay reduced by government provided retirementbenefits. The weighted average discount rate used in determining the actuarialpresent value of projected benefit obligations was 6%, 5.75% and 5.25% for2000, 2001 and 2002, respectively. The assumed long-term rate of return onassets was 6%, 5% and 5% for 2000, 2001 and 2002, respectively. The estimatedfuture salary increase was on average 3% for 2000, 2001 and 2002.

 

Funded status of the Company’s definedbenefit plan is as follows:

(in thousands of euros):

 
|                                                                |   | **At  December 31,** |   |
|---------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                |   | **2001**                  |   | **2002** | ** ** |
| Vested benefit  obligations                                         |   | 3,245                     |   | 3,841 |   |
| Non-vested  benefit obligations                                     |   | 1                         |   | — |   |
| Accumulated  benefit obligations                                    |   | 3,246                     |   | 3,841 |   |
|                                                                |   |                      |   |   |   |
| Projected  benefit obligations for services rendered to date        |   | 3,433                     |   | 4,064 |   |
| Less: Plan  assets at fair value, primarily debt-securities         |   | 3,592                     |   | 3,813 |   |
|                                                                |   |                      |   |   |   |
| Projected  benefit obligations in excess of (less than) plan assets |   | (159                      | )      | 251 |   |
| Unrecognized  transition gain (loss)                                |   | (99                       | )      | (83 | ) |
| Unrecognized  actuarial profit                                      |   | 448                       |   | 91 |   |
| **Net pension liability**                                           |   | 190                       |   | 259 |   |

 

Net pension plan costs areas follows:

(in thousands of euros):

 
|                                            |   | **At  December 31,** |   |
|-------------------------------------------------|--------|---------------------------|--------|
|                                            |   | **2000**                  |   | **2001** | ** ** | **2002** | ** ** |
| Service cost                                    |   | 60                        |   | 36 |   | 40 |   |
| Interest cost on  projected benefit obligations |   | 219                       |   | 183 |   | 201 |   |
| Actual return on  plan assets                   |   | (216                      | )      | (159 | ) | (182 | ) |
| Other, net                                      |   | (33                       | )      | (12 | ) | (9 | ) |
| **Net pension cost**                            |   | 30                        |   | 48 |   | 68 |   |

 

Changes in projected benefitobligations are as follows:  (inthousands of euros):

 
|                                                |   | **At  December 31,** |   |
|-----------------------------------------------------|--------|---------------------------|--------|
|                                                |   | **2001**                  |   | **2002** | ** ** |
| Projected  benefit obligations at beginning of year |   | 3,482                     |   | 3,433 |   |
| Service cost                                        |   | 36                        |   | 79 |   |
| Interest cost                                       |   | 183                       |   | 201 |   |
| Plan  participants contributions                    |   | 39                        |   | — |   |
| Actuarial  (gains)/losses                           |   | 148                       |   | 351 |   |
| Benefits paid                                       |   | (30                       | )      | — |   |
| Other                                               |   | (425                      | )      | — |   |
| **Projected benefit obligations at  end of year**   |   | 3,433                     |   | 4,064 |   |

 

20

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Changes in plan assets areas follows:

(in thousands of euros):

 
|                              |   | **At December 31,** |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | **2001**            |   | **2002** |   |
| Plan assets at  beginning of year |   | 3,154               |   | 3,592 |   |
| Actual return on  plan assets     |   | 181                 |   | 182 |   |
| Employer  contributions           |   | 785                 |   | — |   |
| Plan  participants contributions  |   | 39                  |   | 39 |   |
| Benefits paid                     |   | (30                 | )      | — |   |
| Other                             |   | (537                | )      | — |   |
| **Plan assets at end of year**    |   | 3,592               |   | 3,813 |   |

 

Other changes in Projected benefit obligations and Plan assets arerelated to the former Aegon plan which was settled in 2001.  No future liabilities exist to this plan.

 

**Definedcontribution plan**

The Company changed the major portion of its pension plan from definedbenefit to defined contribution in 1999. Under the Company’s definedcontribution plan the employer contribution is based on the age of employeesand final yearly pay reduced by government provided retirement benefits (grosspension salary). The employers contribution varies between 5.5% and 19.5% ofgross pension salaries, increasing with the age of employees.

 

Under this plan the Company contributed EUR 550,000, EUR 491,000 andEUR 658,000 in 2000, 2001 and 2002, respectively.  The increase in 2002 payments were related to 2002 and 2001pension premiums.

 

**9**

**Stockoption plans**

 

The Company reserved an aggregate of 2,500,000 common shares forissuance under its 1996 Stock Option Plan for employees (the ‘Employee Plan’).TheEmployee Plan provides for the grant of options to employees (includingofficers) and consultants of the Company and its affiliates. The Employee Planprovides that the exercise price of options granted under the Plan shall be100% of the average fair market value of the common shares during a period offive trading days prior to the date of grant plus 0%, 10%, 20% or 30% at theoptionee’s choice. The exercise price is determined at date of grant. Alloptions under the plan are immediately exercisable.The maximum term of anoption granted under the Employee Plan is five years from the date of grant.Resale to third parties of shares purchased through exercise of an optiongranted under the Employee Plan is restricted. Only 25% of such shares may besold in the year following the date the option was granted and in each of thethree years following the first anniversary of the date of grant the optioneegains the right to sell an additional 25% of the shares covered by the option.In the event of termination of an optionee’s employment or consultingarrangement, all options that have not been exercised terminate. The EmplyeePlan will terminate in September 2005.

 

The Company reserved 200,000 common shares for issuance under its 1995Director Option Plan (the ‘Director Plan’). The Director Plan provides forautomatic grants of stock options to Supervisory Directors of the Company. Eachperson who becomes a Supervisory Director after September 1995, other thanindividuals who immediately prior thereto served as a Chief Executive Officerof the Company automatically are granted an option to purchase 5,000 commonshares of the Company (a ‘First Option’). In addition, each SupervisoryDirector is automatically granted an option to purchase 10,000 common shares (a‘Subsequent Option’) on January 1 of each year, provided that he or she hasserved on the Board for at least three months as of that date. All optionsgranted under the Director Plan are exercisable immediately. Under the terms ofthe Director Plan, the exercise price of options granted to SupervisoryDirectors is 100% of the average fair market value of the common shares on thedate of grant. Shares purchased upon exercise of a Subsequent Option aresubject to a repurchase right. The Company may repurchase at the exercise priceof the Subsequent Option any shares purchased by the optionee pursuant to theSubsequent Option if the optionee ceases to 

 

21

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be a Supervisory Director of the Company.This repurchase right lapsesas to one twelfth of the shares subject to the Subsequent Option for each monththat passes after date of grant of the Subsequent Option so long as theoptionee remains a Director. All options granted under the Director Plan have aterm of five years. In the event of termination of an optionee’s status as aDirector, the optionee may exercise his or her remaining options within 90 daysof the termination date (or 12 months in the case of termination as a result ofdeath or disability), but in no event later than the expiration date of anysuch option. The Director Plan will terminate in September 2005.

 

At December 31, 2002, options to purchase 906,627 common shares areoutstanding, comprising 891,627 options under the Employee Plan and 15,000options under the Director Plan.

 

Option activity under both Plans is asfollows:

** **
|                            |   | **Number of  Shares** |   | **Outstanding  Options  Weighted Average  Exercise Price** |   |
|---------------------------------|--------|-----------------------|--------|------------------------------------------------------------|--------|
|                            |   |                  |   | **US$**                                                    |   |
| Balance as of 1  January 1999   |   | 1,609,078             |   | 2.34                                                       |   |
|                            |   |                  |   |                                                       |   |
| Exercised                       |   | —                |   |                                                       |   |
| Forfeited                       |   | (148,220              | )      | 2.52                                                       |   |
| Expired                         |   | —                |   |                                                       |   |
| Granted                         |   | 229,280               |   | 1.80                                                       |   |
| Balance as of 31  December 2000 |   | 1,690,138             |   | 2.25                                                       |   |
|                            |   |                  |   |                                                       |   |
| Exercised                       |   | —                |   |                                                       |   |
| Forfeited                       |   | (939,913              | )      | 2.33                                                       |   |
| Expired                         |   | —                |   |                                                       |   |
| Granted                         |   | 226,500               |   | 0.98                                                       |   |
| Balance as of 31  December 2001 |   | 976,725               |   | 1.87                                                       |   |
|                            |   |                  |   |                                                       |   |
| Exercised                       |   | —                |   | —                                                     |   |
| Forfeited                       |   | (416,798              | )      | 1.77                                                       |   |
| Expired                         |   | (216,325              | )      | 2.11                                                       |   |
| Granted                         |   | 563,025               |   | 0.82                                                       |   |
| Balance as of 31  December 2002 |   | 906,627               |   | 1.21                                                       |   |

 

 
| **Range of  Exercise  Prices US$** |   | **Number  Outstanding at  31 December 2002** |   | **Weighted  Average  Remaining Life** |   | **Weighted  Average Exercise  Price US$** |   |
|------------------------------------|--------|----------------------------------------------|--------|---------------------------------------|--------|-------------------------------------------|--------|
| 0.50 - 0.99                        |   | 629,247                                      |   | 3.10                                  |   | 0.87                                      |   |
| 1.00 - 1.49                        |   | —                                       |   | —                                |   | —                                    |   |
| 1.50 - 1.99                        |   | 225,880                                      |   | 1.56                                  |   | 1.82                                      |   |
| 2.00 - 2.49                        |   | 32,500                                       |   | 0.98                                  |   | 2.40                                      |   |
| 2.50 - 2.99                        |   | —                                       |   | —                                |   | —                                    |   |
| 3.00 - 3.99                        |   | 19,000                                       |   | 0.55                                  |   | 3.62                                      |   |
| 0.50 - 3.99                        |   | 906,627                                      |   | 2.59                                  |   | 1.21                                      |   |

 

All options granted under the plans are exercisable immediately.

 

22

----

 

As permitted under FAS 123, the Company has elected to follow APBOpinion No. 25 and related interpretations in accounting for stock-based awardsto employees. Under APB 25, the Company has recorded no compensation expensebecause at the grant date of the option the fair value of the underlying sharesis equal to or less than the exercise price. Pro forma information regardingnet income and net income per share is required by FAS 123 for awards grantedafter June 30, 1995, as if the Company had accounted for its stock-based awardsto employees under the fair value method of FAS 123. The Company’s net incomeand net income per share would have decreased to the following pro formaamounts if compensation cost for stock options granted under the Employee Planhad been recorded based on the fair value method at the grant dates.

 
|                                                                                       |   | **2000** |   | **2001** |   | **2002** |   |
|--------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Net Income** (in  thousands of euros):                                                   |   |     |   |     |   |     |   |
| As reported  after preferred stock dividend                                                |   | 4,081    |   | 2,215    |   | (520     | )      |
| Deduct: Total  stock based compensation expense under the fair value method for all awards |   | 280      |   | 146      |   | 144      |   |
| Pro Forma                                                                                  |   | 3,801    |   | 2,069    |   | (664     | )      |
|                                                                                       |   |     |   |     |   |     |   |
| **Net income per share**  (euros)                                                          |   |     |   |     |   |     |   |
| Basic and  diluted (1) as reported                                                         |   | 0.13     |   | 0.07     |   | (0.02    | )      |
| Basic and  diluted (1) Pro Forma                                                           |   | 0.12     |   | 0.07     |   | (0.02    | )      |

 

----

(1) Options to purchase 1,690,138,  976,725 and 906,627 shares of common stockwere outstanding as of December 31, 2000, 2001 and 2002 respectively.Theseshares were not included in the computation of diluted earnings per share asthe options’ exercise price was greater than the commom shares’ average marketprice.

 

The fair value of the Company’s stock option awards to employees wasestimated using the Black-Scholes option-pricing model assuming no dividendsand the following weighted-average assumptions:

 
|                                  |   | **2000** |   | **2001** |   | **2002** |   |
|---------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Expected life  (in years)             |   | 4.60     |   | 4.40     |   | 4.03     |   |
| Expected stock  price volatility rate |   | 80.0     | %      | 80.0     | %      | 76.5     | %      |
| Risk-free  interest rate              |   | 5.30     | %      | 4.50     | %      | 4.50     | %      |

 

For options granted in the twelve months ended 31 December 2002, withan exercise price equal to market price of the shares at grant date, theweighted average exercise price and fair value at grant date were estimated atUS$ 0.76 and US$ 0.49, respectively. For options granted in the twelve monthsended 31 December 2002 with an exercise price greater than the market price ofthe shares at grant date, the weighted average exercise price and fair value atgrant date were estimated at US$ 0.82 and US$ 0.47, respectively.

 

**10**

**IncomeTaxes**

 

Income (loss) from continuing operationsbefore income taxes is as follows

(in thousands of euros)

 
|                              |   | **At December 31,** |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | **2000**            |   | **2001** |   | **2002** |   |
| The Netherlands                   |   | 4,733               |   | 4,266 |   | (520 | ) |
| Rest of world                     |   | 2                   |   | (20 | ) | — |   |
| Income (loss) before income taxes |   | 4,735               |   | 4,246 |   | (520 | ) |

 

23

----

 

Effective tax rate of continuing operationsis as follows

(in thousands of euros)

 
|                                             |   | **At December 31,** |   |
|--------------------------------------------------|--------|---------------------|--------|
|                                             |   | **2000**            |   | **2001** |   | **2002** |   |
| Pretax income  (loss) from continuing operations |   | 4,735               |   | 4,246 |   | (520 | ) |
| Statutory tax  rate                              |   | 35                  | %      | 35 | % | 34.5 | % |
| Tax expense  (income) at statutory rate          |   | 1,657               |   | 1,486 |   | (179 | ) |
| Change in  valuation allowance                   |   | (1,657              | )      | (1,486 | ) | 179 |   |
| Tax expense from  continuing operations          |   | —              |   | — |   | — |   |
| Effective tax  rate                              |   | 0                   | %      | 0 | % | 0 | % |

 

**Deferred tax asset is as follows**

(in thousands of euros)

 
|                              |   | **At  December 31,** |   |
|-----------------------------------|--------|----------------------|--------|
|                              |   | **2000**             |   | **2001** |   | **2002** |   |
| Net operating  loss carry forward |   | 23,687               |   | 19,950 |   | 23,066 |   |
| Statutory tax  rate               |   | 35                   | %      | 35 | % | 34.5 | % |
| Gross deferred  tax asset         |   | 8,290                |   | 6,983 |   | 7,958 |   |
| Valuation  allowance              |   | (7,836               | )      | (6,529 | ) | (7,504 | ) |
| Net deferred tax  asset           |   | 454                  |   | 454 |   | 454 |   |

 

The provision for income taxes is calculated based on the statutory taxrate of the applicable fiscal entities for the years ended December 31, 2000,2001 and 2002. These calculations consider the relevant local regulations fornon-tax deductible items.

 

The operating loss carry forwards available at December 31, 2002 relateto entities in The Netherlands. The statutory tax rate for The Netherlands is34.5%. The effective tax rate for the Company is 0%.  In 2000 and 2001 the difference between the statutory tax rateand the effective tax rate is primarily caused by utilization of the tax losscarryforwards.  In 2002, the differencebetween the statutory rate and the effective tax rate was caused by theestablishment of additional tax loss carry forwards.

 

The utilization of the Company’s tax loss carryforwards is subject tovarious local conditions and regulations including, in many cases, therequirement that the entity utilizing the tax loss carry forwards be the entitythat incurred the tax losses. The net operating loss carryforwards have noexpiration date.

 

Management has evaluated evidence impacting the realizibility of itsdeferred tax assets, which primarily consists of net operating loss carryforwards. Management has considered the Company’s history and forecasts for thefuture and concluded that it is more likely than not that benefits of these taxloss carryforwards exceeding EUR 454,000 will not be realized in the near term.As a result the company recorded a valuation allowance for the deferred taxassets exceeding EUR 454,000. The deferred tax asset is accounted for underaccrued taxes and social security premiums (see footnote 3).

 

**11**

**Capitalstock withdrawal**

 

On August 21, 1997 the Company completed the sale in a privateplacement of 6,380,000 common shares and 24,000,000 Preferred sharesaggregating EUR 22.7 million. The net proceeds of the financing were used tofund costs associated with the September 1996 and June 1997 restructurings,reduce bank indebtedness and increase equity and working capital.

 

At December 31, 2001, there were 24,000,000 Preferred sharesoutstanding with no stated term. Each Preferred Share was entitled to acumulative annual dividend of approximately EUR 0.04 and was entitled to castone vote at meetings of the Company’s shareholders.The holders of the PreferredShares had no right to require redemption of such shares. Subsequent to theissuance of the Preferred Shares the Company was granted an irrevocable offerby the investor to withdraw the Preferred Shares at any time for an amountequal to EUR 10.9 million plus (i) accrued and unpaid

 

24

----

 

dividends to the date of withdrawal, and (ii) a withdrawal premium ofEUR 0.45 million. Upon redemption of the Preferred Shares, the Investor CallOption, as defined below, would have been terminated upon payment of EUR 0.45million. Upon the dissolution or liquidation of the Company, the holder ofPreferred Shares would have been entitled to payment, after satisfaction of theCompany’s debts and before payment of any other class of capital stock, of anamount equal to EUR 0.45 per share plus any accumulated and unpaid dividendsfor the then current year and any prior years. In addition, the Company issuedto the investor purchasing the Preferred Shares an option (the ‘Investor CallOption’) to purchase 360,000 shares of newly issued common stock, representing90% of the outstanding shares of common stock of the Company’s Triple PNederland B.V. subsidiary (‘TPN’). The option would have expired August 26,2002. TPN owns a substantial majority of the assets of the Company andgenerates a substantial portion of the Company’s net revenues and net income.The Investor Call Option provided that the investor had the right to purchasesuch 360,000 shares of TPN for an aggregate purchase price of EUR 1.8 million.The Investor Call Option could have been exercised in full at any time withoutrestrictions upon observance of the three months notice period. In addition, ifthe investor exercised the Investor Call Option, the investor had the right tosell all shares of TPN. In such event, the Company had the option (the ‘PutOption’) to require the investor to purchase the remaining 10% of the shares ofTPN held by the Company. The aggregate purchase price that the investor wasobligated to pay under the Put Option would be determined pursuant to a formulabased upon the proceeds of the sale of all TPN shares.

 

In 2001 Triple P N.V. effected a financial restructuring. The Companywithdrew all outstanding Preferred Shares on August 1, 2001 for an aggregateEUR 11.8 million, representing paid-in capital of EUR 10.9 million, an agreedupon withdrawal premium of EUR 0.45 million and EUR 0.45 million for thecancellation of the Investor Call Option. The Company financed this withdrawalwith available surplus cash and by borrowings from its revolving creditfacility. By withdrawing these Preferred Shares Triple P N.V. eliminated itsobligation to pay a yearly dividend of EUR 1.0 million on the Preferred Shares.As per December 31, 2001, the Company has the obligation to pay a preferreddividend of EUR 572,000 related to the year 2001. This preferred dividend wasincluded in shareholders’ equity as per December 31, 2001.

 

During 2002 the Company paid the final installment of preferreddividend related to 2001 of EUR 572,000 to the former holders of PreferredShares.

 

As of December 31, 2002 the Company has authorized 43,750,000 CommonShares and 19,750,000 Preferred Shares and as of that date 30,469,345 CommonShares and no Preferred Shares were outstanding.

 

**12**

**Segmentinformation**

 

The Company operates in the Information and Communication Technology(‘ICT’) industry offering computing and network products (‘Systems’), providingconsulting, project management and implementation services as well asoperational management and maintenance services (‘Services’) and offeringsoftware licenses (‘Software’) to customers located primarily in TheNetherlands.

 

The Company evaluates performance based on several factors. Primaryfinancial measures are net revenues and operating income. The accountingpolicies of the segments are the same as those described in the summary ofsignificant accounting policies in Note 2 of the Notes to the ConsolidatedFinancial Statements.

 

25

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Summarized financial information concerning the Company’s reportablesegments is as follows

(in millions of euros, except number of employees)

 
|                                |   | **Year ended December 31,** |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | **2000**                    |   | **2001** |   | **2002** |   |
| **Net revenues**                    |   |                        |   |   |   |   |   |
| Systems &  Networks             |   | 87.5                        |   | 79.1 |   | 66.4 |   |
| Services                            |   | 24.1                        |   | 26.0 |   | 24.9 |   |
| Software &  Systems Integration |   | 10.8                        |   | 5.8 |   | 5.1 |   |
| **Total Company**                   |   | 122.4                       |   | 110.9 |   | 96.4 |   |
|                                |   |                        |   |   |   |   |   |
| **Operating income**                |   |                        |   |   |   |   |   |
| Systems &  Networks             |   | 3.4                         |   | 1.4 |   | 0.3 |   |
| Services                            |   | 3.8                         |   | 3.3 |   | 3.0 |   |
| Software &  Systems Integration |   | (0.7                        | )      | 0.2 |   | (0.2 | ) |
| Corporate                           |   | (1.2                        | )      | (0.4 | ) | (3.0 | ) |
| **Total Company**                   |   | 5.3                         |   | 4.5 |   | 0.1 |   |
|                                |   |                        |   |   |   |   |   |
| **Number of Employees**             |   |                        |   |   |   |   |   |
| Systems &  Networks             |   | 134                         |   | 115 |   | 86 |   |
| Services                            |   | 251                         |   | 242 |   | 242 |   |
| Software &  Systems Integration |   | 85                          |   | 62 |   | 49 |   |
| Corporate                           |   | 31                          |   | 27 |   | 25 |   |
| **Total Company**                   |   | 501                         |   | 446 |   | 402 |   |
|                                |   |                        |   |   |   |   |   |
| **Total assets**                    |   |                        |   |   |   |   |   |
| Systems &  Networks             |   | 16.7                        |   | 12.9 |   | 8.9 |   |
| Services                            |   | 6.1                         |   | 8.7 |   | 7.4 |   |
| Software &  Systems Integration |   | 3.0                         |   | 2.2 |   | 3.2 |   |
| Corporate                           |   | 11.5                        |   | 2.1 |   | 3.5 |   |
| Discontinued  operations            |   | 2.7                         |   | 2.0 |   | — |   |
| **Total Company**                   |   | 40.0                        |   | 27.9 |   | 23.0 |   |

 

The Company only operates in the geographical area of the Benelux.

 

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**Schedule II**

 

Valuation and qualifiying accounts

(in thousands of euros)

 
|                                        |   | **Balance at  beginning of period** |   | **Charged to  cost  and expenses** |   | **Deductions  and  write-offs** |   | **Balance at  end  of period** |   |
|---------------------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|---------------------------------|--------|--------------------------------|--------|
| **Year ended December 31, 2000**            |   |                                |   |                               |   |                            |   |                           |   |
| Allowances for  doubtful receivables, trade |   | 1,108                               |   | 913                                |   | (284                            | )      | 1,737                          |   |
| **Year ended December 31, 2001**            |   |                                |   |                               |   |                            |   |                           |   |
| Allowances for  doubtful receivables, trade |   | 1,737                               |   | 316                                |   | (898                            | )      | 1,155                          |   |
| **Year ended December 31, 2002**            |   |                                |   |                               |   |                            |   |                           |   |
| Allowances for  doubtful receivables, trade |   | 1,155                               |   | 268                                |   | (221                            | )      | 1,202                          |   |

 

27

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