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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 20-F



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ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended November 30, 2003



Commission file number 0-13742



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OCÉ N.V.

(Exact name of registrant as specified in its charter)



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The Netherlands

(Jurisdiction of incorporation or organization)



Urbanusweg 43, 5914 CA VENLO, The Netherlands

(Address of Principal Executive Offices)



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Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12(g) of the Act:



Ordinary Shares,

nominal or par value 0.50 Euro per share



Securities registered pursuant to Section 15(d) of the Act: None



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Indicate the number of outstanding shares of each of the issuers class of capital or common stock as of the close of the period covered by the annual report.



87,263,488 Ordinary Shares

(nominal value Euro 0.50 per share)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to
such filing requirements for at least the past 90 days.    Yes  x    No ̈.



Indicate by check mark
which financial statement item the registrant has elected to follow: Item 17  x    Item 18 ̈



Indicate by check
mark when the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.    Yes ̈No ̈.



Name and address of person authorized to receive notices and communications from the Securities and Exchange Commission:



|                                                                      |  |                                                                                           
|--------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------
|Daniel I. Booker Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 |  | H.J. Huiberts Secretary of the
Company Océ N.V. P.O. Box
101 5900 MA VENLO The
Netherlands



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TABLE OF CONTENTS



|     |  |                                                                              |  |     
|---- |  | ---------------------------------------------------------------------------- |  | ----
|Item |  | Description                                                                  |  | Page
|     |  |                                                                             
|     |  | Part I                                                                       |  |     
|1    |  | Identity of Directors, Senior Management and Advisers                        |  | 1   
|2    |  | Offer Statistics and Expected Timetable                                      |  | 1   
|3    |  | Key Information                                                              |  | 1   
|4    |  | Information on the Company                                                   |  | 12  
|5    |  | Operating and Financial Review and Prospects                                 |  | 34  
|6    |  | Directors, Senior Management and Employees                                   |  | 49  
|7    |  | Major Shareholders and Related Party Transactions                            |  | 60  
|8    |  | Financial Information                                                        |  | 62  
|9    |  | The Offer and Listing                                                        |  | 63  
|10   |  | Additional Information                                                       |  | 65  
|11   |  | Quantitative and Qualitative Disclosures about Market Risk                   |  | 73  
|12   |  | Description of Securities Other than Equity Securities                       |  | 74  
|     |  |                                                                             
|     |  | Part II                                                                      |  |     
|13   |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 75  
|14   |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 75  
|15   |  | Controls and Procedures                                                      |  | 75  
|16A  |  | Audit Committee Financial Expert                                             |  | 75  
|16B  |  | Code of Ethics                                                               |  | 76  
|16C  |  | Principal Accountant Fees and Services                                       |  | 76  
|16D  |  | Exemptions from the Listing Standards for Audit Committees                   |  | 77  
|     |  |                                                                             
|     |  | Part III                                                                     |  |     
|17   |  | Financial Statements                                                         |  | 78  
|18   |  | Financial Statements                                                         |  | 78  
|19   |  | Exhibits                                                                     |  |     
|     |  |                                                                             
|     |  | Table of Contents to Consolidated Financial Statements                       |  | F-1 
|     |  |                                                                             
|     |  | Signatures                                                                   |  |     
|     |  | Exhibit Index                                                                |  |     
|     |  | Certifications                                                               |  |     



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PART I



Item 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not applicable.



Item 2 OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.



Item 3 KEY INFORMATION



Except where
otherwise indicated, as used herein, the following terms will have the following meanings:



| |  | the Company, Océ, we, us, our, the Group and similar terms refer to Océ N.V. and its
consolidated subsidiaries;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| |  | references to a particular year (e.g. 2003) are to the fiscal year ending November 30 (e.g. November 30, 2003);
| | - | ---------------------------------------------------------------------------------------------------------------



| |  | references to Ordinary Shares are to the Companys ordinary shares, nominal value 0.50 Euro per share; and
| | - | ------------------------------------------------------------------------------------------------------------



| |  | references to ADSs are to the Companys American Depositary Shares, which are Ordinary Shares that have been deposited with Morgan Guaranty Trust, as Depositary,
and which are evidenced by American Depositary Receipts or ADRs.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A. Selected financial data



Exchange
rate information



On January 1, 1999 the Euro became the single currency
of eleven of the fifteen member states of the European Union, replacing the Dutch Guilder as the currency in The Netherlands for wire transfers, and on January 4, 1999 the Stock Market of Euronext Amsterdam N.V. (Euronext Amsterdam)
began listing and trading stocks, including the Ordinary Shares, in Euros. Effective May 9, 1999, the nominal values of the Companys capital stock were redenominated from Dutch Guilder to the Euro. From 1999 through 2001, parties were able to
use both local currencies and the Euro for business transactions. On January 1, 2002 the Euro became the single currency of certain member states of the European Monetary Union, including The Netherlands (the Eurozone), for all cash
transactions.



Amounts set forth in this report are expressed either in Euros
(Euro or ) or in United States dollars (dollars or $). Amounts for periods prior to January 1, 1999 have been restated from the Dutch Guilder into Euros, based on the official fixed rate of
2.20371 Guilders to 1 Euro. Unless otherwise indicated, the amounts stated in dollars included in this report for 2003 were converted into dollars from Euros at an exchange rate of $1.1995 to 1 Euro, which was the Noon Buying Rate on November 30,
2003. The Noon Buying Rate for a given date is the noon buying rate for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on the applicable date.



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The following table sets forth the high, low and average exchange rates for one Euro expressed in dollars based on the
Noon Buying Rate on the dates and for the periods indicated. The average rates for each period are calculated by using the average of the exchange rates on the last day of each month during the period.



|                         |  |      |  |      |  |         |  |           
|------------------------ |  | ---- |  | ---- |  | ------- |  | ----------
|Years ended November 30, |  | Low  |  | High |  | Average |  | Period-End
|                         |  |      |  |     
|1999                     |  | 1.01 |  | 1.19 |  | 1.08    |  | 1.01      
|2000                     |  | 0.83 |  | 1.03 |  | 0.93    |  | 0.87      
|2001                     |  | 0.84 |  | 0.95 |  | 0.90    |  | 0.90      
|2002                     |  | 0.86 |  | 1.02 |  | 0.94    |  | 0.99      
|2003                     |  | 0.99 |  | 1.20 |  | 1.12    |  | 1.20      



|              |  |           |  |      |  |         |  |            |  |     
|------------- |  | --------- |  | ---- |  | ------- |  | ---------- |  | ----
|Months ended: |  | Low       |  | High |  | Average |  | Period-End
|              |  |           |  |      | 
|2003          |  | September |  | 1.08 |  | 1.17    |  | 1.13       |  | 1.17
|              |  | October   |  | 1.15 |  | 1.19    |  | 1.17       |  | 1.16
|              |  | November  |  | 1.14 |  | 1.20    |  | 1.17       |  | 1.20
|              |  | December  |  | 1.19 |  | 1.26    |  | 1.23       |  | 1.26
|2004          |  | January   |  | 1.23 |  | 1.29    |  | 1.26       |  | 1.25
|              |  | February  |  | 1.24 |  | 1.29    |  | 1.26       |  | 1.25



Primary Currencies



As an international company, several foreign currencies are important to the business of
the Company. The following is a list for each applicable currency of the average exchange rates (expressed in Euros for each currency) during the applicable year and the exchange rates (expressed in Euros for each currency) as of November 30, 1999
through November 30, 2003. The average rates are calculated on the average of the daily rates per month weighted with the monthly revenues.



|                      |      |                                     |      |                         |      |        |      |        |      |        |      |        |      |       |      |        |      |        |      |       
|--------------------- | ---- | ----------------------------------- | ---- | ----------------------- | ---- | ------ | ---- | ------ | ---- | ------ | ---- | ------ | ---- | ----- | ---- | ------ | ---- | ------ | ---- | ------
|Applicable Currency   |      | Average Rate During the Fiscal Year |      | Rate as of November 30,
|                      | 1999 |                                     | 2000 |                         | 2001 |        | 2002 |        | 2003 |        | 1999 |        | 2000 |       | 2001 |        | 2002 |        | 2003
|Pound sterling        |      | 0.66                                |      | 0.61                    |      | 0.62   |      | 0.63   |      | 0.68   |      | 0.63   |      | 0.61  |      | 0.62   |      | 0.64   |      | 0.70  
|United States dollar  |      | 1.08                                |      | 0.93                    |      | 0.89   |      | 0.93   |      | 1.11   |      | 1.00   |      | 0.86  |      | 0.89   |      | 0.99   |      | 1.20  
|Australian dollar     |      | 1.67                                |      | 1.58                    |      | 1.72   |      | 1.72   |      | 1.75   |      | 1.59   |      | 1.65  |      | 1.71   |      | 1.77   |      | 1.65  
|Japanese Yen (10,000) |      | 123.53                              |      | 99.18                   |      | 107.53 |      | 117.12 |      | 130.14 |      | 102.40 |      | 95.92 |      | 109.82 |      | 121.76 |      | 131.25
|Swiss franc           |      | 1.60                                |      | 1.56                    |      | 1.50   |      | 1.47   |      | 1.51   |      | 1.60   |      | 1.51  |      | 1.47   |      | 1.48   |      | 1.55  



See Item 11, Quantitative and
Qualitative Disclosures about Market Risk, for a further discussion of the impact of foreign currency fluctuations and hedging on foreign exchange rates.



Select Financial Information



The following table sets forth certain selected consolidated financial information of Océ N.V. and its consolidated subsidiaries and has been derived from
Océs audited Consolidated Financial Statements. This financial information should be read in conjunction with Item 5, Operating and Financial Review and Prospects, and the Companys Consolidated Financial Statements and
the Notes thereto included in this report. The Companys Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in The



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Netherlands (Dutch GAAP), and have been reconciled to generally accepted accounting principles in the United
States of America (U.S. GAAP). U.S. GAAP varies in certain significant respects from Dutch GAAP. For a discussion of the principal differences between Dutch GAAP and U.S. GAAP, see Item 5, Operating and Financial Review and
Prospects, and Note 26 to the Companys Consolidated Financial Statements. Except where expressly noted, all financial information included in this report was prepared in accordance with Dutch GAAP.



|                                                                                                        |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|------------------------------------------------------------------------------------------------------- | ---- | --------------------------- | --- | ---- | ------ | ---- | ------ | --- | ---- | ------ | ---- | ------ | ---- | ------
|(In millions except per share amounts)                                                                  |      | Years ended November 30(b),
|                                                                                                        | 1999 |                             |     | 2000 |        | 2001 |        |     | 2002 |        | 2003 |        | 2003
|                                                                                                        |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|CONSOLIDATED STATEMENT OF OPERATIONS DATA:                                                              |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|Amounts in accordance with Dutch GAAP                                                                   |      | Euro                        |     |      | Euro   |      | Euro   |     |      | Euro   |      | Euro   |      | $     
|                                                                                                        |      |                             |     |      |        |     
|Revenues                                                                                                |      | 2,838                       |     |      | 3,224  |      | 3,234  |     |      | 3,176  |      | 2,769  |      | 3,322 
|Operating income                                                                                        |      | 248                         |     |      | 282    |      | 225    |     |      | 226    |      | 125    |      | 150   
|Income before income taxes, equity in income of investments in minority interests and minority interest |      | 189                         |     |      | 222    |      | 156    |     |      | 172    |      | 94     |      | 113   
|Exceptional item (net of tax)                                                                           |      | -55                         |     |      |       |      | -95    |     |      |       |      |       |      |      
|Net income                                                                                              |      | 77                          |     |      | 152    |      | 10     |     |      | 113    |      | 61     |      | 74    
|                                                                                                        |      |                             |     |      |        |     
|Basic earnings per ordinary share(a)                                                                    |      | 1.54                        | (e) |      | 1.76   |      | 1.19   | (e) |      | 1.30   |      | 0.69   |      | 0.83  
|Diluted earnings per ordinary share(a)                                                                  |      | 1.53                        | (e) |      | 1.74   |      | 1.18   | (e) |      | 1.29   |      | 0.69   |      | 0.83  
|Dividends per ordinary share(a)(d)                                                                      |      | 0.50                        |     |      | 0.58   |      | 0.58   |     |      | 0.58   |      | 0.58   |      | 0.70  
|                                                                                                        |      |                             |     |      |        |     
|Amounts in accordance with U.S. GAAP(c)                                                                 |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|Net income                                                                                              |      | 61                          |     |      | 98     |      | 52     |     |      | 65     |      | 51     |      | 61    
|Earnings per ordinary share                                                                             |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|Basic(a)                                                                                                |      | 0.70                        |     |      | 1.11   |      | 0.56   |     |      | 0.73   |      | 0.57   |      | 0.68  
|Diluted                                                                                                 |      | 0.69                        |     |      | 1.10   |      | 0.56   |     |      | 0.73   |      | 0.56   |      | 0.68  
|                                                                                                        |      |                             |     |      |        |     
|CONSOLIDATED BALANCE SHEET DATA:                                                                        |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|                                                                                                        |      |                             |     |      |        |     
|Amounts in accordance with Dutch GAAP                                                                   |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|Total assets                                                                                            |      | 2,968                       |     |      | 3,216  |      | 3,128  |     |      | 2,862  |      | 2,421  |      | 2,904 
|Long term debt                                                                                          |      | 884                         |     |      | 854    |      | 754    |     |      | 757    |      | 381    |      | 457   
|Capital stock                                                                                           |      | 554                         |     |      | 559    |      | 565    |     |      | 565    |      | 565    |      | 678   
|Shareholders equity                                                                                    |      | 818                         |     |      | 989    |      | 909    |     |      | 771    |      | 713    |      | 855   
|Number of shares outstanding (x1000)(a)                                                                 |      | 83,191                      |     |      | 84,400 |      | 85,241 |     |      | 84,086 |      | 83,409 |      | 83,409
|                                                                                                        |      |                             |     |      |        |     
|Amounts in accordance with U.S. GAAP(c)                                                                 |      |                             |     |      |        |      |        |     |      |        |      |        |      |       
|Total assets                                                                                            |      | 3,198                       |     |      | 3,431  |      | 3,334  |     |      | 3,053  |      | 2,622  |      | 3,145 
|Long term debt                                                                                          |      | 884                         |     |      | 854    |      | 754    |     |      | 757    |      | 381    |      | 457   
|Capital stock                                                                                           |      | 554                         |     |      | 559    |      | 565    |     |      | 565    |      | 565    |      | 678   
|Shareholders equity                                                                                    |      | 1,155                       |     |      | 1,305  |      | 1,282  |     |      | 1,110  |      | 1,079  |      | 1,295 
|Number of shares outstanding (x1000)(a)                                                                 |      | 83,191                      |     |      | 84,400 |      | 85,241 |     |      | 84,086 |      | 83,409 |      | 83,409



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|(a) | Based on the weighted average number of Ordinary Shares outstanding during each period including ADSs (with one ADS representing one Ordinary Share) and reduced by the number of
shares purchased by the Company in connection with its stock option plans.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The comparability of the Selected Financial Information is affected by the acquisitions of Océ Japan Corporation effective May 1999, CGK Computer Gesellschaft Konstanz
G.m.b.H. (now known as Océ Document Technologies G.m.b.H.) effective April 1, 2000, Practical Print Solutions, Ltd. effective November 2001, Gretag Professional Imaging (now known as Océ Display Graphics Systems, Inc.) effective as of
December 2001 and the sale of the Companys South African operations effective as of June 1, 2003. See Item 5 Operating and Financial Review and Prospects.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | See Note 26 of Notes to Consolidated Financial Statements.
|--- | ----------------------------------------------------------

|(d) | Based on amount of cash dividend.
|--- | ---------------------------------

|(e) | The amount stated is before exceptional items. After the exceptional items, the basic earnings per Ordinary Share were Euro 0.88 and $ 0.77 in 1999 and Euro 0.08 and $ 0.07 in 2001.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends



The following table sets forth the interim, final and total cash dividends paid in Euros to
the holders of the Companys Ordinary Shares and translated into dollars based on the Noon Buying Rate on each of the respective dates on which the Company paid its interim and final cash dividends. The actual exchange rate applied by Morgan
Guaranty Trust Company of New York, as the Depositary for the Companys ADSs, with respect to the dividends actually paid to the holders of the ADSs may vary from the Noon Buying Rate.



|                         |         |                         |       |                           |   |       |      |         |      |       |      |       |     
|------------------------ | ------- | ----------------------- | ----- | ------------------------- | - | ----- | ---- | ------- | ---- | ----- | ---- | ----- | ----
|Years ended November
30, |         | Euro per Ordinary Share |       | Dollar per Ordinary Share
|                         | Interim |                         | Final |                           |   | Total |      | Interim |      | Final |      | Total
|1999                     |         | 0.15                    |       | 0.35                      |   |       | 0.50 |         | 0.15 |       | 0.35 |       | 0.50
|2000                     |         | 0.15                    |       | 0.43                      |   |       | 0.58 |         | 0.13 |       | 0.37 |       | 0.50
|2001                     |         | 0.15                    |       | 0.43                      |   |       | 0.58 |         | 0.14 |       | 0.37 |       | 0.51
|2002                     |         | 0.15                    |       | 0.43                      |   |       | 0.58 |         | 0.15 |       | 0.43 |       | 0.58
|2003                     |         | 0.15                    |       | 0.43                      | * |       | 0.58 |         | 0.18 |       | 0.52 |       | 0.70

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|* | As approved by the shareholders of the Company at the Annual General Meeting of Shareholders on March 2, 2004.
|- | --------------------------------------------------------------------------------------------------------------



B. Capitalization and indebtedness



Not applicable.



C. Reasons for the offer and use of proceeds



Not applicable.



D. Risk factors



Forward Looking Statements under the Private Securities Litigation Reform Act of 1995



This annual report contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (referred to hereafter
as the Exchange Act). These forward-looking statements, which may be expressed in a variety of ways, including the use of future or present tense language, refer to future events. Océ has based these forward-looking statements on its current
expectations and projections about future events.



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Océs expectations and projections may change, and Océs actual results, performance or
achievements could be significantly different from the results expressed in or implied by these forward-looking statements based on various important factors, risks and uncertainties (some of which are beyond Océs control),which are
neither manageable nor foreseeable by Océ. When considering these forward-looking statements, readers should keep in mind these risks, uncertainties and other cautionary statements made in this annual report or Océs other annual
or periodic reports filed with the United States Securities and Exchange Commission (the SEC). In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this annual report might not occur.



Océs forward-looking statements speak only as of the date on
which the statements are made, and Océ undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.



Océs business is affected by adverse economic conditions
and resulting declines in customers investments in machines



Océs profitability in 2002 and 2003 was adversely affected by the global economic slowdown, particularly in North America and Western Europe, and Océs profitability in 2004 or thereafter may also be further
affected by a prolonged economic slowdown.



Océs revenues
generally are obtained from three sources: revenues from product sales, revenue from rentals and service and interest from financial leases. Océ further groups its revenues based on whether the revenue is non-recurring revenue (such as
revenue from sales of machines, software and professional services) or recurring revenue (such as sales under long-term maintenance or facility service contracts, rentals, interest from financial leases).



During a short-term economic slowdown, non-recurring revenues are adversely affected because
customers are reluctant to buy new machines, but this adverse impact is generally offset by recurring revenue from long term maintenance and service contracts. During a prolonged economic slowdown, however, the reluctance of Océ customers to
invest has an adverse impact on both recurring and non-recurring revenue because both types of revenue are based on the installed machine population. As long term maintenance contracts expire during a prolonged economic slowdown the Company enters
into fewer new long term agreements to replace expiring contracts because less customers are investing in machines during the slowdown.



The decline in the sales of machines over the past three years resulted in a decrease in Océs non-recurring and recurring revenue in 2003. Because global
economic developments are uncertain in 2004, the continued economic slowdown could continue to adversely affect Océs revenues and financial condition.



Diversity in revenues is important to the Companys stability



Océs strong technology base, the geographic markets in which Océ
operates and the Companys long-term relationship with diverse categories of customers help Océ spread the risk related to a downturn in the economic cycle. In addition, outsourcing of production activities and flexible deployment of
personnel in the Companys manufacturing facilities help to offset some of the negative effects of a downturn in the economic cycle. On a geographical basis Océs revenues are spread between Europe (55%), the United States (38%) and
the rest of the world (7%). In 2003, the results in the United States were not as favorable as the results in prior years due primarily to the weaker U.S. dollar and increased competition in the United States. This decline, however, was partly
offset by more favorable returns in Europe, where the 2003 results exceeded the 2002 results. A balanced spread of revenues and income among the various countries is essential for Océ to ensure that it is not dependent on the results in a
limited number of countries.



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The Company must anticipate trends and respond to changing customer preferences



The markets for Océs machines and services are rapidly changing and becoming
increasingly more complex. Océs success depends in part on its ability to develop and introduce new products and services in a timely manner that satisfy increasingly sophisticated customer requirements, that keep pace with
technological developments and that are accepted in the market. The Company believes that because it sells most of its machines through its direct sales force and because the Companys organization provides ongoing servicing for its machines,
the Company is able to gather continuing feedback from its customers and to understand the changing demands of the market. The Company is then able to use this information to adapt its products and services to address its customers
requirements and to develop new products for its customers. There can be no assurance that the Company will be successful in anticipating and developing new products, product enhancements or new solutions and services to adequately address changing
technologies and customer requirements or that the Companys products, enhancements, solutions or services will be successful in the marketplace or will generate increased revenue. In addition, there is no assurance that the Company will be
able to anticipate and develop technological improvements, to adapt its products to emerging industry standards and changing customer preferences or requirements or to produce high quality products, enhancements and releases in a timely and
cost-effective manner in order to compete with applications offered by its competitors.



The Company is highly dependent on developing new technology



Océs competitive strength hinges on its ability to respond quickly to ever changing demands in the market by introducing distinctive products, and providing systems and services to a diverse category of
customers. Research and the development of new technology plays a key role in enabling the Company to continue to respond to the market and introduce new products and update existing products. The Company offers technological concepts, which it has
developed primarily internally, through the acquisition of businesses or by entering into joint ventures or development agreements with third parties, which give the Company a clear and distinctive profile. The most important elements of
Océs profile are reliability, productivity, ease of use, environmental friendliness and a low total cost of ownership.



In order to continue to develop new technology, Océs invests approximately 6 to 7% of its revenues annually in research and development. The process of
developing new technologies, products and solutions is inherently complex and uncertain and involves significant time, resources, costs and risks. Generally, the development of new technologies and products takes between four and eight years.
Accurate anticipation of customers changing needs and emerging technological trends is critical. Océ must make long-term investments and commit significant resources before knowing whether these investments will eventually result in
products that achieve customer acceptance and generate the revenues required to provide anticipated returns from these investments. Océ may experience difficulties in realizing the expected benefits from its investments in new technologies
and companies. In addition, Océ products reliance on new technology may result in performance or quality problems as technology is implemented. There is no assurance that the technology will be successful or timely or that it will
respond to current market demands.



Océs business model is founded
on a strong and diverse in-house technology portfolio combined with close interaction between the research and development component of the business and the sales and service component of the business. The close and continuing interaction between
research and development, on one hand, and direct sales and services, on the other hand, is crucial to the Companys strategy to provide high quality products and services in response to the demands of the market.



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In addition, because of the rapid developments in technology and in the markets in which Océ operates, there is a
risk that changes in technology could render the Companys technology, products, enhancements and solutions outdated or obsolete, and could result in the Companys inventory becoming in part obsolete or unsaleable. Although Océ
attempts to reduce this risk by applying a clear depreciation method for its machines there is no assurance that as technology changes, Océ will not hold a larger than expected number of obsolete machines or machines that can not be placed
with customers. Océ constantly evaluates its research and development to maintain a tight focus on developing technologies that will be successful in the future and in entering into alliances with third parties. For example, one of the key
factors of success in producing manageable document flow is an effective interaction between hardware and software. To ensure that Océs hardware and software products are compatible and provide the necessary components of a total
document flow purchase, Océs research and development team includes a senior vice president who has specific responsibility to develop compatible software programs.



Finally, Océ constantly reviews its product portfolio to evaluate relevant markets, to take full advantage of product launches, to
improve functionality and the cost of its machines and to offer advanced application software in order to provide total solutions for document management needs of its customers.



Failure to adequately protect the Companys intellectual property could harm its business



Océs products (hardware and software) are based on technology that Océ
owns. In order to protect its proprietary technology, Océ has filed over 5,700 patents and patent applications pending throughout the world. In addition, the Company requires third parties to enter into protective arrangements prior to
disclosing any proprietary technology to third parties with respect to technology that is not covered by patents. There is no assurance that such measures will be adequate to protect the confidentiality of Océs intellectual property.



The Company faces significant competition



Océ operates in an environment of significant competition,
driven by rapid technological advances and changing customer demands. In terms of size, Océ is a relatively small player compared to its direct competitors, and the difference in size between Océ and several of its main competitors has
a direct influence on the Companys competitive position. Bigger companies have greater resources available for research and development, are better able to invest in new activities and products and are more resilient to downturns in economic
conditions or setbacks in product development compared to a smaller company like Océ. To minimize this risk, Océ concentrates on areas and activities in which it has the greatest chance of success given its know-how and capabilities.
Accordingly, Océ concentrates mainly on professional markets which demand high-quality products and services by offering technological concepts, products and services that Océ develops internally.



Favorable pricing is challenging in a competitive market



Océs ability to succeed is dependent, in part, upon its
ability to obtain adequate pricing for its products and services. Depending on competitive market factors, the prices that Océ may be able to obtain in the future for its products and services may vary from historical levels.



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The Company relies on third parties to produce the majority of its parts and components



Working with third parties is an essential part of Océs
production strategy. Océ manufactures key, strategic components of its products (such as process drums, organic photoconductors, silicone materials and toners) internally. With respect to non-strategic components and modules, Océ
generally engages third parties to supply parts and components in accordance with specifications that have been precisely defined by Océ. These third parties are involved in Océ product development from an early stage to ensure that
the non-strategic components and modules meet Océs high standards of quality. Approximately 95% of the non-strategic components used in Océ products are manufactured in this manner.



Océ currently assembles its final products internally at its facilities in the
Netherlands; Poing, Germany; San José, California United States and Vancouver, Canada. However, in 2003, Océ announced that it intends to relocate parts of its manufacturing and assembly activities (related to non-strategic
manufacturing) in the Netherlands to Central Europe and the Far East in order to reduce its manufacturing expenses. Relocation of these manufacturing and assembly operations to Central Europe and the Far East will require that the supply chain is
functioning effectively and efficiently. In order to ensure that this transition is made smoothly and seamlessly to Océ and its customers, Océ intends to increase its cooperation with external logistic specialists. Although the Company
intends for this transition to be seamless to its customers, there can be no assurance that the Company will be successful in making this transition in the intended timeframe, proposed cost structure and with no impact on its production of machines.



Océ depends on third parties to manufacture
non-strategic parts and components of its machines



As stated above,
95% of the non-strategic parts and components are made by third parties. A particular component may be available only from a limited number of suppliers. Suppliers may from time to time extend lead times, limit supplies, increase prices or fail to
produce components in accordance with the Companys specifications due to capacity constraints or other factors, which could adversely affect the Companys ability to deliver its products on a timely basis. Moreover, if one of the third
parties to which the Companys outsources manufacturing of components or sub-assemblies fails to perform, or experiences delays or disruption to its manufacturing, or experiences financial difficulties, this could adversely affect the
Companys sales and operating profit. Finally, although Océ does not foresee any delays or interruptions arising out of the transfer of manufacturing and assembling operations, temporary or significant delays in the supply of components
or the assembly of machines could adversely impact Océs business.



The Company is highly dependent on information technology systems



The Companys operations rely on complex information technology systems and networks, which are potentially vulnerable to damage or interruption from a variety of
sources. Although the Company takes precautions against interruptions of the Companys information technology systems or networks or leakages of its proprietary information, a prolonged interruption or leakage of proprietary data could
have a material adverse effect on its operations, sales and operating profit.



The Companys products and solutions could be subject to technology-based claims from third parties



Because the Companys products and solutions include complex technology, the Company faces a risk of claims that it has infringed third parties intellectual
property rights. As the number of entrants in the market grows and the complexity of the technology and the overlap of product functionalitys increase, the possibility of an inadvertent infringement and related intellectual property claim
against the Company increases. There may be patents and



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patent owners relevant to the Companys product lines that are unknown to the Company. In addition, although the
Company endeavors to ensure that third parties with which it works possess appropriate intellectual property rights, the Company recognizes that it cannot fully avoid risks of intellectual property rights infringement created by third parties with
which it works. Similarly, the Company and its customers may face claims of infringement in connection with its customers use of the Companys products and solutions.



Any claims, regardless of merit, may result in costly and time-consuming litigation, the payment of damages or other compensation, the
invalidation of intellectual property rights on which the Company depends, diverting the attention of the Companys personnel, product shipment delays or require the Company to develop non-infringing technology or to enter into royalty or
licensing agreements. If the Company would be unable to develop non-infringing technology, or if royalty or licensing agreements were not available on commercially acceptable terms, the Company could be precluded from making or selling the affected
products.



The Company is in the process of outsourcing
its leasing business, which could have negative financial consequences



In 2001, the Company announced its plans to outsource its lease activities to third parties, which began in 2002 and continued during 2003. Outsourcing of Océs lease activities is dependent on two key elements: the sale of
equipment to third party lenders, followed by the third party lenders entering into a direct finance lease arrangement with the End-User and transferring Océs existing lease portfolio to third party lenders on a non-recourse basis.



As further discussed on pages 13-14, in the United States, Océ is
outsourcing its lease activities through a captive lease company named Océ Financial Services, Inc. In Europe and the rest of the world, Océ is outsourcing its lease activities through vendor-lease partners in a private label
arrangement. Although leasing activities will be provided through third parties, Océ will continue to provide service and maintenance to its customers with leased machines and products in order to make the outsourcing as seamless as possible
and to continue to provide high quality services to Océs customers. The process of outsourcing its leasing activities in Europe progressed more slowly in 2003 than Océ originally anticipated. The delay was due primarily to the
need to implement unexpected changes in Océs and its vendor-lease partners information systems in order to enable them to track each Océ customers individual printing system after the lease portfolio is transferred to
Océs vendor-lease partners. Océ expects that changes in the new systems will be completed during 2004 and that a significant part of its European lease portfolio will be outsourced to its vendor-lease partners by the end of 2004.
Océ expects that the outsourcing of its lease activities could have financial consequences, as further discussed on page 14.



Presently the outsourcing of the lease portfolio results in off-balance sheet treatment with respect to the assets and related liabilities of the financial leases
outsourced in the United States and in Europe. Future developments with respect to Dutch GAAP, IFRS or US GAAP may adversely affect the off-balance sheet accounting treatment.



The Companys financial results may be impacted by fluctuations in exchange rates



Océ derives its revenue from a number of different geographic areas. In 2003,
Océ achieved 41% of its revenues from the Eurozone, 38% from the United States and 7% from the United Kingdom. Revenues in other countries amounted to 14% in 2003. Because the Company operates globally, it is exposed to foreign exchange risks
and risks associated with the movement of funds among countries. The Companys revenues and expenses are affected by fluctuations in the rate of exchange particularly between the Euro, which is its reporting currency, and the U.S. Dollar, the
Pound Sterling and the Japanese Yen as well as certain other currencies. The Companys policy is to monitor and hedge exchange rate exposure and to manage its operations to mitigate the positive or negative impact



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of exchange rate fluctuations. Exchange rate fluctuations have historically affected (both positively and negatively) the
Companys revenues, expenses and operating profit, and the Company expects that exchange rate fluctuations will continue to have a material affect on the Companys financial results in the future.



In addition to the effect of exchange rate fluctuations on the Companys results, an
investors return in U.S. Dollars from an investment in the Companys ADSs or Ordinary Shares may be affected by any difference between the value of the Euro compared to the value of the U.S. dollar.



Changes in the Companys markets could have an adverse effect on
the value of the Companys long-lived assets



The Companys
long-lived assets were Euro 664 million at November 30, 2002 and Euro 543 million at November 30, 2003. Océ regularly reviews the value of these assets and recognizes an impairment when the carrying value of an asset is not supported by the
Companys current expectations of future cash flows attributable to these assets. Significant declines in stock prices, market capitalization and credit ratings of market participants, as well as the Companys ongoing review and refinement
of its business plans, may result in substantial impairment write-downs of its other long-lived assets at any time. Recognition of impairments of long-lived assets could have an adverse affect on the Companys results and financial condition.
See Item 5, Operating and Financial Review and Prospects, for a further discussion of the impairment charges related to 2003.



The Company has risks related to its pension and post-retirement benefit plans.



The Company currently maintains pension plans in many countries, many of which are defined
benefit plans. The Companys obligations to make contributions to fund defined benefit plan obligations are based on the current value of the assets of a plan as of November 30 of each year utilizing the value of pension assets and liabilities
on that date. Because many plan assets are invested in financial market instruments, if the financial markets do not provide the long-term returns that are expected under the funding calculation, the likelihood of Company contributions to its plans
increases. The equity markets can be volatile, and therefore the Companys estimate of future contribution requirements may change dramatically in a relatively short period of time. Similarly, changes in interest rates can impact the
Companys contribution requirements. Because of the volatility of the financial markets and fluctuations in interest rates, however, the Company might be required to contribute significant additional funds in the future. If the Company is
required to make significant contributions to fund the pension plans, the Companys cash flow available for other uses will be reduced.



The transition from accounting under Dutch GAAP to accounting under International Financial Reporting Standards may have a material effect on the
Company



As from financial years commencing on or after January 1,
2005 all European publicly listed companies (including Océ) will be required to prepare and report their consolidated financial results on the basis of International Financial Reporting Standards (IFRS). As a result, Océ
will be required to prepare and report its consolidated financial results in accordance with IFRS for its 2006 financial year.



To prepare for the transition from reporting in Dutch GAAP to IFRS, in 2003 Océ began to assess the differences between Dutch GAAP and IFRS and to study the
consequences for automated processes and procedures. As a result, Océ is in the process of preparing guidelines to implement the conversion from Dutch GAAP to IFRS in each country where it has business operations. Océ intends to adopt
new IFRS guidelines that do not conflict with Dutch GAAP where possible prior to 2005. For example, at the beginning of 2003 Océ adopted the standard for accounting for pensions under IFRS (IAS 19).



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Based on its initial assessment of the differences between Dutch GAAP and IFRS, Océ believes that the primary
differences will relate to accounting for pension liabilities, option plans, financial instruments and impairment. Under IRFS, a greater number of assets and liabilities that were previously qualified as off-balance sheet (financial
instruments, for example) will be included in the balance sheet. Certain liabilities may also have to be classified in a different way than previously. Currently, it is not possible to give an indication of the effects that the forthcoming changes
will have. The effects, however, may be material.



The
Company is subject to additional risks that may affect the printing industry in general



In addition to the risks listed above, other risk factors which could cause actual results and developments to differ materially from those expressed or implied include, but are not limited to:



| |  | terrorist attacks or war;
| | - | -------------------------



| |  | the availability and cost of raw materials;
| | - | -------------------------------------------



| |  | import, export and tariff regulations;
| | - | --------------------------------------



| |  | the ability to attract and retain skilled employees at reasonable costs;
| | - | ------------------------------------------------------------------------



| |  | claims or lawsuits relating to competition, use of hazardous materials or other legal matters;
| | - | ----------------------------------------------------------------------------------------------



| |  | changes to tax rates; and
| | - | -------------------------



| |  | the ability to enter into, and resulting success of, future business combinations, acquisitions and dispositions.
| | - | -----------------------------------------------------------------------------------------------------------------



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Item 4 INFORMATION ON THE COMPANY



A.
History and development of the Company



Océ N.V. was organized as a
stock corporation under the laws of The Netherlands in 1953, incorporating a business originally founded in 1877. The Companys executive offices are located at St. Urbanusweg 43, 5914 CA Venlo, The Netherlands. The Companys telephone and
fax numbers are 31-77-3592222 and 31-77-3544700, respectively.



Information
about Océ, including the Annual Report 2003, is available through the internet at http://www.oce.com. The Company also distributes its Annual Reports including its Consolidated Financial Statements and other quarterly information to
Morgan Guaranty and Trust Company of New York as Depositary for the Companys ADSs. The depositary generally distributes this information to the holders of the ADSs.



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



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



Océ largely develops its technology
internally. Océs unique and strong technology base is the result of more than 125 years of experience and its consistent investment in research and development. Océ further invests in technology research and development through
its acquisitions of other companies, alliances with strategic partners and cooperation with co-developers and suppliers. Océs research and manufacturing facilities are located in The Netherlands, Germany, Belgium, France, the Czech
Republic, the United States and Japan. In addition, Océ generally manufactures its strategic parts internally while outsourcing the manufacturing of most of its non-strategic parts and components to third parties.



Océ operates in a total of eighty countries and has its own sales force in thirty
countries. In 2003, Océ achieved revenues of Euro 2.8 billion and net income of Euro 61.5 million.



Annual Report 2003



Océs
Annual Report 2003, which describes the Company and its business in further detail, is attached as Exhibit 10 and is incorporated into this report by reference. In the event that any information contained in Exhibit 10 conflicts with this report,
the information contained in this report shall prevail.



Restructuring



The market segments in which Océ has been active historically have
become widely divergent in recent years in terms of profitability and growth. The traditional low- to mid-volume office market has become more competitive and less profitable. In addition, customers are increasingly placing more and more emphasis on
complete document printing solutions, which include not only hardware and machines but also involves software and services tailored to meet customers specific needs. Traditionally, customers demanded machines to copy first and then distribute.
Now, documents are distributed first digitally, viewed and printed on demand when required. Customers are increasingly requesting print on demand and personalized document management systems that integrate paper and digital document flows to replace
traditional print-run, stand-alone copying machines.



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In response to its customers changing needs, in 2001, Océ announced that it was implementing a restructuring
of its operations to better align its business segments with the relevant markets for its products and services. In connection with the restructuring, in 2002, Océ merged two of its strategic business units, Document Printing Systems and
Production Printing Systems, into one unit, which is now its Digital Document Systems strategic business unit. The newly created strategic business unit, Digital Document Systems, focuses on high to very high volume output print management systems.
Océ continued its other strategic business unit, Wide Format Printing Systems. In addition, the Company has re-organized its Business Services group (formerly known as the Facility Services group) and its Software & Professional Services
group under a single management structure to provide better service to each of the strategic business units. The restructuring was largely completed in 2003, and the Companys business has moved from a product-related focus to a market-segment
focus.



In connection with the restructuring, the Company elected to withdraw
from the low volume segments in the office environment except in the Netherlands, Belgium and Switzerland. This withdrawal was substantially complete by the end of 2003. Where necessary, the Company intends to satisfy its customers demands for
low-volume machines by selling low-volume machines of its strategic partners.



Outsourcing of Financial Leases



Historically, the
Companys revenue has been generated from two types of business activities: commercial activities (selling and renting machines and providing services) and providing financial services (financing the lease of Océ machines by its
customers). In 2003, interest from financial leases amounted to Euro 98 million.



More than 50% of the Companys machine sales are financed through financial leases, and leasing forms an indispensable component of the one-stop shopping concept that Océ offers to its customers. Historically,
Océ primarily handled the financing and administration of its leasing activities internally. In 2001, based on extensive research, the Company announced that it intended to outsource the financing of its lease portfolio to third parties while
retaining the one stop shopping concept for its customers through private label financing programs.



The Company has adopted two approaches to outsource its financial lease program. In the United States, the Company has established a captive lease company,
Océ Financial Services, Inc. which is responsible for all leasing activities in the United States. Under this structure, Océ Financial Services, Inc. negotiates and enters into the initial leasing agreement. In due course
Océ Financial Services, Inc. sells a collection of lease receivables (together with the title to the underlying machines) to third party lenders. During 2003, $64 million of lease contracts (together with the title to the underlying machines)
were transferred to two third party lenders in the United States.



In
Europe and the rest of the world, the Company has entered into (or intends to enter into) private label agreements with third party lenders. In December 2001, Océ entered into a private label partnership agreement with Telia Finans AB to
outsource its financing lease portfolio and financing activities in Scandinavia. In 2002, the Company entered into a framework agreement with De Lage Landen International B.V. (DLL), a subsidiary of Rabobank, to outsource its financing
lease portfolio in the Netherlands, Belgium, Spain, France, Germany and the United Kingdom. Under these agreements with DLL and Telia Finans AB, the Company will transfer new and existing financial leases in the applicable countries to DLL and Telia
Finans AB, respectively. Originally, Océ intended to complete the outsourcing of most of its financial leasing activities in Europe by the end of 2003 through private



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label arrangements. As Océ began to transfer existing lease contracts and to outsource new lease contracts to its
private label lenders during 2003, Océ determined that substantial changes to its information systems and Océs third party lenders information systems are required before the transfer becomes effective in order to enable
Océ to have information regarding each customers individual printing system leased through the private label arrangement. Océ intends to implement the required changes to its information systems during 2004 and to complete the
outsourcing of the main part of its lease portfolio in Europe by the end of 2004.



Océ expects that the outsourcing of its lease activities could have the following financial consequences:



| |  | The return on assets (which is defined as operating income as a percentage of average balance sheet totals) of Océs lease activities is currently between 7 and 8%. In
view of Océs goal to achieve a return on assets of 12%, Océ believes that the transfer of the lease portfolio assets will generally improve its return on assets.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Upon the transfer of the lease portfolio, the Company will no longer have the leases (or the related liabilities) on its balance sheet. As a result, Océ believes that it will
have greater capacity for financing new, higher-yield activities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Océs general risks related to bad-credit and debtor defaults will likely change. Because the size of Océs financial lease portfolio will be substantially
reduced, Océs overall risks related to bad-credit and debtor defaults will also be reduced. Océ, however, may retain a portion of its current lease portfolio that does not meet its vendor-lease partners minimum credit
criteria. In addition, Océ may elect, in the future, to provide financing to strategic customers that do not meet Océs vendor-lease partners minimum credit criteria. As a result, Océs risks related to bad
credit or debtor defaults may increase with respect to that portion of the leasing portfolio retained by Océ.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As shown on page 44, interest received from leasing activities has historically yielded a stable stream of revenue, which will largely be eliminated once the lease portfolio is
transferred to Océs vendor-lease partners. The elimination of this stream of revenue may cause Océs results to become more volatile.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The transfer of the lease activities may have the effect of depressing Océs net results. Although the Company anticipates that this effect will be offset by making
effective use of the funds that are released and revenues generated from sales of its machines through future third party financing, there is no guarantee that the Companys future investments of these funds will be successful.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Principal Capital Expenditures and Divestitures



The following tables sets forth in Euros the Companys principal
capital expenditures and divestitures in tangible and intangible assets (including through the acquisition or divestiture of interests in other companies ) in 2001, 2002 and 2003:



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|                                       |  |      |  |      |  |     
|-------------------------------------- |  | ---- |  | ---- |  | ----
|(In millions)                          |  | 2001 |  | 2002 |  | 2003
|                                       |  | Euro |  | Euro |  | Euro
|Capital Expenditures                   |  |      |  |      |  |     
|Intangible assets (net)                |  | 15   |  | 19   |  | 11  
|Property, plant and equipment          |  | 130  |  | 116  |  | 97  
|Rental equipment (net)                 |  | 50   |  | 30   |  | 15  
|Other investments                      |  | 22   |  | 5    |  | 2   
|Capital Divestments                    |  |      |  |      |  |     
|Property, plant and equipment          |  | -24  |  | -15  |  | -17 
|Disposal of unconsolidated companies   |  |     |  | -1   |  |    
|Sale of financial lease portfolio      |  |     |  | -71  |  | -80 
|Acquisitions (Disposals) (net of cash) |  | 31   |  | 55   |  | -2  
|                                       |  |      |  |      |  |     
|Total                                  |  | 224  |  | 138  |  | 26  
|                                       |  |      |  |      |  |     



The Company expects that its 2004
capital expenditures will be approximately Euro 110 million for intangible assets, property, plant and equipment. The Company finances its capital investments through cash from operations and borrowings. The Company believes that its cash flow from
operations and borrowing capacity will provide adequate resources to meet current and future investment needs. As discussed above, Océ expects that the outsourcing of the lease portfolio will significantly reduce its working capital
requirements.



Océ did not make any significant acquisitions in 2003. In
2002 the Company acquired certain assets of the Gretag Professional Imaging Division (presently named Océ Display Graphics Systems Inc.) and all of the outstanding capital stock of GE Mexico, de S.A., in 2001 all of the outstanding stock of
Espace Graphic S.A. in France (presently part of Océ-France S.A.) and Practical Print Solutions, Ltd. (presently part of Océ (UK) Limited) in the United Kingdom.



Except for the sale of its financing lease portfolios (as discussed above), the Company has made no material divestitures since 2001. The
Company is not aware of any public takeover offers by third parties in respect of the Companys Ordinary Shares.



B. Business Overview



General Recent Developments in Océs Business



Océs business has changed significantly during the past decade as technology (and related products) changed from analog to digital. Océ no longer develops any analog products, and Océ now
only re-manufactures analog products on a limited scale. Océs technology and product development are now concentrated on digital processes in which documents are created, scanned, distributed, stored and then printed. These digital
processes occur within network environments, within companies and between parties.



Océs research and development plays a key role in its success, and software plays a critical role in Océs technology and product development in creating and providing total document production capabilities to
Océ customers.



The use of color is increasing in each market segment in
which Océ operates. In response to this demand from its markets, Océ offers its own color products (for full color and spot color). Océ intends to continue to expand its range of color product offerings in 2004.



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Geographic Markets



Although the Companys business activities are world-wide, its primary business is based in the United States, Germany, The Netherlands, the United Kingdom, France
and the rest of Europe. The following table sets forth the geographic distribution of the Companys revenues for the past three fiscal years based on its geographic regions:



|                  |  |                          |  |       |  |       |  |      
|----------------- |  | ------------------------ |  | ----- |  | ----- |  | -----
|                  |  | Years ended November 30,
|(In millions)     |  | 2001                     |  | 2002  |  | 2003  |  | 2003 
|                  |  | Euro                     |  | Euro  |  | Euro  |  | $    
|United States     |  | 1,333                    |  | 1,298 |  | 1,046 |  | 1,255
|Germany           |  | 392                      |  | 371   |  | 335   |  | 402  
|The Netherlands   |  | 279                      |  | 278   |  | 284   |  | 341  
|United Kingdom    |  | 219                      |  | 238   |  | 183   |  | 219  
|France            |  | 220                      |  | 209   |  | 199   |  | 239  
|Rest of Europe    |  | 568                      |  | 554   |  | 519   |  | 623  
|Rest of the World |  | 223                      |  | 228   |  | 203   |  | 243  
|                  |  |                          |  |       |  |       |  |      
|Total             |  | 3,234                    |  | 3,176 |  | 2,769 |  | 3,322
|                  |  |                          |  |       |  |       |  |      



Strategic Business Units



As a result of the restructuring described above, Océ has two
strategic business units: Digital Document Systems and Wide Format Printing Systems. The following table shows the distribution of revenues for the past three fiscal years achieved by each of the Companys strategic business units:



|                             |  |                          |  |       |  |       |  |      
|---------------------------- |  | ------------------------ |  | ----- |  | ----- |  | -----
|                             |  | Years ended November 30,
|(In millions)                |  | 2001*                    |  | 2002  |  | 2003  |  | 2003 
|                             |  | Euro                     |  | Euro  |  | Euro  |  | $    
|                             |  |                          |  |      
|Digital Document Systems     |  | 2,222                    |  | 2,155 |  | 1,907 |  | 2,288
|Wide Format Printing Systems |  | 1,012                    |  | 1,021 |  | 862   |  | 1,034
|                             |  |                          |  |       |  |       |  |      
|Total revenues               |  | 3,234                    |  | 3,176 |  | 2,769 |  | 3,322
|                             |  |                          |  |       |  |       |  |      

---

|* | The historical sales for 2001 included in this report have been adjusted to reflect the restructuring.
|- | ------------------------------------------------------------------------------------------------------



Digital Document Systems



The Digital Document Systems business unit (DDS) concentrates on document output solutions for specific types of customers and activities that require high
productivity. DDS consists of following business groups:



| |  | The Corporate Printingbusiness group, which focuses on print solutions for customers in high production environments by offering integral solutions for document output
management;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Commercial Printingbusiness group, which focuses mainly on customers who use the equipment for commercial applications: suppliers of marketing services, digital print
providers and the printing industry;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | The Océ Business Servicesbusiness group (formerly called the Facility Services group), which provides document handling, printing and copying activities and complete
document management and printing process services to customers that wish to outsource the management of these activities to outside experts; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Software & Professional Servicesbusiness group, which focuses on supporting its customers by supplying them with software products and project services for the
implementation and use of digital solutions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although the
Software & Professional Services group is managed by the DDS strategic business unit, the results of this group have historically been included in the Corporate Printing and Commercial Printing groups within the DDS unit and in the Technical
Document Systems and Display Graphics Systems group within the WFPS unit.



The
following is a summary of each customer segment within each group, the products and services provided by each group and the primary competitors of each group with the DDS strategic business unit:



|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                          |  |                                                
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|                    |  | Customer segments                                                                                                                                                                                                                                                                                                                                                                                                        |  | Products and services                                                                                                                                                                                                                    |  | Competitors                                    
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|Corporate Printing  |  | Financial, telecom and utility companies Banks Insurers Telecom businesses Utility companies Government and education Government institutions Education Health care Social welfare institutions  Trade and industry Retail and wholesale trade Transport and logistics Industrial companies Consultancy  Within these segments Océ is active in: Data centers Central repro departments Professional office environments |  | Departmental printers, black-and-white and color. (Very)
high volume printers/copiers. Black-and-white and color. Production printers, black-and-white and color, cutsheet and continuous feed. High speed scanners. Financial services. |  | Canon IBM Konica/Minolta Ricoh Xerox           
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|Commercial Printing |  | Marketing services Digital Newspaper Network
Printing industry Digital print providers Repro businesses (quick printers and copy shops)                                                                                                                                                                                                                                                                                  |  | (Very) high volume document and transaction printers, black-and-white and color, cutsheet and continuous feed. Financial services.                                                                                                       |  | Canon Heidelberg IBM Konica/Minolta Ricoh Xerox



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|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------
|                                 |  |                                                                                                                     | 
|Océ Business Services            |  | All customer segments of Corporate Printing
Commercial Printing Technical Document Systems                          |  | Taking over and carrying out (outsourcing) by Océ of document management processes for both small and wide format applications.                                                                             |  | Ikon Pitney Bowes Xerox Local
suppliers                                
|                                 |  |                                                                                                                     | 
|Software & Professional Services |  | All customer segments of Corporate Printing
Commercial Printing Technical Document Systems Display Graphics Systems |  | Integrated document management systems: input and output management software, document workflow software, document archiving software. Professional services: training, constancy, implementation, support. |  | Hewlett-Packard IBM PLP Digital Systems Seal Systems Xerox Zeh Software



New DDS products introduced in 2003



The following table lists each new product introduced by the DDS unit in
2003, including the name of the product, the applicable business group and the customer segment that the product is intended to serve:



|                               |  |                                   |  |                                                                                                                                                                                                                                                   
|------------------------------ |  | --------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Product                        |  | Business group                    |  | Application                                                                                                                                                                                                                                       
|                               |  |                                  
|Océ VarioPrint 2050/ 2060/2070 |  | Corporate and Commercial Printing |  | Multifunctional printer/copier for high volume reproduction of documents in office environments.                                                                                                                                                  
|                               |  |                                  
|Océ VarioPrint 2045/ 2055/2065 |  | Corporate and Commercial Printing |  | Multifunctional printer/copier/scanner for high volume reproduction of documents in office environments. Can be upgraded from stand-alone digital printer/copier to multifunctional printer/copier
that can be operated direct via a data network.
|                               |  |                                  
|Océ VarioPrint 2090            |  | Corporate and Commercial Printing |  | Multifunctional printer/copier/scanner for production environments.                                                                                                                                                                               
|                               |  |                                  
|Océ VarioPrint 3090            |  | Corporate and Commercial Printing |  | Productive printer for transaction printing and for processing document print streams.                                                                                                                                                            
|                               |  |                                  
|Océ CS170                      |  | Corporate and Commercial Printing |  | Mid volume color printer/copier.                                                                                                                                                                                                                  
|                               |  |                                  
|Océ CS220                      |  | Corporate and Commercial Printing |  | Mid volume color printer/copier.                                                                                                                                                                                                                  
|                               |  |                                  
|Océ VarioPrint 5115/5160       |  | Corporate and Commercial Printing |  | Productive and flexible cutsheet printers for data center applications. These printers allow printing with regular toner, color toners (for instance for printing the exact house-style color of
users) and MICR toner (for printing of checks).  



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|                            |  |                                   |  |                                                                                                                                                                                                                                                                                                                                                          
|--------------------------- |  | --------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Océ VarioStream 6100        |  | Corporate and Commercial Printing |  | Continuous feed printer for applications using special paper stock.                                                                                                                                                                                                                                                                                      
|                            |  |                                  
|Océ VarioStream 7000 family |  | Corporate and Commercial Printing |  | Complete new family of continuous feed printers with scaleable speeds from 180 ppm to 1,200 ppm. Other important features: paper width extended to 19 inches, high print quality and Custom Tone
and MICR applications. Suitable for printing (bank) statements, invoices, high volume applications in EDP centers, mailshots and graphical applications.
|                            |  |                                  
|Océ PRISMA satellite        |  | Software & Professional Services  |  | Print output management software that enables various digital forms to be added to the print data.                                                                                                                                                                                                                                                       
|                            |  |                                  
|Océ PRISMA production       |  | Software & Professional Services  |  | Output management system for highest productivity and flexibility.                                                                                                                                                                                                                                                                                       
|                            |  |                                  
|Océ PRISMA software         |  | Software & Professional Services  |  | Various new products as well as new releases of existing applications, offering extended capabilities for office environments, data centers and the graphic arts industry.                                                                                                                                                                               



Corporate
Printing



Market position. The Corporate
Printing business group focuses on print solutions for customers in high-production environments where it offers integral solutions for document output management. This relates, for example, to environments in big companies, where large numbers of
transaction documents are printed electronically, and to central repro environments, where large-scale document production takes place. In addition, Océ offers a series of office applications, both at central and at departmental levels to
large companies.



Océs distinctive feature in this market is that
it offers innovative products and services that allow organizations to manage their documents efficiently and effectively. Océ concentrates mainly on those document output activities in which documents add value to the customers primary
business processes. Corporate Printing serves three vertical market segments:



| |  | finance, telecommunication and utility companies;
| | - | -------------------------------------------------



| |  | public services (such as government, health care and education); and
| | - | --------------------------------------------------------------------



| |  | trade and industry (such as industrial companies, retail and wholesale trade, transport, logistics and consultancy).
| | - | --------------------------------------------------------------------------------------------------------------------



Customers in these segments primarily demand efficiency, cost control and flexibility in
their document output activities. Océ has developed software which can efficiently handle the entire document management process, mostly controlled from one single location, for these customers.



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New products in 2003. The use of color is increasingly in demand. Océ has a number of
products available for color applications. The company offers the Océ CPS700 full color printer for the mid-volume, and the Océ VarioStream family for high and very high volumes, which can print both black and any required spot color
during one print operation.



The Company introduced its Color Belt system in
2003, which is applied in the new Océ VarioStream 9000 products, and has the initial capability of allowing duplex printing with spot color at 800 pages printed per minute. The Company intends to further refine and develop this product in the
years ahead into a multi-purpose high volume printer, which will ultimately also be capable of printing full color as well as black-and-white.



Course of affairs in 2003. During 2003 Océ evaluated its current position in its selected market segments. This evaluation again confirmed
that opportunities exist for Océ by offering new document output solutions. As discussed above, in connection with the restructuring, Océ is in the final stage of phasing out low profit activities in the low volume segment to
concentrate on the high volume segments. Along this line, Océ has discontinued approximately 90% of its low volume segment. The Company will continue to offer low volume products in the Netherlands, Belgium and Switzerland because the
Companys low-volume sales in these countries were profitable in 2003. In other countries, Océ intends, where necessary, to satisfy its customers demands for low volume machines in cooperation with its strategic partners.
Océ has also developed alternatives which offer customers the possibility of combining small volumes from stand-alone printers to create efficient document flows for processing on high volume printers.



The Companys focus on specific market segments has led to the introduction of products
and services which are specific to each market segment and which offer added value to Océ customers. As discussed above in the corporate environment digital technology has reached an advanced stage. Analog copying declined during 2003
compared to 2002 and prior years. Document processes in the office and in document and transaction printing production are becoming increasingly more integrated and more and more, printing is replacing copying. Paper continues to be important in the
role of a working and reading document. The importance of layout and color is increasing, as these boost the retention value of the information contained in the document.



Océ believes that distribution and archiving of documents will increasingly be performed in digital form. For the mid-volume and the
high and very high-volume segments Océ was last year able to expand its product range considerably by adding a series of new and updated printers for both cutsheet and continuous feed applications. Océ now offers customers a full range
of products.



Trends. The growth in the corporate
environment is in high-production color and high volume black-and-white print solutions. Océ believes that many customers want to reduce their costs linked to document processing. This is creating a demand to replace a large number of
decentralized printers with a smaller number of high-production, full services systems at departmental or central levels, since such systems enable a substantial reduction in printing costs.



Strategy. Océs strategy for corporate printing is aimed
at achieving a top-three position in the high-production segments of this market by offering a complete range of reliable, easy-to-use and cost-effective high production systems, consisting of black-and white and color printers and scanners as well
as software for the optimum control and management of these printers.



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Commercial Printing



Market position. The Commercial Printing business group serves customers who use printing equipment commercially as a
production asset to generate income. In this market Océ has traditionally held a strong position among digital print providers. For businesses that specialize in direct mail (marketing services) Océ believes that it is one of the world
leaders with its high volume printers. During 2003, Océ added the printing industry market to the segments served by this group, especially for time-critical production runs, limited print-runs and personalized or frequently updated
publications. This segment is expected to show strong growth in the years ahead. Over the past few years Océ has developed a strong position in the production of books with a limited print-run. Although digital printing provisionally
encompasses a small area in the printing world, Océ believes that great growth potential exists in the area of digital printing.



New products in 2003. In connection with developing products for the printing industry, Océ focused on developing and building its sales
organization for this market in 2003. The printing of daily newspapers in limited print-runs, initiated by Océ in 2002 in various major world cities, continued to grow in 2003: Océs Digital Newspaper Network continued to attract
new customers, including several prominent newspapers, and it now has print shops in the United Kingdom, Spain, South Africa and Australia. Because of Océs technology, newspapers are able to run limited print jobs simultaneously in
several countries.



Both by expanding its range and by means of its vertical
market approach Océ is gaining ground in the commercial printing segments. In these highly demanding market segments reliability and productivity are the primary requirements of customers. In 2003, Océ worked to develop software to
meet these requirements.



Course of affairs in 2003. The
decline in the willingness to invest in 2003 affected the commercial printing market, most noticeably in marketing services. In addition, decreasing advertising expenditure because of the weak economy had an adverse impact on Océ
customers direct mail activities. In the printing market the role of digital printing is steadily increasing, although at a slower pace than expected because of the weak economy. The number of placements of machines in 2003 remained at about
the same level as in 2002. Nevertheless, Océ is gaining more and more ground in this market because of its improved and expanded offerings of both hardware and software.



Trends. The strong growth in the commercial digital printing segment is being driven by the fact that printed matter
is being contracted out by the corporate users to commercial printers and by the increasing use of digital printing of printed matter that was traditionally produced on offset presses. This migration from offset printing to digital printing is due
primarily to lower costs and increasingly higher quality and productivity of digital printers and because of the availability of workflow solutions tailored to the needs of the commercial segment. This shift towards digital printing is being further
boosted by the growing demand for smaller print-runs and the production of personalized documents, for which digital printing is a more suitable, and less expensive, technique than offset printing.



Strategy. Océs continuous feed print solutions make it
one of the market leaders in the very high production digital printing segment. Océ also believes that it offers competitive products in this segment through its high-production cutsheet printing systems. Océ intends to use this strong
base to achieve a further improvement in the years ahead in the positions it holds in the printing industry and marketing services segments in particular.



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Océ Business Services



Market position. Océ Business Services operates in a distinct growth market: outsourcing of document
management processes and print management activities. The customers of this group are primarily medium to large companies which concentrate on their core activities and elect to outsource certain office and administrative activities to third parties
(such as mailroom and copy center functions). Over the past ten years Océ has grown to become one of the leading companies in this field both in Europe and in the United States.



Because of its close involvement with the customers document processes, Océ is able to provide these services to its customers
seamlessly, not only for the practical execution of the processes, but also for providing an integrated document management solution. Customer needs range from customers only requiring specific consulting services to customers requiring a range of
machines and products. Océ develops  depending on a customers needs  a series of specific activities and solutions which improve the quality, effectiveness and productivity of the customers document management process,
while keeping the costs for the customer at the same level or even reducing costs further.



Course of affairs in 2003. In 2003, the Business Services group continued to expand by entering into contracts with medium to large companies with significant document production needs. Along these lines,
Océ, in 2003, entered into an agreement with Boeing to manage Boeings 28 central printing departments in the United States.



The growth in this business in 2003 was lower than expected as a result of a stronger focus on providing services to create more added value (in the United States) and to
increase profitability (in Europe). To respond to these customer demands, the American organization was reorganized during the past year, with a greater emphasis on complete printing and document solutions. In Europe the Océ organization was
reorganized to emphasize margin and net income.



Trends.
The market for business services is still showing growth. This growth is the result of an increasing demand for the outsourcing of non-core activities.



Strategy. During 2003 Océ increased its focus on the profitability of its business services activities. Océ intends to continue this
focus in the forthcoming years by improving its contract management process and by achieving synergies with the other parts of the Océ organization. In cooperation with the Software & Professional Services business group, Océ
Business Services intends to offer advanced solutions for complex document management processes. As before, the focus will continue to be on providing to its customers improved business processes in which printing plays an important role.



Software & Professional Services



Market position. The Software & Professional Services business
group collects Océs expertise in the field of output and document management into one, organized group. The group is the knowledge center of Océ specialists who, working in close cooperation with a customers specialists,
help to evaluate a customers print output and document processes and suggest proposals for improvements. After consulting with the customer about its specific needs, Océ designs and implements a printing system, consisting of software
and hardware, tailored to meet the customers needs.



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In the markets on which Océ concentrates, Océ customers have substantial and complex paper flows and
digital document flows that need to be managed. Océ has been developing software to facilitate the print management processes that are allocated to different printers for several years. Over the years, Océ has worked closely with its
customers to develop an extensive range of diverse software programs, which are often tailored to each customers needs. As Océs experience and expertise has grown in software development, this software has been bundled into a
number of complete software packages which focus on applications in the various environments within Océs selected market segments. Using these programs, which are marketed under Océ brand names, it is possible to manage the
document flow at various levels within an organization. Océ deploys its know-how and expertise to supply businesses and customers with solutions consisting of Océ equipment, third-party machines and complex software applications. On
the basis of its expertise and its software the Software & Professional Services business group is capable of providing customers with advice on the restructuring and implementation of their document management systems. The group also provides
support in cases where customers outsource their entire document and printing processes to the Océ Business Services group.



Course of affairs in 2003. During 2003, the Software & Professional Services group focused its efforts on fine-tuning its expertise to become
more closely aligned with the requirements within the Company. The software solutions that Océ currently offers are open systems, which means that hardware and software components of third parties can be seamlessly integrated into the
Océ solutions. In 2003, Océ worked to streamline its various software developments to create a more integrated and more transparent range of offerings. These new product offerings are intended to serve as a basis for the development of
new, broader solutions. In 2003, Océ also began to develop software dedicated to support the activities conducted within Océ Business Services.



Trends. Océ has identified three important trends within the Software & Professional Services business group. In the output management
area there is an increasing need for closed systems to be replaced by open systems which support hardware made by different manufacturers and which also make it possible for external parties to add extra functionalities. The rapid growth of the
document management market is attributable to the need for documents and related document flows to be managed efficiently and effectively. As a result of the extensive digitization of information flows, customers increasingly require systems that
can manage a substantial flow of paper documents and a substantial flow of electronic documents. The third important trend in Software & Professional Services is the growing demand for complete document management solutions which are tailored to
the specific and total needs of individual customers and which are replacing separate components.



Strategy. Océ has succeeded in building up a good position in the market for output management systems with its Océ tools. Océ
intends to expand its development of workflow solutions internally and in cooperation with external strategic partners to develop new open standards. In this area Océ is devoting special attention to the flexible integration of document
management systems within existing workflow solutions.



In addition, Océ
intends to work together with external partners to expand its output management systems into complete document management solutions in which reliability, productivity, durability, ease of use and a low total cost of ownership will play a central
role.



Wide Format Printing Systems



The Wide Format Printing Systems business unit (WFPS) consists of the following
three business groups:



| |  | Technical Document Systems, which relates to the market for wide format printers and output management software for technical applications;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



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| |  | Display Graphics Systems, which serves the market segments for indoor and outdoor advertising and other forms of graphic communication; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| |  | Imaging Supplies, which supplies print media throughout the world.
| | - | ------------------------------------------------------------------



The following is a summary of each customer segment within each group, the products and services provided by each group and the primary competitors of each group with the
WFPS strategic business unit:



|                           |  |                                                                                                                                                                                                          |  |                                                                                                              |  |                                                          
|-------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------
|                           |  | Customer segments                                                                                                                                                                                        |  | Products and services                                                                                        |  | Competitors                                              
|Technical Document Systems |  | Print-for-use Construction companies, architectural and engineering offices Industrial companies Utility companies Telecom businesses Government  Print-for-pay Repro businesses Digital print providers |  | Wide format production printers, black-and-white and
color. Wide format scanners. Financial
services.        |  | Fuji-Xerox Hewlett-Packard KIP Ricoh Xerox               
|                           |  |                                                                                                                                                                                                          | 
|Display Graphics Systems   |  | Print-for-use Corporate and retail in-house
printing Printing works Advertising and design agencies  Print-for-pay Digital print providers Repro businesses Photo processing laboratories                |  | Wide format production printers (roll-to-roll and flatbed) for internal or external use. Financial services. |  | Epson Hewlett-Packard Kodak Mimaki Mutoh Nur Scitex Vutek
|                           |  |                                                                                                                                                                                                          | 
|Imaging Supplies           |  | All customer segments of Technical Document
Systems Display Graphics Systems Corporate Printing
Commercial Printing Océ Business Services                                                                |  | Wide format media. Specialized display graphics
media. Printmedia.                                           |  | 3M Hewlett-Packard Interlicoat Neusiedler
Paperlinx Sihl 



New WFPS Products in 2003



The following table lists each new product introduced by the WFPS unit in
2003, including the name of the product, the applicable business group and the customer segment that the product is intended to serve:



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|                                  |  |                            |  |                                                                                                                                                                                                                                         
|--------------------------------- |  | -------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Product                           |  | Business group             |  | Application                                                                                                                                                                                                                             
|                                  |  |                           
|Océ TCS400                        |  | Technical Document Systems |  | High-production wide format printer/copier for color and black-and-white in industrial environments.                                                                                                                                    
|                                  |  |                           
|Océ Account Center                |  | Technical Document Systems |  | Software that automatically generates information for printing, copying and scanning on Océ TDS and TCS systems.                                                                                                                        
|                                  |  |                           
|Océ Power Logic Controller        |  | Technical Document Systems |  | New software version offers improved control and variation in document production processes, also via internet.                                                                                                                         
|                                  |  |                           
|Océ Print Exec Workgroup          |  | Technical Document Systems |  | Software that enables the printing process to be managed and controlled via selected internet sites up to and including the production of physical documents in architectural offices and in
development and manufacturing environments.
|                                  |  |                           
|Océ Engineering Exec 3.2 and 3.3  |  | Technical Document Systems |  | Expansion of document archiving and print management software to include color, internet and Japanese language options.                                                                                                                 
|                                  |  |                           
|Océ Repro Desk Server 1.1 and 1.6 |  | Technical Document Systems |  | Software that enables print shops and their customers to process assignments on the basis of various data standards.                                                                                                                    
|                                  |  |                           
|Océ Plan Center 1.5               |  | Technical Document Systems |  | Software package available to customers via internet, enabling digital print assignments to be channelled to various print shops via central servers.                                                                                   
|                                  |  |                           
|Océ Arizona 30-S                  |  | Display Graphics Systems   |  | Color printer for durable wide format outdoor advertisements on various media, such as advertising boards, theatre or shop banners and vehicle fleet marking.                                                                           
|                                  |  |                           
|Océ Arizona 500                   |  | Display Graphics Systems   |  | High volume wide format color printer for durable, light-fast outdoor advertisements.                                                                                                                                                   
|                                  |  |                           
|Océ Arizona T220                  |  | Display Graphics Systems   |  | Full color flatbed inkjet printer for rigid and flexible surfaces up to a thickness of over 5 cm for printing advertising boardings, exhibition materials and signposting.                                                              
|                                  |  |                           
|Onyx PosterShop 6.0               |  | Display Graphics Systems   |  | The industry standard in modular software that enables control from various data environments for display graphic printers; incorporates new automated applications.                                                                    



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Technical Document Systems



Market position. In the market for Technical Document Systems, Océ supplies wide format printers which are
used in design engineering environments in the construction and manufacturing industry, by utility companies and telecom businesses, in transport and government services and in the professional print-for-pay environments of specialized reprographic
businesses. Océ holds a strong position in this market and has successfully maintained this position despite the strong competition and economic slowdown during the past two years. In past years, the Company was a leader in introducing
digital products to this sector. This conversion to digital products opened up new sales opportunities, including the scanning of existing drawings (scan-to-file) and the distributed printing of centrally produced digital originals at, or close to
the point where they are used. Through its long term participation in this market, its lengthy relationships with its customers Océ has set unique standards of innovation, quality, productivity and user friendliness, combined with a high
level of service world-wide.



Although the main thrust of the commercial
activities is in Europe and the United States, Océ has for several years been successfully developing wide format activities in Japan. To respond to the demands of this market, Océ has modified its most important machines to meet the
specific requirements of their users. This means not only a fully Japanese character display, but also adaptations to meet the requirements of specific Japanese formats and paper qualities.



Although, there is keen competition from Japanese companies, by concentrating on those market
segments in which Océ excels, the business was able to focus its efforts in Japan and strengthen its presence in Japan further during 2003. Océ is also expanding its sales in China, which is a growing market for this group.



Course of affairs in 2003. Océ has a strong position in the
black-and-white wide format segment. During 2003, in spite of the weak economy, the total printing volume increased slightly and the number of printers installed in the mid volume segment increased due to a combination of aggressive marketing and
cost control efforts.



In this market a gradual shift is taking place from
black-and-white to color for applications that lend themselves to the use of color. Major users of wide format printers are sticking to black-and-white printing, especially for technical drawings for which no universal color code has yet been
developed or for printing high volumes on very productive machines. Océ supported this shift to color by introducing the Océ TCS400. Through sales of this wide format printer, Océ is building up a position in the color segment.
During 2003 Océ enhanced its range of existing machines by adding several new functionalities, including the application of the new Océ Power Logic Controller and various advanced print management software programs. The development of
this software required the capacities of Océ organizations in Phoenix and Cleveland (United States) and Créteil (France). Many of these new functionalities can be added to equipment already installed in the marketplace, which protects
Océs substantial investments made in these machines.



Sales of the
Océ TDS800, the most productive machine in this segment, stagnated in 2003 as a result of changing practices amongst users. Central print production is being increasingly replaced by distributed printing, with the result that the print volume
is being transferred to smaller printers, such as the Océ TCS400 and the Océ TDS600 rather than laser printers such as the Océ TDS800.



In view of its complete range of products Océ is recognized in the market for wide format printing as the supplier that offers by far the widest range of hardware
and software, as was recently confirmed by Bertl, a leading American testing institute. Océ intends to continue to focus its efforts on this market to expand its position further.



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Trends. Océ believes that there is limited future growth in this market for black-and-white
products. The continuing shift to digital is leading to a further decrease in the analog printing volume while at the same time a shift is taking place from digital black-and-white to color. As an increasingly better digital infrastructure becomes
available to users, a shift is also occurring from centralized to decentralized on-demand printing, which is creating a growing demand for mid volume and low volume printers.



Strategy. Despite the limited growth in this market Océ intends to strengthen its position. With a strong
market position in Europe and the United States, Océ intends to expand its position by means of focused marketing activities. In doing so, Océ will further expand its portfolio of high production printers. A second major platform for
growth is the planned introduction of a complete range of color printers, starting with the Océ TCS400 which was launched in 2003.



Display Graphics Systems



Market position. The second wide format segment in which Océ is active is color printing of posters, banners, billboards and countless other
wide format graphics applications for indoor and outdoor use. These applications, known as display graphics, constitute a market that has traditionally made use of silk-screen printing techniques. Digital printing offers the possibility of producing
high quality prints quickly and efficiently in small print-runs and on highly diverse media. In addition, Océ flatbed printers have also been available which can print entire display panels and other flat surfaces. Océ is one of the
leading suppliers in this segment, offering a range of advanced machines.



Course of affairs in 2003.Revenues of the Display Graphics Systems business group showed an overall decline during 2003. This is attributable primarily to the weak economy. This sector is
dependent to a substantial extent on large-scale advertising, which declined in 2003 due to the stagnating economy. This decline in advertising, in turn, resulted in a delay in investments in display graphics machines. In spite of this decline, Onyx
Graphics (one of the Companys subsidiaries), a leading worldwide producer of software, booked excellent results during the year under review.



Trends. Océ expects that this market will grow strongly, driven on the one hand by an increase in advertising spending and, on the other, by
the replacement of traditional production methods by digital printing. The market is fragmented both on the side of the suppliers and on the side of the manufacturers. Océ believes that further consolidation is therefore likely to take place
during the next few years.



Strategy. Océ intends
to strengthen its top three position in the mid volume and high volume segments by leveraging its strong product portfolio and its extensive network of direct and indirect channels. When developing new products, this group focuses on those segments
which are expected to show the most growth, notably the mid volume segment and the sector of flatbed printers. This group also concentrates on areas in which substantial synergies can be achieved within its current activities, in particular in terms
of customers and technology.



Imaging Supplies



Market position. Océ has been supplying
media for printers and copying machines for many years. Media still forms an essential part of Océs total product offerings, especially because of the highly precise interaction that is required between media and hardware. The expertise
that Océ has accrued in the area of media and its knowledge of the various markets are being used to supply specialized materials, such as those needed for display graphics media, which can also be used on competitor equipment. In addition,
Océs range of media



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offerings comprises a large number of products that are specifically tailored to the smaller formats that are mainly used
in offices. For example, Imaging Supplies offers specialized materials for use on the Océ CPS700 color printer. Océ is also a significant supplier of white bulk paper in Europe. In the United States the imaging supplies group sells,
primarily, wide format materials and materials for display graphics.



Course of affairs in 2003. During 2003 the product range was enhanced and strengthened. The total product range of the imaging supplies group includes approximately 3,500 items. To assist in packaging and distributing these
materials, Océ has modern converting and packaging machines which are used to provide prompt service to this highly demanding market. New converting machines, packaging robots and efficiency improvements in production have boosted the
capacity of this group while also lowering costs. This gives Océ the biggest converting activity in Europe. In the course of the year the business group was able to further expand the size of its activities  and its market share 
mainly in the wide format sector, although this did not lead to an increase in revenues due to a strong erosion of paper prices. In the United States the business group succeeded in further expanding its share in the display graphics market segment
and in maintaining its leading position in wide format materials.



Logistics
are essential to the success of this group. Whereas the performance had already been considerably improved in the previous financial year, delivery punctuality was boosted in 2003 to above 98.5%. As a rule Océ can deliver to customers on the
day after the order was placed. New systems for stock control in various countries will also reduce logistics costs even further.



Trends. The market for imaging supplies has been, traditionally, highly competitive and fragmented. As a result, the market has been consolidating
for the past several years. In addition, as customer demands increase, the logistics related to packaging and shipping imaging supplies has been increasingly important in this area.



Strategy. The strategy is to focus primarily on the supply of high-quality, specialized media for wide format
printers in both the DDS and the WFPS segments. Besides this, support is provided for the activities of Océ by supplying a complete and competitive range of small format media. High priority is being given to the further professionalization
of the level of operational excellence in the business group.



Sales and
Services



Océ has a strong direct sales and service organization,
which plays a critical role to the Companys research and development activities and to its overall success. The Company markets and sells its products primarily through its direct sales force of 4,140 employees, sells its maintenance services
through 4,327 of its employees and provides business services through 7,149 of its employees. As a result, the Company has access to a constant flow of up-to date market and customer feedback and information, which allows the Company to anticipate
and respond quickly to changing market needs.



The Company sells certain of its
products (such as plotter systems and fanfold laser printers) through independent distributors and original equipment manufacturers (OEMs) in regions or with respect to specific market segments where the Company does not have its own
sales force. Approximately 5%, 6% and 7% of its revenues in 2003, 2002 and 2001, respectively, were accomplished using independent distributors and OEMs.



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Competition



The Companys business competes (in whole or in part) with a number of companies with significant financial resources and world-wide operations. The Companys
primary competitors in each strategic business unit are set forth on page 17 and 18. In addition, new competitors are entering part of the markets that the Company serves as the markets rapidly evolve. The Companys success in the future will
depend, in part, on its ability to compete successfully in its current geographic and product markets and to expand into additional geographic and product markets. The Company believes that its direct sales and service force gives it a competitive
advantage because it is able to communicate on an ongoing basis directly with its customers to learn quickly about the changing demands of the market.



Research and Development



Technology plays a key role in the continuing success of the Company and its ability to respond to ever changing demands in the market. The success of Océs
products and services is attributable to the Companys ability to develop and market machines, software and services of a high quality and respond to its customers needs. To meet these needs, Océ largely develops its technology and
products internally at its research and development offices located in the Netherlands, Germany, Belgium, France, the United States and Japan. Accordingly, Océ has historically devoted a significant portion of its revenues to research and
development. See Item 5, Operating and Financial Review and Prospects for a further discussion of the Companys research and development policies and details regarding the Companys historical expenditures on research and
development.



Intellectual Property



As noted above, the Companys technology is critical to its success. The Company relies
on a combination of patents, copyrights, trade secrets and other measures to protect its proprietary technology. At November 30, 2003, Océ held approximately 5,750 patents and patent applications pending throughout the world. The Company
considers its patent position to be important to protect its technology and proprietary information and its ability to conduct its business. The Company also believes that its trademark Océ, which is registered in most areas of
the world, is essential to its business. In addition, the Company requires any third party that may have access to its proprietary information to enter into arrangements to protect its technology.



Manufacturing, Logistics and Suppliers



The Company manufactures its strategic parts internally (such as process drums, black and
white and color toners, organic photoconductors and silicone materials). In combination with the machines in which they are included, these strategic parts create unique properties which distinguish the Companys products from its competitors.



Most of the Companys non-strategic parts are manufactured by external
suppliers in the form of sub-assemblies and modules. The Company then manufacturers and assembles the finished products internally. In order to ensure that the components and sub-assemblies meet Océs specifications, Océ generally
involves its third party suppliers early in the development of a product.



During 2003 the Companys principal manufacturing facilities were in the Netherlands and Poing, Germany. In 2003, however, the Company announced that it intends to relocate part of its manufacturing and assembly activities from the
Netherlands to Central Europe and the Far East. The manufacturing activities that will be relocated to Central Europe or the Far East relate only to non-strategic parts and components to be produced by third parties,



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most of which will be shipped to the Companys facilities to be included in the final assembly of machines. The
Company also intends to outsource the final assembly of a few of its older, low volume machines to third parties in Central Europe or the Far East. The Company will continue to manufacture all of its strategic parts and to assemble its newer (and
more complicated) machines internally.



Management believes that its
external suppliers are sufficient to meet its current and future near and mid-term requirements, and the Company has not experienced any meaningful increases in the prices of these materials nor difficulty in obtaining these materials from its
external suppliers.



Seasonality



The Companys business has been, in the past, seasonal. The Company has historically
experienced that sales during the third quarter decreases due to the holiday season in Europe and increase in the fourth quarter due to the higher number of business days during that period.



Governmental Policies



As a global company with operations in 80 countries, the Companys business is subject to direct and indirect regulation in each of the
countries in which it does business. As a result, changes in various types of regulation could affect the Companys business adversely. The implementation of new technological or legal requirements could impact the Companys products,
manufacturing or distribution processes, and could affect the timing of product introductions, the cost of production or products as well as their commercial success. Moreover, regulations that adversely affect the pricing of the Companys
products could affect net sales and operating profit. The impact of these changes in regulation could affect adversely the Companys business even where the specific regulations do not directly apply to the Company or its products.



C. Organizational Structure



The Company is a holding company that conducts its operations through a variety of
subsidiaries. The following is a list of Océs principal subsidiaries (including its significant subsidiaries) which sets forth each subsidiarys name, principal location and country of incorporation. Océ owns 100% of the
equity (and holds 100% of the voting power) of each subsidiary listed except for Océ Japan Corporation of which Océ owns 85% of the equity (and holds 85% of the voting power).



|                                                       |  |                |  |        
|------------------------------------------------------ |  | -------------- |  | -------
|Europe                                                 |  |                |  |        
|Océ-Belgium N.V./S.A.                                  |  | Brussels       |  | Belgium
|Océ-Interservices N.V./S.A.                            |  | Brussels       |  | Belgium
|Océ Software Laboratories Namur S.A.                   |  | Namur          |  | Belgium
|Océ-Danmark a/s                                        |  | Copenhagen     |  | Denmark
|Océ Holding Deutschland Verwaltungsgesellschaft m.b.H. |  | Mülheim/Ruhr   |  | Germany
|Océ-Deutschland G.m.b.H.                               |  | Mülheim/Ruhr   |  | Germany
|Océ Printing Systems G.m.b.H.                          |  | Poing          |  | Germany
|Océ Document Technologies G.m.b.H.                     |  | Konstanz       |  | Germany
|Océ-Finland Oy                                         |  | Helsinki       |  | Finland
|Océ-France S.A.                                        |  | Noisy-le-Grand |  | France 
|Océ Print Logic Technologies S.A.                      |  | Créteil        |  | France 
|Océ-Hungária Kft.                                      |  | Budapest       |  | Hungary
|Océ-Ireland Ltd.                                       |  | Dublin         |  | Ireland
|Océ-Italia S.p.A.                                      |  | Milan          |  | Italy  



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|                                            |  |                          |  |                
|------------------------------------------- |  | ------------------------ |  | ---------------
|Océ-Technologies B.V.                       |  | Venlo                    |  | The Netherlands
|Océ-Nederland B.V.                          |  | s-Hertogenbosch         |  | The Netherlands
|Arkwright Europe B.V.                       |  | Venlo                    |  | The Netherlands
|Océ-Norge A.S.                              |  | Oslo                     |  | Norway         
|Océ-Österreich Ges.m.b.H.                   |  | Vienna                   |  | Austria        
|Océ-Poland Limited, Sp. Z o.o.              |  | Warsaw                   |  | Poland         
|Océ-Portugal Equipamentos Gráficos S.A.     |  | Lisbon                   |  | Portugal       
|Océ-España S.A.                             |  | Barcelona                |  | Spain          
|Océ-Czech republic s.r.o.                   |  | Prague                   |  | Czech Republic 
|Océ (UK) Limited                            |  | Brentwood                |  | United Kingdom 
|Océ Svenska AB                              |  | Stockholm                |  | Sweden         
|Océ (Schweiz) A.G.                          |  | Glattbrugg               |  | Switzerland    
|                                            |  |                         
|North America                               |  |                          |  |                
|Océ-USA Holding, Inc.                       |  | Chicago, Illinois        |  | USA            
|Océ North America, Inc.                     |  | Chicago, Illinois        |  | USA            
|Arkwright, Inc.                             |  | Fiskeville, Rhode Island |  | USA            
|Océ Business Services, Inc.                 |  | New York, New York       |  | USA            
|Océ Groupware Technology, Inc.              |  | Cleveland, Ohio          |  | USA            
|Océ Display Graphics Systems, Inc.          |  | San Jose, California     |  | USA            
|Océ Reprographic Technologies, Inc.         |  | Phoenix, Arizona         |  | USA            
|Océ-Canada, Inc.                            |  | Toronto                  |  | Canada         
|Océ-Mexico S.A. de C.V.                     |  | Mexico City              |  | Mexico         
|                                            |  |                         
|Asia/Pacific                                |  |                          |  |                
|Océ-Australia Ltd.                          |  | Scoresby                 |  | Australia      
|Océ Office Equipment (Beijing) Co., Ltd.    |  | Beijing                  |  | China          
|Océ Office Equipment (Shanghai) Co., Ltd.   |  | Shanghai                 |  | China          
|Océ (Hong Kong China) Ltd.                  |  | Hong Kong                |  | Hong Kong      
|Océ-Japan Corporation                       |  | Tokyo                    |  | Japan          
|Océ Malaysia Sdn. Bhd.                      |  | Petaling Jaya            |  | Malaysia       
|Océ (Singapore) Pte. Ltd.                   |  | Singapore                |  | Singapore      
|Océ (Thailand) Ltd.                         |  | Bangkok                  |  | Thailand       
|                                            |  |                         
|Other countries                             |  |                          |  |                
|Océ-Brasil Comércio e Indústria Ltda.       |  | São Paulo                |  | Brasil         
|                                            |  |                         
|Lease companies                             |  |                          |  |                
|Océ-Australia Finance Pty. Ltd.             |  | Scoresby                 |  | Australia      
|Océ-Deutschland Financial Services G.m.b.H. |  | Mülheim/Ruhr             |  | Germany        
|Océ-France Financement S.A.                 |  | Saint-Cloud              |  | France         
|Océ-Renting S.A.                            |  | Barcelona                |  | Spain          
|Océ (UK) Finance Ltd.                       |  | Brentwood                |  | United Kingdom 
|Océ Financial Services, Inc.                |  | Boca Raton, Florida      |  | USA            



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D. Property, plants and equipment



The Company owns or leases the following facilities:



|                          |  |                                                               |  |                                     |  |                                     
|------------------------- |  | ------------------------------------------------------------- |  | ----------------------------------- |  | ------------------------------------
|Location                  |  | Principal Use/ Products Produced                              |  | Owned/Leased                        |  | Approximate SquareFeet/Square meters
|The Netherlands:          |  |                                                               |  |                                     |  |                                     
|Venlo                     |  | Headquarters                                                  |  | Owned                               |  | 28,915 sq. mtr.                     
|                          |  | Research and Development                                      |  | Owned                               |  | 53,000 sq. mtr.                     
|                          |  | Manufacturing of Printing Equipment                           |  | Owned                               |  | 84,690 sq. mtr.                     
|                          |  | Manufacturing of Supplies                                     |  | Owned                               |  | 43,265 sq. mtr.                     
|                          |  | Warehouse supplies                                            |  | Operational lease                   |  | 19,437 sq. mtr.                     
|                          |  | Warehouse spare parts                                         |  | Owned/Operational lease             |  | 14,934 sq. mtr.                     
|s-Hertogenbosch          |  | Offices                                                       |  | Owned                               |  | 10,860 sq. mtr.                     
|                          |  |                                                               | 
|Germany:                  |  |                                                               |  |                                     |  |                                     
|Mülheim/Ruhr              |  | Offices and Warehouse                                         |  | Owned                               |  | 10,073 sq. mtr.                     
|Poing                     |  | Offices Research and Development, Manufacturing and Warehouse |  | 53% Owned 53% Owned                 |  | 18,286 sq. mtr. 97,775 sq. mtr.     
|                          |  |                                                               | 
|France:                   |  |                                                               |  |                                     |  |                                     
|Noisy-le-Grand            |  | Offices                                                       |  | Capitalized lease                   |  | 14,000 sq. mtr.                     
|Créteil                   |  | Offices and Research and Development                          |  | Owned                               |  | 6,418 sq. mtr.                      
|                          |  |                                                               | 
|England:                  |  |                                                               |  |                                     |  |                                     
|Brentwood                 |  | Offices                                                       |  | Operational lease                   |  | 38,360 sq. mtr.                     
|                          |  |                                                               | 
|United States of America: |  |                                                               |  |                                     |  |                                     
|Chicago, IL               |  | Offices Warehouse                                             |  | Operational lease Operational lease |  | 156,500 sq. ft. 202,000 sq. ft.     
|Boca Raton. FL            |  | Offices                                                       |  | Operational lease                   |  | 144,000 sq. ft.                     
|Mount Laurel, NJ          |  | Warehouse                                                     |  | Operational lease                   |  | 106,000 sq. ft.                     
|Guilford, CT              |  | Manufacturing of Copying Supplies                             |  | Owned                               |  | 110,000 sq. ft.                     
|Fiskeville, RI            |  | Manufacturing of Copying Supplies                             |  | Owned                               |  | 250,000 sq. ft.                     
|Charleston, IL            |  | Manufacturing of Copying Supplies                             |  | Owned                               |  | 100,000 sq. ft.                     



Each of the properties listed above is
owned or leased by the Company free of any material encumbrances.



The land and
buildings in Poing, Germany, are owned by a company in which Océ holds 53% and which is controlled and fully consolidated by Océ. The remaining 47% is owned by a third party. The lease has a ten-year term with three years remaining and
is for a fixed amount of rent at an annual rate of Euro 6.7 million.



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In addition to the principal properties listed above, Océ also owns and leases office and warehouse space
throughout the world where necessary to conduct its business. Certain facilities were subject to capitalized leases, amounting to Euro 9 million, Euro 11 million and Euro 12 million and as of November 30, 2003, 2002 and 2001, respectively, and
certain facilities were subject to operational leases, amounting to Euro 51 million, Euro 58 million and 51 million as of November 30, 2003, 2002 and 2001, respectively.



Océ believes that its production and other facilities are in good operating condition. As discussed above, a significant portion of
the Companys parts and components are manufactured by third party suppliers. The Company manufactures certain strategic parts internally (namely, drums, photoconductors, silicone materials and toners) and assembles its final machines at its
own manufacturing facilities. The Companys facilities currently have adequate production capacity to meet its needs in the short and mid-term future. The Company also believes that it can quickly increase its production capacity in the event
that its production capacity needs increase.



The Company is currently
expanding its toner production facility in Venlo, Netherlands. This expansion began in 2003 and is expected to be largely completed by October 2004 and with full service being provided in 2005. The Company spent Euro 6 million in 2003 related to
this expansion, and the anticipated total costs of this expansion is approximately Euro 13.5 million. The Company will pay for this expansion with cash from operating activities. The Company believes that upon completion of this expansion, the
capacity of the toner facility will be increased by approximately 50%.



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Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Océs Annual Report 2003 is set forth in Exhibit 10 and contains a review of the Companys operating and financial results and prospects. The Annual Report 2003 is incorporated into this Item 5 by reference. The following
discussion supplements and should be read in conjunction with Océs Annual Report 2003 in Exhibit 10. In the event that any portion of Exhibit 10 conflicts with any portion of the discussion contained in this Item 5, the provisions in
this Item 5 will prevail.



Executive Summary



Océ is one of the worlds leading suppliers of high quality products, services
and complete solutions for use by professionals in print and document management environments, primarily in environments where large numbers of documents are processed. The Company operates globally with activities in 80 countries with over 22,000
employees. The Companys revenues are derived from three primary sources:



| |  | Proceeds from product sales;
| | - | ----------------------------



| |  | Proceeds from rentals and service; and
| | - | --------------------------------------



| |  | Interest from financial leases.
| | - | -------------------------------



The 2003 financial year was difficult and disappointing in financial terms. The stagnating economy that negatively effected the 2002 results continued in 2003. As a
result, customers continued to postpone their investment decisions in 2003 and product sales dropped. In addition, because the global economic slowdown has continued for a prolonged period, the Companys revenues from rentals and service (which
are generally based on a stream of revenue over the life of a long-term contract) also decreased.



Costs of sales of products, rentals and service reflect primarily the costs of components and sub-assemblies and labor. Costs of interest from financial leases reflect primarily administrative and selling expenses and
financial expense.



In 2001, Océ announced its intention to outsource
its financial lease portfolio to third parties while retaining the one stop shopping concept for its customers through private label financing programs. The Company has adopted two approaches to outsource its financial lease program. In
the United States, the Company has established a captive lease company that enters into the initial leasing agreements and that later sells bundles of lease receivables (together with the title to the underlying machines) to third party lenders.
During 2003, $64 million of lease contracts (together with the underlying machines) were transferred to two third party lenders in the United States. In Europe and the rest of the world, Océ is in the process of entering into private label
partnership agreements with third party lenders. Under these agreements, Océ will transfer existing financial leases to its third party lenders and its third party lenders will finance new financial leases. Originally, Océ intended to
complete the outsourcing of most of its financial leasing activities in Europe by the end of 2003. During 2003, Océ determined that substantial changes to its information systems were required prior to this transfer. Océ intends to
implement the required changes to its information systems during 2004 and to complete the outsourcing of the main part of its lease portfolio in Europe by the end of 2004.



Research and the development of technology is critical to Océs success. Accordingly, Océ has historically devoted a
significant portion of its revenue to research and development (generally 6 to 7%). Océ exceeded this investment in 2003 by investing approximately 7.7% of its revenues in research and development.



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Océ has a strong direct sales and service organization, which plays a critical role to its research and
development activities and to its overall success. The Company markets and sells its products primarily through its direct sales force of 4,140 employees, sells its maintenance services through 4,327 of its employees and provides business services
through 7,149 of its employees. As a result, the Company has access to a constant flow of up-to-date market and customer feedback and information, which allows the Company to anticipate and respond quickly to changing market needs.



This discussion and analysis of Océs financial condition and results of
operations is based on its consolidated financial statements, which have been prepared in accordance with Dutch GAAP. As further discussed in Note 26 to the Consolidated Financial Statements, Dutch GAAP differs from U.S. GAAP in several significant
respects. The Company reconciles the portions of its consolidated financial statements that contain these differences in accordance with U.S. GAAP.



This discussion contains forward-looking statements concerning the Companys operations, economic performance and financial condition. For more detailed information
regarding the risks involved in forward-looking statements, see Item 3, Key Information.



Significant accounting policies, assumptions, estimates and judgments



When Océ prepares its financial statements, it selects certain accounting principles and methods and makes certain assumptions, estimates and judgments relating to its financial condition and disclosure, which
require managements subjective and complex consideration of a variety of matters, including the following:



| |  | valuing intangible and other long-lived assets;
| | - | -----------------------------------------------



| |  | establishing assumptions as the basis of revenue recognition policy;
| | - | --------------------------------------------------------------------



| |  | identifying expenses in connection with restructuring; and
| | - | ----------------------------------------------------------



| |  | determining contingent liabilities, including any contingent liabilities that Océ may incur in connection with significant litigation.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



The Company bases its assumptions and estimates, and makes its judgments, based on its
historical experience, its expectations for the future and various other factors that it believes are reasonable under the circumstances. The Companys actual results may significantly differ from its assumptions, estimates and judgments and
its financial condition could be significantly different if the Company used different assumptions, estimates and judgments.



The following is a brief discussion of some of the significant assumptions, estimates and judgments that the Company makes which could impact its financial condition and
results of operations. For further details on the accounting policies used in this financial report, see the Notes to the Companys Consolidated Financial Statements.



Valuing intangible and tangible long-lived assets



As of November 30, 2002 and 2003, the intangible long-lived assets amounted to Euro 86
million and Euro 49 million and the tangible long-lived assets amounted to Euro 578 million and Euro 494 million. In accounting for long-lived assets, the Company assesses the impairment of the carrying value of its long-lived assets under both
Dutch GAAP and U.S. GAAP when factors indicate that the carrying value may not be recoverable. Factors that indicate potential impairment include, but are not limited to:



| |  | significant decreases in the market value of the long-lived assets;
| | - | -------------------------------------------------------------------



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| |  | significant changes in the operating or cash flow losses associated with the use of the long-lived asset;
| | - | ---------------------------------------------------------------------------------------------------------



| |  | significant changes in the use of the acquired assets or the strategy for our overall business; and
| | - | ---------------------------------------------------------------------------------------------------



| |  | significant negative industry or economic trends.
| | - | -------------------------------------------------



Under Dutch GAAP, the Company measures the impairment of the applicable asset based on a discounted cash flow method employing estimates of future cash flows and a
discount rate.



Under U.S. GAAP, the Company is required to apply a two step
test. First, the Company determines whether an impairment exists when the undiscounted future cash flows of the related asset is lower than the carrying value of the related asset. In that case, the Company measures the impairment as the excess of
the carrying value over the sum of future discounted cash flows.



Océs projections for future cash flows are based on its current estimates of the future growth of its business, and anticipated future economic, regulatory and political conditions. Océ estimates discount rates to be
commensurate with the risk inherent in its current business model. If Océ estimates change as a result of changes in the business models, printing and document management technology, general economic conditions, the regulatory environment or
other reasons, Océ may have to adjust the carrying value of its long-lived assets and recognize additional impairment charges on its long-lived assets.



Determination of appropriate revenue recognition treatment



Accounting for leases of machines and other equipment involves making complex provisions and significant judgments. If a lease is accounted
for as an operating lease, the Company records revenue from the rental of the machines over the lease term when such rent payments are made. If a lease is accounted for as a financing or sales lease, the Company records the revenue from the sale of
the machine at the beginning of the lease term and interest income from the financing of the machine over the lease term.



Under Dutch GAAP, classification of leases as financing leases is based on the extent to which risks and rewards incident to ownership of a leased asset are transferred
to the lessee. Under U.S. GAAP, at least one of the following criteria is required to be met in order to account for a lease as a financing lease as opposed to an operating lease:



| |  | ownership transfers by the end of the lease term;
| | - | -------------------------------------------------



| |  | the lessee has a bargain purchase option for the machine at the end of the lease term;
| | - | --------------------------------------------------------------------------------------



| |  | the lease term is equal to or greater than 75% of the economic life of the machine; or
| | - | --------------------------------------------------------------------------------------



| |  | the present value of the minimum lease payments are equal to or greater than 90% of the fair market value of the machine.
| | - | -------------------------------------------------------------------------------------------------------------------------



Under U.S. GAAP, the economic life of the machine and the fair value of the machine at the
beginning and end of the lease term are estimated. The estimates are based upon our historical experience with economic lives of our equipment products. In Océs experience, the most objective measure of the economic life of a machine is
the original contract term because most equipment is returned by lessees at or near the end of the contractual term. The longest predominant contractual lease term for Océs principal products is five years and only a small percentage of
Océs leases are for original terms longer than five years. Accordingly Océ has estimated the economic life of most of its products to be five years. Océ believes that five years is representative of the period during which
a machine is expected to be economically usable, with normal repairs and maintenance, for the purpose for which it was intended at the inception of the lease. Under Océs current product portfolio, generally a non-cancelable lease of 45
months or more would qualify as a financing lease.



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At the beginning of a lease term, Océ also estimates the fair market value of the machine and the residual values
of machines at the end of the lease term. Océ estimates the residual values of the machines at the end of the lease term based on its forecasts of supply and demand for similar products, its expected date of retirement of the product, future
product launch plans, the term of the lease, customer behavior, re-manufacturing strategies, competition and technological changes. Because the Company is the developer, manufacturer and servicer of its products, the Company does not believe it has
any significant risks to recovery of its recognized residual values.



If
Océs estimates regarding its products economic lives, fair values or residual values are later determined to be inaccurate, Océ may be required to reclassify a financing lease as an operating lease, which would, in turn,
require Océ to recognize the related revenue over the lease term, record the underlying equipment in Océs consolidated balance sheets and to depreciate the machine over its estimated useful life.



In addition, the Company sells its equipment and services on a stand-alone basis and also
enters into bundled arrangements that contain multiple deliverable elements. These multiple element arrangements typically include equipment, services, supplies and financing components for which the customer pays a single defined price for all
elements. These arrangements typically also include a variable service component for copy volumes in excess of a stated minimum. When separate prices are listed in these multiple element arrangements with Océ customers they may not be
representative of the fair values of those elements because the prices of the different components of the arrangement may be altered in customer negotiations, although the aggregated consideration may remain the same. Therefore, revenues under these
arrangements are allocated based upon estimated fair values of each element. The fair value of each element is estimated based on a review of a number of factors including average selling prices for the elements when they are sold on a stand-alone
basis. The average selling prices are based on managements best estimates of market conditions and competitive pricing considerations. The principal change in estimate relating to such revenue allocations among multiple elements is made with
respect to the estimated fair value of those elements and their related margins. The margins of maintenance and interest percentages are based on an arms length approach. This is a significant factor considered in Océs revenue
allocations process along with other factors, such as pricing changes and customer discounts, which also affect the overall allocation process.



Restructuring expenses



Under Dutch GAAP, restructuring expenses are accrued when a detailed plan has been made and communicated to the employees involved. Océ recorded restructuring
expenses before tax of Euro 11 million and Euro 2 million under Dutch GAAP in 2003 and 2002, respectively, relating primarily to the relocation of its manufacturing and assembly activities. Under U.S. GAAP restructuring expenses are accrued when
management approves and commits to a firm plan and communicates the plan to the affected employees. However, the criteria set for restructuring expenses to be recognized are more strict. Therefore certain costs accrued under Dutch GAAP are expensed
as incurred under U.S. GAAP. Under U.S. GAAP the Company recorded a restructuring expense of Euro 1 million in 2003 and of Euro 44 million in 2002. The recording of restructuring expenses reflects many estimates, including those pertaining to
personnel separation costs, contract settlements, and tangible asset impairments. In making estimates, the Company used the most recent information available. As Océ continues to evaluate the business, there may be supplemental charges for
new restructuring initiatives as well as changes in estimates to amounts previously recorded as payments are made or actions are completed.



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Contingencies



The Companys determination of the treatment of contingent liabilities in its consolidated financial statements is based on Océs view of the expected
outcome of the applicable contingency. Océ consults with legal counsel on matters related to litigation and other experts both within and outside its group with respect to matters in the ordinary course of business. Océ accrues a
liability if an adverse outcome is probable and the amount can be estimated. If either the likelihood of an adverse outcome is only reasonably possible or an estimate is not determinable, Océ disclose any matter that it believes is material
in a note to the financial statements. Actual results may differ from Océs estimated results and could have an adverse impact on its financial condition and results of operations.



The Company is involved in a number of legal actions. Based on currently available
information and legal opinion, we believe that the outcomes of these legal actions will either have no significant adverse effect on the financial position of the Company, or that any possible adverse effects are adequately reflected in the
provisions.



International Financial Reporting Standards



The European Union has passed a regulation that requires listed European companies to comply
with International Financial Reporting Standards (IFRS) for accounting periods starting on or after January 1, 2005. Under this regulation, Océ is required to comply with IFRS beginning December 1, 2005.



To prepare for the transition from reporting in Dutch GAAP to IFRS, in 2003 Océ began
to assess the differences between Dutch GAAP and IFRS and to study the consequences for automated processes and procedures. As a result, Océ is in the process of preparing guidelines to implement the conversion from Dutch GAAP to IFRS in each
country where it has business operations. Océ intends to adopt new IFRS guidelines that do not conflict with Dutch GAAP where possible prior to 2005. For example, at the beginning of 2003 Océ adopted the standard for accounting for
pensions under IFRS. Based on its initial assessment of the differences between Dutch GAAP and IFRS, Océ believes that the primary differences will relate to accounting for pension liabilities, option plans, financial instruments and
impairment. The consequences for other items (such as expenditures) are currently being studied. Under IFRS, a greater number of the assets and liabilities that were previously qualified as off-balance sheet (financial instruments, for
example) will be included in the balance sheet. Certain liabilities may also have to be classified in a different way than previously. Currently, it is not possible to give an indication of the effects that the forthcoming changes will have. The
effects, however, may be material.



New accounting pronouncements in 2003



Dutch GAAP



The process to align Dutch GAAP with IFRS continued in 2003. The authoritative statements
and the recommendations in the Guidelines for annual reporting under Dutch GAAP (the Guidelines) have become more stringent and the disclosure requirements more extensive. In November 2003, a new edition of the Guidelines was published,
which adopted the 2002 Draft Guidelines and proposed new draft Guidelines. The final 2003 Guidelines are applicable for fiscal years starting on or after January 1, 2004.



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The most important changes in the final 2003 Guidelines (applicable for Océs 2004 financial year) are the
following:



|      |  |                           |  |                                                                                                                                                                                                           
|----- |  | ------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No RJ |  | Subject                   |  | Change                                                                                                                                                                                                    
|240   |  | Equity                    |  | Changes including explicit distinction between statutory and consolidated accounts, additional phrases about legal requirements and guidance with regard to classification of equity financial
instruments
|      |  |                          
|270   |  | Revenue recognition       |  | Requirement to add a comprehensive income statement                                                                                                                                                       
|      |  |                          
|292   |  | Leasing                   |  | Incorporation of SIC 27 on transactions in the legal form of a lease                                                                                                                                      
|      |  |                          
|400   |  | Directors report         |  | Further recommendations on sustainability reporting                                                                                                                                                       
|      |  |                          
|520   |  | Intercompany transactions |  | Final Guideline (draft published last year as draft guideline 240.5) on recognition of profits on intercompany transactions                                                                               



Draft Guideline 290a Financial
instruments, processing and valuation (based on International Accounting Standard 39 (IAS 39)) has not changed since the discussion memorandum that was published in early 2001. The draft Guideline was not made final in the final
2003 Guidelines because the proposed amendment to IAS 39, as announced by IASB, was not available to be included in the final 2003 Guidelines. It has been decided not to integrate draft Guideline 290a in final Guideline 290 Financial
Instruments before these amendments to IAS 39 have been implemented.



A
significant new aspect of draft Guideline 290a is that most financial instruments (financial assets and liabilities held for trading and available for sale) are measured at fair value and that gains and losses arising from changes in fair value of
derivatives are recognized in the profit and loss account.



In addition, in the
draft Guideline detailed guidance is given on hedge accounting. Hedge accounting is permitted provided that an entity meets certain qualifying criteria in relation to documentation and hedge effectiveness.



It should be noted that currently the Netherlands Civil Code does not allow for measuring
financial instruments at fair value. The 4th European Directive was amended in 2003 to permit fair value valuation and the Company expects that Dutch law will be amended in a similar manner. However, proposals for such a change have not yet been
published. If Dutch law is changed to comply with the European Directive, the Company anticipates that the differences between Dutch GAAP and U.S. GAAP in respect of reconciling financial instruments will be significantly reduced.



IFRS



The International Accounting Standards Board (the IASB) is currently working on
a number of new standards and amendments to existing standards that will be applicable to all European listed companies required to adopt IFRS in 2005. The main examples are Exposure Draft (ED) 3 (which applies to business combinations,
intangible fixed assets and impairments) and ED 2 (share based payments). It is expected that approximately fifteen other standards will be proposed. As a result, significant uncertainty exists with regard to the impact of the final standards. The
IASB is aiming to complete all new standards and improvements in the first half of 2004. In the second half of 2004 and 2005 no new standards that will be effective to first time adopters are expected to be issued. Currently the IFRS



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standards do not require interim financial reporting. However, the EU has drafted a transparency guideline,
which was issued March 2003. This standard requires that listed companies present semi-annual financial statements based on the requirements of IAS 34 and an updated management report and a statement of the Board of Directors on the accuracy and
completeness of the financial statements. Recently the European Union clarified that quarterly financial statements are not required other than certain general information about the financial position.



U.S. GAAP



In April 2003, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends and clarifies financial accounting and reporting for derivative
instruments and for hedging activities under Accounting for Derivative Instruments and Hedging Activities (SFAS 133). The adoption of SFAS 149 did not have a material impact on the Companys consolidated results of operation or
financial position.



In May 2003, the FASB issued SFAS No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). SFAS 150 establishes standards on how to classify and measure certain financial instruments with characteristics of both liabilities and
equity. The adoption of SFAS 150 did not have a material impact on the Companys consolidated results of operation or financial position.



In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46
requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at
risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 was effective immediately for all variable interest entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The disclosure (but not the accounting) requirements of FIN 46 are effective for
the 2003 financial statements of Océ, regardless of the date on which the variable interest entity was created. In December 2003 the FASB issued FASB Interpretation No. 46 R (FIN 46R), Consolidation of Variable Interest Entities
(Revised). FIN 46R modifies the scope exceptions provided in FIN 46. As of the end of the first interim or annual reporting period ending after March 15, 2004, the provisions of FIN 46R replace the provisions of FIN 46 for all variable interest
entities created or acquired after January 31, 2003.



The Company reviewed its
contractual arrangements and has identified no Variable Interest Entities, as defined by FIN 46.



In November 2002, the Emerging Issues Task Force (EITF) of the FASB reached a consensus on EITF No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. The consensus addresses how to
account for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. Revenue arrangements with multiple deliverables are required to be divided into separate units of accounting if the
deliverables in the arrangement meet certain criteria. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values. When an arrangement contains both lease elements and non-lease elements,
the guidance under FAS 13 is applied to the lease elements by the purchaser and seller, but not to any non-lease elements of the arrangement because such elements are outside of the scope of FAS 13. EITF 00-21 clarifies how to allocate the total
consideration between the lease and non-lease elements. Under EITF 00-21, substantial services, as contemplated by FAS 13, paragraph 1, (e.g., disposables/consumables, services) are not considered executory costs as defined in FAS 13
and, as such, these non-FAS 13 deliverable items should



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be separated from the FAS 13 deliverables (e.g., lease of plant, property and equipment and executory costs) on a
relative fair value basis. The guidance of EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company is currently assessing the impact of the adoption of this statement.



A. Operating Results



The following information provides an analysis of the Companys total revenue, gross margin, operating income and net income for each
of the three most recently completed fiscal years.



Revenues



The Companys revenues are derived from
three primary sources: proceeds from product sales; proceeds from rentals and service; and interest from financial leases. Changes in the Companys revenues primarily result from three factors: organic increases or decreases due to product mix,
growth through acquisitions and the effect of foreign currency exchange rates.



Total revenues in 2003, 2002 and 2001 were Euro 2,769 million, Euro 3,176 million and Euro 3,234 million, respectively. Total revenues in 2003 were 12.8% lower than in 2002. 5.1% of this decrease is attributable to a continuing decrease in
revenues from sales of machines and services and interest revenue from financial leases. The remaining 7.7% reduction was attributable to adverse exchange rate effects and a small business disposal. Total revenues in 2002 were 1.8% lower than in
2001. Decreases in net revenues from 2001 to 2002 were primarily attributable to an organic decrease in revenues of 3.1% related to the downturn in the economy and the corresponding reluctance of customers to purchase new machines and a decrease of
2.1% caused by the negative effects from foreign exchanges rates. These decreases were offset, in part, by an increase of 3.4% of revenues resulting from acquisitions.



Revenues from product sales amounted to Euro 1,553 million, Euro 1,792 million and Euro 1,836 million in 2003, 2002 and 2001, respectively,
and revenues from product sales decreased by 13.4% from 2002 to 2003, compared to a 2.4% decrease from 2001 to 2002. Earnings from rentals and service was Euro 1,119 million, Euro 1,267 million and Euro 1,272 million in 2003, 2002 and 2001,
respectively, and revenues from rentals and services decreased by 11.7% from 2002 to 2003, compared to a 0.4% decrease from 2001 to 2002. Interest income from financial leases was Euro 97 million, Euro 117 million and Euro 125 million in 2003, 2002
and 2001, respectively. Interest income from financial leases decreased by 16.3% from 2002 to 2003, compared to a 6.9% decrease from 2001 to 2002.



Revenues of the DDS business unit were Euro 1,907 million, Euro 2,155 million and Euro 2,222 million in 2003, 2002 and 2001, respectively, and revenues of the DDS
business unit decreased by 3.9% from 2002 to 2003 compared to a 2.5% decrease (on an organic basis) from 2001 to 2002. Sales of machines in the DDS business unit decreased by 11% from 2002 to 2003, compared to a 18% decrease from 2001 to 2002, which
was primarily attributable to the downturn in the economic cycle and the postponement of investment decisions by customers and the decision by the Company to phase out sales of certain of its low- to mid-volume machines in this unit.



Revenues of the WFPS business unit were Euro 862 million, Euro 1,021 and Euro 1,012 million
in 2003, 2002 and 2001, respectively. The revenue of the WFPS business unit decreased by 7.5% from 2002 to 2003, compared to a 4.4% decrease from 2001 to 2002. The decreases in 2003 and 2002 are primarily attributable to the downturn in the economic
cycle and the postponement of investment decisions by customers.



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Gross Margin



Gross margin was Euro 1,165 million, Euro 1,328 million and Euro 1,317 million, respectively, and represents an equivalent of 42.1%, 41.8%
and 40.7% of the Companys total revenues in 2003, 2002 and 2001. Gross margin in 2003 was 0.3% higher than in 2002, compared to an increase by 0.9% from 2001 to 2002. The increase in gross margin from 2001 to 2002 was attributable to the
effects of the Companys foreign currency hedging. In addition, the effect of capacity under-utilization as a result of lower machine sales was offset by lower costs and the phasing out of poorly performing activities.



Selling Expenses



Selling expenses were Euro 624 million, Euro 705 million and Euro 728 million in 2003, 2002
and 2001 respectively, which represents 22.5%, 22.2% and 22.5% of the Companys total revenues in those years. The reduction in selling expenses from 2001 to 2002 and from 2002 to 2003 were primarily related to the reduction in labor costs in
connection with the restructuring partially offset by the negative effect of foreign currency translation.



Research & Development



Investments in research and development were Euro 208 million, Euro 212 million and Euro 200 million in 2003, 2002 and 2001, respectively, which represents 7.5%, 6.7% and
6.2% of the Companys total revenues in 2003, 2002 and 2001, respectively. The Company incurred a repayment liability of Euro 1.0 million in 2003 and Euro 3.0 million in 2002 with respect to a governmental development credit for a color printer
that was launched in 2001. The Company may have additional repayment liabilities in future years depending on the future revenues of this color printer. For a further discussion of these governmental credits, see Note 0 and 14 to the Consolidated
Financial Statements.



General and administrative
expenses



The Companys general and administrative expenses were
Euro 183 million, Euro 185 million and Euro 164 million in 2003, 2002 and 2001, respectively, which represents 6.6%, 5.8% and 5.1% of the Companys total revenues in these years. These expenses decreased by 1.7% from 2002 to 2003 and by 3% (on
a organic basis) from 2001 to 2002 because of the Companys imposition of tight cost controls.



Impairment



An impairment of intangible and tangible fixed assets occurred in 2003 of Euro 25.2 million. This impairment relates to the goodwill of Practical Print Solutions for an
amount of Euro 13.5 million, to the customer base and technology of Océ Display Graphics Systems Inc. for an amount of Euro 9.3 million and to a part of the fixed assets of Arkwright of Euro 2.4 million.



Operating Income



Operating income in 2003, 2002 and 2001 was Euro 125 million, Euro 226 million and Euro 225
million, respectively, and represents 4.5%, 7.1% and 6.9% of the Companys total revenues in 2003, 2002 and 2001, respectively. Operating income (in Euros) decreased by 44.8% from 2002 to 2003, compared to an 0.6% increase from 2001 to 2002.
This decrease was primarily attributable to lower revenues from machine sales and impairment charges incurred.



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Financial expense (net)



The Companys financial expense (net) was Euro 31 million in 2003, Euro 54 million in 2002 and Euro 69 million in 2001. The decrease in
financial expense (net) from 2001 to 2002 and further decrease in 2003 was caused by a reduction in the outstanding amount of the Companys loans and lower interest rates. The average weighted interest bearing capital was Euro 696 million in
2003 (with an average interest rate of 4.10%), Euro 992 million in 2002 (with an average interest rate of 5.25%) and Euro 1,180 million in 2001 (with an average interest rate of 5.65%).



Income taxes



The Companys effective tax rate was 32.4% in 2003, 33.4% in 2002 and 31.1% in 2001. In 2002, the Company indicated that it expected an increase of its effective tax
rate in 2003. This increase did not actually occur in 2003. Rather, the Companys tax rate decreased primarily due to lower than expected income in the United States. Generally, the highest tax rates are applicable within the United States
because the individual state tax rates are included in the total U.S. effective tax rate. As income decreased in the United States in 2003, the effective tax rate also decreased in 2003.



Net Income



Net income was Euro 61 million, Euro 113 million and Euro 10 million in 2003, 2002 and 2001, respectively. Net income decreased by 45.4% from 2002 to 2003, compared to a
major increase from 2001 to 2002. On a basic earnings per ordinary share basis net income in 2003 decreased by 46.9% from 2002 to Euro 0.69 per share, compared to an 1625% increase in 2002 from 2001 to Euro 1.30 per share compared to Euro 0.08 per
share in 2001. Net income in 2001 was reduced by a charge for an exceptional item relating to the Companys restructuring. In 2001, the Companys net income before exceptional item was Euro 105 million, and the Companys basic
earnings per ordinary share was Euro 1.19 per share before exceptional item.



Breakdown of commercial and financial activities



The Companys revenues are derived from two principal activities: commercial activities (revenue derived from selling machines, software and services) and financial activities (revenue derived from offering
financial leases). In assessing the financial position of the Company as a whole, a distinction must be made between these two types of activities.



The revenue from financial activities is derived from the interest from financial leases. The costs of financial activities comprise the costs of financing the lease
portfolio and the administrative and selling expenses. Where the financial activities are financed from interest-bearing capital, it has been assumed that this has been done fully on a fixed-interest basis. The costs of financing are then allocated
on the basis of the average amount of fixed interest-bearing capital. For the administrative and selling expenses, including provisions for doubtful accounts a cost level has been applied which corresponds to that of external captive lease companies
with similar activities, which publish annual accounts. For the financing of the financial activities the Companys policy is to maintain a ratio of 0.15 between the equity and the balance sheet total. This ratio is a standard used by captive
companies in the financial services industry which publish their own annual accounts. The remaining part of the equity is allocated to the commercial activities.



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The following table sets forth a breakdown of the revenue in Euros from commercial activities compared to revenue from
financial activities:



|                                      |  |            |  |       |   |  |       |  |      
|------------------------------------- |  | ---------- |  | ----- | - |  | ----- |  | -----
|(In millions)                         |  |            |  | 2001  |   |  | 2002  |  | 2003 
|                                      |  |            |  | Euro  |   |  | Euro  |  | Euro 
|Revenue                               |  | Commercial |  | 3,109 |   |  | 3,059 |  | 2,672
|                                      |  | Financial  |  | 125   |   |  | 117   |  | 97   
|                                      |  |            |  |       |   |  |       |  |      
|                                      |  | Total      |  | 3,234 |   |  | 3,176 |  | 2,769
|                                      |  |            |  |       |   |  |       |  |      
|Operating income                      |  | Commercial |  | 135   |   |  | 142   |  | 56   
|                                      |  | Financial  |  | 90    |   |  | 84    |  | 69   
|                                      |  |            |  |       |   |  |       |  |      
|                                      |  | Total      |  | 225   |   |  | 226   |  | 125  
|                                      |  |            |  |       |   |  |       |  |      
|Net income                            |  | Commercial |  | 79    |   |  | 86    |  | 36   
|                                      |  | Financial  |  | 26    |   |  | 27    |  | 25   
|                                      |  |            |  |       |   |  |       |  |      
|                                      |  | Total      |  | 105   | * |  | 113   |  | 61   
|                                      |  |            |  |       |   |  |       |  |      
|Cash flow before financing activities |  | Commercial |  | 137   |   |  | 236   |  | 176  
|                                      |  | Financial  |  | 36    |   |  | 102   |  | 152  
|                                      |  |            |  |       |   |  |       |  |      
|                                      |  | Total      |  | 173   |   |  | 338   |  | 328  
|                                      |  |            |  |       |   |  |       |  |      

---

|* | Before exceptional items of Euro 95 million.
|- | --------------------------------------------



Impact of Foreign Currency Fluctuations



As a global business, foreign currency fluctuations can have a positive or negative effect on the Companys financial results. The results in 2003 were negatively
influenced by the strong Euro. Océ attempts to offset the effects of foreign exchange rate fluctuations in the long term relating to the sales of its machines by incurring expenses and buying components of the machines and related supplies,
where possible, in the same currency in which the revenues from the sales of the machines are achieved (matching principle) and by raising the local added value content. In addition, Océ attempts to offset the effects of foreign
exchange rate fluctuations relating to the sales of its services by incurring payroll expenses of the technicians providing the services in the same currency in which the service revenues are achieved. Finally, the Company also attempts to offset
the short-term consequences of foreign exchange fluctuations through an active currency management policy. The Companys current policy is to hedge on a rolling twelve month basis up to 80% of its anticipated foreign currency intercompany
transactions (principally, in U.S. Dollar, Japanese Yen and Pound Sterling). In 2003, as a result of its hedging activities, the negative impact of the strong Euro was limited to a decrease of Euro 16.2 million in net income. For this purpose, the
Company uses a number of financial instruments, particularly forward foreign exchange contracts, which are listed in Note 23 to the Consolidated Financial Statements and further described in Item 11, Quantitative and Qualitative Disclosures
about Market Risk.



Governmental Policies



As a global company with operations in 80 countries, the
Companys business is subject to direct and indirect regulation in each of the countries in which it does business. As a result, changes in various types of regulation could affect the Companys business adversely. The implementation of
new technological or legal requirements



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could impact the Companys products, manufacturing or distribution processes, and could affect the timing of product
introductions, the cost of production or products as well as their commercial success. Moreover, regulations that adversely affect the pricing of the Companys products could affect net sales and operating profit. The impact of these changes in
regulation could affect adversely the Companys business even where the specific regulations do not directly apply to the Company or its products.



B. Liquidity and Capital Resources



Sources of Cash



The Company currently expects to fund operations and capital expenditures from a combination of cash flows from operating activities, available cash and cash equivalent
balances, availability under current credit facilities and cash generated from the sale of the Companys financing lease portfolio.



Cash flows provided by operating activities were Euro 340 million for 2003 compared to Euro 446 million for 2002 and Euro 348 million for 2001. The decrease in cash flows
from operating activities in 2003 resulted from lower earnings after adjusting for non-cash items such as depreciation, amortization and the non-cash portion of restructuring charges and due to the lower needs for financial lease receivables. At
November 30, 2003, the Company had cash available amounting to Euro 56 million compared to Euro 37 million at November 30, 2002 and Euro 40 million at November 30, 2001.



At November 30, 2003, Océ and its Dutch subsidiaries had available Euro 771 million of credit facilities in the form of multi-year
stand-by credit contracts and the Companys subsidiaries outside of the Netherlands had available Euro 435 million of credit. At November 30, 2003, the used portion of these credit facilities amounted to Euro 159 million of long term debt and
Euro 4 million of short term debt. These lines of credit expire over the next 3 to 5 years. None of these credit facility contracts contain restrictive covenants. As a result, repayment of any borrowings under these lines of credit can not be
accelerated in connection with the Companys non-compliance with covenants.



As further discussed in Item 4, the Company is in the process of outsourcing the financing of its lease portfolio to third party lenders, which involves transferring its current lease portfolio to these third party lenders in exchange for
payments equal to the fair value of the portfolio (which, at a minimum, will be the book value) and placing new financial leases directly with the Companys private label lenders. In connection with this process, the Company intends to transfer
a major part of its lease portfolio to third parties under various private label-financing agreements by the end of 2004. The transfer will be gradual and based on a country by country analysis. The Company expects that the transfer of the current
lease portfolio in Europe will be substantially completed by the end of 2004. As a result, the Company expects to have additional cash available to invest from the proceeds of its outsourcing efforts, that the assets on its balance sheet will be
substantially reduced and that interest income, interest expenses and the other costs relating to the financial leasing business will largely be eliminated.



Capital Expenditures



Cash flows used in investing activities were Euro 12 million for 2003 compared to Euro 109 million for 2002 and Euro 175 million for 2001. Net capital expenditures were
Euro 92 million for 2003 compared to Euro 121 million for 2002 and Euro 122 million for 2001. Capital expenditures decreased in 2003 over 2002 due primarily to less investments in property, plant and equipment and less capitalized expenses for
enterprise resource platforms.



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The Company did not make any new significant acquisitions in 2003. In 2002, the Company acquired certain assets of the
Gretag Professional Imaging Division and all of the outstanding capital stock of GE Mexico, S.A. for a combined purchase price of Euro 55 million, net of cash acquired. During 2001, the Company acquired all of the outstanding stock of Espace Graphic
S.A. in France and Practical Print Solutions, Ltd. in the United Kingdom for a combined purchase price of Euro 31 million, net of cash acquired.



Aggregate cash flows used in financing activities were Euro 295 million, Euro 356 million and Euro 148 million for 2003, 2002 and 2001, respectively. The Companys
net debt position, which is comprised of borrowings under bank lines of credit, short-term borrowings, and current and long-term portions of debt, improved in 2003 through the repayment of approximately Euro 240 million of outstanding debt and in
2002 by the repayment of approximately Euro 298 million of outstanding debt. The weighted-average interest for 2003 of 4.10% decreased from 5.25% in financial year 2002.



The Company paid dividends of Euro 52 million during 2003, compared to Euro 52 million during 2002 and Euro 53 million during 2001.



The Company purchases its Ordinary Shares from time to time to cover
obligations under stock option plans. In 2003, Océ purchased 100,000 of its Ordinary Shares for an aggregate price of Euro 0.9 million. In 2002 Océ purchased 619,102 of its Ordinary Shares for an aggregate price of Euro 6.0 million. As
of November 30, 2003, the Company held 3,856,942 Ordinary Shares in treasury, and it has no current intention of selling those shares.



As of November 30, 2003, the Company had the following long-term contractual obligations:



|                                      |       |                        |                  |     |           |     |             |     |               |   
|------------------------------------- | ----- | ---------------------- | ---------------- | --- | --------- | --- | ----------- | --- | ------------- | --
|(In millions)                         |       | Payments Due by Period
|                                      | Total |                        | Less than 1 year |     | 1-3 years |     | 3 - 5 years |     | After 5 years
|Long-Term Debt Obligations            |       | 547                    |                  | 166 |           | 232 |             | 142 |               | 7 
|Capital (Financial) Lease Obligations |       | 3                      |                  | 1   |           | 1   |             |    |               |  
|Operating Leases Obligations          |       | 320                    |                  | 75  |           | 97  |             | 60  |               | 88



As of November 30, 2003, the
Companys principal sources of liquidity consisted of Euro 340 million in cash from operating activities, Euro 56 million of cash and cash equivalents and Euro 1,206 million available borrowings under credit lines. The Company also expects to
raise cash from the sale of part of its financial lease portfolio in Europe and the United States in 2004. Finally, the Company may from time to time raise additional capital in debt and equity markets. The Companys liquidity is affected by
many factors, some of which are based on the normal ongoing operations of its business, the industry in which it operates and the uncertainties of global economies. Although the Companys cash requirements will fluctuate based on the timing and
extent of these factors, management believes that cash generated from operations, together with the liquidity provided by existing cash balances, will be sufficient to satisfy the liquidity requirements for the next twelve months. In 2004, the
current repayable portion of the Companys long term debt will be Euro 166 million. The Company expects capital expenditures in 2004 to be approximately Euro 110 million. In addition, the Company maintains for the next twelve months operating
lease commitments for an amount of approximately Euro 75 million.



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C. Research and Development



Research and development are critical to the success of the Company. The Company employed 1,928 people in six countries during 2003 to
engage in research and development activities (compared to 1,945 and 1,840 employees at the end of 2002 and 2001, respectively).



Océs strategy is to develop machines which are more user-friendly, reliable and productive than competing products. In its search for alternative solutions
over the years Océ has developed various innovative technologies of its own. These technologies were leading-edge and have helped considerably to enhance the distinctive characteristics of Océ products.



Océs research and development activities are located in six countries:
Netherlands, Germany, France, Belgium, United States and Japan.



Because of its
long term focus on research and development, Océ possesses a broad range of technology for printing in black and white and in color. Océ currently focus on continuing to refine this technology and to develop new technology. The most
important developments at the present time are taking place in the area of printing technology (color and black and in white) and software development.



Océ believes software development is essential to the success of its business in the future to make the link between the customers work process and the
Océ printers. In the area of software development Océ has rapidly implemented a number of modifications to ensure that all components of its products connect and work well with each other.



Over the past five years, the Company has spent from 5.9% in 1999 to 7.7% in 2003 of its
total revenues on research and development. The following table sets forth the aggregate amounts spent in research and development over the past five years:



|                         |  |                                     |  |                    
|------------------------ |  | ----------------------------------- |  | -------------------
|Years ended November 30, |  | R&D expenditure (in million Euros) |  | Percent of Revenues
|1999                     |  | 167                                 |  | 5.9                
|2000                     |  | 199                                 |  | 6.2                
|2001                     |  | 203                                 |  | 6.3                
|2002                     |  | 215                                 |  | 6.8                
|2003                     |  | 212                                 |  | 7.7                



Research and development expenditures
do not include substantial additional costs relating to the participation of non-research and development personnel in research and development projects. In addition, research and development expenditures are net of (a) development credits advanced
under a program of The Netherlands government which are not repaid or charged to income until and unless the project for which the advance is made is commercially successful and (b) direct grants provided by the government of The Netherlands which
are not required to be repaid. The development credits and grants (net of provisions for repayment of prior development credits) were Euro 4.0 million in 2003, Euro 1.8 million in 2002, Euro 3.7 million in 2001, Euro 8.8 million in 2000 and Euro 7.7
million in 1999.



D. Trends



The Companys results in 2003 were strongly affected by the global slowdown in economic
growth. This resulted in a postponement of investment decisions by its customers and decreased sales. The development of the economy remains uncertain, and there are no current indications that any significant improvement will occur over the short
term. In view of this uncertainty and given the prevailing market conditions, the Company cannot give a forecast for 2004.



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In addition, as discussed in Item 4, Océ intends to complete most of the outsourcing of its financial lease
portfolio by the end of 2004. As a result, the revenue from these financial leasing activities will be reduced in 2004 and largely eliminated thereafter and the lease related assets (and related liabilities) on the Companys balance sheet will
be substantially reduced. The transfer of the lease activities will likely have the short-term effect of decreasing the net result and earnings per share. Although the Company anticipates that this effect will be offset by making effective use of
the funds that are released and revenues generated from sales of its machines through third party financing, there is no guarantee that the Companys future investments with these funds will be successful.



The Companys results were negatively effected in 2003 by the strong Euro and weak U.S
dollar. The Company believes that this trend may continue in 2004, especially in connection with the prices of products and in connection with currency translation.



Finally, the Company announced in 2003 that it intends to transfer parts of its final assembly and manufacturing activities from the
Netherlands to Central Europe and the Far East. In connection with this transfer, the Company will reduce its work force in the Netherlands by 175 employees. In March 2004, the Company reached an agreement with the Dutch Works Council and the
applicable trade unions relating to the reduction of Dutch employees related to this transfer. The Company intends for this transfer to result in a reduction in manufacturing costs in 2004 and thereafter. The Company expects that this transfer will
be seamless to its operations and customers.



The Company believes that its new
market-focused organization structure, backed by the launch of several major new products, will have a positive effect on Océs competitive strength and will put Océ in the best possible position to minimize difficulties related
to the slow economy and to seize the opportunities that arise when the economy becomes stronger.



E. Off-balance sheet arrangements.



There are no Off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Companys financial condition, results of operations or cash flows that is material to investors.



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Item 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



A. Directors and Senior Management



Under Dutch law and the
Companys Articles of Association, the Company is managed by a Board of Executive Directors, all of whom are employees of the Company, whose activities are generally supervised by a Board of Supervisory Directors, none of whom are employees of
the Company.



Set forth below is information as of March 15, 2004 concerning
the Supervisory Directors, Executive Directors and senior managers of the Company.



Board of Supervisory Directors as at March 15, 2004



|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|J.L. Brentjens (Born: 1940) Chairman   |  | Post(s) held: former Chairman of the Board of Directors of VNU N.V. Nationality: Dutch. Appointed: 2001. Current term of office until 2005. Maximum period of
office until 2011 (age limit). Supervisory directorships: Chairman of the Supervisory Board of Heijmans N.V. and ArboNed N.V.,
Vice-chairman of the Supervisory Board of Roto Smeets De Boer N.V., and member of the Supervisory Board of VNU N.V., Fortis OBAM N.V. and Holdingmaatschappij P. Bakker Hillegom B.V. Other posts: Vice-chairman of Van Leer Group Foundation, Chairman of the Board of the Nijmegen Catholic University Foundation and board member of several foundations.                                                                         
|                                       | 
|F.J. de Wit (Born: 1939) Vice-Chairman |  | Post(s) held: former Chairman of the Board of Directors of N.V. KNP B.T. Nationality: Dutch. Appointed: 1997. Current term of office until 2005. Maximum period of office until 2009 (age limit and 12-year period). Supervisory Directorships: Chairman of the Supervisory Board of PontMeyer N.V. and member of the Supervisory Board of AEGON N.V. Other posts: member of the Advisory Board of Deloitte & Touche and Keyser & Mackay (International) C.V., honorary consul general of Finland and board
member of several foundations.                                                                                                                                                                                        
|                                       | 
|M. Arentsen (Born: 1939)               |  | Post(s) held: former member of the Board of Executive Directors of CSM N.V. Nationality: Dutch. Appointed: 2004. Current term of office until [2008]. Maximum period of
office until 2016 (12-year period).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                       |  | Supervisory directorships: Chairman of the Board of Supervisory Directors of CSM Nederland B.V., Klaverblad Verzekeringen and Incotec B.V. Vice-Chairman of the Board of Supervisory
Directors of Koninklijke Frans Maas Groep N.V. and member of the Executive Board of Directors of Zuivelcooperatie Campina U.A.                                                                                                                                                                                                                                                                                                                                                                                                               
|                                       | 
|A. Baan (Born: 1942)                   |  | Post(s) held: former member of the Board of Management of Royal Philips Electronics N.V. and a former member of the Group Management
Committee of Royal Philips Electronics N.V. Nationality: Dutch. Appointed: 2003. Current term of office until 2007. Maximum period of office until 2013 (age limit). Supervisory directorships: Non-executive director of Imperial Chemical Industries ICI PLC and International Power PLC (London), member of the Supervisory Board of
Royal Volker Wessels Stevin N.V., ASM International N.V. and Wolters Kluwer N.V. Other posts: independent director of Hessen Noord Natie Port of
Antwerp and member of the Supervisor Board of the Netherlands Authority for Financial Markets (AFM).



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|                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|P. Bouw (Born: 1941)         |  | Post(s) held: former Chairman of Koninklijke Luchtvaart Maatschappij N.V. (KLM). Nationality: Dutch. Appointed: 1998. Current term of office until 2006. Maximum period of office until 2010 (12-year period). Supervisory directorships: Chairman of the Supervisory Board of CSM N.V. and Swiss International Airlines A.G. (Switzerland) and member of the Supervisory Board of
NUON N.V., and De Nederlandsche Bank N.V. Other posts: part-time professor in Business Administration at Twente University, chairman of the Board of Trustees of Amsterdam Free Reformed University, Chairman of the Banking Council and member of
the board of several foundations.
|                             | 
|J.V.H. Pennings (Born: 1934) |  | Post(s) held: former Chairman of the Board of Executive Directors of Océ N.V. Nationality: Dutch. Appointed: 1998. Current term of office until 2005. Maximum period of office until 2005 (age limit). Supervisory Directorships: Chairman of the Supervisory Board
of Koninklijke Grolsch N.V., Koninklijke Ahrend N.V., Essent N.V. and N.V. Industriebank Liof, vice-chairman of the Supervisory Board of Wolters Kluwer N.V. and member of the Supervisory Board of Heijmans N.V. and Berenschot Beheer. Other posts: board member of several foundations.                                                                                                         



Under the Companys Articles of
Association, the Board of Supervisory Directors consists of at least three and no more than eight members. Currently, the Board of Supervisory Directors consists of six members. Supervisory Directors are appointed by the shareholders of the Company
at the general meeting of shareholders. Each Supervisory Director is appointed for terms of four years and may serve up to a maximum of twelve years. Each Supervisory Director serves until his resignation, death or removal by shareholders. Under the
terms of Océs Articles of Association, a Supervisory Director who reaches the age of 70 must resign from the Board of Supervisory Directors. At each general meeting of shareholders the term of at least one Supervisory Director expires.
A Supervisory Director who has not reached the age of 70 (and who not served as a Supervisory Director for twelve years) may be immediately reappointed. Vacancies which exist in the Board of Supervisory Directors are filled by shareholders,
generally at the first general meeting of shareholders held after the vacancy occurs or is created. The holders of the Companys Priority Shares (further described in Item 10.B) may make binding nominations for all vacancies in the Supervisory
Board, and the shareholders of the Company have the right to approve or reject the nominations. If the holders of the Companys Priority Shares do not make a binding nomination, then the Board of Supervisory Directors have the right to make
nominations, which may be overruled by the holders of the Ordinary Shares. Except on the proposal of the holder of Priority Shares, no Supervisory Director can be removed without a vote of two-thirds of the votes cast which vote must consist of not
less than a majority of all votes shareholders are entitled to cast.



Effective
as of March 2, 2004 at the general meeting of the shareholders, Mr. L.J.M. Berndsens term as Supervisory Director expired. Mr. Berndsen was not eligible for re-election. Mr. Arentsen was elected as a new member of the Board of Supervisory
Directors to fill the vacancy created by Mr. Berndsens resignation. As further discussed below, Mr. Arentsen will replace Mr. Berndsen as the Chairman of the Companys Audit Committee.



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Board of Executive Directors as at March 15, 2004



|                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|R.L. van Iperen (Born: 1953) |  | Post(s) held: Chairman, Board of Executive Directors. Nationality: Dutch. Appointed: as member of the Board of Executive
Directors in May 1995 and as Chairman of the Board of Executive Directors in September 1999. Functional Responsibilities: Strategy, Corporate
Personnel and Organization, Research & Development, Secretariat of the Company and Legal Affairs, Corporate Communications. Geographical Responsibilities: The Netherlands, United States (Chairman), Germany, Belgium and Japan.
Other posts:Member of the Advisory Board of Rabobank Nederland and New Venture and member of the International Advisory Committee Industrial Design of the
Technical University of Eindhoven. Posts held: Employed by Océ since 1978. After holding several positions within R&D, appointed
assistant director in 1986. Assumed responsibility for the Printing Systems business unit in 1989. Managing Director of Océ-Belgium N.V. from 1992 until his appointment as a member of the Executive Board.
|                             | 
|J. van den Belt (Born: 1946) |  | Post(s) held: Member Board of Executive Directors. Nationality: Dutch. Appointed: March 2001. Functional Responsibilities: Finance and Administration, Treasury,
Tax, Internal Audit, Corporate Information Department, Investor Relations and lease activities. Geographical Responsibilities: France, Spain and Portugal. Prior posts held: From 1970 employed by Unilever in the Netherlands and the
United Kingdom. Since 1977 employed by N.V. Koninklijke Netherlandse Petroleum Maatschappij (Shell). Until 1997 several management posts with Shell in the field of treasury and controlling and as Chief Financial Officer (CFO) in various countries in
Latin America, the United Kingdom and the Netherlands. From 1997 to 2000 CFO of Shell in Brazil. Since September 1, 2000 employed by Océ as CFO.                                                                                                                                                                                               
|                             | 
|R.E. Daly (Born: 1947)       |  | Post(s) held: Member Board of Executive Directors. Nationality: United States. Appointed: 2003. Functional
Responsibilities: United States (CEO). Geographical Responsibilities: United States, Canada, Mexico. Other posts: vice-chairman Environmental Law and Policy Center Board, Chairman Leadership Greater Chicago Board and member of the
Board of Trustees Chicago Symphony Orchestra, the Conference Board Council of Operating Executives and of the Board of SuperValu. Advisory boardmember Loyola School of Business. Prior posts held: From 1964 to 2002 employed by R.R. Donnelly & Sons Company. From 1995 to 2001, served as President of the Telecommunications Business Unit of R.R. Donnelly. From 2001 to December 1, 2002,
served as President of Print Solutions group of R.R. Donnelly. Appointed Chief Executive Officer of Océ-USA Holding, Inc. on December 1, 2002.                                                                                                                 
|                             | 
|J.F. Dix (Born: 1946)        |  | Post(s) held: Member Board of Executive Directors. Nationality: Dutch. Appointed: May 1998. Functional
Responsibilities: Direct Export, Emerging Markets, Marketing Communications, strategic business unit Digital Document Systems (ad interim). Geographical Responsibilities: United Kingdom, Scandinavia, Switzerland, Italy, Austria,
Australia, Central Europe, Far East and Brazil. Prior posts held: From 1970 to 1972 director of family business Trappenfabriek Dix B.V., Utrecht.
Joined Douwe Egberts N.V. in 1972; from 1973 to 1977 served as director in Denmark. Employed by Océ since March 1, 1977. After several management posts, appointed Managing Director of Océ-Belgium N.V. in 1985. From 1988 to 1998, worked
for Océ in the United States, since 1992 as President of Océ-USA, Inc. until his appointment as member of the Executive Board.                                                                                                                                         





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The number of members serving on the Board of Executive Directors is established under Océs Articles of
Association by the holders of the Priority Shares. Currently, the holders of the Priority Shares have established that the Board of Executive Directors will consist of four members, who are appointed by the shareholders of the Company at each
general meeting of shareholders. Subject to being overruled by a shareholders vote, the holders of Priority Shares may make binding nominations for all vacancies in the Executive Board.



Executive Directors serve until their resignation (mandatory at age 60 for the Chairman and
at age 62 for the remaining members), death or removal by shareholders. Except on the proposal of the holder of Priority Shares, no Executive Director can be removed without a vote of two-thirds of the votes cast which vote must consist of not less
than a majority of all votes shareholders are entitled to cast.



None of the
members of the Executive Board perform any principal business activities outside the Company. There are no family relationships between any of the members of the Executive Board and any of the members of the Supervisory Board.



Senior Managers as at March 15, 2004



In addition to the Executive Directors, the following members of the Companys senior
management team assist the Executive Board manage the Company:



|                  |  |                                                                                |  |                              
|----------------- |  | ------------------------------------------------------------------------------ |  | -----------------------------
|Name              |  | Position                                                                       |  | Served in SuchCapacity Since:
|M.J.A. Frequin    |  | Executive Vice President  WFPS                                                |  | 2001                         
|                  |  |                                                                               
|W.H.M. Orbons     |  | Senior Vice President  Research and Development for WFPS and Cutsheet Systems |  | 2000                         
|                  |  |                                                                               
|P. Feldweg        |  | Senior Vice President  Research and Development of Continuous Feed Systems    |  | 2002                         
|                  |  |                                                                               
|M. Pracchi        |  | Senior Vice President  Research and Development of Software                   |  | 2002                         
|                  |  |                                                                               
|N.J. Koole        |  | Senior Vice President  Manufacturing and Logistics                            |  | 1997                         
|                  |  |                                                                               
|H.J. Huiberts     |  | Senior Vice President and General Counsel; Secretary of the Company            |  | 2001                         
|                  |  |                                                                               
|P.H.G.M. Creemers |  | Senior Vice President  Corporate Personnel and Organization                   |  | 1998                         
|                  |  |                                                                               
|C.F. Lindenhovius |  | Senior Vice President  Group Control                                          |  | 1995                         
|                  |  |                                                                               
|P. Hagedoorn      |  | Senior Vice President and Chief Information Officer                            |  | 2003                         



There is no arrangement or
understanding with major shareholders, customers or others pursuant to which any senior manager became a member of senior management. In addition, none of the senior managers are permitted to perform any principal activities outside of the Company.



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B. Compensation



Supervisory Directors



In 2003, the Company paid Euro 205,121, in the aggregate, as compensation to the members of the Board of Supervisory Directors in exchange
for their service on the Board of Supervisory Directors. This amount includes the accrued compensation of the Supervisory Directors during 2002 of Euro 187,193 and a reimbursement for expenses incurred in 2003 in connection with their service on the
Board of Supervisory Directors. At the 1998 General Meeting of Shareholders, the Companys shareholders fixed the compensation of the Board of Supervisory Directors at Euro 40,840 for the Chairman and Euro 27,227 for each other member. These
amounts automatically increase on an annual basis if the CBS Price Index figure for household consumption in September of the preceding year is at least 10% higher than the prior index figure. The compensation of the Supervisory Directors during
2003 will amount Euro 43,355 for the Chairman of the Board of Supervisory Directors and Euro 30,904 for each other member.



Executive Directors



The Board of Supervisory Directors determines the remuneration of the members of the Board of Executive Directors. Generally, remuneration of the members of the Board of
Executive Directors is comprised of four components: base salary, variable salary, grants of stock options and pension benefits.



The following table sets forth the amount of compensation paid and benefits granted to each member of the Board of Executive Directors in 2003. The amounts set forth are
denominated in the currency in which each Executive Director was paid, which are Euros for each of Messrs. van Iperen, van den Belt and Dix and U.S. Dollars for Mr. Daly.



|                |  |            |  |                |    |  |         |  |                         
|--------------- |  | ---------- |  | -------------- | -- |  | ------- |  | ------------------------
|                |  | BaseSalary |  | VariableSalary |    |  | Total   |  | PensionContributions****
|R.L. van Iperen |  | 603,069    |  | 138,244        | *  |  | 741,313 |  | 494,706                 
|J. van den Belt |  | 404,014    |  | 98,109         | *  |  | 502,123 |  | 175,312                 
|R.E. Daly***    |  | 525,000    |  | 411,470        | ** |  | 936,470 |  | 5,400                   
|J.F. Dix        |  | 452,810    |  | 98,109         | *  |  | 550,919 |  | 209,153                 

---

|* | The amount of variable salary paid is based on a combination of the performance of the Company and the individual Executive Director during the prior financial year. The targets
established are based, in part, on the Companys financial performance (such as net income and return on assets) and, in part, on the individual targets (such as implementing strategic plans, policies or operations). Amounts of the variable
salary that accrue for a particular year are actually paid in the following financial year. Accordingly, the amounts listed above for each of Messrs. van Iperen, van den Belt and Dix were amounts paid in 2003 for performance during 2002. The amounts
reflected for each Executive Director in the 2003 Annual Report, however, show the accrued amounts to be payable to each Executive Director in 2004 based on 2003 performance, which is in accordance with Dutch GAAP.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | On January 6, 2003, Mr. Daly was paid a bonus of $411,470 in connection with the execution of his employment agreement with the Company. Under the terms of his employment agreement,
if Mr. Daly voluntarily leaves the employment of the Company prior to certain dates, he will be required to repay part of this bonus to the Company. The amount to be repaid will depend on when Mr. Dalys employment terminates. A copy of Mr.
Dalys employment agreement, as amended, is filed as an exhibit to this report.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|*** | The amounts shown for Mr. Daly are amounts for the entire 2003 financial year, although Mr. Daly did not become an Executive Director until March 12, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | The Company contributes certain amounts to its pension plans on behalf of the members of the Board of Executive Directors.
|---- | --------------------------------------------------------------------------------------------------------------------------



The following table sets forth in Euro at November 30, 2003 the accrued pension entitlements
payable to the members of the Board of Executive Directors and the pension amounts that would be payable to them annually on the basis of their years of service at the end of 2003. The pension scheme applicable to the Dutch Executive Directors was
modified effective as of January 1, 2003. The prior pension scheme was based on a defined benefit system. The new pension scheme is a defined benefit system which provides a maximum pension salary in excess of Euro 237,952 in combination with a
defined contribution system for the salary in excess of the maximum pension salary.



|                |  |     |  |                 |  |                                         |  |                       |  |                                               
|--------------- |  | --- |  | --------------- |  | --------------------------------------- |  | --------------------- |  | ----------------------------------------------
|                |  | Age |  | FinalPensionAge |  | Increase in AccruedEntitlements in 2003 |  | AccruedPension Rights |  | Capital Build-Up inDefined ContributionsScheme
|R.L. van Iperen |  | 50  |  | 60              |  | 12,266                                  |  | 202,335               |  | 70,465                                        
|J. van den Belt |  | 57  |  | 62              |  | 4,943                                   |  | 31,866                |  | 62,236                                        
|R.E. Daly*      |  | 56  |  | 62              |  |                                        |  |                      |  |                                              
|J.F. Dix        |  | 57  |  | 62              |  | 10,444                                  |  | 183,538               |  | 63,261                                        

---

|* | Mr. Daly participates in Companys United States 401(k) plan and is not otherwise eligible to participate in any other Company pension scheme.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------



C. Board practices



The information required in Item 6.C.1 of this report relating to the Supervisory Directors and the Executive Directors is included in the
discussions in Item 6.A. above.



The members of the Board of Supervisory
Directors do not have service contracts with the Company and are not entitled to any benefits upon termination of their service on the Board of Supervisory Directors. Each member of the Board of Executive Directors has entered into an employment
agreement with the Company, each of which is filed as an exhibit to this report. Except for Mr. Daly and Mr. van den Belt, none of these agreements expressly require the Company to pay severance in the event any Executive Directors employment
is terminated. The Companys policy, however, is to pay severance that is reasonable in light of the Executive Directors relationship with the Company, market practices for similar companies and any requirements under applicable law.
Under Mr. Dalys employment agreement, if Mr. Dalys employment is terminated without cause by the Company within three years of the effective date of the agreement or if Mr. Dalys employment is terminated without cause within one
year of a change of control of Océ-USA Holding, Inc. (a wholly-owned subsidiary of Océ N.V.), then Mr. Daly will be entitled to a severance payment of $1,050,000.



Under Mr. van den Belts employment agreement, if Mr. van den Belts employment is terminated by the Company, then Mr. van den
Belt will be entitled to a severance payment equal to 24 months of his base salary (unless Mr. van den Belt would have required to terminate his employment during the 24 months period before his retirement, in which case, his severance payment
will be equal to his base salary for the period from the date of his termination to the date of his retirement).



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The Supervisory Board has established a Remuneration Committee and, in October 2002, an Audit Committee.



As at March 15, 2004 the Remuneration Committee consists of F.J. de Wit (Chairman) and J.L.
Brentjens. The Remuneration Committee monitors and evaluates the remuneration policy for the management and directors of the Company and makes recommendations regarding the remuneration of the Board of Executive Directors to the Supervisory Board.
The Remuneration Committee has not adopted a charter; rather, the committee operates based on a standing resolution from the Board of Supervisory Directors. The Remuneration Committee is required to meet when appropriate.



In October 2002, the Board of Supervisory Directors adopted an audit charter to establish an
Audit Committee. The purpose of the Audit Committee is to assist the Supervisory Board in fulfilling its oversight responsibilities by monitoring the Companys financial reporting process, systems of internal control and financial risk
management policies; responsible for hiring the Companys registered public accounting firm employed to audit the Companys books and monitoring the independent auditors performance; providing an avenue of communication among the
independent auditors, the Companys internal audit department and the Board of Executive Directors and providing an avenue of communication for employees of the Company or others who have concerns regarding the Companys financial
reporting, internal controls, auditing matters and ethical matters. During 2003, the Audit Committee consisted of three members: L.J.M. Berndsen (Chairman), P. Bouw and F.J. de Wit. As discussed above, Mr. L.J.M. Berndsens term as Supervisory
Director expired at the Companys March 2, 2004 general meeting of shareholders, and the vacancy created by Mr. Berndsens resignation was filled by the election of Mr. M. Arentsen. Mr. Arentsen will also replace Mr. Berndsen as Chairman
of the Audit Committee. In order to ensure that the transition on the Audit Committee is smooth and to ensure that the review of the 2003 results are complete, Mr. Berndsen agreed to advise the Audit Committee until the 2003 review was complete.



In accordance with its Charter, the Audit Committee is required to meet a
minimum of four times each year, but may meet more frequently if any member requests an additional meeting. In addition the committee is required to meet privately in executive session at least one time each year with the Companys Vice
President - Internal Audit Department and the independent auditors. The committee will also meet privately in executive session at any time that the Board of Executive Directors, the Vice President - Internal Audit Department or the independent
auditors request a meeting.



D. Employees



The Company employed 22,204, 22,489 and 22,472 employees (in full time equivalents)
world-wide, at November 30, 2003, 2002 and 2001, respectively. The Company believes that its employee relations and relations between management and the various memberships to which Océ employees belong are excellent. Since 1991, the Company
has not experienced any significant strike, work stoppage or labor dispute. For additional information regarding the Companys employees, please refer to Employees and Labour Relations and Social Responsibility on pages
46-49, of the Companys 2003 Annual Report, which is filed as Exhibit 10 to this report and incorporated herein by reference.



The following table sets forth for the past three years the number of employees employed by the Company based on the employees main category of activity and by
geographic distribution.



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Employees by category



|                                                   |  |        |  |        |  |       
|-------------------------------------------------- |  | ------ |  | ------ |  | ------
|                                                   |  | 2001   |  | 2002   |  | 2003  
|Research and Development                           |  | 1,840  |  | 1,945  |  | 1,928 
|Manufacturing and Logistics                        |  | 2,887  |  | 2,809  |  | 2,514 
|Business Services                                  |  | 6,046  |  | 6,611  |  | 7,149 
|Sales                                              |  | 4,653  |  | 4,376  |  | 4,140 
|Service                                            |  | 4,914  |  | 4,617  |  | 4,327 
|Accounting and other staff                         |  | 2,132  |  | 2,131  |  | 2,146 
|                                                   |  |        |  |        |  |       
|Total number of employees at November 30,          |  | 22,472 |  | 22,489 |  | 22,204
|                                                   |  |        |  |        |  |       
|Average number of employees during the fiscal year |  | 22,363 |  | 22,480 |  | 22,346



Distribution of
employees by geographical areas



|                                          |  |        |  |     |  |        |  |     |  |        |  |    
|----------------------------------------- |  | ------ |  | --- |  | ------ |  | --- |  | ------ |  | ---
|                                          |  | 2001   |  | %   |  | 2002   |  | %   |  | 2003   |  | %  
|United States                             |  | 8,234  |  | 37  |  | 8,730  |  | 39  |  | 8,969  |  | 40 
|Netherlands                               |  | 4,059  |  | 18  |  | 4,052  |  | 18  |  | 4,061  |  | 18 
|Germany                                   |  | 3,299  |  | 15  |  | 3,199  |  | 14  |  | 3,063  |  | 14 
|France                                    |  | 1,388  |  | 6   |  | 1,237  |  | 5   |  | 1,203  |  | 6  
|United Kingdom                            |  | 1,111  |  | 5   |  | 1,122  |  | 5   |  | 1,041  |  | 5  
|Rest of Europe                            |  | 3,301  |  | 14  |  | 3,069  |  | 14  |  | 2,903  |  | 13 
|Rest of the world                         |  | 1,080  |  | 5   |  | 1,080  |  | 5   |  | 964    |  | 4  
|                                          |  |        |  |     |  |        |  |     |  |        |  |    
|Total number of employees at November 30, |  | 22,472 |  | 100 |  | 22,489 |  | 100 |  | 22,204 |  | 100
|                                          |  |        |  |     |  |        |  |     |  |        |  |    



E. Share ownership



At November 30, 2003, the members of the Supervisory Board held 2,969
Ordinary Shares (in the aggregate) and no rights arising from options listed on the Euronext Options Exchange. At November 30, 2003, none of the members of the Board of Executive Directors held any Ordinary Shares. The Executive Directors are
entitled to purchase Ordinary Shares in connection with the Companys stock option plan, as further described below.



Océ adopted a stock option plan under which it grants to members of the Board of Executive Directors and certain senior executives of the Company options to
purchase Océs Ordinary Shares and/or share appreciation rights (SARS) in respect of Océs Ordinary Shares to encourage the long term achievement of the Companys objectives.



The holder of an SAR has the right to receive a value equal to the difference between the
stock market price of the Companys Ordinary Shares (based on trading on the Euronext Amsterdam stock exchange) on the day of exercise and the exercise price that was fixed on the day of granting the SARS. Upon exercise of an SAR, the holder
may receive the payment either in cash or the Companys Ordinary Shares.



During 2003, the Company granted an aggregate of 660,000 unconditional options and 15,000 SARS to a total of 174 participants under its stock option plan. The terms and conditions of options granted under the stock option plan depend on
where an individual resides. Participants who reside in The Netherlands and Belgium received options that are exercisable for nine years after the date on which the options are granted. Participants residing in



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other countries received options that are exercisable for eight years after the date on which the options are granted. In
2003, SARS were granted to individuals residing in Switzerland that are exercisable for eight years after the date on which the SARS are granted.



Participants in the stock option plan are required to abide by a code of conduct and observe a waiting period before they may exercise their options or SARS. The waiting
period is typically two to three years after the date on which the options or SARS were granted.



Most of the options and SARS granted under the stock option plan are unconditional, which means that no conditions must be met before the holder may exercise the options or SARS (other than abiding by a code of
conduct and observing the waiting period, as noted above). A limited category of participants have also been awarded conditional options or SARS. A holder of conditional options or SARS may exercise the options or SARS only after the Company meets
certain performance criteria, which is typically based on the Companys Earnings Per Share (EPS) or Operating Income Per Share (OIPS). In the event that the Company achieves the required criteria growth, option rights
will become unconditional.



In 2003, the Company granted 223,000 conditional
options to 34 participants. If this criteria is achieved 223,000 option rights will become unconditional. The maximum possible number of option rights that may become unconditional is 446,000.



The exercise price of conditional and unconditional options or SARS granted in 2003 outside
The Netherlands was based on the opening price per share the Companys Ordinary Shares on the Euronext Amsterdam stock exchange on the date of grant, which was Euro 12.21 per share. Participants residing in The Netherlands to whom options were
granted were offered a choice between an exercise price of Euro 12.21, Euro 13.43, Euro 14.65 or Euro 16.48 per share for tax planning purposes. Holders who elect higher exercise prices are required to pay a lower amount of taxable income in
connection with the grant of the option and the exercise of the option.



Participation in the Companys stock option plan is regulated under Dutch law to prevent the misuse of inside information. Participants in the stock option plan are prohibited from trading in Océ options on the Euronext Options
Exchange in Amsterdam and are not allowed to dispose of or pledge their options. To exercise their options, participants are required to transfer their options to an independent trustee designated by the Company, which then exercises the options
according to the instructions given by the participants. Participants can only give such instructions if they are not in possession of inside information of the Company and the Company has not imposed a trading restriction on the exercise of
options. The Company typically restricts the exercise of options for a period of nine stock exchange trading days after publication of the Companys quarterly results.



As at November 30, 2003, a total of 4,031,000 unconditional option rights or SARS in respect of Ordinary Shares were outstanding at an
average exercise price of Euro 15.80. In addition, as at November 30, 2003, a total of 1,244,000 unconditional options with an average exercise price of Euro 11.00 were outstanding. The average remaining duration of these options is five years.



The Companys policy is to repurchase in the open market its Ordinary
Shares required to be issued in connection with exercises of options or SARS. The Company may also issue Ordinary Shares that it holds in its treasury to cover commitments under existing stock option plans. During 2003, the Company repurchased
100,000 of its Ordinary Shares to be issued in connection with exercises of options and SARS.



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The following table sets forth as at November 30, 2003, the options granted to the members of the Board of Executive
Directors after their appointment to the Board.



|                |  |                          |  |                           |  |                       |  |             |  |                 |  |                  
|--------------- |  | ------------------------ |  | ------------------------- |  | --------------------- |  | ----------- |  | --------------- |  | -----------------
|                |  | Stock OptionPlan in Year |  | Number of Options Granted |  | Exercise Pricein Euro |  | Outstanding |  | Expiration Date
|R.L. van Iperen |  | 1999                     |  |                           |  | 35,000                |  | 30.40       |  | 35,000          |  | November 29, 2004
|                |  | 2000                     |  |                           |  | 42,000                |  | 17.02       |  | 42,000          |  | November 26, 2005
|                |  | 2001                     |  |                           |  | 42,000                |  | 18.10       |  | 42,000          |  | November 29, 2006
|                |  | 2002                     |  | Unconditional             |  | 21,000                |  | 9.77        |  | 21,000          |  | November 28, 2010
|                |  | 2002                     |  | Conditional               |  | 42,000                |  | 9.77        |  | 42,000          |  | November 28, 2010
|                |  | 2003                     |  | Unconditional             |  | 21,000                |  | 10.75       |  | 21,000          |  | November 27, 2011
|                |  | 2003                     |  | Conditional               |  | 42,000                |  | 10.75       |  | 42,000          |  | November 27, 2011
|                |  | 2004                     |  | Unconditional             |  | 21,000                |  | 12.21       |  | 21,000          |  | November 26, 2012
|                |  | 2004                     |  | Conditional               |  | 42,000                |  | 12.21       |  | 42,000          |  | November 26, 2012
|                |  |                          |  |                           |  |                      
|J. van den Belt |  | 2000                     |  |                           |  | 25,000                |  | 16.85       |  | 25,000          |  | November 26, 2005
|                |  | 2001                     |  |                           |  | 35,000                |  | 18.10       |  | 35,000          |  | November 29, 2006
|                |  | 2002                     |  | Unconditional             |  | 17,500                |  | 9.77        |  | 17,500          |  | November 28, 2010
|                |  | 2002                     |  | Conditional               |  | 35,000                |  | 9.77        |  | 35,000          |  | November 28, 2010
|                |  | 2003                     |  | Unconditional             |  | 17,500                |  | 10.75       |  | 17,500          |  | November 27, 2011
|                |  | 2003                     |  | Conditional               |  | 35,000                |  | 10.75       |  | 35,000          |  | November 27, 2011
|                |  | 2004                     |  | Unconditional             |  | 17,500                |  | 12.21       |  | 17,500          |  | November 26, 2012
|                |  | 2004                     |  | Conditional               |  | 35,000                |  | 12.21       |  | 35,000          |  | November 26, 2012
|                |  |                          |  |                           |  |                      
|R.E. Daly       |  | 2003                     |  | Unconditional             |  | 125,000               |  | 10.75       |  | 125,000         |  | November 27, 2010
|                |  | 2003                     |  | Conditional               |  | 50,000                |  | 10.75       |  | 50,000          |  | November 27, 2010
|                |  | 2004                     |  | Unconditional             |  | 25,000                |  | 12.21       |  | 25,000          |  | November 26, 2011
|                |  | 2004                     |  | Conditional               |  | 50,000                |  | 12.21       |  | 50,000          |  | November 26, 2011
|                |  |                          |  |                           |  |                      
|J.F. Dix        |  | 2000                     |  |                           |  | 35,000                |  | 17.02       |  | 35,000          |  | November 26, 2005
|                |  | 2001                     |  |                           |  | 35,000                |  | 18.10       |  | 35,000          |  | November 29, 2006
|                |  | 2002                     |  | Unconditional             |  | 17,500                |  | 9.77        |  | 17,500          |  | November 28, 2010
|                |  | 2002                     |  | Conditional               |  | 35,000                |  | 9.77        |  | 35,000          |  | November 28, 2010
|                |  | 2003                     |  | Unconditional             |  | 17,500                |  | 10.75       |  | 17,500          |  | November 27, 2011
|                |  | 2003                     |  | Conditional               |  | 35,000                |  | 10.75       |  | 35,000          |  | November 27, 2011
|                |  | 2004                     |  | Unconditional             |  | 17,500                |  | 12.21       |  | 17,500          |  | November 26, 2012
|                |  | 2004                     |  | Conditional               |  | 35,000                |  | 12.21       |  | 35,000          |  | November 26, 2012



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The following table sets forth a summary of the Companys outstanding options and SARS held, in the aggregate, by
the Companys employees as of November 30, 2003.



|                       |  |                           |  |                       |  |                  |  |                           |  |             |  |                  |  |                       
|---------------------- |  | ------------------------- |  | --------------------- |  | ---------------- |  | ------------------------- |  | ----------- |  | ---------------- |  | ----------------------
|Stock Option Plan Year |  | Number of Options Granted |  | ExercisePrice in Euro |  | OptionsForfeited |  | ExercisedNumber ofOptions |  | Outstanding |  | Expiration Date*
|1999                   |  |                           |  | 872,500               |  | 30.40-41.15      |  | 450,000                   |  |            |  | 422,500          |  | November 29, 2003/2004
|2000                   |  |                           |  | 791,000               |  | 16.85-22.98      |  | 96,000                    |  |            |  | 695,000          |  | November 26, 2004/2005
|2001                   |  |                           |  | 847,500               |  | 18.10-24.44      |  | 74,000                    |  |            |  | 773,500          |  | November 29, 2005/2006
|2002                   |  | Unconditional             |  | 716,000               |  | 9.77-13.19       |  | 22,000                    |  | 13,000      |  | 681,000          |  | November 28, 2009/2010
|2002                   |  | Conditional               |  | 392,000               |  | 9.77             |  | 44,000                    |  |            |  | 348,000          |  | November 28, 2009/2010
|2003                   |  | Unconditional             |  | 793,000               |  | 10.75-14.51      |  | 3,000                     |  | 6,000       |  | 784,000          |  | November 27, 2010/2011
|2003                   |  | Conditional               |  | 470,000               |  | 10.75            |  | 20,000                    |  |            |  | 450,000          |  | November 27, 2010/2011
|2004                   |  | Unconditional             |  | 675,000               |  | 12.21-16.48      |  |                          |  |            |  | 675,000          |  | November 26, 2011/2012
|2004                   |  | Conditional               |  | 446,000               |  | 12.21            |  |                          |  |            |  | 446,000          |  | November 26, 2011/2012
|                       |  |                           |  |                       |  |                  | 
|TOTAL                  |  |                           |  | 6,003,000             |  |                  |  | 709,000                   |  | 19,000      |  | 5,275,000        |  |                       

---

|* | As noted above, the length of the exercise period varies depending on where the individual holder resides.
|- | ----------------------------------------------------------------------------------------------------------



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Item 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A description of the Companys equity securities and the rights of the holders of the Companys equity securities under the Companys Articles of Association is included in Item 10.B Memorandum
and Articles of Association, below.



A. Major shareholders



As further discussed, in Item 10.B., the authorized capital of Océ
N.V. is Euro 175,001,500 and is divided into four classes of capital stock:



| |  | 145,000,000 Ordinary Shares, nominal value Euro 0.50 per share;
| | - | ---------------------------------------------------------------



| |  | 30 priority shares, nominal value Euro 50 per share;
| | - | ----------------------------------------------------



| |  | 30,000,000 cumulative financing preference shares, nominal value Euro 0.50 per share; and
| | - | -----------------------------------------------------------------------------------------



| |  | 175,000 cumulative protective preference shares, nominal value Euro 500 par share.
| | - | ----------------------------------------------------------------------------------



The relative rights and powers of the holders of each class of capital stock (including voting rights and the rights and powers of the
holders of the priority shares and the cumulative protective preference shares to delay or prevent an unwanted change of control of the Company) are further described in Item 10.B.



Although the Companys Ordinary Shares are issued and held in bearer form, the Company believes that the following entities own the
following shares of its capital stock as of December 31, 2003:



|                                                                        |  |                                                       |  |              |  |                  |   
|----------------------------------------------------------------------- |  | ----------------------------------------------------- |  | ------------ |  | ---------------- | --
|Title of Class                                                          |  | Identity of Person or Group                           |  | Amount Owned |  | Percent of Class |   
|Ordinary Shares                                                         |  | ING Groep N.V.                                        |  | 7,478,456    |  | 8.57             | %*
|                                                                        |  |                                                       | 
|                                                                        |  | Supervisory Directors                                 |  | 2,969        |  |                 |   
|                                                                        |  |                                                       | 
|Priority Shares                                                         |  | Foundation Fort Ginkel                                |  | 30 shares    |  | 100.0            | % 
|                                                                        |  |                                                       | 
|Cumulative Financing Preference Shares                                  |  | Stichting AdministratiekantoorPreferente Aandelen Océ |  | 20,000,000   |  | 100.0            | % 
|                                                                        |  |                                                       | 
|Depositary Receipts representing Cumulative Financing Preference Shares |  | Rabobank NederlandParticipatie maatschappij B.V.      |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                       | 
|                                                                        |  | Fortis N.V.                                           |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                       | 
|                                                                        |  | ABP-PGGM Capital HoldingsN.V.                         |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                       | 
|                                                                        |  | ING Groep N.V.                                        |  | 2,000,000    |  | 10.0             | % 

---

|* | As of December 31, 2003 according to Schedule 13G as filed by ING Groep N.V. with the SEC on February 5, 2004.
|- | --------------------------------------------------------------------------------------------------------------



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Because the Companys shares are issued and held in bearer form, the Company is unable to determine the number of
record holders in the United States. Based on information that the Company has gathered, the Company believes that approximately 17% of its Ordinary Shares are held by United States residents.



To the Companys knowledge, it is not directly or indirectly owned or controlled by
another corporation, foreign government or individual. Except as otherwise described in Item 10.B, the Company does not know of any arrangements which may at a subsequent date result in a change of control of the Company.



B. Related party transactions



As discussed in Item 4, the Company has entered into an agreement with DLL relating to the
outsourcing of its financial lease portfolio in Europe. DLL is a wholly-owned subsidiary of Rabobank. Mr. Berndsen, who served as a Supervisory Director of the Company until March 2, 2004 is also a member of the Board of Supervisory Directors of
Rabobank N.V. In addition, Mr. van Iperen is a member of the advisory board of Rabobank N.V. The agreement between DLL and the Company was negotiated on an arms length basis.



Except as described in Item 10, Share Ownership and Item, Directors and Senior Management, the Company is not a
party to any transactions or loans with any other party that controls the Company, is controlled by the Company or is under common control with the Company, or any associates, individuals or enterprises with significant control over the Company or
key management personnel.



As described in Note 8 to the Consolidated
Financial Statements, the Company made interest free loans to each of the following Executive Directors to assist such Executive Directors in payment of taxes that they owed in connection with the grants of options under the Companys stock
option plan: Euro 0.2 million to Mr. van Iperen and Euro 0.1 million to each of Messrs. Dix and van den Belt.



C. Interests of experts and counsel.



Not applicable.



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Item 8 FINANCIAL INFORMATION



A.
Consolidated Statements and Other Financial Information



The
Companys Consolidated Financial Statements are set forth on pages F-1 through F-35.



Dividend policy



Under the
Companys Articles of Association, the Company is required to pay to the holders of the Cumulative Protective Preference Shares, if issued, a dividend per share equal to the percentage of the amount paid on each Cumulative Protective Preference
Share and which percentage is the average of the three months EURIBOR (Euro Interbank Offerest Rate) - weighted according to the number of days during which such percentage was in force - increased or decreased by a premium or discount equal
to, at most, two percentage points as fixed by the Executive Board with the approval of the Supervisory Board. No Cumulative Protective Preference Shares are outstanding. The Company is required to pay a dividend to the holders of the Cumulative
Financing Preference Shares equal to 6.26% of the amount paid on each Cumulative Financing Preference Share. This amount may be amended on December 1, 2004 and every eight years thereafter. With respect to 2003, the Company will pay a dividend equal
to Euro 0.18 (rounded) per Cumulative Financing Preference Share. After a dividend has been paid on the preference shares, the Company is then required to pay a dividend to the holders of the Priority Shares equal to 4% of the par value of these
shares. With respect to 2003, the Company will pay a dividend equal to Euro 2 per Priority Share.



Finally, under the law of The Netherlands and under the Companys Articles of Association, after payment of dividends on the Priority Shares and the Preference Shares, the Company is then required to pay to the
holders of its Ordinary Shares a minimum cash dividend equal to 5% of the par value of these shares, divided pro rata among the outstanding Ordinary Shares. In addition, the Executive Board, with the approval of the Supervisory Board, may set aside
in reserves part or all of the remaining annual profits to be paid as an additional dividend on the Ordinary Shares and, with the approval of the shareholders, may also pay an additional dividend out of paid in capital and retained earnings. The
Companys general policy is to distribute approximately one-third of the net income attributable to holders of its Ordinary Shares. The dividend distributions in 2001 through 2003 deviated from this policy because of the importance that the
Company places on a stable distribution of dividends. In 2003, the Company paid a total cash dividend per ordinary share equal to Euro 0.58 per share, which constitutes 83.5% of the Companys net income for 2003.



Legal proceedings



The Company through its subsidiaries is involved in several legal proceedings relating to the normal conduct of its business. The Company
does not expect any liability arising from these proceedings to have a significant effect on its financial position or profitability. The Company believes that it has established reserves sufficient to address all probable liabilities relating to
these legal proceedings in accordance with the standards discussed in Significant Accounting Policies included in Item 5, Operating and Financial Review and Prospects.



B. Significant changes



Except as otherwise disclosed in this report, there has been no significant change in the Companys business or financial conditions
since November 30, 2003.



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Item 9 THE OFFER AND LISTING



A. Offer and
Listing Details



Since 1958, the year in which the Companys stock
became publicly traded, the principal market for the Companys Ordinary Shares has been the Stock Market of Euronext Amsterdam N.V. (the Euronext Amsterdam). The Companys Ordinary Shares are also listed on the stock exchanges
in Düsseldorf, Frankfurt am Main and Switzerland on the Electronic Stock Exchange (EBS).



In the United States, ADSs, evidenced by ADRs, have been quoted and traded on The Nasdaq National Market under the symbol OCENY since November 8, 1984. Morgan Guaranty Trust Company of New York is the
depositary for the ADRs (the Depositary). One Océ ADS represents one Océ Ordinary Share. Less than 1% of the outstanding Ordinary Shares are represented by ADSs.



The table below sets forth for the periods indicated the high and low sales prices of Océs Ordinary Shares (expressed in Euros)
on the Euronext Amsterdam stock exchange as reported by the Officiële Prijscourant, the official daily newspaper of the Euronext Amsterdam stock exchange, and the low bid and high asked prices of the ADSs (expressed in dollars) on
The Nasdaq National Market.



|                         |  |                |  |                                           |  |                        |  |            |  |        
|------------------------ |  | -------------- |  | ----------------------------------------- |  | ---------------------- |  | ---------- |  | -------
|                         |  |                |  | Euronext AmsterdamEuro per Ordinary Share |  | Nasdaq Dollars per ADS
|                         |  |                |  | High                                      |  | Low                    |  | High Asked |  | Low Bid
|Annual highs and lows    |  |                |  |                                           |  |                        |  |           
|1999                     |  |                |  | 35.00                                     |  | 14.00                  |  | 40.25      |  | 15.25  
|2000                     |  |                |  | 18.90                                     |  | 11.55                  |  | 17.75      |  | 12.00  
|2001                     |  |                |  | 18.90                                     |  | 6.15                   |  | 17.50      |  | 6.37   
|2002                     |  |                |  | 14.07                                     |  | 6.50                   |  | 13.05      |  | 6.69   
|2003                     |  |                |  | 13.70                                     |  | 6.50                   |  | 15.59      |  | 7.49   
|                         |  |                |  |                                          
|Quarterly highs and lows |  |                |  |                                           |  |                        |  |           
|2002                     |  | First quarter  |  | 12.17                                     |  | 11.00                  |  | 10.75      |  | 9.55   
|                         |  | Second quarter |  | 14.07                                     |  | 11.64                  |  | 13.05      |  | 11.48  
|                         |  | Third quarter  |  | 12.90                                     |  | 9.36                   |  | 12.30      |  | 9.16   
|                         |  | Fourth quarter |  | 11.62                                     |  | 6.50                   |  | 11.49      |  | 6.69   
|2003                     |  | First quarter  |  | 11.80                                     |  | 7.81                   |  | 11.99      |  | 8.30   
|                         |  | Second quarter |  | 8.88                                      |  | 6.50                   |  | 10.20      |  | 7.12   
|                         |  | Third quarter  |  | 12.06                                     |  | 8.45                   |  | 12.96      |  | 10.01  
|                         |  | Fourth quarter |  | 13.70                                     |  | 11.10                  |  | 15.59      |  | 13.00  
|                         |  |                |  |                                          
|Monthly highs and lows   |  |                |  |                                           |  |                        |  |           
|2003                     |  | December       |  | 12.33                                     |  | 11.60                  |  | 15.41      |  | 14.17  
|                         |  | November       |  | 13.29                                     |  | 11.30                  |  | 15.99      |  | 13.25  
|                         |  | October        |  | 13.00                                     |  | 11.10                  |  | 15.13      |  | 13.00  
|2004                     |  | February       |  | 16.10                                     |  | 13.85                  |  | 20.45      |  | 17.29  
|                         |  | January        |  | 14.99                                     |  | 12.17                  |  | 18.75      |  | 15.65  





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B. Plan of distribution



Not applicable.



C. Markets



The markets on which the
Companys Ordinary Shares are traded and listed are discussed in Part A, The Offer and Listing Details, in this Item 9.



D. Selling Shareholders



Not applicable.



E. Dilution



Not applicable.



F. Expenses of the Issue



Not applicable.



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##### Table of Contents

Item 10 ADDITIONAL INFORMATION



A. Share
Capital



Not applicable.



B. Memorandum and Articles of Association



The following is a summary of the Companys current Articles of Association. As further
discussed on Page 56 of the 2003 Annual Report, Dutch corporate governance law is determined by legislation and codes of best practices. In 2003, the Dutch government appointed the Tabaksblat Committee to update Dutch corporate governance code. The
Tabaksblat Committee published a proposed draft for a new corporate governance code in July 2003 and the final code was adopted in December 2003. The Company is currently evaluating provisions of the new code, and the Company may amend its Articles
of Association in 2004 if required under the provisions of the new Dutch corporate governance code.



General



Océ N.V. is an international holding company organized under the corporation law of The Netherlands. The Companys objects are described in Article 2 of the
Companys Articles of Association, an English translation of which has been filed as Exhibit 1 to this report, and are as follows:



| |  | to invest directly or indirectly in companies and to manage and fund its subsidiaries; and
| | - | ------------------------------------------------------------------------------------------



| |  | to do all acts as are directly or indirectly connected with the operation of its subsidiaries.
| | - | ----------------------------------------------------------------------------------------------



The Company shall (and shall cause it subsidiaries to):



| |  | act in a manner to protect the Companys invested capital and to cause the Companys subsidiaries to yield profits;
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | promote the prosperity and the welfare of the Companys employees;
| | - | ------------------------------------------------------------------



| |  | provide satisfactory service to the Companys customers; and
| | - | ------------------------------------------------------------



| |  | contribute to the progress and welfare of the communities in which the Company and its subsidiary companies operate.
| | - | --------------------------------------------------------------------------------------------------------------------



Any references in this report to the Articles of Association should be read in conjunction
with the Articles, as filed.



Directors



The Company is managed by a Board of Executive Directors, all of whom
are employees of the Company, whose activities are generally supervised by a Board of Supervisory Directors, none of whom are employees of the Company.



Under Article 23 at the Articles of Association, if a member of the Board of Executive Directors, in his private capacity, enters into an agreement with the Company or
conducts any legal proceedings against the Company, then the Company may only be represented in those matters by a member of the Board of Executive Directors, a Supervisory Director or other person selected by the shareholders at a general meeting.
Article 23 further provides



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that if a member of the Board of Executive Directors has an interest which conflicts with that of the Company in any
other way, he shall be authorized to represent the Company in the same way that the other members of the Board of Executive Members may act. The articles do not address the right of a Supervisory Director to vote on a matter in which he is
materially interested.



The number of members serving on the Boards of
Supervisory Directors and Executive Directors is determined from time to time by the holders of the Priority Shares. In addition, the holders of the Priority Shares have the right to make the binding nominations for Supervisory and Executive
Directors, and the shareholders of the Company have the right to fill any vacancies on the Supervisory and Executive Boards, typically at the next general meeting of shareholders after the vacancy exists. In the case of binding nominations, the
right of the holders of Priority Shares may be overruled by a vote of two-thirds of the votes cast by the shareholders and the vote must be by more than a majority of all votes which all shareholders are entitled to cast.



At each general meeting of shareholders, at least one Supervisory Director must resign;
however, a Supervisory Director who has not reached the age of 70 may be immediately re-appointed. Each member of the Board of Executive Directors serves until resignation (which is agreed at the age of 60 for the Chairman and 62 for each other
member), death or removal, with or without cause, by the shareholders. Except on a proposal by the holders of the Priority Shares, no Supervisory or Executive Director may be removed without a vote of two-thirds of the votes cast by the shareholders
and the vote must be more than a majority of all votes which all shareholders are entitled to cast.



The remuneration of the Supervisory Board is fixed by the general meeting of shareholders, and the remuneration of the Executive Directors is fixed by the Supervisory Board upon the recommendation of the remuneration
committee.



Article 19 of the Articles of Association outlines the procedures
to be followed by the Boards of Supervisory and Executive Directors relating to investments and financing activities of the Company. Under Article 19, the Board of Supervisory adopts an annual budget of proposed investments and financing. The
Executive Directors may not adopt a resolution without the prior approval of the Board of Supervisory Directors to enter into any new credit facility, borrow any money or make any investments that are not included within the plan or exceed Euro 5
million.



General Description of the
Companys Capital Stock



The authorized capital of Océ
N.V. is Euro 175,001,500 and is divided into four classes of capital stock:



| |  | 145,000,000 Ordinary Shares, nominal value Euro 0.50 per share;
| | - | ---------------------------------------------------------------



| |  | 30 priority shares, nominal value Euro 50 per share;
| | - | ----------------------------------------------------



| |  | 30,000,000 cumulative financing preference shares, nominal value Euro 0.50 per share; and
| | - | -----------------------------------------------------------------------------------------



| |  | 175,000 cumulative protective preference shares, nominal value Euro 500 per share.
| | - | ----------------------------------------------------------------------------------



Priority Shares



All priority shares are issued and held by Foundation Fort Ginkel. The directors of Foundation Fort Ginkel are J.L. Brentjens (Chairman), R.L. van Iperen and F.J. de Wit.
Under the articles of association, the holders of the priority shares have the exclusive rights to:



| |  | determine the number of members of the Companys Supervisory and Executive Boards;
| | - | ----------------------------------------------------------------------------------



| |  | make binding nominations for the Supervisory and Executive Boards;
| | - | ------------------------------------------------------------------



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| |  | approve the issuance of authorized but unissued shares; and
| | - | -----------------------------------------------------------



| |  | propose to a general meeting of shareholders changes in the Companys articles of association.
| | - | ----------------------------------------------------------------------------------------------



The by-laws of the Foundation Fort Ginkel provide that its three directors shall be the Chairman of the Companys Supervisory Board,
the Chairman of the Companys Executive Board and another member of the Companys Supervisory Board.



Cumulative Protective Preference Shares



Although none of the Cumulative Protective Preference Shares are currently issued, the Company has an irrevocable obligation to issue to the Lodewijk Foundation upon its
request to the Company, a number of Cumulative Protective Preference Shares equal to the total nominal value of the Ordinary Shares and the Priority Shares. The directors of the Lodewijk Foundation are N.J. Westdijk (Chairman), S.D. de Bree, J.M.M.
Maeijer, M.W. den Boogert, J.L. Brentjens and R.L. van Iperen. The by-laws of the Foundation Lodewijk provide for two class A directors and four class B directors. One of the class A directors shall be the Chairman of the Companys Supervisory
Board and the other shall be the Chairman of the Companys Executive Board (or other persons designated by the Foundation Fort Ginkel). The by-laws provide that none of the remaining four class B directors may be a member of the Companys
Supervisory or Executive Boards, an advisor or employee of the Company, a director of the Foundation Fort Ginkel, or a shareholder who has granted the Foundation Fort Ginkel the right to vote his or her Ordinary Shares. The by-laws further provide
that in the absence of one or more class B directors the remaining class B directors are entitled to vote on behalf of the absent member or members. The purpose of this provision is to ensure that the class B directors will always be entitled to
exercise the majority of voting rights on the Foundation Lodewijks board of directors.



Cumulative Financing Preference Shares



The Foundation Stichting Administratiekantoor Preferente Aandelen holds all of the Cumulative Financing Preference Shares. The Foundation has issued registered depository receipts, nominal value Euro 0.50, to a number of
institutional investors. The Foundation has five members, three of which are appointed by the shareholders of the Company, one of which is appointed by the holders of the depository receipts and one member by the Executive Board of the Company.



Ordinary Shares



As of November 30, 2003, 87,263,488 Ordinary Shares were outstanding. Océ also has
outstanding American Depositary Shares (ADSs) representing Océs Ordinary Shares, which have been deposited with Morgan Guaranty Trust Company of New York as Depositary, and evidenced by American Depositary Receipts
(ADRs). The ADRs are publicly traded on The Nasdaq National Market.



Voting Rights



Each class of
stock has the following voting rights at the general meeting of shareholders:



| |  | Cumulative Protective Preference Shares  Each holder has 1,000 votes per share;
| | - | --------------------------------------------------------------------------------



| |  | Cumulative Financing Preference Shares  Each holder has 1 vote per share;
| | - | --------------------------------------------------------------------------



| |  | Priority Shares  Each holder has 100 votes per share; and
| | - | ----------------------------------------------------------



| |  | Ordinary Shares  Each holder has 1 vote per share.
| | - | ---------------------------------------------------



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As soon as practicable after receipt of notice of any meeting of shareholders or of holders of Ordinary Shares, the
Depositary is required to mail to each record holder of ADRs a notice containing the information set forth in such notice of meeting and advising such ADR holder that the holder will be entitled, subject to any applicable provision of Dutch law and
the Companys Articles of Association, to instruct the Depositary how to vote the Ordinary Shares represented by the ADRs. The Depositary will, to the extent practicable, vote Ordinary Shares it holds as depositary in accordance with
instructions received from ADR holders and will not vote any Ordinary Shares it holds as depositary unless it receives specified voting instructions. Any holder of one or more ADS(s) will be entitled to attend (but not vote at) any general meeting
of shareholders or of the holders of Ordinary Shares in accordance with the procedures in the notice from the Depositary and subject to the applicable provisions of Dutch law and the Companys Articles of Association.



Dividends



The requirements under the Articles of Association and the Companys related policy
regarding the payment of dividends are set forth in Financial Information in Item 8.



Liquidation Rights



In the event of liquidation of the Company, the assets remaining after payment of all debts, liquidation expenses and taxes are to be distributed in the following order
of priority: to the holders of preference shares, if any, the nominal value of their shares, or in the case of not fully-paid shares, the amount paid thereon, plus any shortfall in dividends; to the holders of Priority Shares, the nominal value of
their shares; and the residue, if any, to the holders of Ordinary Shares in proportion to the nominal value of the shares held by them.



Changes in the Rights of Shareholders



The Articles of Association may only be amended at any general meeting of shareholders by a majority of the votes cast, but only if the amendment has been proposed by the
holders of the Priority Shares.



General Meetings of
Shareholders



The annual general meeting of shareholders must be held
within six months after the close of the fiscal year. General meetings of shareholders will be convened by the Executive Board not later than on the fifteenth day prior to such meeting. Notice of any general meeting of shareholders must be
advertised in at least one daily newspaper having national circulation in The Netherlands and in the Official Price Journal of the Euronext Amsterdam. All holders of registered shares will be admitted only after the Company receives written
notification and holders of bearer shares will be admitted by showing a voucher of deposit of their shares.



There are no limitations under Dutch law or in the Companys Articles of Association on the right of persons who are not citizens or residents in The Netherlands to hold or vote Ordinary Shares. See also
Share ownership under Item 6.



The Companys Articles of
Association do not require shareholders to disclose their shareholdings. The Substantial Shareholders Notification Act (WMZ) however requires holders of voting securities of a corporation whose shares are listed on a Dutch stock exchange
to notify the Autoriteit Financiële Markten (Dutch Securities Board) of the



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number of shares they hold if that number reaches exceeds or falls below specified thresholds. These thresholds are 5%,
10%, 25%, 50% and 662/3% of the Companys outstanding voting rights. As of September 1, 2003, each
Executive Director and Supervisory Director is required to notify the Dutch Securities Board if he acquires or sells any equity or debt securities of the Company.



Extraordinary Meetings of Shareholders



Extraordinary meetings of the shareholders may be held at the request of the Board of Executive Directors, the chairman of the Supervisory
Directors, two Supervisory Directors or shareholders that hold at least 10% of the Companys issued and outstanding capital stock. The agenda for the meeting will be presented by the party that called the meeting. Shareholders of the Company
may also present proposals for consideration up to 30 days prior to the date of the meeting. Resolutions may be adopted by an absolute majority unless otherwise permitted by law or in the Companys articles of association.



Repurchase by the Company of its Own Shares



Subject to certain restrictions under Dutch law and contained in the Companys Articles
of Association, the Board of Executive Directors may cause the Company to purchase its own fully-paid shares up to 10% of the outstanding shares of capital stock, based upon nominal value, at the time of purchase. Such purchases may be made only
upon authorization of shareholders, which authorization is valid for a period of up to eighteen months and must include the number and class of shares to be acquired, the manner in which they may be acquired and the limits within which the purchase
price may be determined.



Historically, such authorizations have been requested
and granted at each annual general meeting of shareholders for the maximum number of shares allowed by the Companys Articles of Association. At the 2003 annual meeting, the shareholders approved a resolution permitting the Company to purchase
its own fully paid shares within the above limitations for a period of eighteen months from the date of the 2003 annual general meeting of shareholders.



Liability to Further Calls or Assessments



All outstanding Ordinary, Priority and Financing Preference Shares are, when issued and paid for, fully paid and non-assessable. Protective Preference shares may be
issued against partial payment, provided that the portion of the par value to be paid in respect of every protective preference share shall - regardless of when it was issued - be equal and that, when subscribing to a protective preference share, at
least one-fourth of the par value must be paid up. Payment must be made in cash, in so far as no other contribution has been agreed upon,



Issuance of Additional Shares



Subject to approval of the Board of Supervisory Directors and the holders of Priority Shares, shares of the Companys authorized but unissued capital stock may be
issued at such times and on such conditions as may be authorized by the shareholders at a general meeting or by the Executive Directors if authorized by the shareholders. Such authorization to the Board of Executive Directors may be given for a
maximum period of five years.



Except for certain issues of Ordinary Shares in
a merger, in exchange for property or to employees, the holders of Ordinary Shares have pre-emptive rights with regard to Ordinary Shares to be issued, pro rata based on the number of their Ordinary Shares. Holders of Priority Shares and holders of
preference shares have no pre-emptive rights in respect of any Ordinary Shares to be issued.



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Pre-emptive rights in respect of Ordinary Shares may be limited or precluded by resolution of a general meeting of
shareholders. In the notice of the meeting, the reasons for the proposal and the intended issue price must be explained in writing. Pre-emptive rights may, subject to the approval of the Priority Shareholders and of the Board of Supervisory
Directors, also be limited or precluded by the Board of Executive Directors by a resolution of a general meeting conferring such power for a maximum of five years. The power may from time to time be extended, but never for a period longer than five
years.



Certificates for Shares and their Transfer



Certificates evidencing Ordinary Shares are issuable only in bearer
form. The ownership of bearer shares is transferred by delivery of the share certificates. Ownership of Priority Shares and preference shares are registered in a register maintained by the Executive Board.



Change of Control



The arrangements with Foundation Fort Ginkel and the Lodewijk Foundation permit these
foundations together to exercise control of the management of the Company and to prevent acquisition of control of the Company by any person in a transaction not approved by management.



C. Material contracts



The Company did not enter into any material contracts outside of the ordinary course of business in 2003.



D. Exchange controls



There are no legislative or other legal provisions currently in force in The Netherlands or arising under the Companys Articles of Association restricting
remittances of dividends, interest or other payments to non-resident holders of securities of the Company. Cash dividends payable in Euros on Ordinary Shares of the Company may be officially transferred from The Netherlands and converted into any
other currency. There are no limitations, under the laws of The Netherlands or the Companys Articles of Association, on the right of foreigners to hold or vote the Companys Ordinary Shares.



E. Taxation



The statements below are only a summary of current tax laws of The Netherlands and the Tax Convention of December 18, 1992 between the
United States of America and The Netherlands (the U.S. Tax Treaty) and are not to be read as extending by implication to matters not specifically referred to herein. As to individual tax consequences, investors in Océ Ordinary
Shares or Océ ADRs should consult their own tax advisors.



Withholding tax



In general, a cash dividend
distributed by a company resident in The Netherlands (such as the Company) is subject to a withholding tax imposed by The Netherlands at a rate of 25%. Stock dividends are generally not subject to the above mentioned withholding tax.



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Pursuant to the provisions of the U.S. Tax Treaty, dividends paid by the Company to a shareholder who is a resident of
the United States, are generally eligible for a reduction in the Dutch withholding tax rate to 15%, unless (i) the beneficial owner of the dividends carries on business in The Netherlands through a permanent establishment, or performs independent
personal services in The Netherlands from a fixed base, and the Ordinary Shares form part of the business property of such permanent establishment or pertain to such fixed base (in which case, the dividends are included with the owners other
business income for The Netherlands tax purposes and are not subject to The Netherlands withholding tax), or (ii) the beneficial owner of the dividends is not entitled to the benefits of the U.S. Tax Treaty under its treaty-shopping
provisions. Dividends paid to qualifying exempt U.S. pension trusts and qualifying exempt U.S. organizations are exempt from Dutch withholding tax under the U.S. Tax Treaty. However, qualifying exempt U.S. organizations must accept payment of the
dividend net of the 25% withholding tax and then apply for a refund.



For U.S.
tax purposes, the gross amount (including the withheld amount) of dividend distributed on Ordinary Shares will be dividend income to the U.S. shareholder, not eligible for the dividends received deduction generally allowed to corporations. However,
subject to certain conditions and limitations, the Dutch withholding tax will be treated as a foreign income tax that is eligible for credit against the shareholders U.S. income taxes.



Capital gains



Capital gains upon the sale or exchange of Ordinary Shares or ADS by a non-resident
individual or corporation are exempt from Dutch income tax, corporation tax or withholding tax, unless (i) such gains are effectively connected with a permanent establishment of the shareholders trade or business in The Netherlands or (ii) are
derived from a direct, indirect or deemed substantial participation in the share capital of a company (such substantial participation not being a business asset). In general, an individual has a substantial participation if he holds either directly
or indirectly and either independently or jointly with his spouse or steady partner, at least 5% of the total issued share capital or particular class of shares of a company. For determining a substantial participation, other shares held by close
relatives are taken into account. The same applies to options to buy shares. Generally, a deemed substantial participation exists if (in part) a substantial participation has been disposed of, or is deemed to have been disposed of, on a
non-recognition basis. Under the U.S. Tax Treaty however, The Netherlands may only tax a capital gain derived from a substantial participation if the selling holder has been a resident of The Netherlands at any time during the five-year period
preceding the sale, and owned at the time of sale either alone or together with relatives, at least 25% of any class of shares.



Net wealth tax



The Netherlands does not impose a net wealth tax with respect to the ownership of Ordinary Shares.



Estate and gift taxes



Except where Ordinary Shares are attributable to a permanent establishment or permanent representative of the shareholder in The
Netherlands, no estate, inheritance or gift taxes are imposed by The Netherlands on the transfer of Ordinary Shares if, at the time of death or the transferor the shareholder or transferor is not a resident of The Netherlands.



Under Dutch law, inheritance or gift taxes (as the case may be) are due, however, if such
shareholder or transferor:



| |  | is a Dutch national and has been a resident of The Netherlands at any time during the ten years preceding death or transfer; or
| | - | -------------------------------------------------------------------------------------------------------------------------------



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| |  | is not a Dutch national but has been a resident of The Netherlands at any time during the twelve months immediately preceding the transfer (for The Netherlands gift taxes only).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F. Dividends and paying agents



Not applicable.



G. Statement by experts



Not applicable.



H. Document on display



Copies of the
documents concerning the Company referred to herein may be obtained by writing to the Secretary of the Company. In addition the Companys 2003 (in Dutch or English) Annual Report is available on request from the Secretary of the Company. The
annual report is also published in English and in Dutch on the Companys web site at: http://www.oce.com.



The Company is also subject to certain of the reporting requirements of the Exchange Act. As a foreign private issuer, the Company is exempt from the rules
under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations, and the officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act, with respect to their purchases and sales of shares. In addition, the Company is not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose
securities are registered under the Exchange Act. However, the Company will file with the SEC, within six months after the end of each fiscal year, an annual report on Form 20-F containing financial statements audited by an independent accounting
firm. The Company also publishes unaudited interim financial information after the end of each quarter, which it furnishes to the SEC under cover of a Form 6-K.



You may read and copy any document the Company files with the SEC at its public reference facilities at 450 Fifth Street, N.W., Washington, DC 20549, Woolworth
Building, 233 Broadway, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington DC 20549. The SEC also maintains a website that contains reports and other information regarding registrants that are required to file electronically with it. The address of this website is
http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.



I. Subsidiary information



Not applicable.



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Item 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The information provided in this Item 11 may constitute forward looking statements, which are discussed in Item 3 Key Information.



As a global business, Océ faces market risks with respect to foreign exchange rates and interest rate risks. Océ has adopted
several risk management policies in an attempt to minimize this risks.



Foreign Exchange Risks



As a global company with operations in
80 countries, Océ achieves approximately 60% of its revenues outside of the Eurozone. In order to minimize its risks related to differences between the Euro (the currency in which Océ prepares its financial statements) and currencies
outside of the Eurozone, the prices charged by Océ are generally denominated in customers local currency. In addition, to the greatest extent possible, the expenses related to the revenues from sales in non-Euro currencies are also
denominated in the same currency as the revenue from the sale (such as labor expenses). However, because most of Océ machines are manufactured in the Eurozone, a foreign exchange risk arises with respect to the flow of machines outside of the
Eurozone. At Océ, these net currency flows (also called transaction exposure) are the subject of an active foreign exchange management policy, which is implemented in close consultation with the Board of Executive Directors.



The Companys current policy is to hedge on a rolling twelve month basis
up to 80% of its foreign currency transactions (mainly in the U.S. Dollar). For this purpose, the Company uses a number of financial instruments, particularly forward foreign exchange contracts, which are listed in Note 23 to the Consolidated
Financial Statements. The contract value and the result of forward foreign exchange contracts as of November 30, 2003 and 2002, respectively, were:



| |  | For cash flows in 2003 Euro 187.1 million and Euro 8.2 million and in 2002 Euro 210.5 million and Euro 7.3 million; and
| | - | -----------------------------------------------------------------------------------------------------------------------



| |  | For (intercompany) loans in 2003 Euro 148.0 million and Euro 1.7 million and in 2002, Euro 172.7 million and Euro 11.3 million.
| | - | -------------------------------------------------------------------------------------------------------------------------------



The Company does not, however, hedge against currency translation exposures.



The hypothetical impact on operating income if the U.S. Dollar (which is very relevant for
the Company, because its U.S. revenues amount to 38% of its total revenues) changes compared with the Euro by 10% would be Euro 28 million for 2003 assuming that no other measures had been taken as protective measures against this decrease.



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Interest Rate Risk



Most of the Companys interest revenues originate from market placements of machines under financial lease contracts as described in Item 4, Information on the
Company. Océ financial lease contracts usually contain a fixed interest which corresponds to the rates charged by external leasing businesses. These contracts are generally financed by interest-bearing capital with an interest rate
fixed for the duration of the contracts.



Océ uses interest rate
instruments to manage its risk related to fixed and variable interest rate exposures, which are listed in Note 23 to the Consolidated Financial Statements attached hereto. Océs primary objective is to prevent a disparity between the
portfolio of rentals and leases and the financing obtained by the Company to support the portfolio of the Company. Océs goal is to achieve a ratio of 60% to 80% between the fixed-interest assets and related liabilities. The Company had
entered into interest rate swap contracts with the contract value/notional principal value of Euro 836 million with a market value of interest rate instruments of Euro 21 million at November 30, 2003 and the contract value/notional principal value
of Euro 1,050 million with a market value of interest rate instruments of Euro 6 million at November 30, 2002.



The following analysis presents the hypothetical loss in earnings of those financial instruments and derivative instruments held by the Company at November 30, 2003, which are sensitive to changes in interest rates.
The aggregate hypothetical loss in earnings on an annual basis on all financial instruments and derivative instruments that would have resulted from a hypothetical increase in interest rates of 10 percent, sustained for one year, is estimated to
have no impact in view of the hedging operations undertaken.



The compensating
effect on the interest sensitivity of new lease contracts is not taken in consideration due to uncertainty. This effect, however, is not considered to be significant.



Debt Risk



The Company is party to several long term debt contracts to fund the Company, which are listed in Note 11 to the Consolidated Financial Statements.



Other Risk



The Company is also exposed to risk due to fluctuations of the purchase price of paper. This risk typically has a limited effect on the
Companys gross margin because the cost increases are passed on to customers via sales price increases.



Credit risks are reduced by doing business solely with financial institutions which have a high credit rating, with fixed limits being applicable to each institution.



Item 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



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PART II



Item 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



Item 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



None.



Item 15 CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



The Companys principal
executive officer and principal financial officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at November 30, 2003
(the Evaluation Date). Based upon their evaluation, the principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and to provide
reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Companys management, including its principal executive officer and principal financial officer, as appropriate
to allow timely decisions regarding required disclosure. While the Board of Executive Directors believes that the present design of the Companys disclosure controls and procedures are effective to provide reasonable assurance that the controls
and procedures will achieve their objectives, future events affecting Océs business may cause the Company to significantly modify its disclosure controls and procedures or its internal control over financial reporting. The design of a
control system inherently has limitations, including that the benefits of controls must be considered relative to their costs. Additionally, controls can be circumvented by the individual acts of some persons, or by collusion of two or more people.
Therefore, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objective.



Changes in Internal Controls over Financial Reporting



During the year ended November 30, 2003, there have not been any significant changes in the Companys internal control over financial reporting (as such
term is defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



Item 16A AUDIT COMMITTEE FINANCIAL EXPERT



The
members of the Audit Committee are all independent members of the Supervisory Board (as the term independence is defined under the NASDAQ listing rules applicable to the Company). The Supervisory Board has determined that Mr. Berndsen
qualified as the Audit Committee financial expert during 2003 and that his successor, Mr. Arentsen, qualifies as the Audit Committee financial expert.



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Item 16B CODE OF ETHICS



The Company has
adopted a Code of Ethics, which states its ethical principles with respect to various subjects. The Code of Ethics is applicable to the following employees of the Company:



| |  | the Members of the Executive Board of Océ N.V.;
| | - | -----------------------------------------------



| |  | the Group Controller;
| | - | ---------------------



| |  | the Corporate Treasurer;
| | - | ------------------------



| |  | the Manager Internal Audit Department;
| | - | --------------------------------------



| |  | the Manager of the Corporate Tax Department
| | - | -------------------------------------------



| |  | the Manager Investors Relations;
| | - | --------------------------------



| |  | the Controllers of the Océ operating companies;
| | - | -----------------------------------------------



| |  | the Controllers of the Strategic Business Units; and
| | - | ----------------------------------------------------



| |  | any employee designated by the Group Controller, who will keep a current register of such designated persons.
| | - | -------------------------------------------------------------------------------------------------------------



The Companys Code of Ethics is posted on it website at www.oce.com. No
amendments were made to, and no waivers were granted under the Companys Code of Ethics in respect of, the Companys principal executive officer, principal financial officer or principal accounting officer in 2003.



Item 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES



PricewaterhouseCoopers Accountants N.V. has served as the Companys principal independent accountant for each of the three year periods ended November 30, 2003. The following table presents the aggregate fees in Euros for audit
services and other services rendered by PricewaterhouseCoopers in 2003 and 2002.



|                                               |  |       |  |      
|---------------------------------------------- |  | ----- |  | -----
|Year ended November 30, (Amounts in thousands) |  | 2002  |  | 2003 
|                                               | 
|Audit Fees                                     |  | 1,936 |  | 2,191
|Audit-Related Fees                             |  | 1,212 |  | 555  
|Tax Fees                                       |  | 913   |  | 674  
|All Other Fees                                 |  | 0     |  | 0    
|                                               |  |       |  |      
|Total                                          |  | 4,061 |  | 3,420
|                                               |  |       |  |      



Audit Fees



Audit fees paid by the Company to PricewaterhouseCoopers relate to the services provided by
PricewaterhouseCoopers for the audit of the Companys annual consolidated financial statements included in its annual report on Form 20-F and for services that are normally provided in connection with local statutory and regulatory filings or
engagements of the Company.



Audit-Related Fees



Audit-related fees paid by the Company to PricewaterhouseCoopers relate to services provided
by PricewaterhouseCoopers to the Company that are reasonably related to the performance of the audit of the



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Companys consolidated financial statements. The audit-related fees mainly include the following services provided
by PricewaterhouseCoopers to the Company in 2003:



| |  | Advisory services related to the companys design and roll out of its section 302 certification process;
| | - | --------------------------------------------------------------------------------------------------------



| |  | advice related to the conversion from Dutch GAAP to IFRS; and
| | - | -------------------------------------------------------------



| |  | accounting consultation relating to Dutch GAAP, US GAAP and IFRS.
| | - | -----------------------------------------------------------------



The audit-related fees mainly include the following services provided by PricewaterhouseCoopers to the Company in 2002:



| |  | due diligence pertaining to business combinations;
| | - | --------------------------------------------------



| |  | assessment of internal accounting controls; and
| | - | -----------------------------------------------



| |  | accounting consultation relating to Dutch GAAP, US GAAP and IFRS.
| | - | -----------------------------------------------------------------



Tax Fees



Tax fees paid by the Company to PricewaterhouseCoopers relate to services provided in the area of tax compliance and tax advice.



All Other Fees



None.



Pre-Approval Policies



During 2003 the Audit Committee adopted procedures to pre-approve audit, audit related,
tax and other services to be provided by its independent public accountants. Under the Audit Committees pre-approval procedures, at the beginning of each fiscal year, the Audit Committee reviews and pre-approves a summary of all audit and tax
services expected to be performed by the independent accountants in the coming fiscal year, which includes a detailed description of the proposed work and an estimate of the cost of the project. Any additional audit-related, additional tax and
additional other services to be provided by the Companys independent auditor must be pre-approved individually by the Audit Committee.



During the 2003 year 3% of the audit related, tax related and other services were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.



Item 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES



Not applicable.



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##### Table of Contents

Part III



Item 17 FINANCIAL STATEMENTS



See Item 19.



Item 18 FINANCIAL STATEMENTS



Not applicable.



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                           |  |     
|------------------------------------------------------------------------------------------ |  | ----
|                                                                                           |  | Page
|Report of the Independent Auditors                                                         |  | F-2 
|                                                                                           | 
|Consolidated Statements of Operations for the years ended November 30, 2001, 2002 and 2003 |  | F-3 
|                                                                                           | 
|Consolidated Balance Sheets as of November 30, 2002 and 2003                               |  | F-4 
|                                                                                           | 
|Consolidated Statements of Cash Flows for the years ended November 30, 2001, 2002 and 2003 |  | F-6 
|                                                                                           | 
|Notes to Consolidated Financial Statements                                                 |  | F-8 
|                                                                                           | 
|Schedule:                                                                                  |  |     
|                                                                                           | 
|II Valuation and qualifying accounts as of November 30, 2001, 2002 and 2003                |  | F-35



F-1



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##### Table of Contents

REPORT OF THE INDEPENDENT AUDITORS



To the Board
of Supervisory Directors and the Board of Executive Directors of Océ N.V.



In our opinion, the accompanying consolidated financial statements listed in the index appearing on F-3 to F-35 present fairly, in all material respects, the financial position of Océ N.V. and its subsidiaries at November 30, 2003
and 2002, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2003 in conformity with accounting principles generally accepted in the Netherlands.



These financial statements are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



Accounting principles generally accepted in the Netherlands vary in certain significant
respects from accounting principles generally accepted in the United States of America (US GAAP). Information relating to the nature and effect of such differences is presented in Note 26 to the Consolidated Financial Statements.



/s/ PricewaterhouseCoopers Accountants N.V.

PricewaterhouseCoopers Accountants N.V.



Amsterdam, the Netherlands

January 29, 2004



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                        |  |                                         |  |           |  |           |  |          
|------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | --------- |  | --------- |  | ---------
|                                                                                                        |  | Years ended November 30,               
|                                                                                                        |  | 2001                                    |  | 2002      |  | 2003      |  | 2003     
|                                                                                                        |  | (in thousands except per share amounts)
|                                                                                                        |  | Euro                                    |  | Euro      |  | Euro      |  | $*       
|Net sales                                                                                               |  | 1,836,061                               |  | 1,792,144 |  | 1,552,760 |  | 1,862,536
|Rentals and service                                                                                     |  | 1,272,467                               |  | 1,267,485 |  | 1,118,939 |  | 1,342,167
|Interest from financial leases                                                                          |  | 125,109                                 |  | 116,514   |  | 97,564    |  | 117,028  
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Total revenues                                                                                          |  | 3,233,637                               |  | 3,176,143 |  | 2,769,263 |  | 3,321,731
|                                                                                                        |  |                                         |  |          
|Cost of sales                                                                                           |  | 1,100,111                               |  | 1,076,531 |  | 943,820   |  | 1,132,112
|Cost of rentals and service                                                                             |  | 816,401                                 |  | 771,117   |  | 660,230   |  | 791,946  
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Gross margin                                                                                            |  | 1,317,125                               |  | 1,328,495 |  | 1,165,213 |  | 1,397,673
|                                                                                                        |  |                                         |  |          
|Selling expenses                                                                                        |  | 728,423                                 |  | 704,847   |  | 623,660   |  | 748,080  
|Research and development expenses                                                                       |  | 199,585                                 |  | 212,830   |  | 208,321   |  | 249,881  
|General and administrative expenses                                                                     |  | 164,411                                 |  | 184,747   |  | 183,226   |  | 219,780  
|Impairment                                                                                              |  |                                        |  |          |  | 25,175    |  | 30,197   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|                                                                                                        |  | 1,092,419                               |  | 1,102,424 |  | 1,040,382 |  | 1,247,938
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Operating income                                                                                        |  | 224,706                                 |  | 226,071   |  | 124,831   |  | 149,735  
|                                                                                                        |  |                                         |  |          
|Financial expense (net)(Note 19)                                                                        |  | 68,925                                  |  | 54,101    |  | 30,552    |  | 36,647   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before income taxes, equity in income of investments in minority interests and minority interest |  | 155,781                                 |  | 171,970   |  | 94,279    |  | 113,088  
|                                                                                                        |  |                                         |  |          
|Income taxes (Note 18)                                                                                  |  | 48,484                                  |  | 57,425    |  | 30,522    |  | 36,611   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before equity in income of investments in minority interests and minority interest               |  | 107,297                                 |  | 114,545   |  | 63,757    |  | 76,477   
|                                                                                                        |  |                                         |  |          
|Equity in income of investments in minority interests                                                   |  | 121                                     |  | 279       |  | 90        |  | 108      
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before minority interest                                                                         |  | 107,418                                 |  | 114,824   |  | 63,847    |  | 76,585   
|                                                                                                        |  |                                         |  |          
|Minority interest in net income of subsidiaries                                                         |  | 2,348                                   |  | 2,293     |  | 2,385     |  | 2,861    
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Net income before exceptional items                                                                     |  | 105,070                                 |  | 112,531   |  | 61,462    |  | 73,724   
|                                                                                                        |  |                                         |  |          
|Exceptional items (net of tax)                                                                          |  | 95,000                                  |  |          |  |          |  |         
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Net income                                                                                              |  | 10,070                                  |  | 112,531   |  | 61,462    |  | 73,724   
|                                                                                                        |  |                                         |  |          
|Basic earnings per ordinary share                                                                       |  | 0.08                                    |  | 1.30      |  | 0.69      |  | 0.83     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Diluted earnings per ordinary share                                                                     |  | 0.08                                    |  | 1.29      |  | 0.69      |  | 0.83     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Net income in accordance with US GAAP (Note 26)                                                         |  | 51,682                                  |  | 65,008    |  | 50,718    |  | 60,836   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Earnings per ordinary share in accordance with US GAAP                                                  |  |                                         |  |           |  |           |  |          
|Basic                                                                                                   |  | 0.56                                    |  | 0.73      |  | 0.57      |  | 0.68     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Diluted                                                                                                 |  | 0.56                                    |  | 0.73      |  | 0.56      |  | 0.68     
|                                                                                                        |  |                                         |  |           |  |           |  |          

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



The accompanying Notes are an integral part of these Consolidated Financial Statements.



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OCÉ N.V. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



|                                               |  |                |  |           |  |          
|---------------------------------------------- |  | -------------- |  | --------- |  | ---------
|                                               |  | November 30,  
|                                               |  | 2002           |  | 2003      |  | 2003     
|                                               |  | (in thousands)
|                                               |  | Euro           |  | Euro      |  | $*       
|CURRENT ASSETS:                                |  |                |  |           |  |          
|                                               |  |                | 
|Cash and cash equivalents (Note 1)             |  | 37,385         |  | 55,709    |  | 66,823   
|Prepaid expenses                               |  | 29,557         |  | 24,330    |  | 29,184   
|Accounts receivable (Note 2)                   |  | 670,698        |  | 578,495   |  | 693,904  
|Financial lease receivables (Note 7)           |  | 422,465        |  | 348,911   |  | 418,519  
|Inventories (Note 3)                           |  | 345,588        |  | 310,404   |  | 372,330  
|                                               |  |                |  |           |  |          
|Total current assets                           |  | 1,505,693      |  | 1,317,849 |  | 1,580,760
|                                               |  |                | 
|FIXED ASSETS:                                  |  |                |  |           |  |          
|                                               |  |                | 
|Intangible fixed assets (Note 4)               |  | 86,138         |  | 48,721    |  | 58,441   
|                                               |  |                | 
|Property, plant and equipment (Notes 5 and 15) |  | 458,852        |  | 430,527   |  | 516,417  
|Rental equipment (Note 6)                      |  | 118,942        |  | 63,279    |  | 75,903   
|                                               |  |                |  |           |  |          
|Tangible fixed assets                          |  | 577,794        |  | 493,806   |  | 592,320  
|                                               |  |                | 
|Investments in minority interests              |  | 2,902          |  | 2,535     |  | 3,041    
|Financial lease receivables (Note 7)           |  | 590,707        |  | 451,848   |  | 541,992  
|Other long term assets (Note 8)                |  | 99,109         |  | 106,503   |  | 127,750  
|                                               |  |                |  |           |  |          
|                                               |  | 692,718        |  | 560,886   |  | 672,783  
|                                               |  |                | 
|Total fixed assets                             |  | 1,356,650      |  | 1,103,413 |  | 1,323,544
|                                               |  |                |  |           |  |          
|TOTAL ASSETS                                   |  | 2,862,343      |  | 2,421,262 |  | 2,904,304
|                                               |  |                |  |           |  |          

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



The accompanying Notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



|                                                    |  |                                     |  |           |  |          
|--------------------------------------------------- |  | ----------------------------------- |  | --------- |  | ---------
|                                                    |  | November 30,                       
|                                                    |  | 2002                                |  | 2003      |  | 2003     
|                                                    |  | (in thousands except share amounts)
|                                                    |  | Euro                                |  | Euro      |  | $*       
|CURRENT LIABILITIES:                                |  |                                     |  |           |  |          
|Borrowings under bank lines of credit (Note 9)      |  | 14,858                              |  | 1,638     |  | 1,965    
|Short term borrowings (Note 9)                      |  | 14,936                              |  | 888       |  | 1,065    
|Current portion of long term debt (Note 9 and 11)   |  | 57,094                              |  | 165,895   |  | 198,991  
|Accounts and notes payable, trade                   |  | 165,244                             |  | 132,593   |  | 159,045  
|Other current-and accrued liabilities (Note 17)     |  | 354,073                             |  | 345,934   |  | 414,948  
|Deferred income (Note 10)                           |  | 52,240                              |  | 45,830    |  | 54,973   
|                                                    |  |                                     |  |           |  |          
|Total current liabilities                           |  | 658,445                             |  | 692,778   |  | 830,987  
|                                                    |  |                                     | 
|LONG TERM DEBT:                                     |  |                                     |  |           |  |          
|Long term debt (Note 11)                            |  | 756,558                             |  | 380,793   |  | 456,761  
|                                                    |  |                                     |  |           |  |          
|Total long term debt                                |  | 756,558                             |  | 380,793   |  | 456,761  
|                                                    |  |                                     | 
|LONG TERM LIABILITIES (PROVISIONS):                 |  |                                     |  |           |  |          
|Deferred income taxes (Note 18)                     |  | 26,823                              |  | 29,325    |  | 35,175   
|Long term provisions (Note 12)                      |  | 609,939                             |  | 566,779   |  | 679,852  
|                                                    |  |                                     |  |           |  |          
|Total long term liabilities                         |  | 636,762                             |  | 596,104   |  | 715,027  
|                                                    |  |                                     | 
|COMMITMENTS AND CONTINGENT LIABILITIES              |  |                                     |  |           |  |          
|(Note 14)                                           |  |                                     |  |           |  |          
|                                                    |  |                                     | 
|MINORITY INTEREST                                   |  | 39,798                              |  | 38,822    |  | 46,567   
|                                                    |  |                                     | 
|SHAREHOLDERS EQUITY (Note 13):                     |  |                                     |  |           |  |          
|Priority Shares                                     |  | 2                                   |  | 2         |  | 2        
|(30 with a nominal or par value Euro 50)            |  |                                     |  |           |  |          
|Ordinary Shares                                     |  |                                     |  |           |  |          
|(87,263,488) with a nominal or par value Euro 0.50) |  | 43,631                              |  | 43,631    |  | 52,335   
|Financing Preference Shares                         |  |                                     |  |           |  |          
|(20,000,000 with a nominal or par value Euro 0.50)  |  | 10,000                              |  | 10,000    |  | 11,995   
|Paid-in capital                                     |  | 511,400                             |  | 511,408   |  | 613,434  
|Legal reserve                                       |  | 1,295                               |  | 592       |  | 710      
|Retained earnings                                   |  | 252,331                             |  | 261,609   |  | 313,800  
|Accumulated translation adjustment                  |  | -47,879                             |  | -114,477  |  | -137,314 
|                                                    |  |                                     |  |           |  |          
|Total shareholders equity                          |  | 770,780                             |  | 712,765   |  | 854,962  
|                                                    |  |                                     |  |           |  |          
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY            |  | 2,862,343                           |  | 2,421,262 |  | 2,904,304
|                                                    |  |                                     |  |           |  |          

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



The accompanying Notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                    |  |                          |  |                |  |          |  |         
|----------------------------------------------------------------------------------- |  | ------------------------ |  | -------------- |  | -------- |  | --------
|                                                                                    |  | Years ended November 30,
|                                                                                    |  | 2001                     |  | 2002           |  | 2003     |  | 2003    
|                                                                                    |  |                          |  | (in thousands) |  |         
|                                                                                    |  | Euro                     |  | Euro           |  | Euro     |  | $*      
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                        |  | 21,125                   |  | 40,133         |  | 37,385   |  | 44,843  
|CASH FLOW FROM OPERATING ACTIVITIES:                                                |  |                          |  |                |  |          |  |         
|Net income                                                                          |  | 10,070                   |  | 112,531        |  | 61,462   |  | 73,724  
|Adjustments to reconcile net income to cash flow generated by operating activities: |  |                          |  |                |  |          |  |         
|Depreciation and amortization                                                       |  | 194,191                  |  | 197,150        |  | 173,370  |  | 207,957 
|Impairment                                                                          |  |                         |  |               |  | 25,175   |  | 30,196  
|Additions to rental equipment                                                       |  | -136,503                 |  | -106,884       |  | -83,025  |  | -99,588 
|Proceeds from sale of rental equipment                                              |  | 86,038                   |  | 77,181         |  | 67,747   |  | 81,263  
|Financial lease receivables                                                         |  | -455                     |  | -11,143        |  | 45,347   |  | 54,394  
|Equity in income of investments in minority interests                               |  | 208                      |  | -3             |  | 271      |  | 325     
|Net income for minority interests                                                   |  |                         |  |               |  | 2,385    |  | 2,861   
|Increase in long term liabilities (provisions)                                      |  | 110,112                  |  | 27,633         |  | -41,241  |  | -49,469 
|Changes in working capital:                                                         |  |                          |  |                |  |          |  |         
|Accounts receivable and other receivables                                           |  | 20,297                   |  | 69,888         |  | 70,786   |  | 84,908  
|Provisions for financial lease receivables, inventories and accounts receivable     |  | 74,508                   |  | 59,162         |  | 52,140   |  | 62,542  
|Inventories                                                                         |  | 42,102                   |  | 20,525         |  | 5,458    |  | 6,547   
|Trade accounts payable                                                              |  | -20,926                  |  | 4,901          |  | -31,342  |  | -37,595 
|Net change in other working capital accounts **                                     |  | -31,197                  |  | -4,687         |  | -8,992   |  | -10,786 
|                                                                                    |  |                          |  |                |  |          |  |         
|Total cash flow from operating activities                                           |  | 348,445                  |  | 446,254        |  | 339,541  |  | 407,279 
|                                                                                    |  |                          |  |               
|CASH FLOW FROM INVESTING ACTIVITIES:                                                |  |                          |  |                |  |          |  |         
|Additions to intangible fixed assets                                                |  | -15,178                  |  | -19,370        |  | -11,497  |  | -13,791 
|Additions to property, plant and equipment                                          |  | -130,329                 |  | -115,936       |  | -97,129  |  | -116,507
|Other investments                                                                   |  | -22,362                  |  | -4,635         |  | -1,925   |  | -2,309  
|Divestment of intangible fixed assets                                               |  |                         |  |               |  | 94       |  | 113     
|Proceeds from sale of property, plant and equipment                                 |  | 23,931                   |  | 14,684         |  | 16,599   |  | 19,911  
|Acquisition of minority interests                                                   |  |                         |  | -23            |  | -17      |  | -20     
|Proceeds from disposition of minority interests                                     |  |                         |  | 930            |  | 5        |  | 6       
|Proceeds from sale of lease portfolio                                               |  |                         |  | 70,800         |  | 79,768   |  | 95,682  
|Acquisitions (disposal) at net asset value (net of cash)                            |  | -30,941                  |  | -55,008        |  | 2,379    |  | 2,854   
|                                                                                    |  |                          |  |                |  |          |  |         
|Total cash flow from investing activities                                           |  | -174,879                 |  | -108,558       |  | -11,723  |  | -14,061 
|                                                                                    |  |                          |  |               
|CASH FLOW FROM FINANCING ACTIVITIES:                                                |  |                          |  |                |  |          |  |         
|Proceeds from long term debt                                                        |  | 82,330                   |  | 132,904        |  | 9,116    |  | 10,935  
|Repayment of long term debt                                                         |  | -172,624                 |  | -123,635       |  | -329,623 |  | -395,383
|Borrowings and current portion of long term debts                                   |  | 20,833                   |  | -300,386       |  | 81,727   |  | 98,032  
|Repurchase of shares                                                                |  | -24,081                  |  | -6,047         |  | -924     |  | -1,108  
|Dividends paid                                                                      |  | -52,943                  |  | -52,336        |  | -51,963  |  | -62,330 
|Increase (decrease) in minority interests                                           |  | -1,066                   |  | -1,004         |  | -3,361   |  | -4,032  
|Other                                                                               |  |                         |  | -5,320         |  |         |  |        
|                                                                                    |  |                          |  |                |  |          |  |         
|Total cash flow from financing activities                                           |  | -147,551                 |  | -355,824       |  | -295,028 |  | -353,886
|Effect of exchange rate changes                                                     |  | -7,007                   |  | 15,380         |  | -14,466  |  | -17,352 
|                                                                                    |  |                          |  |               
|CASH AND CASH EQUIVALENTS, END OF YEAR                                              |  | 40,133                   |  | 37,385         |  | 55,709   |  | 66,823  

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------

|** | See details on next page
|-- | ------------------------



The accompanying Notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                               |  |                          |  |         |  |         |  |        
|-------------------------------------------------------------- |  | ------------------------ |  | ------- |  | ------- |  | -------
|                                                               |  | Years ended November 30, |  |        
|                                                               |  | 2001                     |  | 2002    |  | 2003    |  | 2003   
|                                                               |  | (in thousands)          
|                                                               |  | Euro                     |  | Euro    |  | Euro    |  | $*     
|SPECIFICATION OF NET CHANGE IN OTHER WORKING CAPITAL ACCOUNTS: |  |                          |  |         |  |         |  |        
|Prepaid expenses                                               |  | -2,338                   |  | 410     |  | 5,138   |  | 6,163  
|Income taxes                                                   |  | -10,259                  |  | 24,896  |  | 12,205  |  | 14,640 
|Value added taxes, social security and other taxes payable     |  | -628                     |  | -1,176  |  | 2,929   |  | 3,513  
|Pension liabilities                                            |  | 6,190                    |  | -3,779  |  | -2,395  |  | -2,873 
|Other liabilities                                              |  | -9,391                   |  | -24,551 |  | -3,229  |  | -3,873 
|Accrued liabilities                                            |  | -12,203                  |  | -5,146  |  | -17,037 |  | -20,436
|Deferred income                                                |  | -2,568                   |  | 4,659   |  | -6,603  |  | -7,920 
|                                                               |  |                          |  |         |  |         |  |        
|                                                               |  | -31,197                  |  | -4,687  |  | -8,992  |  | -10,786
|                                                               |  |                          |  |        
|Supplemental cash flow information:                            |  |                          |  |         |  |         |  |        
|                                                               |  |                          |  |        
|Income taxes paid (net)                                        |  | 52,324                   |  | -4,060  |  | -24,624 |  | -29,536
|Interest received (net)                                        |  | 58,319                   |  | 52,328  |  | 61,540  |  | 73,817 
|                                                               |  |                          |  |        
|Non cash transactions:                                         |  |                          |  |         |  |         |  |        
|                                                               |  |                          |  |        
|Conversion of convertible bonds into share capital             |  | 6,298                    |  | 9       |  | 8       |  | 10     

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



The accompanying Notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



0. Summary of
significant accounting principles



The accompanying Consolidated Financial
Statements have been prepared in accordance with accounting principles generally accepted in the Netherlands. These accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of
America (US GAAP). For a description of the significant differences and the related effect on the Consolidated Financial Statements, see Note 26 to the Consolidated Financial Statements. Amounts in the accompanying Consolidated Financial Statements
have been stated in Euros, the currency of the Netherlands, the country in which Océ N.V. is incorporated.



The financial year of the Company commences at December 1 and closes at November 30 of the subsequent financial year.



The dollar amounts at November 30, 2003 and for the period then ended have been presented
solely for the convenience of readers of these financial statements in the United States of America and have been translated from Euros at the rate of $ 1.1995 per Euro 1, the Noon Buying Rate on November 30, 2003. Such translation should not be
construed as a representation that the Euro amounts could be converted into dollars at this or any other rate.



New accounting principles applied



In
the fiscal year 2002, the Company changed its accounting principles to require intangible assets acquired through purchase business combinations to be identified and recorded at fair value separate from goodwill. The intangible assets are amortized
over their estimated useful lives.



Compared to the previous financial year,
the accounting principles in fiscal year 2003 have undergone the following changes to bring them further in line with International Financial Reporting Standards (IFRS). With effect from this financial year pensions are reported in accordance with
the method prescribed by International Accounting Standard 19 (IAS 19). This method leads to a more transparent reporting and reduces the volatility of the pension costs. In IAS 19 the projected benefit principle is used, which takes
into account such factors as future salary increases. In connection with this accounting standard an additional provision has been made and charged to shareholders equity. The pension costs and liabilities were previously reported on the basis
of local pension schemes.



Contrary to previous years the final dividend for
ordinary shareholders has no longer been included as a liability in the balance sheet. Comparative figures have been restated in the balance sheet as at November 30, 2002.



In cases where the expected cash flows are of a long-term nature, provisions are now valued on the basis of their net present value compared
to nominal value in previous years. Because the effect of this change is limited, the comparative figures have not been restated.



Principles of consolidation



The Consolidated Financial Statements include the accounts of the parent company, Océ N.V., and its subsidiaries (the Company). An entity is regarded
as a subsidiary, if Océ directly or indirectly holds a



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##### Table of Contents

controlling interest in it. Joint ventures are proportionally consolidated. Investments in minority interests, in which
the Company has an investment of between 20% - 50% and has no controlling interest, are accounted for under the equity method.



For names of subsidiaries and investments in minority interests see pages 115 and 116 of the Océ Annual Report 2003, which are incorporated herein by reference.
Intercompany transactions and account balances have been eliminated upon consolidation.



Assumptions, estimates and judgements



When Océ
prepares its financial statements, it selects certain accounting principles and methods and makes certain assumptions, estimates and judgments relating to its financial condition and disclosure, which require managements subjective and complex
consideration of a variety of matters.



The Company bases its assumptions and
estimates, and makes its judgments, based on its historical experience, its expectations for the future and various other factors that it believes are reasonable under the circumstances. The Companys actual results may significantly differ
from its assumptions, estimates and judgments and its financial condition could be significantly different if the Company used different assumptions, estimates and judgments.



Foreign exchange



Balance sheet items expressed in foreign currencies are translated into Euros at the closing exchange rate at the end of the reporting period. Translation differences
related to foreign subsidiaries balance sheet items are added to, or charged against, shareholders equity. Foreign currency profit and loss items are translated into Euros at the average exchange rate during the period. The difference
between the average and the closing rate is added to, or charged against, shareholders equity.



Revenue recognition



In the normal
course of business, the Company generates revenue through the sale of equipment, services, and supplies and income associated with the financing of its equipment sales. The Company recognizes revenue when realized or realizable and earned, which is
when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the sales price is fixed or determinable; and collectibility is reasonably assured. More specifically, revenue related to the Companys
sales of its products and services are as follows:



Equipment:



Revenue recognition criteria on sale of equipment
are generally met when the equipment is delivered and installed at the customer site. In instances in which the agreement with the customer contains a customer acceptance clause, revenue is deferred until customer acceptance is obtained.



The Company may offer customer financing to assist customers in their acquisition of
Océ products. At the time a financing transaction is consummated, which qualifies as a sales-type lease, the Company records the total lease receivable net of unearned income and the estimated residual value of the equipment. Unearned income
is recognized as finance income using the interest method over the term of the lease. Leases not qualifying as sales-type leases are accounted for as operating leases for which revenue is recognized ratably over the lease term. The underlying
equipment is depreciated on a straight-line basis over the assets estimated useful life.



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Services:



Service revenues are derived primarily from maintenance contracts on our equipment sold or leased to customers and are recognized ratably
over the term of the service contracts.



Supplies:



Supplies revenue generally is recognized upon
shipment.



Multiple Element
Arrangements:



The Company sells its equipment and services on a
stand-alone basis and also enters into bundled arrangements that contain multiple deliverable elements. These multiple element arrangements typically include equipment, services, supplies and financing components for which the customer pays a single
defined price for all elements. These arrangements typically also include a variable component for copy volumes in excess of stated minimums. When separate prices are listed in these multiple element arrangements with our customers they may not be
representative of the fair values of those elements because the prices of the different components of the arrangement may be altered in customer negotiations, although the aggregate consideration may remain the same. Therefore, revenues under these
arrangements are allocated based upon estimated fair values of each element.



The fair value of each element is estimated based on a review of a number of factors including average selling prices for the elements when they are sold on a stand-alone basis. The average selling prices are based on managements best
estimates of market conditions and competitive pricing considerations. The principal change in estimate relating to such revenue allocations among multiple elements is made with respect to the estimated fair value of those elements and their related
margins. This is a significant factor considered in our revenue allocation process along with other factors, such as pricing changes and customer discounts, which also affect the overall allocation process.



Research and development expenses



Research costs are charged direct to the Statement of Operations. Product development costs
are capitalized if they comply with the relevant criteria.



Development
credits and subsidies



Development credits granted by the government are
recognized as a reduction of research and development expenses. These credits are subject to a contingent repayment. Upon determination of commercial success of a project, a current liability is created to cover the repayment in respect of that
project and is charged to research and development costs. Actual repayments to the government are made as sales of the relevant product occur and are charged to the relevant development credit liabilities. See Note 14 to the Consolidated Financial
Statements.



Subsidies received from the government are included in the
statement of operations as an income item in the year of entitlement thereto.



Financial expenses (net)



Besides interest received and
interest paid, expenses related to raising loans are also included. The effect of interest rate instruments are included.



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Income tax



Income tax is calculated on the commercial results at the rates applicable in the various countries. This method implies that provisions are made for deferred income
taxes. The entitlement to loss compensation is taken into consideration in so far as there is a reasonable expectation that it can be realized. Allowance is made for dividend withholding tax that cannot be offset at the moment of dividend
distribution by an affiliated company.



Earnings per ordinary share



Earnings per ordinary share are calculated by dividing the net income
attributable to holders of ordinary shares by the average number of ordinary shares outstanding during the year. In making this calculation the ordinary shares purchased by the company throughout the financial year are deducted from the number of
ordinary shares outstanding. To calculate the average number of outstanding shares on the basis of full conversion, the basis is formed by the weighted average number of shares in issue and the potential increase as a result of conversion and
outstanding options. The assumption applied for the conversion arising from convertible debenture bonds is that these are converted in full. An adjustment is also made to net income to eliminate interest charges, whilst allowing for the effect of
taxation. The calculation of the increase arising from options is based on the value of the options granted, i.e. the number of options times the exercise price, divided by the average share price during the financial year. This increase is only
applied if the average share price is higher than the exercise price of the options upon grant. In making this calculation no adjustment is made to net income.



Intangible assets



As of fiscal year 2001 goodwill and other intangible assets arising from acquisitions are capitalized and amortized on a straight line basis over the estimated economic lifetime, with a maximum of twenty years.
Software development costs, including costs incurred to purchase third party software, are capitalized when the Company has determined that the software is technologically feasible and additional functionality is created. Capitalization of software
costs ceases when the software is substantially complete and is ready for its intended use.



Straight-line amortizations are charged at fixed percentages of the value of the historical cost and are based on the estimated economic lifetime of the assets, as follows:



|                |  |                
|--------------- |  | ---------------
| Goodwill      |  | 10 to 20 years,
| Software      |  | 3 to 5 years,  
| Technology    |  | 5 to 10 years, 
| Customer base |  | 6 years,       
| Trade marks   |  | 10 years,      
| Other         |  | 3 years.       



Property, plant and equipment



Property, plant and equipment are valued at historical cost, less
cumulative depreciation. Straight-line depreciation is charged at a fixed percentage of the historical costs and is based on the estimated economic lifetime of the assets, as follows:



|                               |  |                
|------------------------------ |  | ---------------
| Property and plant           |  | 20 to 50 years,
| Production machines          |  | 8 to 10 years, 
| Factory and office equipment |  | 3 to 10 years, 
| Vehicles                     |  | 4 or 5 years.  



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Depreciation of specific pieces of equipment used for the manufacture of machines takes place pro rata to the expected
number of units to be manufactured.



Certain assets which are acquired under a
financial lease contract are capitalized.



Rental equipment



Rental equipment is valued at historical manufacturing costs plus directly related
indirect costs. Depreciation takes place on a straight-line basis over the estimated economic lifetime of 3 to 5 years.



Inventories



Inventories are valued at the lower of cost, in accordance with the first-in first-out method, or market. Allowances have been made for obsolescence.



Investments in minority interests



Investments in minority interests are included at acquisition cost plus equity in undistributed earnings as determined by the accounting principles applied in these
Consolidated Financial Statements.



Financial lease receivables



The valuation is based on the present value of the contracted terms,
taking into account the risk of uncollectability.



Other long term assets



Other long term assets include mortgages, loans, guarantee deposits and
deferred tax assets, which are valued at nominal value, after taking into account the risk of uncollectability.



Impairment of long lived assets



The Company reviews the carrying value of its long-lived assets, including goodwill and other intangible assets, whenever events or changes in circumstances indicate that
the carrying value of the asset may not be recoverable. The Company assesses recoverability of the carrying value of the asset by grouping assets at the lowest level for which there are identifiable cash flows that are largely independent of the
cash flows of other groups of assets. The Company then estimates the discounted future cash flows expected to result from the asset grouping, including the proceeds from disposal. An impairment loss would be recognized when the estimated discounted
future cash flows expected to result from the use of the asset and its disposal are less than its carrying value. In such instances, the carrying value of long-lived assets is reduced to the estimated fair value, as determined using an appraisal or
discounted cash flow, as appropriate.



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Deferred income taxes



The provision for deferred taxation is calculated on the differences between valuation of assets and liabilities for financial reporting and tax purposes, based on the
effective rate of corporate tax in the various countries. Deferred tax assets are recognized for net operating loss carry forwards when it is probable that such carry forwards will be realized.



Long term liabilities (provisions)



Pension liabilities exist both under defined contribution schemes and under
defined benefit schemes. In most countries the latter schemes are mainly insured by external funds. In the case of a defined contribution scheme the contribution is booked as a charge in the year to which it relates. In defined benefit
schemes the costs are calculated according to the projected unit credit method. In this method the pension costs are charged to the Statement of Operations over the expected service life of the employees. All actuarial gains and losses
are charged to the Statement of Operations over the remaining periods of service. These calculations are made annually by qualified actuaries. The pension liabilities are calculated as the net present value of the estimated future cash outflows,
whilst applying an interest rate that corresponds to the interest rate for government bonds having the same future maturity dates. This system has been applied as from December 1, 2002, whilst the difference as compared to the accounting principles
previously used has been charged to shareholders equity after making allowance for the tax consequences.



The provision for severance obligations schemes relates to employees who have opted to make use of such non-activity or early retirement schemes.



Other provisions relate, amongst others, to (legal) proceedings and warranty commitments.



Provisions are included at the nominal value of the expected costs needed to settle the
liabilities; in cases where the time-based value of money has a material effect, valuation takes place on the basis of the net present value.



Derivative financial instruments



The Company enters into a variety of interest rate swaps and forward currency contracts to manage interest rate and foreign currency exposures. The Company accounts for
such transactions as hedges when these contracts off set the risk inherent in the exposures. In addition the transaction must have a satisfactory level of correlation between the financial instrument and the designated item or transactions hedged.



Realized and unrealized gains and losses on interest rate swaps are deferred
and recognized as interest expense over the term of the contracts.



Realized
and unrealized gains and losses on foreign currency contracts which hedge the future cash flows are recognized under cost of goods sold in the related period.



Realized and unrealized gains and losses on foreign currency contracts which hedge the (intercompany) loans in foreign operations are recordered in the Statement of
Operations.



The Companys accounts receivable result from its trade and
lease operations and reflect a broad customer base nationally as well as internationally. The Company routinely assesses the financial strength of its customers. As a consequence, concentrations of credit risk are limited.



The Companys cash equivalents represent high quality securities placed of major
international banks and financial institutions of high repute. This policy limits the exposure to credit risk.



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Reclassifications



Certain reclassifications have been made to prior years financial statements to conform to the current years presentation. These reclassifications had no
effect on the prior years shareholders equity or net income.



1.
Cash and cash equivalents



Cash and cash equivalents include time deposits
of Euro 2.4 million and Euro 11.4 million at November 30, 2002 and 2003, respectively. For the purpose of the Consolidated Statements of Cash Flows, prepared in accordance with IAS 7, the Company considers all highly liquid instruments with an
original maturity date of three months or less as cash equivalents.



2.
Accounts receivable



Accounts receivable consist of the following:



|                          |  |                |  |        
|------------------------- |  | -------------- |  | -------
|                          |  | November 30,  
|                          |  | 2002           |  | 2003   
|                          |  | (in thousands)
|                          |  | Euro           |  | Euro   
|Trade accounts receivable |  | 574,119        |  | 502,555
|Discounted trade bills    |  | -38            |  | -324   
|Current tax               |  | 10,480         |  | 9,256  
|Other                     |  | 86,137         |  | 67,008 
|                          |  |                |  |        
|Total                     |  | 670,698        |  | 578,495
|                          |  |                |  |        



Allowances for doubtful accounts
amounts to Euro 65.8 million and Euro 53.7 million at November 30, 2002 and 2003, respectively.



3. Inventories



Inventories consist of
the following:



|                                       |  |                |  |        
|-------------------------------------- |  | -------------- |  | -------
|                                       |  | November 30,  
|                                       |  | 2002           |  | 2003   
|                                       |  | (in thousands)
|                                       |  | Euro           |  | Euro   
|Raw materials and other materials      |  | 34,427         |  | 39,733 
|Semi-finished products and spare parts |  | 116,666        |  | 107,048
|Finished products and trade stock      |  | 194,495        |  | 163,623
|                                       |  |                |  |        
|Total                                  |  | 345,588        |  | 310,404
|                                       |  |                |  |        



Allowances for obsolescence are in
total Euro 157.4 million and Euro 165.8 million at November 30, 2002 and 2003, respectively.



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##### Table of Contents

4. Intangible fixed assets



Intangible fixed assets consist of the following (in thousands):



|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|----------------------------- |  | -------- |  | -------- |  | ---------- |  | ------------ |  | -------------------- |  | -------
|                              |  | Goodwill |  | Software |  | Technology |  | Customerbase |  | Trademarks and other |  | Total  
|                              |  | Euro     |  | Euro     |  | Euro       |  | Euro         |  | Euro                 |  | Euro   
|At December 1, 2001           |  |          |  |          |  |            |  |              |  |                      |  |        
|Acquisition value             |  | 28,286   |  | 15,178   |  |           |  |             |  |                     |  | 43,464 
|Accumulated amortisation      |  | 85       |  | 27       |  |           |  |             |  |                     |  | 112    
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|Book value                    |  | 28,201   |  | 15,151   |  |           |  |             |  |                     |  | 43,352 
|                              |  |          |  |          |  |           
|Movements in book value:      |  |          |  |          |  |            |  |              |  |                      |  |        
|Expenditure                   |  |         |  | 19,370   |  |           |  |             |  |                     |  | 19,370 
|Divestments                   |  |         |  |         |  |           |  |             |  |                     |  |       
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|Net investments               |  |         |  | 19,370   |  |           |  |             |  |                     |  | 19,370 
|                              |  |          |  |          |  |           
|Acquisition of participations |  | 4,216    |  | 8,548    |  | 8,112      |  | 13,324       |  | 5,731                |  | 39,931 
|Amortisation                  |  | 3,220    |  | 7,051    |  | 1,644      |  | 2,378        |  | 634                  |  | 14,927 
|Impairment                    |  |         |  |         |  |           |  |             |  |                     |  |       
|Foreign currency translations |  | -691     |  | -1,175   |  | 100        |  | 140          |  | 38                   |  | -1,588 
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|At November 30, 2002          |  | 28,506   |  | 34,843   |  | 6,568      |  | 11,086       |  | 5,135                |  | 86,138 
|                              |  |          |  |          |  |           
|At December 1, 2002           |  |          |  |          |  |            |  |              |  |                      |  |        
|Acquisition value             |  | 31,687   |  | 41,709   |  | 8,112      |  | 13,324       |  | 5,731                |  | 100,563
|Acumulated amortisation       |  | 3,181    |  | 6,866    |  | 1,544      |  | 2,238        |  | 596                  |  | 14,425 
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|Book value                    |  | 28,506   |  | 34,843   |  | 6,568      |  | 11,086       |  | 5,135                |  | 86,138 
|                              |  |          |  |          |  |           
|Movements in book value:      |  |          |  |          |  |            |  |              |  |                      |  |        
|Expenditure                   |  |         |  | 10,212   |  | 696        |  | 589          |  |                     |  | 11,497 
|Divestments                   |  |         |  | 94       |  |           |  |             |  |                     |  | 94     
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|Net investments               |  |         |  | 10,118   |  | 696        |  | 589          |  |                     |  | 11,403 
|                              |  |          |  |          |  |           
|Amortisation                  |  | 2,701    |  | 10,189   |  | 1,468      |  | 1,650        |  | 534                  |  | 16,542 
|Impairment                    |  | 13,530   |  |         |  | 900        |  | 8,351        |  |                     |  | 22,781 
|Foreign currency translations |  | -2,893   |  | -3,639   |  | -978       |  | -1,153       |  | -834                 |  | -9,497 
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|At November 30, 2003          |  | 9,382    |  | 31,133   |  | 3,918      |  | 521          |  | 3,767                |  | 48,721 
|                              |  |          |  |          |  |           
|At November 30, 2003          |  |          |  |          |  |            |  |              |  |                      |  |        
|Acquisition value             |  | 28,087   |  | 47,312   |  | 7,399      |  | 11,669       |  | 4,756                |  | 99,223 
|Accumulated amortisation      |  | 18,705   |  | 16,179   |  | 3,481      |  | 11,148       |  | 989                  |  | 50,502 
|                              |  |          |  |          |  |            |  |              |  |                      |  |        
|Book value 30, 2003           |  | 9,382    |  | 31,133   |  | 3,918      |  | 521          |  | 3,767                |  | 48,721 
|                              |  |          |  |          |  |            |  |              |  |                      |  |        



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##### Table of Contents

5. Property, plant and equipment



Property, plant and equipment consists of the following (in thousands):



|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|----------------------------- |  | ---------------- |  | ------------------ |  | ---------------- |  | --------------------------------- |  | -------------------------------------------- |  | ---------
|                              |  | Propertyandplant |  | ProductionMachines |  | Otherfixedassets |  | Underconstructionand pre-payments |  | Not inproductionprocessandinvestmentproperty |  | Total    
|                              |  | Euro             |  | Euro               |  | Euro             |  | Euro                              |  | Euro                                         |  | Euro     
|At December 1, 2001           |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Acquisition value             |  | 334,360          |  | 413,875            |  | 405,215          |  | 46,006                            |  | 5,436                                        |  | 1,204,892
|Accumulated depreciation      |  | 147,040          |  | 309,537            |  | 287,166          |  |                                  |  | 3,143                                        |  | 746,886  
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Book value                    |  | 187,320          |  | 104,338            |  | 118,049          |  | 46,006                            |  | 2,293                                        |  | 458,006  
|                              |  |                  |  |                    |  |                 
|Movements in book value:      |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Expenditure                   |  | 10,689           |  | 47,056             |  | 53,518           |  | 4,673                             |  |                                             |  | 115,936  
|Divestments                   |  | 366              |  | 3,516              |  | 7,864            |  | 2,938                             |  |                                             |  | 14,684   
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Net investments               |  | 10,323           |  | 43,540             |  | 45,654           |  | 1,735                             |  |                                             |  | 101,252  
|                              |  |                  |  |                    |  |                 
|Acquisition of participations |  | 72               |  | 1,538              |  | 1,460            |  |                                  |  |                                             |  | 3,070    
|Depreciation                  |  | 9,827            |  | 35,822             |  | 49,205           |  | 80                                |  |                                             |  | 94,934   
|Foreign currency translations |  | -1,979           |  | -2,568             |  | -2,947           |  | -963                              |  | -85                                          |  | -8,542   
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|At November 30, 2002          |  | 185,909          |  | 111,026            |  | 113,011          |  | 46,698                            |  | 2,208                                        |  | 458,852  
|                              |  |                  |  |                    |  |                 
|At December 1, 2002           |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Acquisition value             |  | 341,659          |  | 432,621            |  | 417,387          |  | 46,781                            |  | 4,545                                        |  | 1,242,993
|Accumulated depreciation      |  | 155,750          |  | 321,595            |  | 304,376          |  | 83                                |  | 2,337                                        |  | 784,141  
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Book value                    |  | 185,909          |  | 111,026            |  | 113,011          |  | 46,698                            |  | 2,208                                        |  | 458,852  
|                              |  |                  |  |                    |  |                 
|Reclassification              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Acquisition value             |  | -15,433          |  |                   |  |                 |  |                                  |  | 15,433                                       |  |         
|Accumulated depreciation      |  | -12,937          |  |                   |  |                 |  |                                  |  | 12,937                                       |  |         
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Book value                    |  | -2,496           |  |                   |  |                 |  |                                  |  | 2,496                                        |  |         
|                              |  |                  |  |                    |  |                 
|Movements in book value:      |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Expenditure                   |  | 17,663           |  | 38,384             |  | 64,693           |  | -24,529                           |  | 918                                          |  | 97,129   
|Divestments                   |  | 518              |  | 2,721              |  | 9,496            |  | 2,933                             |  | 931                                          |  | 16,599   
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Net investments               |  | 17,145           |  | 35,663             |  | 55,197           |  | -27,462                           |  | -13                                          |  | 80,530   
|                              |  |                  |  |                    |  |                 
|Acquisition of participations |  |                 |  | -21                |  | -112             |  |                                  |  |                                             |  | -133     
|Depreciation                  |  | 10,061           |  | 33,221             |  | 48,310           |  |                                  |  | 385                                          |  | 91,977   
|Impairment                    |  | 600              |  | 1,794              |  |                 |  |                                  |  |                                             |  | 2,394    
|Foreign currency translations |  | -3,094           |  | -4,368             |  | -5,873           |  | -944                              |  | -72                                          |  | -14,351  
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|At November 30, 2003          |  | 186,803          |  | 107,285            |  | 113,913          |  | 18,292                            |  | 4,234                                        |  | 430,527  
|                              |  |                  |  |                    |  |                 
|At November 30, 2003          |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Acquisition value             |  | 338,104          |  | 434,134            |  | 431,341          |  | 18,292                            |  | 19,048                                       |  | 1,240,919
|Accumulated depreciation      |  | 151,301          |  | 326,849            |  | 317,428          |  |                                  |  | 14,814                                       |  | 810,392  
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          
|Book value                    |  | 186,803          |  | 107,285            |  | 113,913          |  | 18,292                            |  | 4,234                                        |  | 430,527  
|                              |  |                  |  |                    |  |                  |  |                                   |  |                                              |  |          



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##### Table of Contents

6. Rental equipment



Rental equipment consists of the following:



|                             |  |                |  |        
|---------------------------- |  | -------------- |  | -------
|                             |  | 2002           |  | 2003   
|                             |  | (in thousands)
|                             |  | Euro           |  | Euro   
|At December 1,               |  |                |  |        
|Cost                         |  | 551,656        |  | 469,131
|Accumulated depreciation     |  | 372,503        |  | 350,189
|                             |  |                |  |        
|Book value                   |  | 179,153        |  | 118,942
|                             |  |                |  |        
|Movements in book value:     |  |                |  |        
|Installed on rental          |  | 106,884        |  | 83,025 
|Divestments                  |  | -77,181        |  | -68,590
|Depreciation                 |  | 87,289         |  | 64,851 
|Foreign currency translation |  | -2,625         |  | -5,247 
|                             |  |                |  |        
|At November 30               |  | 118,942        |  | 63,279 
|                             |  |               
|Cost                         |  | 469,131        |  | 364,469
|Accumulated depreciation     |  | 350,189        |  | 301,190
|                             |  |                |  |        
|Book value                   |  | 118,942        |  | 63,279 
|                             |  |                |  |        



7. Financial lease receivables



Financial lease receivables consist of the following:



|                               |  |                |  |         
|------------------------------ |  | -------------- |  | --------
|                               |  | 2002           |  | 2003    
|                               |  | (in thousands)
|                               |  | Euro           |  | Euro    
|Financial lease receivables    |  | 1,231,769      |  | 974,470 
|Allowance for uncollectibility |  | -31,884        |  | -29,298 
|Current lease receivables      |  | -422,465       |  | -348,911
|Unearned interest              |  | -197,538       |  | -149,428
|Residual value                 |  | 10,825         |  | 5,015   
|                               |  |                |  |         
|Total                          |  | 590,707        |  | 451,848 
|                               |  |                |  |         



8. Other long term assets



|                              |  |                |  |        
|----------------------------- |  | -------------- |  | -------
|                              |  | 2002           |  | 2003   
|                              |  | (in thousands)
|                              |  | Euro           |  | Euro   
|Book value at December 1,     |  | 84,032         |  | 99,109 
|New amounts receivable        |  | 20,384         |  | 13,365 
|Repayments                    |  | -3,228         |  | -2,850 
|Foreign currency translations |  | -2,079         |  | -3,121 
|                              |  |                |  |        
|Book value at November 30,    |  | 99,109         |  | 106,503
|                              |  |                |  |        



This item includes deferred tax claims
of Euro 82.8 million (in 2002: Euro 75.8 million). An amount of Euro 1.8 million (2002: Euro 2.1 million) was provided to personnel in the form of loans.



Other long term assets also include an amount of Euro 0.4 million (2002: Euro 0.4 million) for loans provided to the Board of Executive Directors. The specification of
this amount is as follows: R. van Iperen Euro 0.2 million, J. van den Belt Euro 0.1 million and J. Dix Euro 0.1 million. These loans are interest-free and were made available prior to November 30, 2002.



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##### Table of Contents

Repayment takes place upon exercise of the annual tranche of options in respect of which the loan was provided.



9. Borrowings under bank lines of credit and short term borrowings



Borrowing facilities at November 30, 2003 amounted to Euro 771 million
(2002: Euro 930 million) for the parent company and its Dutch subsidiaries. At November 30, 2003 no amount of this facility was utilized.



Borrowing facilities for the subsidiaries outside of the Netherlands totaled Euro 435 million at November 30, 2003 (2002: Euro 171 million). These facilities are
denominated in various currencies.



At November 30, 2003 the used portion of
these facilities amounted to Euro 159 million (2002: Euro 157 million) classified as current portion short term and Euro 4 million (2002: Euro 14 million) classified as long term debt, bearing interest of 1.8 % in 2003.



Commitment fees of approximately Euro 1.3 million were paid for unused credit facilities in
2003 (2002 Euro 0.9 million and 2001 Euro 1.4 million).



10. Deferred income



These amounts represent advance billings related to rental and
maintenance contracts for copying equipment.



11. Long term debt



Other long term debt consists of the following:



|                                                                                                                |  |                |  |         
|--------------------------------------------------------------------------------------------------------------- |  | -------------- |  | --------
|                                                                                                                |  | November 30,  
|                                                                                                                |  | 2002           |  | 2003    
|                                                                                                                |  | (in thousands)
|                                                                                                                |  | Euro           |  | Euro    
|LOANS                                                                                                           |  |                |  |         
|U.S. Dollar denominated, average interest of 2.0% and 1.6%, maturing through 2005                               |  | 273,733        |  | 80,761  
|Euro denominated, average interest of 5.1% and 5.9%, maturing through 2013                                      |  | *404,467       |  | *395,076
|Norwegian Crown denominated, average interest of 7.2% and 3.0%, maturing through 2004                           |  | 15,096         |  | 1,273   
|Swedish Crown denominated, average interest 3.2%, maturing through 2008                                         |  |               |  | 1,139   
|Czech Crown denominated, average interest of 3.4% and 2.5%, maturing through 2008                               |  | 2,129          |  | 1,707   
|Swiss Franc denominated, average interest 1.0% and 0.4%, maturing through 2004                                  |  | 56,128         |  | 39,300  
|Australian Dollar denominated, average interest 4.9% and 5.0%, maturing through 2003                            |  | 2,151          |  | 2,419   
|Hong Kong Dollar denominated, average interest 2.2% and 0.6%, maturing through 2008                             |  | 77             |  | 387     
|Japanese Yen denominated, average interest 0.3% and 0.3%, maturing through 2008                                 |  | 164            |  | 731     
|Pound Sterling denominated, average interest 4.1% and 3.9%, maturing through 2006                               |  | 45,053         |  | 8,033   
|Mexican Peso denominated, average interest 6.7% and maturing through 2008                                       |  |               |  | 219     
|Singapore Dollar denominated, average interest 1.8% and 1.0%, maturing through 2008                             |  | 570            |  | 920     
|South African Rand denominated, average interest 13.0%                                                          |  | 303            |  |        
|Convertible Euro debenture bonds to Company Personnel, average interest of 4.7% and 4.5%, maturing through 2009 |  | 10,555         |  | 11,507  
|Thailand Bath denominated, average interest 2.5%, maturing through 2008                                         |  | 912            |  | 677     
|Capitalized lease obligations, average interest of 12.1% and 11.7%, maturing through 2005                       |  | 2,314          |  | 2,539   
|                                                                                                                |  |                |  |         
|Total other long term debt                                                                                      |  | 813,652        |  | 546,688 
|Current portion                                                                                                 |  | 57,094         |  | 165,895 
|                                                                                                                |  |                |  |         
|Total long term portion                                                                                         |  | 756,558        |  | 380,793 
|                                                                                                                |  |                |  |         

---

|* | The fixed interest rates of the Euro loans have been fully swapped into variable interest rates (see Note 23).
|- | --------------------------------------------------------------------------------------------------------------



F-18



---

##### Table of Contents

Aggregate principal repayments applicable to these borrowings for the next years are as follows:



|                          |  |                
|------------------------- |  | ---------------
|Years ending November 30, |  | Euro           
|                          |  | ( in thousands)
|2004                      |  | 165,895        
|2005                      |  | 23,979         
|2006                      |  | 207,553        
|2007                      |  | 139,219        
|2008                      |  | 2,593          
|Thereafter                |  | 7,449          
|                          |  |                
|Total                     |  | 546,688        
|                          |  |                



12. Long term liabilities
(provisions)



The composition of provisions is as follows (in thousands
Euro):



|                                                      |  |               |  |                                            |  |                        |  |        |  |         
|----------------------------------------------------- |  | ------------- |  | ------------------------------------------ |  | ---------------------- |  | ------ |  | --------
|                                                      |  | Selfinsurance |  | Retirementbenefits andseveranceobligations |  | Restructuringprovision |  | Other  |  | Total   
|                                                      |  | Euro          |  | Euro                                       |  | Euro                   |  | Euro   |  | Euro    
|At December 1, 2001                                   |  | 908           |  | 201,813                                    |  | 126,514                |  | 38,156 |  | 367,391 
|Additions                                             |  | -908          |  | 38,763                                     |  | 1,808                  |  | 6,632  |  | 46,295  
|Usage                                                 |  |              |  | -19,937                                    |  | -38,709                |  | -1,016 |  | -59,662 
|Foreign currency translations                         |  |              |  | -3,389                                     |  |                       |  | -703   |  | -4,092  
|                                                      |  |               |  |                                            |  |                        |  |        |  |         
|At November 30, 2002                                  |  |              |  | 217,250                                    |  | 89,613                 |  | 43,069 |  | 349,932 
|                                                      |  |               |  |                                            | 
|Change in opening balance due to transition to IAS 19 |  |              |  | 260,007                                    |  |                       |  |       |  | 260,007 
|Additions                                             |  |              |  | 75,037                                     |  | 10,979                 |  | 4,306  |  | 90,322  
|Usage                                                 |  |              |  | -73,484                                    |  | -48,296                |  | -5,775 |  | -127,555
|Foreign currency translations                         |  |              |  | -4,459                                     |  | -261                   |  | -1,207 |  | -5,927  
|                                                      |  |               |  |                                            |  |                        |  |        |  |         
|At November 30, 2003                                  |  |              |  | 474,351                                    |  | 52,035                 |  | 40,393 |  | 566,779 



This table displays a rollforward of
the restructuring provision from November 30, 2001 to November 30, 2003 (in millions).



|                     |  |                   |  |           |  |          |  |                  
|-------------------- |  | ----------------- |  | --------- |  | -------- |  | -----------------
|Type of costs        |  | Balance Nov. 2001 |  | Additions |  | Utilized |  | Balance Nov. 2002
|                     |  | Euro              |  | Euro      |  | Euro     |  | Euro             
|Write-down of assets |  | 30.0              |  |          |  | -18.5    |  | 11.5             
|Personnel costs      |  | 96.5              |  | 1.8       |  | -20.2    |  | 78.1             
|                     |  |                   |  |           |  |          |  |                  
|Total long term part |  | 126.5             |  | 1.8       |  | -38.7    |  | 89.6             
|                     |  |                   |  |          
|Type of costs        |  | Balance Nov. 2002 |  | Additions |  | Utilized |  | Balance Nov. 2003
|                     |  | Euro              |  | Euro      |  | Euro     |  | Euro             
|Write-down of assets |  | 11.5              |  |          |  | -6.3     |  | 5.2              
|Personnel costs      |  | 78.1              |  | 11.0      |  | -42.3    |  | 46.8             
|                     |  |                   |  |           |  |          |  |                  
|Total long term part |  | 89.6              |  | 11.0      |  | -48.6    |  | 52.0             



F-19



---

##### Table of Contents

In 2001 an exceptional item of Euro 125 million before tax has been charged to income comprising Euro 50 million for
write down of assets and Euro 75 million for personnel costs (mainly redundancy and outplacement costs).



13. Shareholders equity



The
changes in shareholders equity are summarized below (in thousands):



|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|---------------------------------- |  | ------------------------- |  | -------------- | --- |  | --------------- |  | -------------------- |  | -------------- |  | ---------------- |  | ------------------------------ |  | ------------------------
|                                   |  | FinancingPreferenceshares |  | Ordinaryshares |     |  | Paid in capital |  | RevaluationAccount * |  | Legalreserve * |  | Retainedearnings |  | Accumul.translationadjustments |  | TotalShare-holdersequity
|                                   |  | Euro                      |  | Euro           |     |  | Euro            |  | Euro                 |  | Euro           |  | Euro             |  | Euro                           |  | Euro                    
|Balance November 30, 2000          |  | 10,000                    |  | 43,340         | (a) |  | 505,387         |  | 27,091               |  | 1,750          |  | 374,482          |  | 27,395                         |  | 989,445                 
|                                   |  |                           |  |                |     |  |                 | 
|Net income                         |  |                           |  |                |     |  |                 |  |                      |  |                |  | 10,070           |  |                                |  | 10,070                  
|Transfer                           |  |                           |  |                |     |  |                 |  |                      |  | -71            |  | 71               |  |                                |  |                        
|Dividends (b)                      |  |                           |  |                |     |  |                 |  |                      |  |                |  | -52,336          |  |                                |  | -52,336                 
|Conversions of convertible loans   |  |                           |  | 293            |     |  | 6,005           |  |                      |  |                |  |                  |  |                                |  | 6,298                   
|Purchase of shares                 |  |                           |  |                |     |  |                 |  |                      |  |                |  | -24,081          |  |                                |  | -24,081                 
|Foreign currency translations      |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  | -20,819                        |  | -20,819                 
|Reclassification                   |  |                           |  |                |     |  |                 |  | -27,091              |  |                |  | 27,091           |  |                                |  |                        
|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|Balance November 30, 2001          |  | 10,000                    |  | 43,633         | (a) |  | 511,392         |  |                     |  | 1,679          |  | 335,297          |  | 6,576                          |  | 908,577                 
|                                   |  |                           |  |                |     |  |                 | 
|Net income                         |  |                           |  |                |     |  |                 |  |                      |  |                |  | 112,531          |  |                                |  | 112,531                 
|Transfer                           |  |                           |  |                |     |  |                 |  |                      |  | -384           |  | 384              |  |                                |  |                        
|Dividends (b)                      |  |                           |  |                |     |  |                 |  |                      |  |                |  | -52,070          |  |                                |  | -52,070                 
|Conversions of convertible loans   |  |                           |  |                |     |  | 8               |  |                      |  |                |  |                  |  |                                |  | 8                       
|Purchase of shares                 |  |                           |  |                |     |  |                 |  |                      |  |                |  | -6,029           |  |                                |  | -6,029                  
|Costs of purchase of shares        |  |                           |  |                |     |  |                 |  |                      |  |                |  | -18              |  |                                |  | -18                     
|Foreign currency translations      |  |                           |  |                |     |  |                 |  |                      |  |                |  | 381              |  | -54,455                        |  | -54,074                 
|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|Balance November 30, 2002          |  | 10,000                    |  | 43,633         | (a) |  | 511,400         |  |                     |  | 1,295          |  | 390,476          |  | -47,879                        |  | 908,925                 
|                                   |  |                           |  |                |     |  |                 | 
|Change in accounting policies      |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|- transition to IAS 19             |  |                           |  |                |     |  |                 |  |                      |  |                |  | -174,047         |  |                                |  | -174,047                
|- dividends                        |  |                           |  |                |     |  |                 |  |                      |  |                |  | 35,902           |  |                                |  | 35,902                  
|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|Restated balance November 30, 2002 |  | 10,000                    |  | 43,633         | (a) |  | 511,400         |  |                     |  | 1,295          |  | 252,331          |  | -47,879                        |  | 770,780                 
|                                   |  |                           |  |                |     |  |                 | 
|Net income                         |  |                           |  |                |     |  |                 |  |                      |  |                |  | 61,462           |  |                                |  | 61,462                  
|Transfer                           |  |                           |  |                |     |  |                 |  |                      |  | -703           |  | 703              |  |                                |  |                        
|Dividends (b)                      |  |                           |  |                |     |  |                 |  |                      |  |                |  | -51,963          |  |                                |  | -51,963                 
|Conversions of convertible loans   |  |                           |  |                |     |  | 8               |  |                      |  |                |  |                  |  |                                |  | 8                       
|Purchase of shares                 |  |                           |  |                |     |  |                 |  |                      |  |                |  | -892             |  |                                |  | -892                    
|Cost of purchase shares            |  |                           |  |                |     |  |                 |  |                      |  |                |  | -32              |  |                                |  | -32                     
|Foreign currency translations      |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  | -66,598                        |  | -66,598                 
|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         
|Balance November 30, 2003          |  | 10,000                    |  | 43,633         | (a) |  | 511,408         |  |                     |  | 592            |  | 261,609          |  | -114,477                       |  | 712,765                 
|                                   |  |                           |  |                |     |  |                 |  |                      |  |                |  |                  |  |                                |  |                         

---

|* | The revaluation account and the legal reserve are established according to Dutch Company Law and are generally unavailable for distribution.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

|(a) | These amounts include Euro 1,500, representing the nominal value of 30 priority shares of Euro 50.
|--- | --------------------------------------------------------------------------------------------------

|(b) | Dividends per ordinary shares have been Euro 0.58, Euro 0.58 and Euro 0.58 (rounded) for respectively 2001, 2002 and 2003. The dividend of cumulative financing preference shares is
included.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-20



---

##### Table of Contents

Information regarding the various classes of shares at November 30, 2003 is as follows:



|                             |  |                   |  |                                |  |                       
|---------------------------- |  | ----------------- |  | ------------------------------ |  | ----------------------
|Authorized capital           |  | Authorized shares |  | Nominal valueper share in Euro |  | Voting rights pershare
|Priority Shares              |  | 30                |  | 50                             |  | 100                   
|Ordinary Shares              |  | 145,000,000       |  | 0.50                           |  | 1                     
|Financing Preference Shares  |  | 30,000,000        |  | 0.50                           |  | 1                     
|Protective Preference Shares |  | 175,000           |  | 500                            |  | 1000                  



|                                |  |                      |  |                      |  |                     
|------------------------------- |  | -------------------- |  | -------------------- |  | --------------------
|Ordinary Shares                 |  | 2001 Ordinary Shares |  | 2002 Ordinary Shares |  | 2003 Ordinary Shares
|Balance at beginning of period  |  | 86,674,380           |  | 87,261,509           |  | 87,262,525          
|Conversion of convertible loans |  | 587,129              |  | 1,016                |  | 963                 
|                                |  |                      |  |                      |  |                     
|Balance at end of period        |  | 87,261,509           |  | 87,262,525           |  | 87,263,488          
|                                |  |                      |  |                      |  |                     



Convertible loans consist of
convertible Euro debenture bonds to Company personnel (see Note 11).



|                                    |  |           |  |           |  |          
|----------------------------------- |  | --------- |  | --------- |  | ---------
|Purchased number of ordinary shares |  | 2001      |  | 2002      |  | 2003     
|Balance beginning of the year       |  | 1,149,840 |  | 3,149,840 |  | 3,768,942
|Purchased                           |  | 2,000,000 |  | 619,102   |  | 100,000  
|Exercise of options                 |  |          |  |          |  | -12,000  
|                                    |  |           |  |           |  |          
|Balance end of the year             |  | 3,149,840 |  | 3,768,942 |  | 3,856,942
|                                    |  |           |  |           |  |          



The purchased ordinary shares are
relating to the Stock Option Plan.



Priority shares



All priority shares are issued and
outstanding. They are held by Stichting Fort Ginkel, Venlo, the Netherlands, the directors of which are: J.L. Brentjens (Chairman), R.L. van Iperen and F.J. de Wit.



The Articles of Association grant certain rights to the holders of priority shares, including the following:



| |  | the determination of the number of members of the Supervisory and Executive Boards;
| | - | -----------------------------------------------------------------------------------



| |  | the preparation of a binding nomination list to the shareholders for the appointment of Supervisory and Executive Directors;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| |  | the alteration of the Articles of Association is possible only if proposed by priority shareholders; and
| | - | --------------------------------------------------------------------------------------------------------



| |  | approval is required for the issue of shares not yet issued.
| | - | ------------------------------------------------------------



In any one year not more than Euro 60 in dividends may be distributed on all the priority shares together.



Financing Preference Shares



All Financing Preference Shares are held by the Stichting Administratiekantoor Preferente Aandelen Océ in return for the issuance to
a number of institutional investors of registered depositary receipts with limited cancellability. The directors of this Foundation are H. de Ruiter (Chairman), S. Bergsma, J.M. Boll, L. Traas and D.M.N. van Wensveen. The outstanding Financial
Preference Shares are 20 million in the financial years 2001, 2002 and 2003.



F-21



---

##### Table of Contents

Protective Preference Shares



Since 1979 the Company has been subject to an irrevocable obligation to issue to the
Lodewijk Stichting, headquartered in Venlo, Protective Preference Shares upon the request of said foundation. This obligation currently relates to a number of Protective Preference Shares having a number of votes at most equal to the total number of
votes of the Ordinary Shares and Financing Preference Shares of the Company outstanding at the time of such request. The Directors of the Lodewijk Stichting are:



N.J. Westdijk (Chairman), S.D. de Bree, J.L. Brentjens, J.M.M. Maeijer, M.W. den Boogert and R.L. van Iperen. No Protective Preference
Shares are outstanding.



14. Commitment and contingent liabilities



The Company is contingently liable for the following items:



|                                                                                                                                                                    |  |               |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ----
|                                                                                                                                                                    |  | November 30, 
|                                                                                                                                                                    |  | 2002          |  | 2003
|                                                                                                                                                                    |  | (in millions)
|                                                                                                                                                                    |  | Euro          |  | Euro
|Government development credits and related surcharges depending on the commercial success of related development projects for which these
credits have been granted |  | 47.2          |  | 48.3
|Guarantee commitments                                                                                                                                               |  | 3.8           |  | 3.9 
|Recourse liabilities in respect of bills discounted                                                                                                                 |  | 0.1           |  | 0.3 
|Collateral security for liabilities                                                                                                                                 |  | 0.4           |  |    



In the ordinary course of business,
the Company has incurred commitments pursuant to terms of leases and other contracts such as those for capital expenditures and purchase commitments.



Repurchase commitments at November 30, 2003 of Euro 6.2 million (2002: Euro 5.5 million) exist on the lease contracts with third parties. The estimated market value is
higher than the repurchase commitment.



The Company is involved in a number of
legal actions. Based on currently available information and legal expert opinions, we believe that the outcomes of these legal actions will either have no significant adverse effect on the financial position of the Company, or that any possible
adverse effects are adequately reflected in the provisions.



15. Capital
leases



The Company has included the following assets financed by
capitalized leases in property, plant and equipment.



|                              |  |                |  |       
|----------------------------- |  | -------------- |  | ------
|                              |  | November 30,  
|                              |  | 2002           |  | 2003  
|                              |  | (in thousands)
|                              |  | Euro           |  | Euro  
|Buildings and improvements    |  | 15,454         |  | 11,738
|Equipment and vehicles        |  | 4,657          |  | 6,139 
|                              |  |                |  |       
|                              |  | 20,111         |  | 17,877
|Less accumulated depreciation |  | 9,078          |  | 8,604 
|                              |  |                |  |       
|Total                         |  | 11,033         |  | 9,273 
|                              |  |                |  |       



F-22



---

##### Table of Contents

At November 30, 2003 minimum rental payments are as follows (in thousands):



|                                                |  |      
|----------------------------------------------- |  | -----
|Years ending November 30,                       |  | Euro 
|2004                                            |  | 1,441
|2005                                            |  | 706  
|2006                                            |  | 495  
|2007                                            |  | 235  
|2008                                            |  | 62   
|Thereafter                                      |  |     
|                                                |  |      
|Total minimum rental payments                   |  | 2,939
|Interest and executory costs                    |  |     
|                                                |  |      
|Present value of future minimum rental payments |  | 2,939
|                                                |  |      



16. Operating leases



The Company has future minimum rental commitments under operating leases
of approximately Euro 320 million at November 30, 2003. Sublease rental income is insignificant. Future rental payments (in thousands) are as follows:



|                              |  |        
|----------------------------- |  | -------
|Years ending November 30,     |  | Euro   
|2004                          |  | 75,108 
|2005                          |  | 57,012 
|2006                          |  | 39,921 
|2007                          |  | 33,127 
|2008                          |  | 27,367 
|Thereafter                    |  | 87,571 
|                              |  |        
|Total minimum rental payments |  | 320,106
|                              |  |        



Total rental expense was Euro 103
million, Euro 112 million and Euro 102 million for the years ended November 30, 2001, 2002 and 2003, respectively.



17. Other current- and accrued liabilities



The other current- and accrued liabilities consists of the following (in thousands):



|                                                           |  |         |  |        
|---------------------------------------------------------- |  | ------- |  | -------
|                                                           |  | 2002    |  | 2003   
|                                                           |  | Euro    |  | Euro   
|Current liabilities:                                       |  |         |  |        
|Value added taxes, social security and other taxes payable |  | 53,917  |  | 56,528 
|Pension liabilities                                        |  | 4,906   |  | 2,365  
|Dividend                                                   |  | 3,551   |  | 3,551  
|Income taxes                                               |  | 15,392  |  | 25,569 
|Other                                                      |  | 24,685  |  | 21,796 
|Accrued liabilities:                                       |  |         |  |        
|Salaries and payroll taxes                                 |  | 157,865 |  | 149,624
|Other                                                      |  | 93,757  |  | 86,501 
|                                                           |  |         |  |        
|Total                                                      |  | 354,073 |  | 345,934
|                                                           |  |         |  |        



F-23



---

##### Table of Contents

18. Income taxes



The additional information concerning the income tax expense consists of the following:



|            |  |                          |  |      |  |      |  |      |  |       |  |     
|----------- |  | ------------------------ |  | ---- |  | ---- |  | ---- |  | ----- |  | ----
|            |  | Years ended November 30,
|            |  | 2001                     |  | 2002 |  | 2003
|            |  | (in millions)           
|            |  |                          |  | Euro |  |      |  | Euro |  |       |  | Euro
|Netherlands |  | -8.2                     |  |      |  | 9.9  |  |      |  | -14.9 |  |     
|Foreign     |  | 48.9                     |  |      |  | 35.9 |  |      |  | 34.0  |  |     
|            |  |                          |  |      |  |      |  |      |  |       |  |     
|Current     |  |                          |  | 40.7 |  |      |  | 45.8 |  |       |  | 19.1
|            |  |                          |  |      |  |     
|Netherlands |  | 8.5                      |  |      |  | 2.9  |  |      |  | 10.9  |  |     
|Foreign     |  | -0.7                     |  |      |  | 8.7  |  |      |  | 0.5   |  |     
|            |  |                          |  |      |  |      |  |      |  |       |  |     
|Deferred    |  |                          |  | 7.8  |  |      |  | 11.6 |  |       |  | 11.4
|            |  |                          |  |      |  |      |  |      |  |       |  |     
|Total       |  |                          |  | 48.5 |  |      |  | 57.4 |  |       |  | 30.5
|            |  |                          |  |      |  |      |  |      |  |       |  |     



The income tax provisions as shown in
the accompanying Consolidated Statements of Operations differ from the amounts computed by applying the Dutch federal statutory income tax rates to income before income taxes and minority interests.



A reconciliation of the Dutch statutory income tax rate to the effective income tax rate is
set forth below:



|                                                |  |                          |  |      |  |     
|----------------------------------------------- |  | ------------------------ |  | ---- |  | ----
|                                                |  | Years ended November 30,
|                                                |  | 2001                     |  | 2002 |  | 2003
|                                                |  | %                        |  | %    |  | %   
|Dutch statutory tax rate                        |  | 35.0                     |  | 35.0 |  | 34.5
|Non-deductible expenses                         |  | 2.1                      |  | 1.7  |  | 6.6 
|Tax credits                                     |  | -2.0                     |  | -1.9 |  | -3.3
|Foreign taxes deviating from the Dutch tax rate |  | 2.8                      |  | 2.1  |  | -4.8
|Released valuation allowance                    |  | -5.8                     |  | -4.5 |  | -1.7
|Other                                           |  | -1.0                     |  | 1.0  |  | 1.1 
|                                                |  |                          |  |      |  |     
|Effective income tax rate                       |  | 31.1                     |  | 33.4 |  | 32.4
|                                                |  |                          |  |      |  |     



Deferred taxes exist for the
following time differences:



|                                      |  |                          |  |         |  |        
|------------------------------------- |  | ------------------------ |  | ------- |  | -------
|                                      |  | Years ended November 30,
|                                      |  | 2001                     |  | 2002    |  | 2003   
|                                      |  | (in thousands)          
|                                      |  | Euro                     |  | Euro    |  | Euro   
|Accelerated depreciation              |  | -4,061                   |  | 17,553  |  | 25,244 
|Inventory obsolescence                |  | 14,506                   |  | -1,481  |  | -2,088 
|Sundry provisions / accrued expenses  |  | -17,231                  |  | 21,396  |  | 25,633 
|Tax benefit of tax loss carry-forward |  | 1,818                    |  | 1,577   |  | 114    
|Leasing                               |  | 8,687                    |  | -24,086 |  | -40,605
|Other                                 |  | 4,061                    |  | -3,325  |  | 3,150  
|                                      |  |                          |  |         |  |        
|                                      |  | 7,780                    |  | 11,634  |  | 11,448 
|                                      |  |                          |  |         |  |        



F-24



---

##### Table of Contents

The composition of deferred income taxes, as shown in the Consolidated Balance Sheet, is as follows:



|                                                         |  |               |  |             |  |        |  |            
|-------------------------------------------------------- |  | ------------- |  | ----------- |  | ------ |  | -----------
|                                                         |  | 2002          |  | 2003       
|                                                         |  | (in millions)
|                                                         |  | assets        |  | liabilities |  | assets |  | liabilities
|                                                         |  | Euro          |  | Euro        |  | Euro   |  | Euro       
|Intangible fixed assets                                  |  | 32.4          |  |            |  | 30.9   |  |           
|Leasing                                                  |  |              |  | 98.0        |  |       |  | 69.0       
|Other fixed assets                                       |  | 2.4           |  | 12.3        |  | 24.8   |  | 12.1       
|Current assets                                           |  | 45.8          |  |            |  | 38.6   |  | 0.5        
|Other long term liabilities                              |  | 25.1          |  | 0.2         |  | 83.2   |  |           
|Current liabilities                                      |  | 1.8           |  | 2.1         |  | 0.3    |  | 14.1       
|                                                         |  |               |  |             |  |        |  |            
|Total deferred tax assets/liabilities                    |  | 107.5         |  | 112.6       |  | 177.8  |  | 95.7       
|                                                         |  |               |  |            
|Net deferred tax position                                |  | 96.6          |  | 101.7       |  | 111.4  |  | 29.3       
|Tax loss carry forwards                                  |  | 19.8          |  |            |  | 14.2   |  |           
|Valuation allowance                                      |  | -52.4         |  |            |  | -42.8  |  |           
|Change in accounting principles for pensions             |  | 11.8          |  | -74.9       |  |       |  |           
|                                                         |  |               |  |             |  |        |  |            
|Provision for deferred income tax assets and liabilities |  | 75.8          |  | 26.8        |  | 82.8   |  | 29.3       
|                                                         |  |               |  |             |  |        |  |            



Deferred tax assets form part of the
balance sheet caption Other long term assets.



The valuation
allowance is related to tax loss carry forwards and certain deferred tax assets for which realization is less then probable.



At November 30, 2003 no provision is made for withholding taxes on dividends of approximately Euro 0.5 million relating to undistributed earnings of certain subsidiaries
which management intends to reinvest indefinitely.



Operating loss carry
forwards existing at November 30, 2003 expire as follows (in millions):



|       |  |      |  |      |  |            |  |           |  |      
|------ |  | ---- |  | ---- |  | ---------- |  | --------- |  | -----
|Year   |  | 2007 |  | 2008 |  | thereafter |  | unlimited |  | Total
|Amount |  | 1.2  |  | 0.5  |  | 2.5        |  | 10.0      |  | 14.2 



19. Financial expense (net)



Financial expense consists of:



|                                      |  |                          |  |        |  |       
|------------------------------------- |  | ------------------------ |  | ------ |  | ------
|                                      |  | Years ended November 30,
|                                      |  | 2001                     |  | 2002   |  | 2003  
|                                      |  | (in thousands)          
|                                      |  | Euro                     |  | Euro   |  | Euro  
|Interest and similar income items     |  | -5,404                   |  | -4,422 |  | -5,753
|Interest charges and similar expenses |  | 72,125                   |  | 56,751 |  | 34,589
|Other financial expenses              |  | 2,204                    |  | 1,772  |  | 1,716 
|                                      |  |                          |  |        |  |       
|Financial expense (net)               |  | 68,925                   |  | 54,101 |  | 30,552
|                                      |  |                          |  |        |  |       



Amounts of interest capitalized in
each year were immaterial.



F-25



---

##### Table of Contents

20. Foreign exchange results



Foreign currency results are included in cost of goods sold for an amount of Euro 27.0 million (loss), Euro 7.9 million (profit) and Euro
22.4 million (profit) in 2001, 2002 and 2003, respectively.



21. Minimum
future rental copying income



Copiers are rented generally for periods of
one to three years. The rental contracts vary as to terms, but in general contain a provision for fixed monthly rental receipts with additional contingent receipts, based on actual number of copies made.



At November 30, 2003, minimum future receipts totaled approximately Euro 193 million to be
received as follows (in millions):



|                          |  |     
|------------------------- |  | ----
|Years ending November 30, |  | Euro
|2004                      |  | 83  
|2005                      |  | 51  
|2006                      |  | 30  
|2007                      |  | 15  
|2008                      |  | 9   
|Thereafter                |  | 5   
|Total                     |  | 193 
|                          |  |     



The amount above the contractual
minimum receivables included in the Consolidated Statements of Operations were approximately Euro 125 million, Euro 117 million and Euro 98 million for 2001, 2002 and 2003, respectively.



F-26



---

##### Table of Contents

22. Segment information



Below is shown the operating profit (in millions):



|                                            |  |                           |  |                         |  |      
|------------------------------------------- |  | ------------------------- |  | ----------------------- |  | -----
|                                            |  | WideFormatPrintingSystems |  | DigitalDocumentsSystems |  | Total
|                                            |  | (in millions)            
|2001                                        |  |                           |  |                         |  |      
|Total revenues                              |  | 1,012                     |  | 2,222                   |  | 3,234
|Operating income                            |  | 98                        |  | 127                     |  | 225  
|Net income *                                |  |                           |  |                         |  | 10   
|                                            |  |                           | 
|Assets                                      |  | 809                       |  | 2,319                   |  | 3,128
|                                            |  |                           | 
|2002                                        |  |                           |  |                         |  |      
|Total revenues                              |  | 1,021                     |  | 2,155                   |  | 3,176
|Operating income                            |  | 96                        |  | 130                     |  | 226  
|Net income                                  |  | 53                        |  | 60                      |  | 113  
|                                            |  |                           | 
|Assets                                      |  | 807                       |  | 2,055                   |  | 2,862
|Liabilities                                 |  | 501                       |  | 1,550                   |  | 2,051
|Shareholders equity and minority interests |  | 306                       |  | 505                     |  | 811  
|                                            |  |                           | 
|Investments in fixed and intangible assets  |  | 38                        |  | 112                     |  | 150  
|Depreciation                                |  | 32                        |  | 150                     |  | 182  
|Amortisation                                |  | 4                         |  | 11                      |  | 15   
|Impairment                                  |  |                          |  |                        |  |     
|                                            |  |                           | 
|2003                                        |  |                           |  |                         |  |      
|Total revenues                              |  | 862                       |  | 1,907                   |  | 2,769
|Operating income                            |  | 55                        |  | 70                      |  | 125  
|Net income                                  |  | 30                        |  | 31                      |  | 61   
|                                            |  |                           | 
|Assets                                      |  | 674                       |  | 1,747                   |  | 2,421
|Liabilities                                 |  | 391                       |  | 1,279                   |  | 1,670
|Shareholders equity and minority interests |  | 283                       |  | 468                     |  | 751  
|                                            |  |                           | 
|Investments in fixed and intangible assets  |  | 24                        |  | 82                      |  | 106  
|Depreciation                                |  | 32                        |  | 125                     |  | 157  
|Amortisation                                |  | 6                         |  | 11                      |  | 17   
|Impairment                                  |  | 11                        |  | 14                      |  | 25   

---

|* | Not available per SBU
|- | ---------------------



The spread of revenues, assets and investments per geographical area are shown below (in millions):



|                  |  |                                |  |                                  |  |                         |  |       |  |      |  |     
|----------------- |  | ------------------------------ |  | -------------------------------- |  | ----------------------- |  | ----- |  | ---- |  | ----
|                  |  | revenues per geographical area |  | geographical spread    of assets |  | geographicalinvestments
|Countries         |  | 2002                           |  | 2003                             |  | 2002                    |  | 2003  |  | 2002 |  | 2003
|                  |  | Euro                           |  | Euro                             |  | Euro                    |  | Euro  |  | Euro |  | Euro
|United States     |  | 1,298                          |  | 1,046                            |  | 884                     |  | 626   |  | 35   |  | 23  
|Germany           |  | 371                            |  | 335                              |  | 460                     |  | 434   |  | 18   |  | 17  
|Netherlands       |  | 278                            |  | 284                              |  | 624                     |  | 626   |  | 75   |  | 39  
|United Kingdom    |  | 238                            |  | 183                              |  | 237                     |  | 140   |  |     |  | 5   
|France            |  | 209                            |  | 199                              |  | 178                     |  | 163   |  | 3    |  | 5   
|Rest of Europe    |  | 554                            |  | 519                              |  | 364                     |  | 333   |  | 14   |  | 14  
|Rest of the World |  | 228                            |  | 203                              |  | 115                     |  | 99    |  | 5    |  | 3   
|                  |  |                                |  |                                  |  |                         |  |       |  |      |  |     
|Total             |  | 3,176                          |  | 2,769                            |  | 2,862                   |  | 2,421 |  | 150  |  | 106 
|                  |  |                                |  |                                  |  |                         |  |       |  |      |  |     



F-27



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##### Table of Contents

23. Financial derivative instruments



Interest Rate Swaps



Interest rate swaps and caps are allowable hedge contracts when the transactions reduce interest rate risk.



The Company enters into interest rate swap contracts to manage interest costs, interest income (of the lease portfolio) and the risk
associated with changing interest rates. At November 30, 2003 the following contracts which effectively converted its fixed Euro rate debt (see Note 11) into variable rate debt were in effect:



|                    |  |                       |  |                                              |  |                              
|------------------- |  | --------------------- |  | -------------------------------------------- |  | -----------------------------
|Fixed rate receipts |  | Variable rate payment |  | Remaining weighted average maturity in years |  | Notional amount (in millions)
|6.39%               |  | 2.43%                 |  | 3.28                                         |  | Euro                 314     



Also contracts which convert floating
rate debt (see also Note 8 and 10) into fixed rate debt were in effect:



|                                    |  |                                     |  |                               |  |    
|----------------------------------- |  | ----------------------------------- |  | ----------------------------- |  | ---
|Weighted averagefixed rate payments |  | Remaining average maturity in years |  | Notional amount (in millions)
|%                                   |  |                                     |  |                               |  |    
|5.86                                |  | 0.26                                |  | Australian Dollars            |  | 16 
|4.53                                |  | 1.24                                |  | Pound Sterling                |  | 31 
|3.50                                |  | 1.94                                |  | U.S. Dollars                  |  | 190
|3.43                                |  | 1.35                                |  | Euro                          |  | 310



The aggregated estimated fair value of
above swap contracts was approximately Euro 21 million based on the interest rates at November 30, 2003.



Foreign Exchange Contracts



The Company
enters into foreign currency exchange contracts aimed at protecting the operating income and (intercompany) loans held in foreign currencies. During 2003 the Company has entered into forward exchange contracts mainly in currencies which fluctuate
vis-à-vis the Euro including the U.S. Dollar and Pound Sterling.



Per
November 30, 2003, the countervalue in Euro of such contracts in foreign currencies amounted to Euro 187.1 million in respect of the hedge of forecasted cash flows and Euro 148.0 million in respect of the hedge of the (intercompany) loans. The
aggregated market value of the above foreign currency positions would give an outcome of Euro 8.2 million and Euro 1.7 million respectively higher than the contracted value at November 30, 2003.



Credit Risk



The interest rate swap agreements and the foreign exchange contracts have been entered into with major financial institutions which are
expected to fully perform under the terms of the agreements.



F-28



---

##### Table of Contents

The only balance sheet item of which the fair value deviates from the carrying value is the Long term debt.
The fair value of the long term debt is approximately Euro 31.6 million lower than the carrying value based on similar terms and remaining maturities.



24. Pension disclosures



With the effect from this financial year the pension accounting standard IAS 19 was applied. No comparative figures are available. The introduction of this change in accounting principles had the following
effects: the provision for pensions has been increased by Euro 260 million, whilst shareholders equity, after allowing for the tax effect, has been reduced by Euro 174 million.



|                                         |  |     
|---------------------------------------- |  | ----
|                                         |  | 2003
|                                         |  | %   
|The principal actuarial assumptions are: |  |     
|Discount rate percentage                 |  | 5.29
|Expected return on pension assets        |  | 6.59
|Expected increase in salaries            |  | 2.78
|Expected increase in benefits            |  | 2.00



|                                                                   |  |               
|------------------------------------------------------------------ |  | --------------
|                                                                   |  | 2003          
|                                                                   |  | (in thousands)
|The amounts charged to the Statement of Operations are as follows: |  |               
|Service costs                                                      |  | 45,058        
|Interest costs                                                     |  | 66,227        
|Expected return on pension assets                                  |  | -53,090       
|Other                                                              |  | -718          
|                                                                   |  |               
|Pension costs                                                      |  | 57,477        
|                                                                   |  |               
|The amounts included in the balance sheet are shown below:         |  |               
|Pension liabilities                                                |  | -1,204,068    
|Fair value of pension assets                                       |  | 788,404       
|                                                                   |  |               
|Funded status                                                      |  | -415,664      
|                                                                   |  |               
|Transitional liabilities unrecognized                              |  |              
|Prior service costs unrecognized                                   |  | -177          
|Unrecognized actuarial gains                                       |  | -15,286       
|                                                                   |  |               
|Pension provisions included in the balance sheet                   |  | -431,127      
|                                                                   |  |               
|Movements in pension liabilities:                                  |  |               
|Pension liabilities at December 1, 2002                            |  | -1,181,643    
|Service costs                                                      |  | -45,058       
|Interest costs                                                     |  | -66,227       
|Employee contributions                                             |  | -12,523       
|Amendments                                                         |  | 896           
|Actuarial gains                                                    |  | 32,957        
|Benefits paid                                                      |  | 30,702        
|Exchange differences                                               |  | 36,828        
|                                                                   |  |               
|Pension liabilities at November 30                                 |  | -1,204,068    
|                                                                   |  |               



F-29



---

##### Table of Contents

|                                                 |  |               
|------------------------------------------------ |  | --------------
|                                                 |  | 2003          
|                                                 |  | (in thousands)
|Changes in pension assets:                       |  |               
|Fair value of pension assets at December 1, 2002 |  | 743,185       
|Actual return on investments                     |  | 34,656        
|Employer contributions                           |  | 55,414        
|Employee contributions                           |  | 12,523        
|Benefits paid                                    |  | -30,702       
|Exchange differences                             |  | -26,672       
|                                                 |  |               
|Fair value of pension assets at November 30      |  | 788,404       
|                                                 |  |               



25. Earnings per share calculations





|                                                                           |  |                          |  |         |  |       
|-------------------------------------------------------------------------- |  | ------------------------ |  | ------- |  | ------
|                                                                           |  | Years ended November 30,
|                                                                           |  | 2001                     |  | 2002    |  | 2003  
|                                                                           |  | (in thousands)          
|Net income attributable to holders of ordinary shares                      |  | 6,519                    |  | 108,980 |  | 57,911
|Weighted average number of ordinary shares outstanding                     |  | 85,241                   |  | 84,086  |  | 83,409
|Net income per ordinary share in Euro                                      |  | 0.08                     |  | 1.30    |  | 0.69  
|                                                                           |  |                          | 
|Net income attributable to holders of ordinary shares                      |  | 6,519                    |  | 108,980 |  | 57,911
|Interest costs of convertible loans (net)                                  |  | 270                      |  | 322     |  | 300   
|                                                                           |  |                          |  |         |  |       
|Net income based on full conversion                                        |  | 6,789                    |  | 109,302 |  | 58,211
|                                                                           |  |                          | 
|Weighted average number of ordinary shares outstanding                     |  | 85,241                   |  | 84,086  |  | 83,409
|Adjustment for assumed conversion                                          |  | 714                      |  | 568     |  | 729   
|Adjustment for options                                                     |  |                         |  | 125     |  | 30    
|                                                                           |  |                          |  |         |  |       
|Weighted average number of ordinary shares on the basis of full conversion |  | 85,955                   |  | 84,779  |  | 84,168
|                                                                           |  |                          | 
|Net income per ordinary share on the basis of full conversion in Euro      |  | 0.08                     |  | 1.29    |  | 0.69  



F-30



---

##### Table of Contents

26. Generally accepted accounting principles in the United States of America



The Companys consolidated financial statements are prepared in accordance with Dutch
GAAP, which vary in certain significant respects from accounting principles generally accepted in the United States of America (US GAAP). The principle differences between Dutch and US GAAP are presented below together with explanations of certain
adjustments that affect consolidated net income and total shareholders equity as of and for the years ended November 30.



|                                                                                               |  |                                                     |  |            |  |            |  |           
|---------------------------------------------------------------------------------------------- |  | --------------------------------------------------- |  | ---------- |  | ---------- |  | ----------
|                                                                                               |  | Years ended November 30,                            |  |           
|                                                                                               |  | 2001                                                |  | 2002       |  | 2003       |  | 2003      
|                                                                                               |  | (in thousands, except shares and per share amounts)
|                                                                                               |  | Euro                                                |  | Euro       |  | Euro       |  | $*        
|Net income under Dutch GAAP as shown in the accompanying Consolidated Statements of Operations |  | 10,070                                              |  | 112,531    |  | 61,462     |  | 73,724    
|                                                                                               |  |                                                     |  |           
|US GAAP adjustments                                                                            |  |                                                     |  |            |  |            |  |           
|Goodwill                                                                                       |  | -11,949                                             |  | -8,130     |  | -931       |  | -1,117    
|Restructuring provision                                                                        |  | 40,099                                              |  | -43,511    |  | -5,250     |  | -6,297    
|Self insurance franchise                                                                       |  | -908                                                |  | -907       |  |           |  |          
|Pension provision                                                                              |  | 11,726                                              |  | 2,633      |  | -14,992    |  | -17,983   
|Use of tax-deductible goodwill                                                                 |  | -14,800                                             |  | -7,721     |  |           |  |          
|Realised translation adjustments                                                               |  |                                                    |  |           |  | -1,789     |  | -2,146    
|Derivative instruments                                                                         |  | 53,277                                              |  | -4,230     |  | 8,260      |  | 9,907     
|Option plan                                                                                    |  |                                                    |  | -598       |  | 154        |  | 185       
|Tax effect on adjustments                                                                      |  | -35,833                                             |  | 14,941     |  | 3,804      |  | 4,563     
|                                                                                               |  |                                                     |  |            |  |            |  |           
|Net income under US GAAP                                                                       |  | 51,682                                              |  | 65,008     |  | 50,718     |  | 60,836    
|                                                                                               |  |                                                     |  |            |  |            |  |           
|Earnings per ordinary share:                                                                   |  |                                                     |  |            |  |            |  |           
|Basic                                                                                          |  | 0.56                                                |  | 0.73       |  | 0.57       |  | 0.68      
|Diluted                                                                                        |  | 0.56                                                |  | 0.73       |  | 0.56       |  | 0.68      
|                                                                                               |  |                                                     |  |           
|Weighted average number of ordinary shares outstanding:                                        |  |                                                     |  |            |  |            |  |           
|Basic                                                                                          |  | 85,241,097                                          |  | 84,086,202 |  | 83,408,783 |  | 83,408,783
|Diluted                                                                                        |  | 85,955,452                                          |  | 84,779,196 |  | 84,167,802 |  | 84,167,802



|                                        |  |                                   |  |          |  |         |  |        
|--------------------------------------- |  | --------------------------------- |  | -------- |  | ------- |  | -------
|                                        |  | Statement of Comprehensive income
|                                        |  | 2001                              |  | 2002     |  | 2003    |  | 2003   
|                                        |  | (in thousands)                   
|                                        |  | Euro                              |  | Euro     |  | Euro    |  | $*     
|Net income                              |  | 51,682                            |  | 65,008   |  | 50,718  |  | 60,836 
|Foreign currency translation adjustment |  | -21,695                           |  | -55,920  |  | -74,671 |  | -89,568
|Additional minimum liability            |  | -9,472                            |  | -127,501 |  | 47,573  |  | 57,064 
|Derivative instruments                  |  |                                  |  | -4,729   |  | 150     |  | 180    
|                                        |  |                                   |  |          |  |         |  |        
|Comprehensive income                    |  | 20,515                            |  | -123,142 |  | 23,770  |  | 28,512 
|                                        |  |                                   |  |          |  |         |  |        

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



F-31



---

##### Table of Contents

The reconciliation of the shareholders equity as shown in the accompanying Consolidated Balance Sheets to amounts
determined in accordance with US GAAP is as follows:



|                                                                                               |  |                          |  |           |  |          
|---------------------------------------------------------------------------------------------- |  | ------------------------ |  | --------- |  | ---------
|                                                                                               |  | Years ended November 30,
|                                                                                               |  | 2002                     |  | 2003      |  | 2003     
|                                                                                               |  | (in thousands)          
|                                                                                               |  | Euro                     |  | Euro      |  | $*       
|Shareholders equity under Dutch GAAP as shown in the accompanying Consolidated Balance Sheets |  | 908,925                  |  | 712,765   |  | 854,962  
|US GAAP adjustments                                                                            |  |                          |  |           |  |          
|Goodwill                                                                                       |  | 198,558                  |  | 197,627   |  | 237,054  
|Restructuring provisions                                                                       |  | 39,846                   |  | 34,596    |  | 41,497   
|Pension provision                                                                              |  | 52,707                   |  | 289,649   |  | 347,434  
|Additional minimum liability                                                                   |  | -137,358                 |  | -111,101  |  | -133,266 
|Derivative instruments                                                                         |  | 16,876                   |  | 25,366    |  | 30,427   
|Option plan                                                                                    |  | -598                     |  | -444      |  | -533     
|Dividend not declared                                                                          |  | 39,453                   |  |          |  |         
|Deferred income taxes on above adjustments                                                     |  | -8,226                   |  | -69,145   |  | -82,939  
|                                                                                               |  |                          |  |           |  |          
|Shareholders equity under US GAAP                                                             |  | 1,110,183                |  | 1,079,313 |  | 1,294,636
|                                                                                               |  |                          |  |           |  |          



If the above adjustments were
reflected in the Consolidated Balance Sheets, the amounts of the following accounts would be:



|                      |  |                                          |  |                          |  |          |  |         
|--------------------- |  | ---------------------------------------- |  | ------------------------ |  | -------- |  | --------
|                      |  |                                          |  | Years ended November 30,
|                      |  |                                          |  | 2002                     |  | 2003     |  | 2003    
|                      |  |                                          |  | (in thousands)          
|                      |  |                                          |  | Euro                     |  | Euro     |  | $*      
|Intangible assets     |  | Gross                                    |  | 411,493                  |  | 409,022  |  | 490,622 
|                      |  | Amortization                             |  | -123,325                 |  | -159,717 |  | -191,581
|Long term liabilities |  | Deferred income taxes                    |  | 110,008                  |  | 98,470   |  | 118,115 
|                      |  | Pension provision                        |  | 164,543                  |  | 184,702  |  | 221,550 
|                      |  | Restructuring provision                  |  | 56,139                   |  | 31,189   |  | 37,411  
|                      |  | Other provisions                         |  | 36,697                   |  | 26,643   |  | 31,958  
|Current liabilities   |  | Other incl. additional minimum liability |  | 149,238                  |  | 110,932  |  | 133,063 

---

|* | See Note 0 Summary of significant accounting principles
|- | -------------------------------------------------------



F-32



---

##### Table of Contents

Goodwill



Goodwill paid has been capitalised since December 1, 2000. Previously goodwill was charged directly to shareholders equity. Under US GAAP goodwill is capitalised,
and with effect from December 1, 2002, upon adoption of FAS 142, it is no longer amortised, rather it is subject to an annual impairment test. Prior to December 1, 2002, goodwill was amortised on a straight-line basis over a period of 10 to 40
years. Goodwill related to acquisitions after June 15, 2000 is no longer amortised but is subject to the impairment test as described above.



Restructuring provision



Under US GAAP the formation of restructuring provisions is subject to more stringent criteria than under Dutch GAAP such as:



|a. | Management, having the authority to approve the action, commits to a plan of termination;
|-- | -----------------------------------------------------------------------------------------



|b. | The plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and expected completion date;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------



|c. | The plan establishes the terms of the benefits that employees will receive upon termination, in sufficient detail to enable employees to determine the type and amount of benefits
they will receive if they are involuntarily terminated; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d. | Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn before the charge may be
taken.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For these reasons a part of the provisions is not yet
recognised under US GAAP until a future period.



Self -insurance franchise



In the previous years, under Dutch GAAP, the Company provided for
uninsured potential future losses that had not yet occurred. Under US GAAP such losses are not accrued for until they are incurred.



Pensions



Under US GAAP, pension costs are calculated according to FAS 87. With effect from the 2003 financial year IAS 19 has been applied in the Dutch Financial Statements. Previously, pensions were based on local
calculations.



Upon transition to IAS 19, all unrecognized actuarial losses are
charged to shareholders equity while under US GAAP these losses maintain to be amortized over the average remaining service period.



|                                    |  |               
|----------------------------------- |  | --------------
|Pension cost under US GAAP:         |  | 2003          
|                                    |  | (in thousands)
|                                    |  | Euro          
|Service cost                        |  | 45,058        
|Interest cost                       |  | 66,227        
|Expected return on plan assets      |  | -53,090       
|Amortization of transition costs    |  | -2,948        
|Amortization of prior service costs |  | -152          
|Amortization of losses              |  | 17,623        
|Other costs                         |  | 323           
|Curtailment                         |  | -572          
|                                    |  |               
|Net periodic pension cost           |  | 72,469        
|                                    |  |               



The assumptions used for FAS 87
calculations are identical to the information provided in Note 24.



F-33



---

##### Table of Contents

Use of tax-deductible goodwill



Under Dutch GAAP, a full provision was made for the tax benefit relating to the potential deductibility of goodwill resulting from a
previous acquisition. Subsequent reduction of this provision is realized in the Statement of Operations as reduced income tax expense. Under US GAAP, to the extent that a provision is recorded for an acquired tax benefit, the provision when
subsequently recognized, first reduces goodwill and then other non current intangible assets, and once these assets are reduced to zero, the benefit is included in income as a reduction of the income tax expense.



Realised translation adjustments



Under US GAAP, upon disposal of investments, the accumulated translation adjustment related
to that investment is recognised in the Statement of Operations.



Derivative
instruments



Under Dutch GAAP, receivables and liabilities denominated in
a foreign currency, including derivative contracts, are in principle carried at cost converted into Euros at the exchange rates at the end of the period. US GAAP requires valuation of derivatives at fair value. Under Dutch GAAP, unrealized gains and
losses on interest rate swaps used in hedging relationships are deferred until settlement or termination. Under US GAAP, these contracts are carried at fair value. Changes in fair value are recorded in the Statement of Operations.



Option plans



Under Dutch GAAP, compensation charges for the issuance of share options are recorded to the extent that the market value of the common
stock exceeds the exercise price on the date of grant. Under US GAAP, certain of Oces option plans do not meet the provisions for fixed plan accounting in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and therefore variable accounting is applied using the intrinsic value method. Océ has and will continue to remeasure compensation cost for the variable options until the options are exercised, cancelled
or forfeited.



Interest from capital leases



As explained in Note 0 to Consolidated Financial Statements interest from capital leases has
been recognized as a component of total revenues. Under US GAAP the related financial interest expense should be reported as a component of operating income.



Risk and uncertainties



The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements in order to conform with generally accepted
accounting principles. Changes in such estimates and assumptions may affect amounts reported in future periods.



27. Subsequent events



There are no material subsequent events.



F-34



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##### Table of Contents

SCHEDULE II



OCÉ N.V. AND SUBSIDIARIES



VALUATION AND QUALIFYING ACCOUNTS AS OF

NOVEMBER 30, 2001, 2002 AND 2003



|                                            |  |                              |  |                             |  |             |  |            |  |                         
|------------------------------------------- |  | ---------------------------- |  | --------------------------- |  | ----------- |  | ---------- |  | ------------------------
|                                            |  | Balance atbeginningof period |  | Additions charged to income |  | Acquisition |  | Deductions |  | Balance at end of period
|                                            |  | (In thousands)              
|                                            |  | Euro                         |  | Euro                        |  | Euro        |  | Euro       |  | Euro                    
|2001                                        |  |                              |  |                             |  |             |  |            |  |                         
|Allowance for doubtful accounts:            |  |                              |  |                             |  |             |  |            |  |                         
|- Accounts receivable                       |  | 52,758                       |  | 25,486                      |  | 321         |  | 16,764     |  | 61,801                  
|- Finance lease debtors                     |  | 13,247                       |  | 12,239                      |  |            |  | 626        |  | 24,860                  
|Allowance for stock obsolescence            |  | 183,685                      |  | 36,784                      |  | 192         |  | 44,643     |  | 176,018                 
|Valuation allowance for deferred tax assets |  | 62,268                       |  | -9,003                      |  |            |  |           |  | 53,265                  
|                                            |  |                              |  |                             | 
|2002                                        |  |                              |  |                             |  |             |  |            |  |                         
|                                            |  |                              |  |                             | 
|Allowance for doubtful accounts:            |  |                              |  |                             |  |             |  |            |  |                         
|- Accounts receivable                       |  | 61,801                       |  | 29,336                      |  | 1,553       |  | 26,922     |  | 65,768                  
|- Finance lease debtors                     |  | 24,860                       |  | 11,061                      |  |            |  | 4,037      |  | 31,884                  
|Allowance for stock obsolescence            |  | 176,018                      |  | 18,765                      |  | 10,897      |  | 48,317     |  | 157,363                 
|Valuation allowance for deferred tax assets |  | 53,265                       |  | -817                        |  |            |  |           |  | 52,448                  
|                                            |  |                              |  |                             | 
|2003                                        |  |                              |  |                             |  |             |  |            |  |                         
|                                            |  |                              |  |                             | 
|Allowance for doubtful accounts:            |  |                              |  |                             |  |             |  |            |  |                         
|- Accounts receivable                       |  | 65,768                       |  | 21,970                      |  | -44         |  | 34,031     |  | 53,663                  
|- Finance lease debtors                     |  | 31,884                       |  | 742                         |  |            |  | 3,328      |  | 29,298                  
|Allowance for stock obsolescence            |  | 157,363                      |  | 29,428                      |  | -430        |  | 20,532     |  | 165,829                 
|Valuation allowance for deferred tax assets |  | 52,448                       |  | -9,629                      |  |            |  |           |  | 42,819                  



F-35



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##### Table of Contents

Item 19 EXHIBITS



(a) The following financial
statements are being filed as part of this annual report:



|                                                                               |  |                 
|------------------------------------------------------------------------------ |  | ----------------
|                                                                               |  | Page            
|Report of independent auditors                                                 |  | F-2             
|Consolidated statements of operations                                          |  | F-3             
|Consolidated balance sheets                                                    |  | F-4 and F-5     
|Consolidated statements of cash flows                                          |  | F-6 and F-7     
|Notes to consolidated financial statements                                     |  | F-8 through F-35
|                                                                               | 
|Schedule:                                                                      |  |                 
|                                                                               | 
|Valuation and qualifying accounts                                              |  |                 
|See also Table of Contents to Consolidated Financial Statements on page F-1.



(b) The following exhibits are being
filed as part of this annual report:



| | 1. | Articles of Association as confirmed by notarial deed as of April 9, 1999 (English translation)*
| | -- | ------------------------------------------------------------------------------------------------



| | 4. | Material Contracts
| | -- | ------------------



| | (a) | Service Contract between the Company and R.L. van Iperen (English translation)**
| | --- | --------------------------------------------------------------------------------



| | (b) | Service Contract between the Company and J. van den Belt (English translation)**
| | --- | --------------------------------------------------------------------------------



| | (c) | Service Contract between the Company and J.F. Dix (English translation)**
| | --- | -------------------------------------------------------------------------



| | (d) | Redacted Private Label Program Agreement between the Company and De Lage Landen International B.V. (English translation) (Portions of this exhibit were omitted pursuant to a request
for confidential treatment and were filed separately with the office of the Secretary of the Securities and Exchange Commission).**
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e)(i) | Employment Agreement dated as of December 1, 2002 (the Daly Employment Agreement) by and between Océ -USA Holding, Inc. and Ronald E. Daly***
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------



| | (e)(ii) | Amendment to Daly Employment Agreement***
| | ------- | -----------------------------------------



| | 8. | Subsidiaries of Océ N.V.***
| | -- | ---------------------------



| | 10. | Annual Report 2003, which has been translated into English from Dutch.***
| | --- | -------------------------------------------------------------------------



| | 12. | Certifications required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.***
| | --- | ------------------------------------------------------------------------------------------------



| | 13. | Certifications required under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***
| | --- | ------------------------------------------------------------------------------------------------------------------------------

---

|* | Filed as an Exhibit to the Companys Annual Report on Form 20-F for the fiscal year ended November 30, 2000 and incorporated herein by reference.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

|** | Filed as an Exhibit to the Companys Annual Report on Form 20-F, as amended, for the fiscal year ended November 30, 2002 and incorporated herein by reference.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | Filed herewith.
|--- | ---------------



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##### Table of Contents

SIGNATURES



The registrant hereby certifies that
it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



OCÉ N.V.By:

/s/ R.L. van IperenR.L. van IperenChairman of the Board of Executive Directors




Dated: March
26, 2004